Cadiz (US:CDZI)2024-03-28 20:35Water Resources and Management - The Cadiz Property holds between 17 to 34 million acre-feet of groundwater, comparable to Lake Mead, the largest reservoir in the U.S.[29] - The Water Project aims to manage the groundwater basin to offer storage for up to 1 million acre-feet of fresh water, which would be imported and stored for future dry years[33] - The Northern Pipeline, acquired for $19 million, spans 220 miles and is intended for water conveyance, with agreements in place to serve 23 disadvantaged communities along its route[42][67] - Cadiz has committed over 200,000 acre-feet of clean water supply to disadvantaged communities in California's Coachella Valley and High Desert[49] - The company 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 50 years for beneficial use in Southern California communities[174] - In the first quarter of 2024, the company entered into agreements with multiple public water systems to purchase 15,000 AFY of annual water supply, representing 60% of the Northern Pipeline's full capacity of 25,000 AFY[177] Financial Performance - The company reported a net loss of $31.4 million for the year ended December 31, 2023, compared to a net loss of $24.8 million for the year ended December 31, 2022, primarily due to a $5.3 million loss on extinguishment of debt[157] - Revenue totaled $2.0 million during the year ended December 31, 2023, with $0.8 million from ATEC sales, $0.8 million from alfalfa crop harvests, and $0.4 million from agricultural lease rental income[158] - Cost of sales for the year ended December 31, 2023, totaled $2.9 million, with a net operating loss of $1.4 million primarily due to increased diesel costs and suppressed market conditions for alfalfa[183] - General and administrative expenses increased to $17.3 million in 2023 from $13.5 million in 2022, driven by investments in community partnerships and corporate communications modernization[184] - Interest expense decreased to $4.9 million in 2023 from $8.3 million in 2022[186] - Cash used for operating activities was $20.9 million in 2023, up from $18.6 million in 2022, primarily for general and administrative expenses[194] - Cash used for investing activities increased to $5.8 million in 2023 from $4.1 million in 2022, mainly for the development of new wells[195] - Cash provided by financing activities totaled $17.6 million in 2023, compared to $16.6 million in 2022, primarily from share issuances[223] Capital and Financing - As of December 31, 2023, the company had total indebtedness of approximately $38.5 million, secured by its assets[90] - The company entered into a Third Amendment to Credit Agreement on March 6, 2024, which included a new tranche of senior secured convertible term loans totaling $20 million, maturing on June 30, 2027[90] - The company plans to raise additional capital to finance working capital needs and capital expenditures, with no assurances on the availability of new financing[196] - The maturity date of the Credit Agreement was extended to June 30, 2026, allowing for continued financing flexibility[191] - The company expects sufficient funds to meet short-term working capital needs from net proceeds of approximately $19.0 million from the Third Amended Credit Agreement[224] Land and Agricultural Operations - The company has 9,600 acres of land permitted for agriculture and an additional 9,600 acres adjacent to it that could be developed in the future[64] - Approximately 3,100 acres of the Cadiz Property are actively farmed or leased for farming activities, contributing to the company's agricultural and water infrastructure[121] - The company completed the acquisition of ATEC in 2022, enhancing its portfolio with innovative water filtration solutions for contaminated groundwater sources[152] Environmental and Regulatory Considerations - The introduction of low TDS groundwater could improve local water quality, potentially reducing treatment costs for public water systems in Southern California[72] - The company focuses on sustainable practices, including the repurposing of the Northern Pipeline to reduce greenhouse gas emissions[50] - The company is subject to various regulatory approvals for its water resources development activities, which could impact timelines and investment returns[88] - The company has approximately 7,400 acres reserved in its Fenner Valley Desert Tortoise Conservation Bank, the largest land bank in California dedicated to protecting the desert tortoise[142] Stockholder and Market Information - The market price of the company's common stock is volatile, influenced by factors such as litigation outcomes and regulatory developments[108] - As of March 26, 2024, the number of stockholders of record for the company's common stock was 56[129] - The company has not paid cash dividends on its common stock and does not anticipate doing so in the foreseeable future[147] - The company emphasizes long-term incentives for management through equity securities, which may lead to dilution of existing stockholders' ownership[92] Operational Challenges - Revenue from ATEC and agricultural operations is the principal source of income, but working capital needs are not fully supported by these operations[179] - The company has not identified any significant risks from known cybersecurity threats that have materially affected its operations[117] - The company incurred depreciation expenses of $1.2 million in 2023, up from $0.7 million in 2022, primarily due to new construction placed into service[161]