Cadiz (US:CDZI)2024-11-13 21:20Water Rights and Supply Agreements - Cadiz Inc. owns vested water rights to withdraw 2.5 million acre-feet of groundwater, expected to produce an average of 50,000 acre-feet of water per year for beneficial use in Southern California communities [119]. - In the first three quarters of 2024, Cadiz Inc. entered into agreements with multiple public water systems to purchase 21,275 acre-feet of annual water supply, representing approximately 85% of the Northern Pipeline's full capacity of 25,000 acre-feet per year [125]. - The Northern Pipeline has a water conveyance capacity of 25,000 acre-feet per year, while the Southern Pipeline's capacity ranges from 75,000 to 150,000 acre-feet per year depending on the diameter selected [122]. - The company has executed Letters of Intent reserving up to 100,000 acre-feet of surplus water for local disadvantaged communities as part of the Mojave-San Bernardino County One Water Project [127]. Financial Performance - Revenue for the three months ended September 30, 2024, totaled $3.2 million, a significant increase from $0.4 million in the same period in 2023, primarily driven by ATEC sales of $2.8 million [142]. - Revenue totaled $4.9 million for the nine months ended September 30, 2024, compared to $1.3 million for the same period in 2023, primarily driven by ATEC sales of $3.5 million [147]. - The total costs and expenses for the three months ended September 30, 2024, were $7.99 million, leading to an operating loss of $4.77 million [139]. - The company incurred a net loss of $6.8 million for the three months ended September 30, 2024, compared to a net loss of $6.9 million in the same period in 2023 [140]. - The company incurred a net loss of $22.5 million for the nine months ended September 30, 2024, an improvement from a net loss of $24.7 million in the same period of 2023 [146]. Costs and Expenses - Cost of sales for the nine months ended September 30, 2024, was $4.3 million, with a gross margin of 31.4% for ATEC, compared to $1.5 million in the same period of 2023 [149]. - General and administrative expenses, excluding stock-based compensation, decreased to $12.7 million for the nine months ended September 30, 2024, from $13.2 million in 2023 [150]. - Net interest expense increased to $5.9 million for the nine months ended September 30, 2024, compared to $3.6 million in the same period of 2023, primarily due to increased borrowing [152]. - Compensation costs for stock and option awards rose to $3.6 million for the nine months ended September 30, 2024, compared to $1.1 million in 2023 [151]. Cash Flow and Financing - Cash used in operating activities was $15.3 million for the nine months ended September 30, 2024, slightly down from $15.4 million in 2023 [169]. - Cash provided by financing activities totaled $14.7 million for the nine months ended September 30, 2024, compared to $18.9 million in the same period of 2023 [171]. - The company completed a registered direct offering in November 2024, raising approximately $21.9 million to advance its water supply and groundwater banking project [158][159]. - The net proceeds from the November 2024 Direct Offering are approximately $21.9 million, providing sufficient funds for short-term working capital needs [172]. Future Capital Needs - Future working capital needs will depend on measures pursued in the entitlement and development of water supply and storage resources [173]. - The company may need to raise additional capital for working capital and capital expenditures in the long term [173]. - Future capital expenditures will depend on the progress of the Water Project and ATEC operational needs [173]. - The company is evaluating cash requirements and potential means of raising cash, including equity or debt placements [175]. - Equity placements will be minimized to reduce the dilutive effect on existing stockholders [175]. - Limitations on liquidity and capital raising ability may adversely affect the company [175]. - Sufficient liquidity is critical for resource development activities [175]. Strategic Investments - A letter of intent was signed with a non-profit investment fund for a prospective investment of up to $150 million as a limited partner in Newco, aimed at financing sustainable infrastructure projects [131]. - Cadiz Inc. completed the acquisition of ATEC Water Systems, enhancing its portfolio with innovative water filtration solutions [123]. - Cadiz Inc. estimates that it would cost approximately $800 million to fully operationalize the Mojave Groundwater Banking Project [129].