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, 2021.

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, and Section 27A of the Securities
Act of 1933, 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, 2021, 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, 2022, 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 timing of any future asset sales and
revenue and cash generation, which could adversely affect our liquidity.

On April 13, 2022, the Company, Parent, and Purchaser, entered into the Merger
Agreement. Pursuant to the Merger Agreement, and upon the terms and subject to
the conditions thereof, Parent has agreed to cause Purchaser to commence the
Offer to purchase all of the outstanding Shares at an offer price of $15.75 per
Share, less any applicable withholding taxes and without interest. Following the
successful closing of the Offer, and subject to the terms and conditions of the
Merger Agreement, Purchaser will be merged with and into the Company pursuant to
Section 251(h) of the DGCL, with the Company continuing as the surviving
corporation in the Merger and a wholly owned subsidiary of Parent. At the
effective time of the Merger, each Share that was not tendered in the Offer,
other than the Cancelled Shares and Dissenting Shares (as each are
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defined in the Merger Agreement), will be converted into the right to receive
the Offer Price, less any applicable withholding taxes and without interest.
Purchaser commenced the Offer on April 27, 2022, with a scheduled expiration
time of one minute following 11:59 pm Eastern Time on May 24, 2022, unless the
offer is extended or terminated. There is no guarantee that the Offer or the
Merger will be consummated within the proposed timeline, or at all. Refer to
Note 5 "Subsequent Events" of our unaudited condensed consolidated financial
statements for more information related to the Merger.

Results of Operations

Shareholders' Equity (in thousands):

March 31, 2022       December 31,

2021 Change


    Shareholders' equity             $       207,502      $

208,596 $ (1,094)


    Shareholders' equity per share   $         11.34      $

11.39 $ (0.05)

The decrease in our shareholders' equity during the three months ended March 31, 2022, was due primarily to the net loss of $1.5 million.

Income Statement (in thousands):



                                                               Three Months Ended March 31,
                                                                   2022              2021            Change

Revenue and other income                                       $     966          $ 2,933          $ (1,967)
Cost of sales                                                        213              375              (162)
Project and general and administrative expenses                    2,284            1,844               440
Net Income (loss) before income taxes                          $  (1,531)

$ 714 $ (2,245)

Revenue and other income (loss)



The majority of our revenue recorded for the three months ended March 31, 2022
was from the sale of 16.7 acre-feet of water rights at Fish Springs Ranch, for
total proceeds of $713,000.

Project and general and administrative expenses for the three months ended March
31, 2022 included approximately $100,000 of non-applicable option payments (not
applicable to the purchase price) for water rights purchases in Lyon County,
Nevada (three months ended March 31, 2021, $75,000) and legal fees and other
expenses incurred of approximately $614,000 (three months ended March 31, 2021,
$145,000) the majority of which was incurred in connection with the definitive
merger agreement dated April 13, 2022 between the Company and D.R. Horton Inc.
(see note 5 'Subsequent Events').

Income Taxes



Based on the analysis conducted at December 31, 2021, we recorded a tax benefit
of $18.1 million primarily due to the reversal of another portion of the
valuation allowance of $21.7 million due to the increased likelihood that we
will be able to utilize a significant portion of our Net Operating Losses prior
to their expiration. For the three months ended March 31, 2022 and March 31,
2021 the Company has recorded a tax provision of $0 and $182,000 respectively.





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Liquidity and Capital Resources - Three Months Ended March 31, 2022 and 2021



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, 2022, 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.

As of April 13, 2022 our stock repurchase program has been terminated.

Cash Flows

Cash Flows From Operating Activities



Our operations used $2.5 million of cash during the first three months of 2022.
The principal operating cash inflow was approximately $966,000 from the sale of
various water rights assets and other income. This was offset by $3.5 million of
cash used for overhead and various project expenses.

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.

Cash Flows From Investing Activities

There were no significant cash flows from investing activities during the three months ended March 31, 2022, and March 31, 2021.

Cash Flows From Financing Activities

We used $129,000 and $986,000 in cash to repurchase 10,900 and 107,000 shares of our common stock during the three months ended March 31, 2022 and 2021, respectively.

Off-Balance Sheet Arrangements



As of March 31, 2022, 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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