Cadiz (CDZI) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements This section presents Cadiz Inc.'s unaudited condensed consolidated financial statements for Q2 and H1 2025, reporting a net loss of $7.7 million for Q2 and $17.3 million for H1, with notes on accounting policies and financial matters Condensed Consolidated Statements of Operations and Comprehensive Loss Cadiz Inc. reported Q2 2025 revenues of $4.1 million (up from $0.5 million) with a net loss of $7.7 million, while H1 2025 revenues grew to $7.1 million (from $1.6 million) with a net loss widening to $17.3 million | Metric ($ in thousands) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total revenues | $4,126 | $513 | +704.3% | | Operating loss | $(5,777) | $(6,949) | +16.9% | | Net loss | $(7,730) | $(8,872) | +12.9% | | Net loss per common share | $(0.11) | $(0.15) | +26.7% | | Metric ($ in thousands) | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total revenues | $7,080 | $1,634 | +333.3% | | Operating loss | $(13,310) | $(11,857) | -12.3% | | Net loss | $(17,323) | $(15,722) | -10.2% | | Net loss per common share | $(0.25) | $(0.27) | +7.4% | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $136.4 million from $134.5 million at year-end 2024, with cash decreasing to $13.2 million and stockholders' equity rising to $35.6 million due to capital raising | Balance Sheet Item ($ in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $13,205 | $17,292 | | Total current assets | $21,039 | $25,786 | | Total assets | $136,379 | $134,494 | | Long-term debt, net | $58,751 | $56,708 | | Total liabilities | $100,813 | $100,533 | | Total stockholders' equity | $35,566 | $33,961 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly decreased to $5.0 million in H1 2025 from $9.9 million in H1 2024, while investing activities used $10.8 million and financing provided $14.3 million from stock issuance | Cash Flow Activity ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,000) | $(9,936) | | Net cash used in investing activities | $(10,800) | $(467) | | Net cash provided by financing activities | $14,338 | $16,003 | | Net (decrease) increase in cash | $(1,462) | $5,600 | Condensed Consolidated Statement of Stockholders' Equity Stockholders' equity increased from $34.0 million to $35.6 million in H1 2025, driven by $18.3 million from a direct offering and stock-based compensation, offset by a $17.3 million net loss and $2.6 million in preferred dividends - In the first half of 2025, the company issued 5,715,000 shares through a direct offering, resulting in net proceeds of $18.3 million[14] - The accumulated deficit increased from $(676.1) million at the end of 2024 to $(675.4) million as of June 30, 2025, after accounting for a net loss of $17.3 million, preferred dividends, and a reclassification of prior dividends from accumulated deficit to additional paid-in capital[14] Notes to the Condensed Consolidated Financial Statements The notes detail accounting policies, liquidity, segment performance, debt, and stock compensation, highlighting the company's two segments and recent equity offerings to fund operations and development projects - The company incurred a net loss of $17.3 million for the six months ended June 30, 2025, and had working capital of $9.4 million; management believes it can continue as a going concern through potential equity placements, asset sales, or cost reductions[20][27][29] - In March 2025, the company raised approximately $18.3 million in net proceeds from a registered direct offering of 5,715,000 shares of common stock[26] - The company operates in two reportable segments: Land and Water Resources, which is in a pre-revenue development phase, and Water Filtration Technology (ATEC), which provides the majority of current revenues[37] - In March 2024, the company entered into a Third Amended Credit Agreement with Heerema, providing a new $20 million senior secured convertible term loan and extending existing debt maturity to June 30, 2027[24][48] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's water solutions business, highlighting significant revenue growth in the ATEC segment, which drove overall revenue increases despite a widening operating loss due to increased development costs and stock-based compensation, with ongoing reliance on debt and equity financing Business Overview Cadiz Inc. is a water solutions provider with substantial Southern California assets, focusing on developing its Mojave Groundwater Bank, securing 85% of Northern Pipeline capacity, and establishing MWI to fund $800 million in construction costs with $425 million in potential equity - The company's asset portfolio includes 2.5 million acre-feet of water supply, 1 million acre-feet of groundwater storage, 220 miles of existing pipeline, and rights for a new 43-mile pipeline[100][102][103] - In 2024, the company entered into agreements with water providers for the purchase of 21,275 AFY of annual water supply, representing 85% of the Northern Pipeline's full capacity[108] - The company is forming Mojave Water Infrastructure Company, LLC (MWI) to fund the approximately $800 million construction cost of the Mojave Groundwater Bank and has non-binding letters of intent for up to $425 million in equity capital[112] Results of Operations Q2 2025 revenues rose to $4.1 million (from $0.5 million) with a narrowed operating loss of $5.8 million, while H1 2025 revenues grew to $7.1 million (from $1.6 million), but operating loss increased to $13.3 million due to higher development and compensation costs | Segment Performance (in thousands) | Q2 2025 Revenue | Q2 2024 Revenue | Q2 2025 Operating (Loss)/Income | Q2 2024 Operating Loss | | :--- | :--- | :--- | :--- | :--- | | Land and Water Resources | $431 | $350 | $(6,227) | $(6,538) | | Water Filtration Technology | $3,695 | $163 | $450 | $(411) | | Segment Performance (in thousands) | H1 2025 Revenue | H1 2024 Revenue | H1 2025 Operating (Loss)/Income | H1 2024 Operating Loss | | :--- | :--- | :--- | :--- | :--- | | Land and Water Resources | $996 | $986 | $(13,853) | $(11,324) | | Water Filtration Technology | $6,084 | $648 | $543 | $(533) | - The increase in ATEC sales in H1 2025 is attributed to the shipment of 195 filters compared to 37 filters in H1 2024[126] - General and administrative expenses for H1 2025, excluding stock-based compensation, increased to $11.7 million from $8.7 million in H1 2024, due to higher legal, consulting, and marketing costs[128] Liquidity and Capital Resources The company relies on debt and equity financing, raising $40.4 million from two direct offerings for the Mojave Groundwater Bank, with cash used in operations decreasing to $5.0 million in H1 2025, while investing activities increased to $10.8 million - Completed a registered direct offering in November 2024 for net proceeds of approximately $22.1 million[132] - Completed a registered direct offering in March 2025 for net proceeds of approximately $18.3 million[133] - In March 2024, the company amended its credit agreement, securing a new $20 million convertible term loan and extending the maturity of existing debt to June 30, 2027[139] - Cash used in operating activities decreased to $5.0 million in H1 2025 from $9.9 million in H1 2024, driven by lower working capital needs at ATEC[144] Outlook The company has sufficient short-term working capital from recent equity offerings and cash on hand, but requires additional long-term capital for the Mojave Groundwater Bank and other projects, potentially through equity, debt, or asset dispositions - The company has sufficient funds for short-term working capital needs following the March 2025 Direct Offering[147] - Long-term capital will be needed to finance the Mojave Groundwater Bank, with the timing dependent on MWI funding and reimbursement of development costs[148] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Cadiz Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[152] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the last fiscal quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[153] - No material changes to the company's internal control over financial reporting were identified during the last fiscal quarter[154] PART II – OTHER INFORMATION Legal Proceedings No material changes to legal proceedings have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to legal proceedings have occurred since the last annual report[157] Risk Factors No material changes to risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors have occurred since the last annual report[158] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the current reporting period - Not applicable[159] Other Information The company reported no Form 8-K information or nomination process modifications, and no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during H1 2025 - During the six months ended June 30, 2025, no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement[162] Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley and Inline XBRL financial data files - The report includes certifications from the CEO and CFO as required by Sections 302 and 906 of the Sarbanes-Oxley Act[166] - Inline XBRL documents are filed concurrently with the report[164]