The following discussion and analysis of financial condition and results of
operations should be read together with the Unaudited Condensed Consolidated
Financial Statements and accompanying Notes included elsewhere in this report,
and the Consolidated Financial Statements and accompanying Notes included in our
Annual Report on Form 10-K for the year ended December 31, 2020.

Note About "Forward-Looking Statements"



This Quarterly Report on Form 10-Q (including the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" section) contains
"forward-looking statements," as defined in Section 21E of the United States
Securities Exchange Act of 1934, as amended, regarding our business, financial
condition, results of operations, and prospects, including, without limitation,
statements about our expectations, beliefs, intentions, anticipated
developments, and other information concerning future matters. Words such as
"may," "will," "could," "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," "should," "target," "projects,"
"contemplates," "predicts," "potential," "continue," and similar expressions or
variations of such words are intended to identify forward-looking statements,
but are not the exclusive means of identifying forward-looking statements in
this Quarterly Report on Form 10-Q. Although forward-looking statements in this
Quarterly Report on Form 10-Q reflect the good faith judgment of our management,
such statements can only be based on current expectations and assumptions.
Consequently, forward-looking statements are inherently subject to risks and
uncertainties, and the actual results and outcomes could differ materially from
what is expressed or implied by the forward-looking statements. Factors that
could cause or contribute to such differences in results and outcomes include,
without limitation, those discussed under the headings "Item 1A. Risk Factors"
in our Annual Report on Form 10-K for the year ended December 31, 2020, in "Item
1A: Risk Factors" of Part II of this Quarterly Report on Form 10-Q, and in other
filings made from time to time with the United States Securities and Exchange
Commission ("SEC") after the date of this Quarterly Report on Form 10-Q. Readers
are urged not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no
obligation to (and we expressly disclaim any obligation to) revise or update any
forward-looking statement, whether as a result of new information, subsequent
events, or otherwise (except as may be required by law), in order to reflect any
event or circumstance which may arise after the date of this Quarterly Report on
Form 10-Q. Readers are urged to carefully review and consider the various
disclosures made in this Quarterly Report on Form 10-Q and our Annual Report on
Form 10-K and other filings with the SEC.

Business Strategy and Goals

Vidler Water Resources, Inc. is a holding company. In this Quarterly Report, Vidler and its subsidiaries are collectively referred to as "Vidler," "the Company," or by words such as "we" and "our."

Our business is to source, develop and provide sustainable potable water resources to fast-growing communities throughout the Southwest U.S. that lack, or are running short of, available water resources.



Our objective is to maximize long-term shareholder value. Currently, we believe
the highest potential return to shareholders is from a return of capital. As we
monetize assets, rather than reinvest the proceeds, we intend to return capital
back to shareholders through a stock repurchase program or by other means such
as special dividends. Nonetheless, we may, from time to time, reinvest a portion
of proceeds from asset monetizations in further development of existing assets,
if we believe the returns on such reinvestment outweigh the benefits of a return
of capital.

As of March 31, 2021, our major consolidated subsidiary was Vidler Water
Company, Inc. a water resource and water storage business with assets and
operations primarily in the southwestern United States, including Nevada,
Arizona, Colorado, and New Mexico. Our revenue and cash generation from the sale
of our water resource and real estate assets can vary significantly from quarter
to quarter and largely depends on when actual sale transactions close. We are
unable to predict with any certainty the impact on the timing of any future
asset sales and revenue and cash generation due to the economic contraction in
the U.S. as a result of the COVID-19 pandemic. However, we believe if an
economic contraction in the U.S. persists for several quarters, it is likely
that future asset sales will be delayed, which could adversely affect our
liquidity.

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Results of Operations

Shareholders' Equity (in thousands):

March 31, 2021       December 31,

2020 Change


     Shareholders' equity             $       177,857      $

178,270 $ (413)


     Shareholders' equity per share   $          9.63      $

9.59 $ 0.04





The decrease in our shareholders' equity during the three months ended March 31,
2021, was primarily due to the repurchase of approximately 107,000 shares of our
common stock for $986,000 which was partially offset by the gains on sale of
certain of our real estate and water assets.

Total Assets and Liabilities (in thousands):


                                 March 31, 2021       December 31, 2020       Change
           Total assets         $       179,977      $          180,446      $ (469)
           Total liabilities    $         2,120      $            2,176      $   56

Income Statement (in thousands):



                                                             Three Months

Ended March 31,


                                                                2021                 2020             Change
Revenue and other income (loss)                           $        2,933          $    229          $  2,704
Cost of sales                                                        375                13               362
Project and general and administrative expenses                    1,844             2,027              (183)
Net income (loss) before income taxes                     $          714

$ (1,811) $ 2,525

Revenue and other income (loss)



The majority of our revenue recorded for the three months ended March 31, 2021
was from the sale of 296 acre-feet of water rights at Dodge Flat, Nevada, for
total proceeds of $2.1 million.

Income Taxes



Based on the analysis conducted at December 31, 2020 we reversed a portion of
the valuation allowance on our net deferred tax assets of $9.3 million. We
recorded a deferred tax benefit of $9.3 million for the year ended December 31,
2020, resulting in an effective tax rate of 0% for the year ended December 31,
2020. The effective tax rate differed from our federal corporate income tax rate
of 21% due primarily to the valuation allowance changes recorded on our net
deferred tax assets in 2020. As of March 31, 2021 the Company has released
approximately $182,000 of the deferred tax asset to reflect the expected tax
provision for the 2021 fiscal year.

We report comprehensive income or loss as well as net income or loss from the
condensed consolidated statements of operations and comprehensive income or
loss. Comprehensive income measures changes in equity, and includes unrealized
items which are not recorded in the condensed consolidated statements of
operations.




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Liquidity and Capital Resources - Three Months Ended March 31, 2021 and 2020



A substantial portion of our historical revenue and cash flow has, and is
expected in the future, to come from one-time sales of our assets that are
primarily long-term water resource development projects that we expect to
support economic growth in the local markets where those assets are located. We
classify such sales and costs incurred to acquire and develop our water assets
as operating activities in our consolidated statement of cash flows. The timing
and amount of sales and cash flows depend on a number of factors which are
difficult to predict, and cannot be directly compared from one period to
another. However, given our cash balance at March 31, 2021, we currently believe
that we have sufficient resources to cover our expenses for at least the next 12
months.

Our revenue and cash generation from the sale of our water resource and real
estate assets can vary significantly from quarter to quarter and largely depends
on when actual sale transactions close. We are unable to predict with any
certainty the impact on the timing of any future asset sales and revenue and
cash generation due to the economic contraction in the U.S. as a result of the
COVID-19 pandemic. If an economic contraction in the U.S. persists for several
quarters, it is likely that future asset sales will be delayed, which could
adversely impact our liquidity.
In the long-term, we estimate that cash from asset sales will provide us with
adequate funding for future operations. However, if additional funding is
needed, we may defer significant expenditures (including stock repurchases),
sell assets, obtain a line of credit, or complete a debt or equity offering. Any
equity or convertible debt offering may be dilutive to our shareholders, and any
debt offering may include operating covenants that could restrict our business.
We are currently not subject to any debt covenants that limit our ability to
obtain additional financing through debt or equity offerings.

We expect to continue to repurchase shares of our common stock in the open market at opportunistic prices, up to our current board approved amount of $100 million, subject to maintaining adequate working capital requirements.

Cash Flows

Cash Flows From Operating Activities



Our operations provided $1 million of cash during the first three months of
2021. The principal operating cash inflow was approximately $2.9 million from
the sale of various real estate and water rights assets and other income. This
was offset by $1.9 million of cash used for overhead and various project
expenses.

Our operations utilized $2.9 million of cash during the first three months
of 2020. The principal operating cash inflow was approximately $0.2 million from
the sale of various real estate and water rights assets and other income. This
was offset by $3.1 million of cash used for overhead and various project
expenses.

Cash Flows From Investing Activities

There were no significant cash flows from investing activities during the three months ended March 31, 2021, and March 31, 2020.

Cash Flows From Financing Activities

We used $986,000 and $3.6 million in cash to repurchase 107,000 and 398,000 shares of our common stock during the three months ended March 31, 2021 and 2020, respectively.

Off-Balance Sheet Arrangements



As of March 31, 2021, we had no off-balance sheet arrangements, that have, or
are reasonably likely to have, a material current or future effect on our
consolidated financial condition, revenues or expenses, results of operations,
liquidity, capital expenditure, or capital resources.





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