cdzi20220630

cdzi20220630_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 June 30, 2022

☐ 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 August 10, 2022, the Registrant had 50,793,567 shares of common stock, par value $0.01 per share, outstanding.

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 June 30, 2022 and 2021	1

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the six months ended June 30, 2022 and 2021	2

Unaudited Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	3

Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	4

Unaudited Condensed Consolidated Statement of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2022	5

Unaudited Condensed Consolidated Statement of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2021	6

Unaudited Notes to the Condensed Consolidated Financial Statements	7

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	23

ITEM 4. Controls and Procedures	23

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings	24

ITEM 1A. Risk Factors	24

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	24

ITEM 3. Defaults Upon Senior Securities	24

ITEM 4. Mine Safety Disclosures	24

ITEM 5. Other Information	25

ITEM 6. Exhibits	26

	For the Three Months
	Ended June 30,
*($ in thousands, except per share data)*	2022			2021

Total revenues	$	185		$	141

Costs and expenses:
General and administrative		3,405			6,375
Depreciation		172			103

Total costs and expenses		3,577			6,478

Operating loss		(3,392	)		(6,337	)

Interest expense, net		(2,055	)		(4,858	)

Loss before income taxes		(5,447	)		(11,195	)
Income tax expense		(1	)		(1	)
Loss from equity-method investments		(35	)		(366	)

Net loss and comprehensive loss	$	(5,483	)	$	(11,562	)

Less: Preferred stock dividend		(1,288	)		-

Net loss and comprehensive loss applicable to common stock	$	(6,771	)	$	(11,562	)

Basic and diluted net loss per common share	$	(0.13	)	$	(0.30	)

Basic and diluted weighted average shares outstanding		50,770			39,099

	For the Six Months
	Ended June 30,
*($ in thousands, except per share data)*	2022			2021

Total revenues	$	328		$	280

Costs and expenses:
General and administrative		7,211			9,608
Depreciation		293			206

Total costs and expenses		7,504			9,814

		(7,176	)		(9,534	)

Interest expense, net		(4,047	)		(7,400	)

Loss before income taxes		(11,223	)		(16,934	)
Income tax expense		(3	)		(3	)
Loss from equity-method investments		(169	)		(569	)

Net loss and comprehensive loss	$	(11,395	)	$	(17,506	)

Less: Preferred stock dividend		(2,553	)		-

Net loss and comprehensive loss applicable to common stock	$	(13,948	)	$	(17,506	)

Basic and diluted net loss per common share	$	(0.29	)	$	(0.46	)

Basic and diluted weighted average shares outstanding		47,619			38,470

	June 30,			December 31,
*($ in thousands, except per share data)*	2022			2021

ASSETS
Current assets:
Cash and cash equivalents	$	13,239		$	10,965
Restricted cash		1,288			1,288
Accounts receivable		154			270
Prepaid expenses and other current assets		910			691
Total current assets		15,591			13,214

Property, plant, equipment and water programs, net		80,509			78,890
Long-term deposit/prepaid expenses		420			420
Equity-method investments		907			976
Goodwill		3,813			3,813
Right-of-use asset		3,269			3,281
Long-term restricted cash		5,050			7,603
Other assets		4,538			4,296
Total assets	$	114,097		$	112,493

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	633		$	286
Accrued liabilities		1,582			808
Current portion of long-term debt		57			107
Dividend payable		1,288			1,288
Operating lease liabilities		26			24
Total current liabilities		3,586			2,513

Long-term debt, net		47,606			46,477
Long-term lease obligations with related party, net		19,780			18,855
Long-term operating lease liabilities		3,083			3,257
Deferred revenue		750			750
Other long-term liabilities		34			32
Total liabilities		74,839			71,884
Stockholders’ equity:
Preferred stock - $.01 par value; 100,000 shares authorized at June 30, 2022 and December 31, 2021; shares issued and outstanding – 329 at June 30, 2022 and December 31, 2021		1			1
8.875% Series A cumulative, perpetual preferred stock - $.01 par value; 7,500 shares authorized at June 30, 2022 and December 31, 2021; shares issued and outstanding – 2,300 at June 30, 2022 and December 31, 2021		1			-
Common stock - $.01 par value; 70,000,000 shares authorized at June 30, 2022 and December 31, 2021; shares issued and outstanding – 50,770,275 at June 30, 2022 and 43,656,169 at December 31, 2021		506			436
Additional paid-in capital		626,098			613,572
Accumulated deficit		(587,348	)		(573,400	)
Total stockholders’ equity		39,258			40,609
Total liabilities and stockholders’ deficit	$	114,097		$	112,493

	For the Six Months
	Ended June 30,
*($ in thousands)*	2022			2021

Cash flows from operating activities:
Net loss	$	(11,395	)		(17,506	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		293			206
Amortization of debt discount and issuance costs		1,160			2,372
Amortization of right-of-use asset		12			15
Interest expense added to loan principal		-			4,209
Interest expense added to lease liability		913			806
Loss on equity method investments		169			569
Compensation charge for stock and share option awards		856			3,440
Unrealized (gain) loss on warrant derivative liabilities		-			(573	)
Changes in operating assets and liabilities:
Accounts receivable		116			(11	)
Prepaid expenses and other current assets		(219	)		(544	)
Other assets		(242	)		177
Accounts payable		216			(154	)
Lease liabilities		(172	)		(175	)
Other accrued liabilities		743			1,170

Net cash used in operating activities		(7,550	)		(5,999	)

Cash flows from investing activities:
Additions to property, plant and equipment and water programs		(1,748	)		(20,177	)
Contributions to equity-method investments		(100	)		(259	)

Net cash used in investing activities		(1,848	)		(20,436	)

Cash flows from financing activities:
Net proceeds from issuance of stock		11,741			30,354
Proceeds from the issuance of warrants		-			4
Dividend payments		(2,553	)		-
Principal payments on long-term debt		(69	)		(27	)

Net cash provided by financing activities		9,119			30,331

Net (decrease) increase in cash, cash equivalents and restricted cash		(279	)		3,896

Cash, cash equivalents and restricted cash, beginning of period		19,856			7,424

Cash, cash equivalents and restricted cash, end of period	$	19,577		$	11,320

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

Balance as of December 31, 2021		43,656,169	$	435		329	$	1		2,300	$	1	$	613,572	$	(573,400	)	$	40,609

Stock-based compensation expense		236,995		2		-		-		-		-		431		-			433
Issuance of shares pursuant to direct offerings		6,857,140		69		-		-		-		-		11,672		-			11,741
Dividends declared on 8.875% series A cumulative perpetual preferred shares ($550 per share)		-		-		-		-		-		-		-		(1,265	)		(1,265	)
Net loss and comprehensive loss		-		-		-		-		-		-		-		(5,912	)		(5,912	)

Balance as of March 31, 2022		50,750,304		506		329	$	1		2,300	$	1		625,675		(580,577	)		45,606

Stock-based compensation expense		19,971		-		-		-		-		-		423		-			423
Dividends declared on 8.875% series A cumulative perpetual preferred shares ($560 per share)		-		-		-		-		-		-		-		(1,288	)		(1,288	)
Net loss and comprehensive loss		-		-		-		-		-		-		-		(5,483	)		(5,483	)

Balance as of June 30, 2022		50,770,275		506		329	$	1		2,300	$	1	$	626,098	$	(587,348	)	$	39,258

Cash, Cash Equivalents and Restricted Cash	June 30, 2022		December 31, 2021		June 30, 2021
*(in thousands)*

Cash and Cash Equivalents	$	13,239	$	10,965	$	11,186
Restricted Cash		1,288		1,288		-
Long Term Restricted Cash		5,050		7,603		134
Cash, Cash Equivalents and Restricted Cash in the Consolidated Statement of Cash Flows	$	19,577	$	19,856	$	11,320

	Three Months Ended
	June 30,
	2022		2021

Interest on outstanding debt	$	1,463	$	2,939
Amortization of debt discount		592		6
Amortization of deferred loan costs		-		1,913

	$	2,055	$	4,858

	Six Months Ended
	June 30,
	2022		2021

Interest on outstanding debt	$	2,887	$	5,601
Unrealized (gains) losses on warrants, net		-		(573	)
Amortization of debt discount		1,160		12
Amortization of deferred loan costs		-		2,360

	$	4,047	$	7,400

* 3.1	Cadiz Certificate of Incorporation, as amended

* 3.2	Cadiz Bylaws, as amended

* 10.1	2019 Equity Incentive Plan, as amended

* 31.1	Certification of Scott S. Slater, Chief Executive Officer of Cadiz Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

* 31.2	Certification of Stanley E. Speer, Chief Financial Officer and Secretary of Cadiz Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

* 32.1	Certification of Scott S. Slater, Chief Executive Officer of Cadiz Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* 32.2	Certification of Stanley E. Speer, Chief Financial Officer and Secretary of Cadiz Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


* 101.INS	Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

* 101.SCH	Inline XBRL Taxonomy Extension Schema Document

* 101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

* 101.DEF	Inline XBRL Extension Definition Linkbase Document

* 101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

* 101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Cadiz Inc.



By:	/s/ Scott S. Slater	August 12, 2022
	Scott S. Slater	Date
	Chief Executive Officer and President
	(Principal Executive Officer)

By:	/s/ Stanley E. Speer	August 12, 2022
	Stanley E. Speer	Date
	Chief Financial Officer and Secretary
	(Principal Financial Officer)

SEC Form 10-Q filed by CADIZ Inc.