CDZI

Cadiz Inc. 10-K Summary: Fiscal Year Ended December 31, 2025

Business Context and Reporting Period

Cadiz Inc. (CDZI) is a water solutions provider based in Southern California, operating primarily through two segments: Land and Water Resources and Water Filtration Technology. The company owns approximately 46,000 acres in the Mojave Desert, including the Cadiz Ranch, which underlies a significant aquifer system. Its core strategy involves developing the Mojave Groundwater Bank to provide conserved water supply, groundwater storage, and conveyance infrastructure to public and private water systems. The reporting period covers the fiscal year ended December 31, 2025.

Key Financial Metrics

Segment Performance: Revenue growth was driven by the Water Filtration Technology segment (ATEC), which generated $14.5 million in revenue (up from $7.9 million in 2024) with a gross margin of 48.4%. The Land and Water Resources segment generated $1.8 million in revenue, primarily from agricultural operations, but incurred an operating loss of $28.1 million due to development costs.

Material Changes vs. Prior Period

• Revenue Growth: Total revenue increased 70% year-over-year, primarily due to record sales of water filtration systems by ATEC, including a major project for the Central Utah Water Conservancy District.
• Increased Expenses: General and administrative expenses rose to $29.5 million (from $24.3 million) due to increased legal and consulting fees for the Mojave Groundwater Bank development and higher marketing costs for ATEC.
• Debt Expansion: Total indebtedness increased significantly following the execution of the Lytton Credit Agreement. The company drew $15 million in November 2025 and an additional $15 million in March 2026.
• Project Cost Escalation: The estimated cost to construct the Mojave Groundwater Bank increased from approximately $800 million to a range of $1.25 billion to $1.5 billion due to inflation, labor costs, and power generation requirements.

Guidance, Outlook, and Risks

Financing and Capital Strategy: The company established Mojave Water Infrastructure Company LLC (MWI) to fund the project. It has secured a $51 million unsecured loan facility from Lytton Rancheria of California (convertible into storage cash flow rights) and is pursuing up to $400 million in private equity commitments. The company also qualified for an invitation to apply for up to $194 million in federal WIFIA funding.

Outlook: Management expects proceeds from the Lytton Credit Agreement and cash on hand to meet short-term working capital needs. Long-term capital requirements remain significant to complete the Northern and Southern Pipelines and wellfield facilities.

Risks and Contingencies:

• Regulatory Approvals: Operations depend on obtaining change-of-use authorizations for the Northern Pipeline from the BLM, Air Force, and California State Lands Commission. A 3rd Addendum to the Final EIR for storage operations is expected in Q2 2026.
• Liquidity: The company continues to incur net losses and relies on debt and equity financing. Failure to raise additional capital could force reductions in operating expenses.
• Goodwill Impairment: The company holds $5.7 million in goodwill. While no impairment was recorded in 2025, future declines in stock price or underperformance could trigger impairment charges.

Investor Verification Checklist

• Capital Raise Status: Verify the closing of the targeted $400 million private equity commitment for MWI and the finalization of the WIFIA loan application.
• Regulatory Milestones: Monitor the approval status of the 3rd Addendum to the Final EIR and the change-of-use permits for the Northern Pipeline conversion.
• Construction Costs: Confirm the finalization of Guaranteed Maximum Price (GMP) contracts for the Northern Pipeline (expected Q2 2026) and Southern Pipeline to validate the $1.25B-$1.5B cost estimate.
• Liquidity Runway: Assess the sufficiency of current cash reserves ($8.6M) and the Lytton drawdowns against the projected cash burn rate for ongoing development and operations.
• ATEC Growth Sustainability: Evaluate the pipeline of future orders for ATEC to ensure continued revenue growth offsets the high fixed costs of the water development segment.