<SUBMISSION>
<ACCESSION-NUMBER>0000863110-01-500047
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20010930
<FILING-DATE>20011114
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ARTESIAN RESOURCES CORP
<CIK>0000863110
<ASSIGNED-SIC>4941
<IRS-NUMBER>510002090
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-18516
<FILM-NUMBER>1787204
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>664 CHURCHMANS RD
<CITY>NEWARK
<STATE>DE
<ZIP>19702
<PHONE>3024536900
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>664 CHURCHMANS RD
<CITY>NEWARK
<STATE>DE
<ZIP>19702
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>q9_2001.htm
<DESCRIPTION>3RD QUARTER TEST FILING
<TEXT>
<HTML>
<HEAD>

<META NAME="Generator" CONTENT="Microsoft Word 97">
<TITLE>q9_2001</TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080">

<B><FONT SIZE=3><P ALIGN="CENTER">UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISION<BR>
Washington, D.C. 20549</P>
<P ALIGN="CENTER">FORM 10-Q</P>
</B><P>(Mark One)<BR>
[&nbsp;X&nbsp;]&nbsp;&nbsp;QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</P>
<P ALIGN="CENTER">For the quarterly period ended September 30, 2001</P>
<P ALIGN="CENTER">OR</P>
<P>[&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=336>
<TR><TD VALIGN="TOP">
<P><FONT SIZE=3>For the transition period from&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT SIZE=3><P>Commission file number 0-18516</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><P ALIGN="CENTER">&nbsp;</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD VALIGN="TOP">
<P ALIGN="CENTER"><B><FONT SIZE=3>ARTESIAN RESOURCES CORPORATION</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">--------------------------------------------------------------</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">(exact name of registrant as specified in its charter)</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=667>
<TR><TD WIDTH="60%" VALIGN="TOP">
<P ALIGN="CENTER"><B><FONT SIZE=3>Delaware</B></FONT></TD>
<TD WIDTH="40%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">51-0002090</B></FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">------------------------------------------------------------</FONT></TD>
<TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">---------------------------------------</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">(State or other jurisdiction of incorporation or organization)</FONT></TD>
<TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">(I.R.S. Employer Identification Number)</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;</FONT></TD>
<TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;</FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=3><P ALIGN="CENTER">664 Churchmans Road, Newark, Delaware&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19702</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=2>
<FONT SIZE=3><P ALIGN="CENTER">------------------------------------------------------------------</FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=2>
<FONT SIZE=3><P ALIGN="CENTER">Address of principal executive officers</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;</FONT></TD>
<TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;</FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=3><P ALIGN="CENTER">(302) 453-6900</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=2>
<FONT SIZE=3><P ALIGN="CENTER">-----------------------------------------------------------</FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=2>
<FONT SIZE=3><P ALIGN="CENTER">Registrant's telephone number, including area code</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: [&nbsp;X&nbsp;]&nbsp;Yes&nbsp;&nbsp;&nbsp;[&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;No</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of September 30, 1,638,393 shares and 391,824 shares of Class A Non-Voting Common Stock and Class B Common Stock, respectively, were outstanding.</P>
<P>&nbsp;</P>
<P>&nbsp;</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=622>
<TR><TD VALIGN="TOP" COLSPAN=3 HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;&nbsp;</P>
<B><P ALIGN="CENTER">ARTESIAN RESOURCES CORPORATION</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=3 HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">INDEX TO FORM 10-Q</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP" COLSPAN=2 HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP" COLSPAN=2 HEIGHT=14>
<B><FONT SIZE=3><P>Part I-Financial Information:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">Page(s)</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P ALIGN="RIGHT">Item 1-&nbsp;&nbsp;</B></FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P>Financial Statements</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P>Consolidated Balance Sheet -</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P>September 30, 2001 and December 31, 2000</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">3-4</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P>Consolidated Statement of Income for</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P>the quarters ended September 30, 2001 and 2000</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">5-6</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P>Consolidated Statement of Income for</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P>the nine months ended September 30, 2001 and 2000</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">7-8</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P>Consolidated Statement of Retained Earnings</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P>for the nine months ended September 30, 2001 and 2000</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">8</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P>Consolidated Statement of Cash Flows for the</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P>nine months ended September 30, 2001 and 2000</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">8-10</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P>Notes to the Consolidated Financial Statements</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">11-15</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P ALIGN="RIGHT">Item 2-&nbsp;&nbsp;</B></FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P>Management's Discussion and Analysis of</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P>Financial Condition</B> <B>and</B> <B>Results of Operations</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">16-18 </FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P ALIGN="RIGHT">Item 3-&nbsp;&nbsp;</B></FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P>Quantitative and Qualitative Disclosures about</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P>Market Risk</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">19</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP" COLSPAN=2 HEIGHT=14>
<B><FONT SIZE=3><P>Part II-Other Information:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P ALIGN="RIGHT">Item 1-&nbsp;&nbsp;</B></FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P>Legal Proceedings</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">19</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P ALIGN="RIGHT">Item 2-&nbsp;&nbsp;</B></FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P>Changes in Securities</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">19</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P ALIGN="RIGHT">Item 3-&nbsp;&nbsp;</B></FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P>Defaults Upon Senior Securities</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">19</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P ALIGN="RIGHT">Item 4-&nbsp;&nbsp;</B></FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P>Submission of Matters to a Vote of</B> <B>Security Holders</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">20</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P ALIGN="RIGHT">Item 5-&nbsp;&nbsp;</B></FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P>Other Information</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">20</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P ALIGN="RIGHT">Item 6-&nbsp;&nbsp;</B></FONT></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14>
<B><FONT SIZE=3><P>Reports on Form 8-K and Exhibits</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">20-21</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="71%" VALIGN="TOP" HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP" COLSPAN=2 HEIGHT=14><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14><P></P></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP" COLSPAN=2 HEIGHT=14>
<B><FONT SIZE=3><P>Signatures</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=14>
<FONT SIZE=3><P ALIGN="CENTER">22</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><DL>
<DT>&nbsp;</DT>
<DT>&nbsp;</DT>
<DT>&nbsp;</DT>
</DL></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=630>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<P><FONT SIZE=3>&nbsp;</P>
<P>Part I-Financial Information</FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT SIZE=3><P>Item I-Financial Statements</FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16><P></P></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<B><FONT SIZE=3><P ALIGN="CENTER">ARTESIAN RESOURCES CORPORATION</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<B><FONT SIZE=3><P ALIGN="CENTER">CONSOLIDATED BALANCE SHEET</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Unaudited</FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(In thousands)</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">September 30, 2001</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;&nbsp;&nbsp;December 31, &nbsp;&nbsp;&nbsp;2000</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">-------------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">------------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>ASSETS</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Utility plant, at original cost</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;less accumulated depreciation</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">149,106</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">134,038</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Current assets</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Cash and cash equivalents</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">726</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">392</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Accounts receivable, net</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,655</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,967</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Unbilled operating revenues</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,509</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,102</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Materials and supplies-at cost</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;on FIFO basis</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">651</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">730</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Prepaid property taxes</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">896</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">591</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Prepaid expenses and other</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">656</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">620</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">8,093</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">6,402</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Other assets</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Non-utility property (less accumulated</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;depreciation 2001-$81; 2000-$166)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">299</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">268</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other deferred assets</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,266</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,335</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,565</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,603</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Regulatory assets, net</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,308</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,364</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">161,072</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">144,407</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">===========</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>LIABILITIES AND STOCKHOLDERS' EQUITY</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Stockholders' equity</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Common stock</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,030</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,013</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Additional paid-in capital</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">24,844</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">24,474</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Retained earnings</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">6,875</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">6,070</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Preferred stock</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">272</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">272</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">34,021</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">32,829</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Preferred stock-mandatorily redeemable,</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;net of current portion</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">200</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">300</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Long-term debt, net of current portion</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">49,648</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">50,717</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">83,869</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">83,846</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Current liabilities</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Notes payable</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">16,334</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,000</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Current portion of long-term debt</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,328</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,119</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Current portion of mandatorily</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;redeemable preferred stock</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">100</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">100</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Accounts payable</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">3,319</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">3,168</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Overdraft payable</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">961</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,224</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Income taxes payable</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">568</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---&nbsp;&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Interest accrued</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">313</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">530</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Customer deposits</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">417</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">419</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,030</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">938</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">24,370</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">9,498</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Deferred credits and other liabilities</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Net advances for construction</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">18,780</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">18,780</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Postretirement benefit obligation</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,384</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,455</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Deferred investment tax credits</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">911</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">934</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Deferred income taxes</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">5,139</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">4,231</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">26,214</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">25,400</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Net contributions in aid of construction</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">26,619</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">25,663</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-----------</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">161,072</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">144,407</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">===========</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">===========</FONT></TD>
</TR>
<TR><TD WIDTH="56%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><ADDRESS>See notes to the consolidated financial statements.</ADDRESS></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><P>&nbsp;</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=626>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<P ALIGN="CENTER"><B><FONT SIZE=3>ARTESIAN RESOURCES CORPORATION</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<B><FONT SIZE=3><P ALIGN="CENTER">CONSOLIDATED STATEMENT OF INCOME</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Unaudited</FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(In thousands, except share and per share amounts)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">For the Quarter</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Ended September 30,</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2001</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2000</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>OPERATING REVENUES</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Water sales</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">8,776</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;6,913</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other utility operating revenue</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">156</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">98</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Non utility revenue</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">15</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">11</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">8,947</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">7,022</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>OPERATING EXPENSES</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Utility operating expenses</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">4,198</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">3,825</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Related party expenses</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">44</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">45</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Non-utility operating expenses</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">17</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">10</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">737</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">729</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;State and federal income taxes</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">940</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">363</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Property and other taxes</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">462</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">406</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">6,398</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">5,378</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>OPERATING INCOME</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,549</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,644</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">78</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">58</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>OTHER INCOME (EXPENSE), NET</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">5</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">10</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><DL>
<DT>INCOME BEFORE INTEREST CHARGES</DT>
</DL></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,632</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,712</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>INTEREST CHARGES</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,175</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,076</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>NET INCOME</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,457</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">636</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>DIVIDENDS ON PREFERRED STOCK</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">12</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">14</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>NET INCOME APPLICABLE TO COMMON STOCK</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,445</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;622</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>INCOME PER COMMON SHARE:</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;0.71</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;0.31</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Diluted</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;0.70</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;0.30</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>CASH DIVIDEND PER COMMON SHARE</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;0.28</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">0.275</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>AVERAGE COMMON SHARES OUTSTANDING</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,027,567</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,009,116</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Diluted</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,070,251</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,045,165</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<I><FONT SIZE=3><P>See notes to the consolidated financial statements.</I></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><DL>
<DT></DT>
</DL></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=635>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT SIZE=3><P>&#9;&#9;<B>ARTESIAN RESOURCES CORPORATION</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<B><FONT SIZE=3><P ALIGN="CENTER">CONSOLIDATED STATEMENT OF INCOME</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Unaudited</FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(In thousands, except share and per share amounts)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;&nbsp;&nbsp;For the Nine Months</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;&nbsp;&nbsp;Ended September 30,</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2001&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2000&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>OPERATING REVENUES</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Water sales</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">23,456</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;20,261</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other utility operating revenue</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">380</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">317</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Non utility revenue</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">45</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">32</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">23,881</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">20,610</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>OPERATING EXPENSES</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Utility operating expenses</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">12,732</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">11,409</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Related party expenses</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">133</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">135</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Non-utility operating expenses</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">41</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">31</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,203</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,015</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;State and federal income taxes</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,721</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,209</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Property and other taxes</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,343</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,210</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">18,173</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">16,009</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>OPERATING INCOME</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">5,708</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">4,601</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
290</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
209</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>OTHER INCOME (EXPENSE), NET</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">29</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">29</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>INCOME BEFORE INTEREST CHARGES</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">6,027</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">4,839</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>INTEREST CHARGES</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">3,402</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,945</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>NET INCOME</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,625</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,894</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>DIVIDENDS ON PREFERRED STOCK</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">39</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">46</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>NET INCOME APPLICABLE TO COMMON STOCK</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,586</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;1,848</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">=======</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>INCOME PER COMMON SHARE:</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1.28</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.92</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">=======</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Diluted</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1.25</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.90</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">=======</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>CASH DIVIDEND PER COMMON SHARE</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">.83</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp; .82</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">=======</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>AVERAGE COMMON SHARES OUTSTANDING</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,022,146</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,005,345</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Diluted</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,062,991</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,043,537</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><DL>
<DT>&nbsp;</DT>
<DT>&nbsp;</DT>
<DT>&nbsp;</DT>
</DL></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=629>
<TR><TD VALIGN="TOP" COLSPAN=6 HEIGHT=16>
<P ALIGN="CENTER"><B><FONT SIZE=3>CONSOLIDATED STATEMENT OF RETAINED EARNINGS</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=6 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Unaudited</FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=6 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(In thousands)</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;&nbsp;&nbsp;For the Nine Months</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;&nbsp;&nbsp;Ended September 30,</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">2001</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Balance, beginning of period</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">6,070</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;5,933</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Net income</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,625</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,894</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">8,695</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">7,827</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Less: Dividends</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,775</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,689</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock-Repurchase</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">45</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">40</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-------</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Balance, end of period</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">6,875</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;6,098</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">======</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">======</FONT></TD>
</TR>
<TR><TD WIDTH="60%" VALIGN="TOP" HEIGHT=16>
<I><FONT SIZE=3><P>See notes to the consolidated financial statements.</I></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><DL>
<DT>&nbsp;</DT>
</DL></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=629>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<P ALIGN="CENTER"><B><FONT SIZE=3>ARTESIAN RESOURCES CORPORATION</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<B><FONT SIZE=3><P ALIGN="CENTER">CONSOLIDATED STATEMENT OF CASH FLOWS</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Unaudited</FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(In thousands)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;&nbsp;&nbsp;For the Nine Months</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="33%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;&nbsp;&nbsp;Ended September 30,</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">2001</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>CASH FLOWS FROM OPERATING ACTIVITIES</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>NET INCOME</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,625&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;1,894&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Adjustments to reconcile net income to net</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;cash provided by operating activities:</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,089&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,884&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Deferred income taxes, net</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">885&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,004&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Allowance for funds used during construction</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(290)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(209)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Changes in Assets and Liabilities:</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Accounts receivable</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(688)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,209&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Unbilled operating revenue</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(407)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(92)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Materials and supplies</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">79&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">82&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Accrued state and federal income taxes</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">568&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(525)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Prepaid property taxes</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(305)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(296)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Prepaid expenses and other</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(36)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(303)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other deferred assets</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">69&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">127&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Regulatory assets</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">56&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">257&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Postretirement benefit obligation</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(71)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(63)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Accounts payable</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">151&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(1,642)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Interest accrued</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(217)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(323)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Customer deposits and other, net</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">90&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(460)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>NET CASH PROVIDED BY OPERATING ACTIVITIES</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
4,598&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
2,544&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>CASH FLOWS FROM INVESTING ACTIVITIES</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Capital expenditures (net of AFUDC)</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(17,315)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(10,155)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Proceeds from sale of assets</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">11&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">24&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>NET CASH USED IN INVESTING ACTIVITIES</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(17,304)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(10,131)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>CASH FLOW FROM FINANCING ACTIVITIES</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Net borrowings (repayments) under line of </FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>credit agreement</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">14,334&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">7,195&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Overdraft payable</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(263)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,748&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Net advances and contributions in aid of construction</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,362&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,466&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Net proceeds from stock transactions</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">341&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">244&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Dividends</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(1,775)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(1,689)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Repayment of long-term debt</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(833)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(834)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Principal payments under capital lease obligations</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(26)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(21)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Retirement of preferred stock</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(100)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">(100)</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>NET CASH PROVIDED BY FINANCING ACTIVITIES</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
13,040&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
8,009&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>NET INCREASE IN CASH AND CASH EQUIVALENTS</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
334&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT"><BR>
422&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">392&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">122&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>CASH AND CASH EQUIVALENTS AT END OF PERIOD</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">726&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;544&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Supplemental Disclosures of Cash Flow Information:</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Interest paid</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">3,555&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;3,201&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Income taxes paid</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">157&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;750&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">========</FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" HEIGHT=16>
<I><FONT SIZE=3><P>See notes to the consolidated financial statements.</I></FONT></TD>
<TD WIDTH="6%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><DL>
<DT>&nbsp;</DT>
</DL>
<B><P>&nbsp;</P>
<P><BR>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</P>
<P>NOTE 1-GENERAL</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unaudited consolidated financial statements of Artesian Resources Corporation and its wholly-owned subsidiaries (the Company or Artesian Resources), including its principal operating company, Artesian Water Company, Inc. (Artesian Water), presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures prescribed by generally accepted accounting principles. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2000, included in the Company's Annual Report on Form 10-K. The accompanying consolidated financial statements have not been audited by independent accountants in accordance with generally accepted auditing standards. However, in the opinion of management such consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to fairly present the Company's financial position and results of operations. The results of operations for the interim periods may not be indicative of the results that may be expected for the entire year.</P>
<B><P>NOTE 2-REGULATORY ASSETS</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain expenses, which are recoverable through rates, without a return on investment, as permitted by the State of Delaware Public Service Commission (PSC), are deferred and amortized during future periods using various methods. Expenses related to rate proceedings are amortized on a straight-line basis over a period of two years. The post retirement benefit obligation, which is being amortized over twenty years is adjusted for the difference between the net periodic post retirement benefit costs and the cash payments. The deferred income taxes will be amortized over future years as the tax effects of temporary differences previously flowed through to the customer reverse. Regulatory assets, net of amortization, comprise:</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=628>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">September 30, 2001</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">December 31, 2000</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="40%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Unaudited</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="40%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(in thousands)</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Postretirement benefit obligation</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,384</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">1,455</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Deferred income taxes recoverable</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp; in future rates</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">661</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">665</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Expense of rate proceedings</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">263</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">244</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">---------</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,308</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,364</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">=========</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">=========</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><P ALIGN="CENTER">&nbsp;</P>
<B><P>NOTE 3-DEBT</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May 4, 1999, Artesian repurchased 126,353 shares of Class B Common Stock and 24,165 shares of Class A Non-Voting Common Stock from Ellis D. and Helena C. Taylor in exchange for a promissory note (the "Note") in the principal amount of $4,450,000 representing the purchase price of the stock, with a discounted present value of $4,307,000. The Note is payable quarterly, on a calendar basis, over a four year period and in sixteen equal principal installments of $278,125 commencing on June 30, 1999. The outstanding balance on the Note bears interest in an amount computed based on the quarterly dividend the Taylors would have received on the Stock transferred to Artesian but not yet paid for by Artesian. In addition, the principal installment is adjusted on a quarterly basis to reflect increases in the book value per common share of the Company as reported in its most recent quarterly financial statement distributed to stockholders prior to the quarterly payment. Such amounts, if any, represent contingent purchase price of the stock and will be charged to retained earnings. At September 30, 2001, Artesian had $1,668,750 outstanding under this promissory note.</P>
<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>On December 29, 2000, Artesian Water issued a $20.0 million, 8.17%, twenty year Series O First Mortgage Bond to redeem the Series K $7.0 million First Mortgage Bond and to pay down the lines of credit. On December 29, 2020 the Series O First Mortgage Bond matures.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January 31, 2001, Artesian Water Company, Inc. entered into a financing agreement with the Delaware Department of Health and Social Services to borrow funds totaling not more than $4,307,144 from the State's Revolving Loan Fund under an unsecured General Obligation Note. The note bears interest of 4.48%, and is payable ratably over twenty years. The effective rate of the loan, including expenses related to the closing, is 4.57%. The Company intends to use the proceeds of this revolving loan to repay outstanding short-term debt. As such, the Company has reclassified $4,307,144 from notes payable to long-term debt on the balance sheet for the period ending December 31, 2000. The proceeds were received on August 16, 2001.</P>
<B><P>NOTE 4-NON-UTILITY OPERATING EXPENSES</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Artesian Wastewater Management, Inc. (Artesian Wastewater) is an additional non-regulated subsidiary of Artesian Resources, which provides wastewater treatment services in Delaware. On March 12, 1997, Artesian Wastewater became a one-third owner in AquaStructure Delaware, L.L.C., which markets proposals to design, construct and operate wastewater treatment facilities. Artesian Wastewater operates a small wastewater treatment spray irrigation facility owned by a municipality in Southern New Castle County Delaware. Artesian Wastewater is paid a lump sum fee to maintain operations at the facility</P>
<B><P>NOTE 5-RELATED PARTY TRANSACTIONS</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The office building and shop complex utilized by Artesian Water are leased at an average annual rental of $180,000 from a partnership, White Clay Realty, in which certain of Artesian Resources' officers and directors are partners. Management believes that the payments made to White Clay Realty for the lease of its office building and shop complex are comparable to what Artesian Water would have to pay to unaffiliated parties for similar facilities.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expenses associated with related party transactions are as follows:</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=650>
<TR><TD WIDTH="38%" VALIGN="TOP" HEIGHT=16>
<P></TD>
<TD WIDTH="7%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">For the Quarter</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;&nbsp;&nbsp;For the Nine Months</FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="55%" VALIGN="TOP" COLSPAN=7 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Unaudited</FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Ended September 30,</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Ended September 30,</FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2001</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2000</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2001</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2000</FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="27%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(in thousands)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="25%" VALIGN="TOP" COLSPAN=3 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(in thousands)</FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>White Clay Realty</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">44</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;45</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">133&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>$</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;135</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><FONT SIZE=3><P>&nbsp;</P>
</B><H4>NOTE 6-NET INCOME PER COMMON SHARE AND EQUITY PER COMMON SHARE</H4>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 and potentially dilutive effect of employee stock options. The following table summarizes the shares used in computing basic and diluted net income per share: </P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=629>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16>
<P></TD>
<TD WIDTH="23%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;For the Quarter</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">For the NineMonths</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="47%" VALIGN="TOP" COLSPAN=4 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Unaudited</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="23%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Ended September 30,</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">Ended September 30,</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">2001</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">2001</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="23%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(in thousands)</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(in thousands)</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Average common shares outstanding during</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;the period for Basic computation</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,028</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,009</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,022</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,005</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Dilutive effect of employee stock options</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">42</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">36</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">41</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">39</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">--------</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-------</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">-------</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Average common shares outstanding during</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>&nbsp;&nbsp;the period for Diluted computation</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,070</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,045</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,063</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">2,044</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">=====</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">=====</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">=====</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="RIGHT">=====</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><P>&nbsp;</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity per common share was $16.63 and $16.18 at September 30, 2001 and 2000, respectively. These amounts were computed by dividing common stockholders' equity, excluding preferred stock, by the number of shares of common stock outstanding on September 30, 2001 and 2000, respectively.</P>
<B><P>&nbsp;</P>
<P>NOTE 7-IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 2001, the FASB issued Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. Statement 141 also specifies criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase price allocable to an assembled workforce may not be accounted for separately. Statement 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of Statement 142. Statement 142 will also require that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is required to adopt the provisions of Statement 141 immediately, except with regard to business combinations initiated prior to July 1, 2001, and Statement 142 effective January 1, 2002. Furthermore, any goodwill and any intangible asset determined to have an indefinite useful life that is acquired in a purchase business combination completed after June 30, 2001 will not be amortized, but will continue to be evaluated for impairment in accordance with the appropriate pre-Statement 142 accounting literature. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 will continue to be amortized as they were prior to the adoption of Statement 142.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management is in the process of evaluating the impact of SFAS No. 141 and SFAS No. 142 on the Company's financial statements.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August 2001, the FASB issued statement No. 143, Accounting for Asset Retirement Obligations. Statement No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Statement No. 143 requires recognition of a liability at fair value and an increase to the carrying value of the related asset for any retirement obligation. This amount would then be amortized over the life of the asset. The liability would be adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows. This statement is effective June 2003.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our adoption of this statement will not have a material impact on our financial condition or results of operations.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October 2001, the FASB issued Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Statement No. 144 incorporated the disposal of a business segment into the framework of Statement No. 121. Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The statement also excludes goodwill that was included in Statement No. 121 scope and provided refinement to cash flow estimations for defining any applicable impairment. This Statement is effective January 1, 2002. </P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our adoption of this statement will not have a material impact on our financial condition or results of operations.</P>
<P>&nbsp;</P>
<B><P>NOTE 8-RATE PROCEEDINGS</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December 5, 2000, Artesian Water filed a petition with the PSC to implement new rates seeking increased revenues of approximately 22.57% or $6.4 million on an annualized basis. Effective February 3, 2001, Artesian Water was permitted, through temporary rates approved by the PSC, to collect an increase of $2.5 million on an annualized basis, subject to refund, until permanent rates were approved by the PSC. </P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June 19, 2001, the PSC approved a settlement that Artesian Water entered into with Staff of the Delaware Public Service Commission ("Staff") and the Division of the Public Advocate ("DPA") on June&nbsp;6, 2001. The parties' stipulated agreement provides for an increase in rates designed to provide the Company an additional $3.7 million in annualized revenues. The settlement, as approved, also allowed the Company a return on equity of 10.5%. The new rates approved by the PSC became effective July 1, 2001. As a result of these new rates, approximately $1.2 million in additional annualized revenues will be reflected in rates for service beginning July 1, 2001.<B> </P>
</B><I><P>&nbsp;</P>
</I><P>&nbsp;</P>
<DL>
<DT>&nbsp;</DT>
<DT>&nbsp;</DT>
</DL>
<B><P>ITEM 2</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=624>
<TR><TD VALIGN="TOP" HEIGHT=26>
<P ALIGN="CENTER"><B><FONT SIZE=3>ARTESIAN RESOURCES CORPORATION<BR>
MANAGEMENT'S DISCUSSION AND ANALYSIS</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" HEIGHT=26>
<B><FONT SIZE=3><P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS </P>
<P ALIGN="CENTER">OF OPERATIONS FOR THE PERIOD ENDED</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" HEIGHT=26>
<B><FONT SIZE=3><P ALIGN="CENTER">SEPTEMBER 30, 2001</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><H4>&nbsp;</H4>
<H4>RESULTS OF OPERATIONS</H4>
<U><P>Overview</P>
</U><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Artesian Water, our principal subsidiary, is the oldest and largest regulated public water utility in the State of Delaware and has been providing water within the state since 1905. We distribute and sell water to residential, commercial, industrial, governmental, municipal and utility customers throughout Delaware. As of September 30, 2001, we had approximately 66,000 metered customers and served a population of approximately 214,000, representing approximately 28% of Delaware's total population. We believe that we have a reputation for providing water and service of superior quality to our customers.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Delaware Public Service Commission regulates Artesian Water's rates charged for water service, the sale and issuance of securities, mergers and other matters. We 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. Increases in customers served by Artesian Water also contribute to increases in our operating revenues, although such increases have been offset slightly by reductions in customers' individual usage. Our business is also subject to seasonal fluctuations and the effects of weather.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Artesian Water has regularly invested in security measures to enhance the safety of its water supply and system.  In light of the terrorist attacks on September 11, 2001, however, we have increased security measures at various facilities or accelerated the rate at which we are investing in new security measures.  Artesian Water communicates with federal, state and local authorities and industry trade associations in order to obtain current information on possible threats and security measures for water utility operations.  The cost of the increased security measures is expected to be fully recoverable in water rates and is not expected to a have a material impact on our results from operations or financial condition.</P>
<U><P>Operating Revenues</P>
</U><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We realized 98.1% and 98.2% of our total revenue in the quarter ended September 2001 and the first nine months of 2001 from the sale of water. Water sales revenue increased $1,863,000, or 26.9% and $3,195,000, or 15.8%, for the quarter ended September 30, 2001 and the nine months ended September 30, 2001 compared to the quarter ended September 30, 2000 and the first nine months of 2001. The increase for both periods was primarily due to a growth in the number of customers served, a return to normal weather, and implementation of rates related to the rate proceeding completed July 2001. </P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December 5, 2000, Artesian Water filed a petition with the PSC to implement new rates seeking increased revenues of approximately 22.57% or $6.4 million on an annualized basis. Effective February 3, 2001, Artesian Water was permitted, through temporary rates approved by the PSC, to collect an increase of $2.5 million on an annualized basis, subject to refund, until permanent rates were approved by the PSC. </P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June 19, 2001, the PSC approved a settlement that Artesian Water entered into with Staff of the Delaware Public Service Commission ("Staff") and the Division of the Public Advocate ("DPA") on June&nbsp;6, 2001. The parties' stipulated agreement provides for an increase in rates designed to provide the Company an additional $3.7 million in annualized revenues. The settlement, as approved, also allowed the Company a return on equity of 10.5%. The new rates approved by the PSC became effective July 1, 2001. As a result of these new rates, approximately $1.2 million in additional annualized revenues will be reflected in rates for service beginning July 1, 2001.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other utility operating revenues have increase $58,000 and $63,000 for the quarter and nine months ended September 30, 2001, over respective periods in 2000 due to an increase in antenna rental income and an expansion into providing contract operation services.</P>
<U><P>Operating Expenses</P>
</U><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating and maintenance expenses increased $379,000 for the quarter ended September 30, 2001, and $1,331,000 for the nine months ended September 30, 2001, over the comparable periods ended September 30, 2000. An increase of $245,000 for the quarter, and $660,000 for the nine months ended September 30, 2001, in payroll and benefits, due to additional positions and wage increases, contributed to the increase in operating and maintenance expenses. In addition, purchased water expense increased due to the timing of water purchases under minimum contract arrangements. We expect to purchase less water during the last three months of 2001 as compared to the same period a year ago. We target annual purchases of water to approximate the minimum contractual obligations.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization expense increased $8,000, or 1.1% for the quarter ended September 30, 2001 and $188,000, or 9.3%, for the nine months ended September 30, 2001, compared to the comparable period of 2000, due to capital additions. Income tax expense increased $577,000, or 159.0%, and $512,000, or 42.3%, for the quarter and the nine months ended September 30, 2001, as a result of increased profitability.</P>
<U><P>Interest Charges</P>
</U><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest charges increased $99,000, or 9.2%, for the quarter ended September 30, 2001, and $457,000, or 15.5%, for the first nine months of 2001, compared to the quarter ended September 2000 and the first nine months of 2000 due to interest related to the issuance of the $20 million, 8.17% series O bond, which included the refinancing of the $7 million 10.17%, series K bond.</P>
<U><P>Net Income</P>
</U><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the quarter and the nine months ended September 30, 2001, Artesian Resources recorded earnings of $1,445,000, and $2,586,000, which represents a $823,000, or 132.3%, increase and a $738,000, or 39.9%, increase, respectively, as compared to earnings of $622,000 for the quarter ended September 2000 and $1,848,000 for the nine months ended September 30, 2000. </P>
<B><P>LIQUIDITY AND CAPITAL RESOURCES</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our primary sources of liquidity for the first nine months of 2001 were $14.3 million provided by borrowings on our line of credit and $4.6 million provided by cash flow from operating activities.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We rely on our sources of liquidity for investments in our utility plant and systems and to meet our various payment obligations. We currently estimate that our aggregate investments in our utility plant and systems for the remainder of 2001 will be approximately $5.6 million. These obligations and our investments in utility plant will be financed with cash flow from our operating activities and short-term borrowings under our revolving credit agreements. Our total obligations related to dividend and sinking fund payments on preferred stock, interest payments on indebtedness, rental payments and water service interconnection agreements for the remainder of 2001 are anticipated to be approximately $1.8 million.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Developer advances and contributions in aid of construction are used for the installation of mains and hydrants in new developments. We anticipate that an additional $1.2 million of capital expenditures will be financed by developers during the remainder of 2001.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At September 30, 2001, we had a working capital deficit of $16.3 million mainly due to borrowings on our lines of credit incurred to finance investment in utility plant. </P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At September 30, 2001, Artesian Water had lines of credit with three separate financial institutions totaling $35.0 million to meet its temporary cash requirements. These revolving credit facilities are unsecured. As of September 30, 2001, we had $18.7 million of available funds under these lines. The interest rate for borrowings under each of these lines is the London Interbank Offering Rate plus 1.0% or, at our discretion, the bank's federal funds rate plus 1.0%. All the facilities are reviewed annually by each bank for renewal.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect that our available cash balances, together with projected cash generated from operations and the available bank credit line, will be sufficient to fund our activities for at least the next 24 months.</P>
<B><P>CAUTIONARY STATEMENT</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statements in this Quarterly Report on Form 10-Q which express our "belief", "anticipation" or "expectation", as well as other statements which are not historical fact (e.g. statements under &quot;Results of Operations" and "Liquidity and Capital Resources&quot; regarding anticipated expenditures for the remainder of this year), are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that could cause actual results to differ materially from those projected. Certain factors, such as developments in future rate proceedings, competitive market pressures, material changes in demand from larger customers, changes in weather, availability of labor, changes in government policies, the possible effects of potential acquisitions by Artesian Water of assets or other companies, the potential need to make unplanned investments in additional security measures if warranted by terrorist activities or threatened terrorist activities and changes in economic conditions, could cause results to differ materially from those in the forward-looking statements. </P>
<B><P>ITEM 3-QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 interest rate risk related to existing fixed rate, long-term debt is not material due to the term of our First Mortgage Bonds, which have maturity dates ranging from 2003 to 2020.</P>
<B><P>PART II-OTHER INFORMATION</P>
<P>ITEM 1-LEGAL PROCEEDINGS</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December 5, 2000, Artesian Water filed a petition with the PSC to implement new rates seeking increased revenues of approximately 22.57% or $6.4 million on an annualized basis. Effective February 3, 2001, Artesian Water was permitted, through temporary rates approved by the PSC, to collect an increase of $2.5 million on an annualized basis, subject to refund, until permanent rates were approved by the PSC. </P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June 19, 2001, the PSC approved a settlement that Artesian Water entered into with Staff of the Delaware Public Service Commission ("Staff") and the Division of the Public Advocate ("DPA") on June&nbsp;6, 2001. The parties' stipulated agreement provides for an increase in rates designed to provide the Company an additional $3.7 million in annualized revenues. The settlement, as approved, also allowed the Company a return on equity of 10.5%. The new rates approved by the PSC became effective July 1, 2001. As a result of these new rates, approximately $1.2 million in additional annualized revenues will be reflected in rates for service beginning July 1, 2001. </P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no other material legal proceedings pending at this date.&nbsp;</P>
<B><P>ITEM 2-CHANGES IN SECURITIES</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable. </P>
<B><P>ITEM 3-DEFAULTS UPON SENIOR SECURITIES</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.</P>
<B><P>ITEM 4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May 2, 2001 Mr. Norman H. Taylor Jr. was elected by the holders of our Class B Common Stock (which is not publicly traded), as director for a term expiring at the third succeeding annual meeting from May 2, 2001. Mr. Norman H. Taylor, Jr. fills the director position vacated by William H. Taylor II. Mr. William Wyer was re-elected as a director by the Class B Common Stockholders on the same date.</P>
<B><P>ITEM 5-OTHER INFORMATION</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September 17, 2001, the Company announced that is was negotiating with Middlesex Water Company ("Middlesex") to acquire Middlesex's Delaware subsidiary, Tidewater Utilities, Inc. ("Tidewater").  Following an extensive period of due diligence and discussions, the Company has discontinued these negotiations.  The Company has recorded approximately $240,000 in acquisition cost that it expects to expense in the fourth quarter of 2001.</P>
<B><P>ITEM 6-REPORTS ON FORM 8-K</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A current report on Form 8K was filed on September 17, 2001 reporting under Item 5 that the Company is in negotiations with Middlesex Water Company regarding the sale of Middlesex's Delaware subsidiary, Tidewater Utilities, Inc., to Artesian.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A current report on Form 8K was filed on October 29, 2001 reporting under Item 5, on earnings for the third quarter. </P>
<B><P ALIGN="CENTER">INDEX TO EXHIBITS</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=624>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<P><U><FONT SIZE=3>Exhibit Number</U></FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16>
<U><FONT SIZE=3><P>Description</U></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT SIZE=3><P>3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Articles of Incorporation and By-Laws</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(3.1)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=4 HEIGHT=16>
<FONT SIZE=3><P>Restated Certificate of Incorporation of the Company effective May 26, 1995, incorporated by reference to the exhibit filed with Artesian Resources Corporation Form 10-Q for the quarter ended June 30, 1995.</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(3.2)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=4 HEIGHT=16>
<FONT SIZE=3><P>Restated Certificate of Incorporation of the Company effective April 26, 1994, including Certificate of Correction incorporated by reference to the exhibit filed with the Artesian Resources Corporation Form 10-Q for the quarter ended March 31, 1994.</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(3.3)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=3 HEIGHT=16>
<FONT SIZE=3><P>By-Laws of the Company effective April 27, 1993, incorporated by reference to the exhibit filed with the Artesian Resources Corporation Form 8-K filed April 27, 1993.</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<FONT SIZE=3><P>4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Instruments Defining the Rights of Security Holders, Including Indentures</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=15>
<FONT SIZE=3><P ALIGN="CENTER">(4.1)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=4 HEIGHT=15>
<FONT SIZE=3><P>Fifteenth Indenture dated as of December 1, 2000 between Artesian Water Company Inc., Subsidiary of Artesian Resources Corporation, and Wilmington Trust Company as Trustee. Incorporated by reference to the exhibits filed with Artesian Resources Form 10Q for the Quarter ended 3/31/01.</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(4.2)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=4 HEIGHT=16>
<FONT SIZE=3><P>Thirteenth and Fourteenth Indentures dated as of June 17, 1997, between Artesian Water Company, Inc., subsidiary of Artesian Resources Corporation, and Wilmington Trust Company, as Trustee. Incorporated by reference to the exhibits filed with Artesian Resources Corporation Form 10Q for the quarter ended June 30, 1997. </FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(4.3)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=5 HEIGHT=16>
<FONT SIZE=3><P>Twelfth Supplemental Indenture dated as of December 5, 1995, between Artesian Water Company, Inc. subsidiary of Artesian Resources Corporation, and Wilmington Trust Company, as Trustee. Incorporated by reference to the exhibit filed with the Artesian Resources Corporation Annual Report on Form 10-K for the year ended December 31, 1995 ended December 31, 1995.</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(4.4)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=5 HEIGHT=16>
<FONT SIZE=3><P>Eleventh Supplemental Indenture dated as of February 16, 1993, between Artesian Water Company, Inc., subsidiary of Artesian Resources Corporation, and Principal Mutual Life Insurance Company. Incorporated by reference to the exhibit filed with Artesian Resources Corporation Annual Report on Form 10-K for the year ended December 31, 1992.</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(4.5)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=9 HEIGHT=16>
<FONT SIZE=3><P>Tenth Supplemental Indenture dated as of April 1, 1989, between Artesian Water Company, Inc., subsidiary of Artesian Resources Corporation, and Wilmington Trust Company, as Trustee. Incorporated by reference to the exhibit filed with Artesian Resources Corporation Registration Statement on Form 10 filed April 30, 1990, and as amended by Form 8 filed on June 19, 1990. Other Supplemental Indentures with amounts authorized less than ten percent of the total assets of the Company and its subsidiaries on a consolidated basis will be furnished upon request. </FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Material </FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Contracts </FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(10.1)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=3 HEIGHT=16>
<FONT SIZE=3><P>Amended and Restated Artesian Resources Corporation 1992 Non-Qualified Stock Option Plan, as amended, filed with the Artesian Resources Corporation Form 10-K for year ended December 31, 1998.</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(10.2)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=4 HEIGHT=16>
<FONT SIZE=3><P>Lease dated as of March 1, 1972, between White Clay Realty Company and Artesian Water Company, Inc. incorporated by reference to the exhibit filed with Artesian Resources Corporation Registration Statement on Form 10 Filed April 30, 1990, and as amended by Form 8 filed June 19, 1990.</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(10.3)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=2 HEIGHT=16>
<FONT SIZE=3><P>Plan for Officers incorporated by reference to the exhibit filed with the Artesian Resources Corporation Form 10-K for the year ended December 31, 1993.</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(10.4)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=3 HEIGHT=16>
<FONT SIZE=3><P>Artesian Resources Corporation Incentive Stock Option Plan incorporated by reference to the exhibit filed with the Artesian Resources Corporation Annual Report on Form 10-K for the year ended December 31, 1995.</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="80%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P ALIGN="CENTER">(10.5)</FONT></TD>
<TD WIDTH="80%" VALIGN="TOP" ROWSPAN=2 HEIGHT=16>
<FONT SIZE=3><P>Share Repurchase Agreement dated April 28, 1999, and related Promissory Note dated May 4, 1999.</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><P>&nbsp;</P>
<DL>
<DT>&nbsp;</DT>
<DT>&nbsp;</DT>
</DL>
<B><P ALIGN="CENTER">SIGNATURES</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.</P>
<B><P ALIGN="CENTER">ARETESIAN RESOURCES CORPORATION</P>
</B><P ALIGN="CENTER">&nbsp;</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=8 WIDTH=624>
<TR><TD WIDTH="23%" VALIGN="TOP" HEIGHT=16>
<P><FONT SIZE=3>11/14/01</FONT></TD>
<TD WIDTH="77%" VALIGN="TOP" HEIGHT=16>
<U><FONT FACE="Lucida Handwriting"><P>Dian C. Taylor </FONT><FONT SIZE=3>/s/</FONT><FONT FACE="Lucida Handwriting"> </U></FONT></TD>
</TR>
<TR><TD WIDTH="23%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="77%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Dian C. Taylor</FONT></TD>
</TR>
<TR><TD WIDTH="23%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="77%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>President, CEO, and Chair of the Board</FONT></TD>
</TR>
<TR><TD WIDTH="23%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="77%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Artesian Resources Corporation and Subsidiaries</FONT></TD>
</TR>
<TR><TD WIDTH="23%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="77%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="23%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="77%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="23%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>11/14/01</FONT></TD>
<TD WIDTH="77%" VALIGN="TOP" HEIGHT=16>
<U><FONT FACE="Lucida Handwriting"><P>David B. Spacht </FONT><FONT SIZE=3>/s/</U></FONT></TD>
</TR>
<TR><TD WIDTH="23%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="77%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>David B. Spacht</FONT></TD>
</TR>
<TR><TD WIDTH="23%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="77%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Vice President, Chief Financial Officer, and Treasurer</FONT></TD>
</TR>
<TR><TD WIDTH="23%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="77%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Artesian Resources Corporation and Subsidiaries</FONT></TD>
</TR>
<TR><TD WIDTH="23%" VALIGN="TOP" HEIGHT=16>
<FONT SIZE=3><P>Form 10Q </P>
<P>September 2001</FONT></TD>
<TD WIDTH="77%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
</TABLE>
</CENTER></P>

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