cdzi20210930

cdzi20210930_10q.htm

United States

Securities and Exchange Commission

Washington, D. C. 20549

FORM 10-Q

(Mark One)

☑ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended September 30, 2021

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from …… to …….

Commission File Number 0-12114

Cadiz Inc.

(Exact name of registrant specified in its charter)

Delaware	77-0313235
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

550 South Hope Street, Suite 2850
Los Angeles, California	90071
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (213) 271-1600

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

CDZI

The NASDAQ Global Market

Depositary Shares (each representing a

1/1000^th fractional interest in share of

8.875% Series A Cumulative Perpetual

Preferred Stock, par value $0.01 per share)

CDZIP

The NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

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

☐ Large accelerated filer ☐ Accelerated filer ☑ Non-accelerated filer

☑ Smaller Reporting Company ☐ Emerging growth company

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

Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐ No ☑

As of November 5, 2021, the Registrant had 43,656,169 shares of common stock, par value $0.01 per share, outstanding.

*Fiscal Third Quarter 2021 Quarterly Report on Form 10-Q*		*Page*

PART I – FINANCIAL INFORMATION

ITEM 1.	Financial Statements

Cadiz Inc. Condensed Consolidated Financial Statements

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended September 30, 2021 and 2020		1

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the nine months ended September 30, 2021 and 2020		2

Unaudited Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020		3

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020		4

Unaudited Condensed Consolidated Statement of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2021		5

Unaudited Condensed Consolidated Statement of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2020		6

Unaudited Notes to the Condensed Consolidated Financial Statements		7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	27

ITEM 4.	Controls and Procedures	28

PART II – OTHER INFORMATION

ITEM 1.	Legal Proceedings	29

ITEM 1A.	Risk Factors	29

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	29

ITEM 3.	Defaults Upon Senior Securities	29

ITEM 4	Mine Safety Disclosures	30

ITEM 5.	Other Information	30

ITEM 6.	Exhibits	31

Cadiz Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

	For the Three Months
	Ended September 30,
*($ in thousands, except per share data)*	2021			2020

Total revenues	$	142		$	139

Costs and expenses:
General and administrative		4,202			2,527
Depreciation		107			106

Total costs and expenses		4,309			2,633

Operating loss		(4,167	)		(2,494	)

Interest expense, net		(2,000	)		(1,920	)
Loss on extinguishment of debt		(1,399	)		-

Loss before income taxes		(7,566	)		(4,414	)
Income tax expense		(2	)		(2	)
Loss from equity-method investments		(271	)		(77	)

Net loss and comprehensive loss	$	(7,839	)	$	(4,493	)

Less: Preferred stock dividend requirements		(1,449	)		-

Net loss and comprehensive loss applicable to common stock	$	(9,288	)	$	(4,493	)

Basic and diluted net loss per common share	$	(0.22	)	$	(0.13	)

Basic and diluted weighted average shares outstanding		41,855			35,036

See accompanying notes to the unaudited condensed consolidated financial statements.

Cadiz Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

	For the Nine Months
	Ended September 30,
*($ in thousands, except per share data)*	2021			2020

Total revenues	$	422		$	401

Costs and expenses:
General and administrative		13,810			9,602
Depreciation		313			281

Total costs and expenses		14,123			9,883

Operating loss		(13,701	)		(9,482	)

Interest expense, net		(9,400	)		(7,166	)
Interest income		-			23
Loss on extinguishment of debt		(1,399	)		(12,394	)

Loss before income taxes		(24,500	)		(29,019	)
Income tax expense		(5	)		(5	)
Loss from equity-method investments		(840	)		(776	)

Net loss and comprehensive loss	$	(25,345	)	$	(29,800	)

Less: Preferred stock dividend requirements		(1,449	)		-

Net loss and comprehensive loss applicable to common stock	$	(26,794	)	$	(29,800	)

Basic and diluted net loss per common share	$	(0.68	)	$	(0.89	)

Basic and diluted weighted average shares outstanding		39,611			33,654

See accompanying notes to the unaudited condensed consolidated financial statements.

Cadiz Inc.

Condensed Consolidated Balance Sheets (Unaudited)

	September 30,			December 31,
*($ in thousands, except per share data)*	2021			2020

ASSETS
Current assets:
Cash and cash equivalents	$	18,575		$	7,290
Restricted cash		1,449			-
Accounts receivable		83			55
Prepaid expenses and other current assets		737			691
Total current assets		20,844			8,036

Property, plant, equipment and water programs, net		77,579			53,481
Long-term deposit/prepaid expenses		420			3,000
Equity-method investments		949			1,354
Goodwill		3,813			3,813
Right-of-use asset		3,287			15
Long-term restricted cash		8,891			134
Other assets		4,324			4,530
Total assets	$	120,107		$	74,363

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	579		$	548
Accrued liabilities		2,481			674
Current portion of long-term debt		134			51
Warrant derivative liabilities		-			1,847
Dividend payable		1,449			-
Operating lease liabilities		24			15
Total current liabilities		4,667			3,135

Long-term debt, net		45,929			78,596
Long-term lease obligations with related party, net		18,428			17,183
Long-term operating lease liabilities		3,183			-
Deferred revenue		750			750
Other long-term liabilities		31			-
Total liabilities		72,988			99,664
Stockholders’ equity (deficit):
Preferred stock - $.01 par value; 100,000 shares authorized at September 30, 2021 and December 31, 2020; shares issued and outstanding - 3,156 at September 30, 2021 and 7,531 at December 31, 2020		1			1
8.875% Series A cumulative, perpetual preferred stock - $.01 par value; 7,500 shares authorized at September 30, 2021 and zero shares at December 31, 2020; shares issued and outstanding – 2,300 at September 30, 2021 and 0 at December 31, 2020		-			-
Common stock - $.01 par value; 70,000,000 shares authorized at September 30, 2021 and December 31, 2020; shares issued and outstanding – 42,508,398 at September 30, 2021 and 36,902,361 at December 31, 2020		424			368

Additional paid-in capital		612,902			513,744
Accumulated deficit		(566,208	)		(539,414	)
Total stockholders’ equity (deficit)		47,119			(25,301	)

Total liabilities and stockholders’ equity	$	120,107		$	74,363

See accompanying notes to the unaudited condensed consolidated financial statements.

Cadiz Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

	For the Nine Months
	Ended September 30,
*($ in thousands)*	2021			2020

Cash flows from operating activities:
Net loss	$	(25,345	)		(29,800	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		313			281
Amortization of debt discount and issuance costs		2,911			823
Amortization of right-of-use asset		15			-
Interest expense added to loan principal		4,265			4,120
Interest expense added to lease liability		1,227			1,082
Loss on equity method investments		840			776
Loss on debt conversion and extinguishment of debt		1,399			12,394
Compensation charge for stock and share option awards		4,136			1,824
Unrealized gain on warrant derivative liabilities		(573	)		(259	)
Changes in operating assets and liabilities:
Accounts receivable		(28	)		(47	)
Prepaid expenses and other current assets		(46	)		(249	)
Other assets		206			(214	)
Accounts payable		91			226
Lease liabilities		(95	)		-
Other accrued liabilities		1,041			(1,253	)

Net cash used in operating activities		(9,643	)		(10,296	)

Cash flows from investing activities:
Additions to property, plant and equipment and water programs		(21,094	)		(5,103	)
Contributions to equity-method investments		(435	)		(2,709	)

Net cash used in investing activities		(21,529	)		(7,812	)

Cash flows from financing activities:
Net proceeds from issuance of common stock		32,459			9,808
Net proceeds from the issuance of 8.857% series A cumulative, perpetual preferred stock		54,209			-
Proceeds from the issuance of long-term debt		50,137			150
Issuance costs of long-term debt		(2,878	)		-
Principal payments on long-term debt		(77,559	)		(30	)
Costs of extinguishment of debt		(2,525	)		-
Taxes paid related to net settlement of equity awards		(1,184	)		-
Proceeds from the exercise of warrants		4			-

Net cash provided by financing activities		52,663			9,928

Net increase (decrease) in cash, cash equivalents and restricted cash		21,491			(8,180	)

Cash, cash equivalents and restricted cash, beginning of period		7,424			15,816

Cash, cash equivalents and restricted cash, end of period	$	28,915		$	7,636

See accompanying notes to the unaudited condensed consolidated financial statements.

Cadiz Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)

For the three and nine months ended September 30, 2021 ($ in thousands, except share data)

										8.875% Series A
										Cumulative Perpetual				Additional						Total
	Common Stock				Preferred Stock					Preferred Stock				Paid-in			Accumulated			Stockholders’
	Shares		Amount		Shares			Amount		Shares		Amount		Capital			Deficit			Equity

Balance as of December 31, 2020		36,902,361	$	368		7,531		$	1		-	$	-	$	513,744		$	(539,414	)	$	(25,301	)

Stock-based compensation expense		72,229		1		-			-		-		-		147			-			148
Reclassification of warrant liability		-		-		-			-		-		-		3,179			-			,179
Issuance of shares pursuant to ATM offerings		1,368,362		13		-			-		-		-		14,853			-			14,866
Net loss and comprehensive loss		-		-		-			-		-		-		-			(5,944	)		(5,944	)

Balance as of March 31, 2021		38,342,952		382		7,531			1		-		-		531,923			(545,358	)		(13,052	)

Stock-based compensation expense		6,812		-		-			-		-		-		3,293			-			3,293
Issuance of shares pursuant to ATM offerings		115,956		1		-			-		-		-		1,412			-			1,413
Issuance of shares pursuant to direct offering		1,219,512		12		-			-		-		-		14,062			-			14,074
Issuance of shares pursuant to exercise of warrants		362,500		4		-			-		-		-		-			-			4
Conversion of preferred shares to common shares		506,312		5		(1,250	)		-		-		-		(5	)		-			-
Issuance of shares to lenders		64,356		-		-			-		-		-		764			-			765
Net loss and comprehensive loss		-		-		-			-		-		-		-			(11,562	)		(11,562	)

Balance as of June 30, 2021		40,618,400		405		6,281			1		-		-		551,449			(556,920	)		(5,065	)

Stock-based compensation expense		1,335		-		-			-		-		-		697			-			697
Issuance of restricted stock units		158,673		1		-			-		-		-		-			-			1
Net settlement for taxes related to equity awards		-		-		-			-		-		-		(1,184	)					(1,184	)
Issuance of shares pursuant to ATM offerings		165,000		2		-			-		-		-		2,101			-			2,103
Conversion of preferred shares to common shares		1,265,780		13		(3,125	)		-		-		-		(13	)		-			-
Issuance of 8.875% series A cumulative perpetual preferred shares		-		-		-			-		2,300		-		54,209			-			54,209
Issuance of warrants		-		-		-			-

SEC Form 10-Q filed by Cadiz, Inc.