cdzi20220930

cdzi20220930_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, 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 November 14, 2022, the Registrant had 55,823,810 shares of common stock, par value $0.01 per share, outstanding.

*Fiscal Third Quarter 2022 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, 2022, and 2021	1

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

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

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

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

Unaudited Condensed Consolidated Statement of Stockholders’ Equity (Deficit) for the three and nine months ended September 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	19

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	25

ITEM 4. Controls and Procedures	26

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings	27

ITEM 1A. Risk Factors	27

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	27

ITEM 3. Defaults Upon Senior Securities	27

ITEM 4. Mine Safety Disclosures	27

ITEM 5. Other Information	28

ITEM 6. Exhibits	29

Cadiz Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

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

Total revenues	$	599		$	142

Costs and expenses:
Cost of goods sold		1,163			-
General and administrative		3,770			4,202
Depreciation		180			107

Total costs and expenses		5,043			4,309

Operating loss		(4,444	)		(4,167	)

Interest expense, net		(2,097	)		(2,000	)
Loss on extinguishment of debt		-			(1,399	)

Loss before income taxes		(6,541	)		(7,566	)
Income tax expense		(2	)		(2	)
Loss from equity-method investments		(2	)		(271	)

Net loss and comprehensive loss	$	(6,545	)	$	(7,839	)

Less: Preferred stock dividend		(1,265	)		(1,449	)

Net loss and comprehensive loss applicable to common stock	$	(7,810	)	$	(9,288	)

Basic and diluted net loss per common share	$	(0.15	)	$	(0.22	)

Basic and diluted weighted average shares outstanding		50,793			41,855

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)*	2022			2021

Total revenues	$	927		$	422

Costs and expenses:
Cost of goods sold		1,163			-
General and administrative		10,911			13,810
Depreciation		473			313

Total costs and expenses		12,547			14,123

Operating loss		(11,620	)		(13,701	)

Interest expense, net		(6,144	)		(9,400	)
Loss on extinguishment of debt		-			(1,399	)

Loss before income taxes		(17,764	)		(24,500	)
Income tax expense		(5	)		(5	)
Loss from equity-method investments		(171	)		(840	)

Net loss and comprehensive loss	$	(17,940	)	$	(25,345	)

Less: Preferred stock dividend		(3,818	)		(1,449	)

Net loss and comprehensive loss applicable to common stock	$	(21,758	)	$	(26,794	)

Basic and diluted net loss per common share	$	(0.45	)	$	(0.68	)

Basic and diluted weighted average shares outstanding		48,689			39,611

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)*	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	6,957		$	10,965
Restricted cash		1,265			1,288
Accounts receivable		546			270
Inventories		335			-
Prepaid expenses and other current assets		814			691
Total current assets		9,917			13,214

Property, plant, equipment and water programs, net		80,771			78,890
Long-term deposit/prepaid expenses		420			420
Equity-method investments		906			976
Goodwill		3,813			3,813
Right-of-use asset		-			3,281
Long-term restricted cash		3,785			7,603
Other assets		4,510			4,296
Total assets	$	104,122		$	112,493

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	462		$	286
Accrued liabilities		907			808
Current portion of long-term debt		148			107
Dividend payable		1,265			1,288
Operating lease liabilities		-			24
Total current liabilities		2,782			2,513

Long-term debt, net		48,353			46,477
Long-term lease obligations with related party, net		20,263			18,855
Long-term operating lease liabilities		-			3,257
Deferred revenue		750			750
Other long-term liabilities		35			32
Total liabilities		72,183			71,884

Commitments and contingencies (Note 8)

Stockholders’ equity:
Preferred stock - $.01 par value; 100,000 shares authorized at September 30, 2022 and December 31, 2021; shares issued and outstanding – 329 at September 30, 2022 and December 31, 2021		1			1
8.875% Series A cumulative, perpetual preferred stock - $.01 par value; 7,500 shares authorized at September 30, 2022 and December 31, 2021; shares issued and outstanding – 2,300 at September 30, 2022 and December 31, 2021		1			-
Common stock - $.01 par value; 70,000,000 shares authorized at September 30, 2022 and December 31, 2021; shares issued and outstanding – 50,793,567 at September 30, 2022 and 43,656,169 at December 31, 2021		506			436
Additional paid-in capital		626,589			613,572
Accumulated deficit		(595,158	)		(573,400	)
Total stockholders’ equity		31,939			40,609
Total liabilities and stockholders’ equity	$	104,122		$	112,493

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)*	2022			2021

Cash flows from operating activities:
Net loss	$	(17,940	)		(25,345	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		473			313
Amortization of debt discount and issuance costs		1,777			2,911
Amortization of right-of-use asset		18			15
Interest expense added to loan principal		-			4,265
Interest expense added to lease liability		1,390			1,227
Loss on equity method investments		171			840
Loss on debt conversion and extinguishment of debt		-			1,399
Compensation charge for stock and share option awards		1,348			4,136
Unrealized (gain) loss on warrant derivative liabilities		-			(573	)
Changes in operating assets and liabilities:
Accounts receivable		(276	)		(28	)
Inventories		(335	)		-
Prepaid expenses and other current assets		(43	)		(46	)
Other assets		(214	)		206
Accounts payable		253			91
Lease liabilities		(98	)		(95	)
Other accrued liabilities		102			1,041
Net cash used in operating activities		(13,374	)		(9,643	)

Cash flows from investing activities:
Additions to property, plant and equipment and water programs		(2,432	)		(21,094	)
Contributions to equity-method investments		(101	)		(435	)
Net cash used in investing activities		(2,533	)		(21,529	)

Cash flows from financing activities:
Net proceeds from issuance of stock		11,741			32,459
Net proceeds from the issuance of 8.875% series A cumulative, perpetual preferred stock		-			54,209
Proceeds from the issuance of long-term debt		275			50,137
Issuance costs of long-term debt		-			(2,878	)
Proceeds from the exercise of warrants		-			4
Dividend payments		(3,841	)		-
Principal payments on long-term debt		(117	)		(77,559	)
Costs of extinguishment of debt		-			(2,525	)
Taxes paid related to net settlement of equity awards		-			(1,184	)
Net cash provided by financing activities		8,058			52,663

Net (decrease) increase in cash, cash equivalents and restricted cash		(7,849	)		21,491

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

Cash, cash equivalents and restricted cash, end of period	$	12,007		$	28,915

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, 2022 ($ in thousands, except share data)

									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

Stock-based compensation Expense		23,292		-		-		-		-		-		491		-			491
Dividends declared on 8.875% series A cumulative perpetual preferred shares ($550 per share)		-		-		-		-		-		-		-		(1,265	)		(1,265	)
Net loss and comprehensive loss		-		-		-		-		-		-		-		(6,545	)		(6,545	)

Balance as of September 30, 2022		50,793,567		506		329	$	1		2,300	$	1	$	626,589	$	(595,158	)	$	31,939

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				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, 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		-			3,179
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

SEC Form 10-Q filed by CADIZ Inc.