cdzi20230930

cdzi20230930_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, 2023

☐ 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 8, 2023, the Registrant had 66,710,795 shares of common stock, par value $0.01 per share, outstanding.

*Fiscal Third Quarter 2023 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, 2023 and 2022	1

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the nine months ended September 30, 2023 and 2022	2

Unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	3

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	4

Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended September 30, 2023	5

Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended September 30, 2022	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	29

ITEM 4. Controls and Procedures	29

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings	30

ITEM 1A. Risk Factors	30

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	30

ITEM 3. Defaults Upon Senior Securities	30

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)*	2023			2022

Total revenues	$	368		$	599

Costs and expenses:
Cost of sales		692			1,163
General and administrative		5,127			3,700
Depreciation		308			180

Total costs and expenses		6,127			5,043

Operating loss		(5,759	)		(4,444	)

Interest expense, net		(1,173	)		(2,097	)

Loss before income taxes		(6,932	)		(6,541	)
Income tax expense		(4	)		(2	)
Loss from equity-method investments		-			(2	)

Net loss and comprehensive loss	$	(6,936	)	$	(6,545	)

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

Net loss and comprehensive loss applicable to common stock	$	(8,201	)	$	(7,810	)

Basic and diluted net loss per common share	$	(0.12	)	$	(0.15	)

Basic and diluted weighted average shares outstanding		66,611			50,793

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)*	2023			2022

Total revenues	$	1,307		$	927

Costs and expenses:
Cost of sales		1,482			1,163
General and administrative		14,378			10,911
Depreciation		942			473

Total costs and expenses		16,802			12,547

Operating loss		(15,495	)		(11,620	)

Interest expense, net		(3,637	)		(6,144	)
Loss on derivative liability		(220	)		-
Loss on early extinguishment of debt		(5,331	)		-

Loss before income taxes		(24,683	)		(17,764	)
Income tax expense		(8	)		(5	)
Loss from equity-method investments		-			(171	)

Net loss and comprehensive loss	$	(24,691	)	$	(17,940	)

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

Net loss and comprehensive loss applicable to common stock	$	(28,509	)	$	(21,758	)

Basic and diluted net loss per common share	$	(0.44	)	$	(0.45	)

Basic and diluted weighted average shares outstanding		65,299			48,689

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)*	2023			2022

ASSETS
Current assets:
Cash and cash equivalents	$	13,306		$	9,997
Restricted cash		-			1,288
Accounts receivable		410			454
Inventories		2,128			316
Prepaid expenses and other current assets		782			380
Total current assets		16,626			12,435

Property, plant, equipment and water programs, net		85,536			84,138
Long-term deposit/prepaid expenses		420			420
Goodwill		5,714			5,714
Right-of-use asset		463			553
Long-term restricted cash		134			2,497
Other assets		5,562			5,030
Total assets	$	114,455		$	110,787

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,626		$	1,107
Accrued liabilities		1,184			1,545
Current portion of long-term debt		193			140
Dividend payable		1,265			1,288
Contingent consideration liabilities		1,450			1,450
Short-term deferred revenue		93			-
Operating lease liabilities		119			109
Total current liabilities		5,930			5,639

Long-term debt, net		37,394			48,950
Long-term lease obligations with related party, net		22,333			20,745
Long-term operating lease liabilities		354			444
Deferred revenue		750			750
Other long-term liabilities		39			36
Total liabilities		66,800			76,564

Commitments and contingencies (Note 10)

Stockholders’ equity:

Preferred stock - $.01 par value; 100,000 shares authorized at September 30, 2023 and December 31, 2022; shares issued and outstanding – 329 at September 30, 2023 and December 31, 2022		1			1
8.875% Series A cumulative, perpetual preferred stock - $.01 par value; 7,500 shares authorized at September 30, 2023 and December 31, 2022; shares issued and outstanding – 2,300 at September 30, 2023 and December 31, 2022		1			1
Common stock - $.01 par value; shares authorized – 85,000,000 at September 30, 2023 and 70,000,000 at December 31, 2022; shares issued and outstanding – 66,604,981 at September 30, 2023 and 55,823,810 at December 31, 2022		664			556
Additional paid-in capital		678,796			636,963
Accumulated deficit		(631,807	)		(603,298	)
Total stockholders’ equity		47,655			34,223
Total liabilities and stockholders’ deficit	$	114,455		$	110,787

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)*	2023			2022

Cash flows from operating activities:
Net loss	$	(24,691	)		(17,940	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		942			473
Amortization of debt discount and issuance costs		337			1,777
Amortization of right-of-use asset		90			18
Interest expense added to loan principal		711			-
Interest expense added to lease liability		1,570			1,390
Unrealized loss on derivative liability		220			-
Loss on early extinguishment of debt		5,331			-
Loss on equity method investments		-			171
Compensation charge for stock and share option awards		1,142			1,348
Changes in operating assets and liabilities:
Accounts receivable		44			(276	)
Inventories		(1,812	)		(335	)
Prepaid expenses and other current assets		(402	)		(43	)
Other assets		(532	)		(214	)
Accounts payable		1,312			253
Lease liabilities		(80	)		(98	)
Deferred revenue		93
Other accrued liabilities		323			102

Net cash used in operating activities		(15,402	)		(13,374	)

Cash flows from investing activities:
Additions to property, plant and equipment and water programs		(3,815	)		(2,432	)
Contributions to equity-method investments		-			(101	)

Net cash used in investing activities		(3,815	)		(2,533	)

Cash flows from financing activities:
Net proceeds from issuance of stock		38,490			11,741
Proceeds from the issuance of long-term debt		233			275
Dividend payments		(3,841	)		(3,841	)
Principal payments on long-term debt		(15,119	)		(117	)
Issuance costs of long-term debt		(27	)		-
Costs for early extinguishment of debt		(600	)		-
Taxes paid related to net share settlement of equity awards		(261	)		-

Net cash provided by financing activities		18,875			8,058

Net decrease in cash, cash equivalents and restricted cash		(342	)		(7,849	)

Cash, cash equivalents and restricted cash, beginning of period		13,782			19,856

Cash, cash equivalents and restricted cash, end of period	$	13,440		$	12,007

See accompanying notes to the unaudited condensed consolidated financial statements.

Cadiz Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the three and nine months ended September 30, 2023 ($ 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, 2022		55,823,810	$	556		329	$	1		2,300	$	1	$	636,963	$	(603,298	)	$	34,223

Stock-based compensation expense		217,452		2		-		-		-		-		63		-			65
Issuance of shares pursuant to direct offerings		10,500,000		105		-		-		-		-		38,385		-			38,490
Dividends declared on 8.875% series A cumulative perpetual preferred shares ($550 per share)		-		-		-		-		-		-		-		(1,265	)		(1,265	)
Net loss and comprehensive loss		-		-		-		-		-		-		-		(10,691	)		(10,691	)

Balance as of March 31, 2023		66,541,262		663		329	$	1		2,300	$	1		675,411		(615,254	)		60,822

Stock-based compensation expense		54,344		1		-		-		-		-		163		-			164
Dividends declared on 8.875% series A cumulative perpetual preferred shares ($560 per share)		-		-		-		-		-		-		-		(1,288	)		(1,288	)
Net loss and comprehensive loss		-		-		-		-		-		-		-		(7,064	)		(7,064	)

Balance as of June 30, 2023		66,595,606		664		329	$	1		2,300	$	1		675,574		(623,606	)		52,634

Stock-based compensation expense		9,375		-		-		-		-		-		652		-			652

SEC Form 10-Q filed by CADIZ Inc.