What changed in this filing

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Item 9A. Controls and Procedures

2025-03-28 compared with 2024-03-28 · 186 added, 175 removed, 771 unchanged (32% of the section changed)

10 unchanged sentences

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis.

conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Other Information

25 unchanged sentences

Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934

W-1 to Purchase Common Stock of Cadiz Inc.

dated as of July 2, 2021

W-2 to Purchase Common Stock of Cadiz Inc.

dated as of July 2, 2021

Common Stock Purchase Warrant dated as of March 6, 2024

20 unchanged sentences

and Fenner Gap Mutual Water Company to Santa Margarita Water District in the Northern Pipeline, dated February 28, 2024, among Cadiz Inc., Fenner Gap Mutual Water Company and Santa Margarita Water District

Amendment for the Delivery of Water Made Available by Cadiz Inc.

and Fenner Gap Mutual Water Company to Solomon Hills, dated April 18, 2024, among Cadiz Inc., Cadiz Real Estate LLC, Fenner Gap Mutual Water Company and Solstra Communities California LLC

Track Utilization Agreement dated September 16, 2013, between Arizona & California Railroad Company and Cadiz Real Estate LLC

21 unchanged sentences

Second Amendment to Purchase and Sale Agreement dated December 4, 2020, by and between El Paso Natural Gas Company, LLC, a Delaware limited liability company and Cadiz Inc., a Delaware corporation

Conversion and Exchange Agreement, dated March 5, 2020, by and between Cadiz Inc.

and Elkhorn Partners Limited Partnership

Registration Rights Agreement, dated March 5, 2020, by and among Cadiz Inc.

and the other parties thereto

Underwriting Agreement, dated as of June 29, 2021, by and among the Company and B.

Riley Securities, Inc., as representative of the several underwriters named therein

Credit Agreement, dated as of July 2, 2021, by and among Cadiz Inc.

1 unchanged sentence

Riley Securities, Inc., as administrative agent

Security Agreement, dated as of July 2, 2021, made by Cadiz Inc., Cadiz Real Estate LLC, in favor of B.

Riley Securities, Inc.

First Amendment to Credit Agreement, dated as of February 2, 2023, by and among Cadiz Inc.

9 unchanged sentences

First Amendment to Deed of Trust, Assignment of Leases and Rents, Securities Agreement, Financing Statement and Fixture Filing, dated as of February 2, 2023

Employment Agreement between Cadiz Inc.

Kennedy dated as of February 4, 2022

Amended and Restated Employment Agreement between Cadiz Inc.

Kennedy dated as of April 26, 2024

Form of Board Observer and Nomination Right Agreement

2 unchanged sentences

and Heerema International Group Services S.A.

Form of Underwriting Agreement

Form of Registration Rights Agreement

8 unchanged sentences

Amended and Restated Limited Liability Company Agreement of ATEC Water Systems, LLC dated as of November 6, 2022

Successor Agent and Amendment Agreement, dated as of July 23, 2024, by and among Cadiz Inc., Cadiz Real Estate LLC, ATEC Water Systems, LLC, Octagon Partners LLC, the other loan parties, the lenders thereto, B.

Riley Securities, Inc and Alter Domus LLC

Northern Pipeline Delivery Agreement, dated as of August 13, 2024, by and among Cadiz Inc., Cadiz Real Estate LLC, Fenner Gap Mutual Water Company and Cucamonga Valley Water District

Employment Agreement between Cadiz Inc.

and Cathryn Rivera dated as of September 16, 2024

Renewable Energy System Site Lease and Easement Agreement, dated October 21, 2024, between Cadiz Real Estate LLC and RIC Development, LLC

Placement Agent Agreement, dated as of November 4, 2024, by and between the Company and B.

Riley Securities, Inc.

Purchase Option Agreement, dated November 10, 2024, by and among GMHR Acquisitions Co., LLC, LKM Industries Inc., North West Iron & Metal LLC and Cadiz Inc.

Letter of Intent, dated November 21, 2024, by and between Lytton Rancheria of California and Cadiz Inc.

Placement Agent Agreement, dated as of March 7, 2025, by and between the Company and Roth Capital Partners, LLC

Insider Trading Policy

Subsidiaries of the Registrant

Consent of Independent Registered Public Accounting Firm

Certification of Scott Slater, Chief Executive Officer of Cadiz Inc.

Certification of Susan Kennedy, Chief Executive Officer of Cadiz Inc.

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

2 unchanged sentences

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Scott Slater, Chief Executive Officer of Cadiz Inc.

Certification of Susan Kennedy, Chief Executive Officer of Cadiz Inc.

pursuant to 18 U.S.C.

72 unchanged sentences

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

10 unchanged sentences

As described in Note 2 to the consolidated financial statements, management has prepared the Company’s consolidated financial statements on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company incurred losses of $31.4 million for the year ended December 31, 2023.

The Company had working capital of $2.2 million as of December 31, 2023 and used cash in operations of $20.9 million for the year ended December 31, 2023.

The Company incurred a net loss and comprehensive loss of $31.1 million for the year ended December 31, 2024.

The Company had working capital of $11.4 million as of December 31, 2024 and used cash in operating activities of $21.5 million for the year ended December 31, 2024.

Management assesses whether the Company has sufficient liquidity to fund its costs for the next twelve months from the financial statement issuance date.

1 unchanged sentence

In the preparation of this liquidity assessment, management applies judgment to estimate the significant assumptions related to the projected cash flows of the Company including the following:

(i) projected cash outflows, (ii) projected cash inflows, (iii) categorization of expenditures as discretionary versus non-discretionary and (iv) ability to raise capital.

(i) projected cash outflows, (ii) projected cash inflows, (iii) categorization of expenditures as discretionary versus non-discretionary, and (iv) the ability to raise capital.

The cash flow projections are based on known or planned cash requirements for operating costs as well as planned costs for project development.

The principal considerations for our determination that performing procedures relating to the liquidity assessment is a critical audit matter are the significant judgment by management when assessing whether the Company has sufficient liquidity and a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s liquidity assessment and the significant assumptions related to projected cash outflows, projected cash inflows, categorization of expenditures as discretionary versus non-discretionary, and ability to raise capital.

The principal considerations for our determination that performing procedures relating to the liquidity assessment is a critical audit matter are (i) the significant judgment by management when assessing whether the Company has sufficient liquidity and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s liquidity assessment and the significant assumptions related to projected cash outflows, projected cash inflows, categorization of expenditures as discretionary versus non-discretionary, and the ability to raise capital (collectively, “management’s significant assumptions”).

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others (i) testing management’s process for assessing whether the Company has sufficient liquidity;

(ii) evaluating the appropriateness of the projected cash flow model;

(iii) testing the completeness and accuracy of the underlying data used in the projected cash flow model;

and (iv) evaluating the reasonableness of management’s significant assumptions related to projected cash outflows, projected cash inflows, categorization of expenditures as discretionary versus non-discretionary, and ability to raise capital.

Evaluating management’s assumptions related to projected cash outflows, projected cash inflows, categorization of expenditures as discretionary versus non-discretionary, and ability to raise capital involved evaluating whether the assumptions used were reasonable considering (i) current and past performance of the Company;

These procedures included, among others, testing management’s process for estimating future liquidity requirements for the twelve months after the date the financial statements are issued and evaluating the sufficiency of the Company’s disclosures about whether the Company has sufficient liquidity to fund its costs for the next twelve months from the financial statement issuance date.

Testing management’s process involved (i) evaluating the appropriateness of the projected cash flow model;

(ii) testing the completeness and accuracy of the underlying data used in the projected cash flow model;

and (iii) evaluating the reasonableness of management’s significant assumptions.

Evaluating management’s significant assumptions involved evaluating whether the assumptions used were reasonable considering (i) current and past performance of the Company;

(ii) management’s historical forecasting accuracy;

41 unchanged sentences

$ 17,292 $ 4,502

Restricted Cash

Accounts receivable

23 unchanged sentences

Long-term operating lease liabilities

Deferred revenue

Long-term deferred revenue

Other long-term liabilities

30 unchanged sentences

Interest expense added to lease liability

Gain/Loss on equity method investments

Finance Expense

Loss on early extinguishment of debt

17 unchanged sentences

( 934 ) ( 5,787 )

Contributions to equity-method investments

Distributions from equity-method investments

Payments for acquisitions, net of cash acquired

Payments for contingent consideration liabilities

Net cash used in investing activities

7 unchanged sentences

Issuance costs of long-term debt

( 1,294 ) ( 27 )

Principal payments on long-term debt

2 unchanged sentences

Taxes paid related to net share settlement of equity awards

( 52 ) ( 261 )

Net cash provided by financing activities

3 unchanged sentences

Cash, cash equivalents and restricted cash, beginning of period

13,782 19,856

Cash, cash equivalents and restricted cash, end of period

2 unchanged sentences

Consolidated Statements of Stockholders ’ Equity

See accompanying notes to the consolidated financial statements.

8.875% Series A Cumulative

8 unchanged sentences

- - - - - - - ( 5,106 ) ( 5,106 )

Reclassification of derivative liability

- - - - - - 2,570 - 2,570

Stock-based compensation expense

8 unchanged sentences

- - - - - - - ( 5,106 ) ( 5,106 )

Reclassification of derivative liability

Issuance of warrants

- - - - - - 887 - 887

Stock-based compensation expense

Issuance of shares to lenders

166,036 1 - - - - 480 - 481

Issuance of shares to consultants

100,000 1 - - - - 256 - 257

Capitalization of gain on extinguishment of debt

- - - - - - 1,928 - 1,928

Stock-based compensation expense, net of taxes

1,377,058 15 - - - - 4,537 - 4,552

Net loss and comprehensive loss

1 unchanged sentence

Balance as of December 31, 2024

See accompanying notes to the consolidated financial statements.

75,353,889 $ 752 329 $ 1 2,300 $ 1 $ 709,303 $ ( 676,096 ) $ 33,961

Notes To The Consolidated Financial Statements

NOTE 1 – DESCRIPTION OF BUSINESS

NOTE 1 – BUSINESS

(“Cadiz or the “Company”) is a water solutions provider with a unique combination of land, water, pipeline and water filtration technology assets strategically located in Southern California between major water systems serving population centers in the Southwestern United States.

The Company’s portfolio of assets includes 2.5 million acre-feet of water supply, 220 miles of existing, buried pipeline, 1 million acre-feet of groundwater storage capacity, versatile, scalable, and cost-effective water filtration technology.

The Company’s portfolio of assets includes 2.5 million acre-feet of permitted water supply, 220 miles of existing, buried pipeline, 1 million acre-feet of groundwater storage capacity, and versatile, scalable, and cost-effective water filtration technology.

The Company provides products and services to public water systems, government agencies and commercial clients that address the emerging threat of water scarcity and affordability in a region of the world facing severe challenges from climate change.

3 unchanged sentences

The Company’s supply, storage and pipeline assets are located in a remote area of eastern San Bernardino County that sits at the crossroads of major highway, rail, energy, and water infrastructure between California’s primary water supply systems, the Colorado River Basin and the State Water Project.

As a result, the Cadiz Water Conservation and Storage Project is well positioned to assist public water agencies in storing and managing unpredictable water supplies and provide reliable, affordable water supplies to chronically underserved areas of California.

As a result, the Mojave Groundwater Bank is well positioned to assist public water agencies in storing and managing unpredictable water supplies and provide reliable, affordable water supplies to chronically underserved areas of California.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

The Consolidated Financial Statements of the Company have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company incurred losses of $ 31.4 million and $ 24.8 million for the years ended December 31, 2023 and 2022, respectively.

The Company had working capital of $ 2.2 million at December 31, 2023 and used cash in operations of $ 20.9 million for the year ended December 31, 2023.

The higher loss in 2023 was primarily due to a loss on extinguishment of debt in the amount of $ 5.3 million resulting from issuance of a conversion instrument, a repayment fee and elimination of debt discount associated with the paydown of $ 15 million of senior secured debt in February 2023.

The Company incurred a net loss and comprehensive loss of $ 31.1 million and $ 31.4 million for the years ended December 31, 2024 and 2023, respectively.

The Company had working capital of $ 11.4 million at December 31, 2024 and used cash in operating activities of $ 21.5 million for the year ended December 31, 2024.

The lower loss in 2024 was primarily due to a 2023 loss on extinguishment of debt in the amount of $ 5.3 million resulting from issuance of a conversion instrument, a repayment fee and elimination of debt discount associated with the paydown of $ 15 million of senior secured debt in 2023, and improved operating results for the water filtration technology business segment offset by higher compensation costs related to stock based non-cash bonus awards and increased interest expense related to the Third Amended Credit Agreement in 2024.

Notes To The Consolidated Financial Statements

Cash requirements during the year ended December 31,2023, primarily reflect certain operating and administrative costs related to development of the Company’s land, water, infrastructure and technology assets for water solutions including the Cadiz Water Conservation & Storage Project (“Water Project”), agricultural operations and water filtration business.

Cash requirements during the year ended December 31,2024 primarily reflect certain operating and administrative costs related to development of the Company’s land, water, infrastructure and technology assets for water solutions including the Mojave Groundwater Bank, agricultural operations and water filtration business.

The Company’s present activities are focused on the development of its assets in ways that meet an urgent need for groundwater storage capacity in Southern California and growing demand for affordable, reliable, long-term water supplies before the next drought strikes the Southwestern United States.

9 unchanged sentences

(c) the Convertible Loan existing prior to the Third Amended Credit Agreement, in an aggregate principal amount of approximately $ 16 million plus interest accruing thereon, has become unsecured;

and (d) extension of the maturity date for the existing Convertible Loan and non-convertible loans to June 30, 2027 ( see Note 15 – “Subsequent Events”).

and (d) extension of the maturity date for the existing Convertible Loan and non-convertible loans to June 30, 2027 ( see Note 7 – “Long-Term Debt”).

On November 5, 2024, the Company completed the sale and issuance of 7,000,000 shares of its common stock to certain institutional investors in a registered direct offering ( “November 2024 Direct Offering”).

The shares of common stock were sold at a purchase price of $ 3.34 per share, for aggregate gross proceeds of $ 23.4 million and aggregate net proceeds of approximately $ 22.1 million.

Notes To The Consolidated Financial Statements

On March 7, 2025, the Company completed the sale and issuance of 5,715,000 shares of its common stock to certain institutional investors in a registered direct offering ( “March 2025 Direct Offering”) (see Note 14 - “Subsequent Events”).

The shares of common stock were sold at a purchase price of $ 3.50 per share, for aggregate gross proceeds of approximately $ 20.0 million and aggregate net proceeds of approximately $ 18.3 million.

The Company may meet its debt and working capital requirements through a variety of means, including extension, refinancing, equity placements, the sale or other disposition of assets, or reductions in operating costs.

1 unchanged sentence

The Company does not expect the loan covenants to materially limit its ability to finance its water and agricultural development activities.

Notes To The Consolidated Financial Statements

Management assesses whether the Company has sufficient liquidity to fund its costs for the next twelve months from the financial statement issuance date.

11 unchanged sentences

All significant intercompany transactions and balances have been eliminated in consolidation.

The Company applies the equity method of accounting for investments in which the Company has significant influence but not a controlling interest.

Use of Estimates in Preparation of Financial Statements

2 unchanged sentences

Actual results could differ from those estimates.

Notes To The Consolidated Financial Statements

Segment Reporting

The Company currently operates in two reportable segments based upon its organizational structure and the way in which its operations are managed and evaluated.

The Company’s largest segment is Land and Water Resources, which comprises all activities regarding its properties in the eastern Mojave Desert including pre-revenue development of the Water Project (supply, storage and conveyance), and agricultural operations.

The Company’s largest segment is Land and Water Resources, which comprises all activities regarding its properties in the eastern Mojave Desert including pre-revenue development of the Mojave Groundwater Bank (supply, storage and conveyance), and agricultural operations.

The Company’s second operating segment is its Water Filtration Technology business, ATEC Water Systems LLC (“ATEC”) which provides innovative water filtration solutions for impaired or contaminated groundwater sources.

The Company acquired the assets of ATEC Systems, Inc.

in November 2022 into its new subsidiary ATEC.

There were intersegment sales of $ 311 thousand during the year ended December 31, 2023, which resulted in an intercompany elimination of profits in the amount of $ 99 thousand.

Notes To The Consolidated Financial Statements

The Chief Operating Decision-Maker for our Land and Water Resources segment is the Chief Executive Officer of Cadiz Inc.

and for the Water Filtration Technology segment is the Chief Executive Officer of ATEC.

There were no intersegment sales during the year ended December 31, 2024, and there were intersegment sales of $ 311 thousand during the year ended December 31, 2023, which resulted in an intercompany elimination of profits in the amount of $ 99 thousand.

Revenue Recognition

1 unchanged sentence

The Company recognizes revenue by following the five -step model under ASC 606 to achieve the core principle that an entity recognizes revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Sales of farm crops are recognized when product is shipped to customers at Cadiz Ranch, and sales at ATEC are recognized when filters are shipped to the customer.

Sales of farm crops are recognized when product is shipped to customers at Cadiz Ranch, and sales at ATEC are recognized in accordance with the customer contract which generally occurs when filters are delivered to the customer.

Stock-Based Compensation

General and administrative expenses include $ 4.6 million and $ 1.5 million of stock-based compensation expenses in the years ended December 31, 2024 and 2023, respectively.

Stock-based compensation is generally based upon grants of stock awards, performance stock units (“PSU”) and restricted stock units (“RSU”) to its employees and consultants under the 2019 Equity Incentive Plan.

For stock awards, PSUs or RSUs granted, the Company determines the fair value of the stock award, PSUs or RSU at the date of the grant and recognizes the compensation expense over the vesting period.

For PSUs or RSUs which vest upon completion of certain milestones, the fair value of the PSU or RSU is recognized when it is probable that the milestone will be achieved.

Notes To The Consolidated Financial Statements

Net Loss Per Common Share

Basic net loss per share is computed by dividing the net loss applicable to common stock by the weighted-average common shares outstanding.

Options, restricted stock units, convertible debt, convertible preferred shares and warrants were not considered in the computation of net loss per share because their inclusion would have been antidilutive.

Restricted and performance stock units, convertible debt, convertible preferred shares and warrants were not considered in the computation of net loss per share because their inclusion would have been antidilutive.

Had these instruments been included, the fully diluted weighted average shares outstanding would have increased by approximately 9,861,000 shares and 5,290,000 shares for the years ended December 31, 2024 and 2023, respectively.

6 unchanged sentences

These costs, which are expected to be recovered through future revenues, consist of direct labor, drilling costs, consulting fees for various engineering, hydrological, environmental and additional feasibility studies, and other professional and legal fees.

The Company has not commenced depreciation of these assets as they are not yet in service as the Water Project is not operating.

The Company has not commenced depreciation of these assets as they are not yet in service as the Mojave Groundwater Bank is not operating.

While interest on borrowed funds is currently expensed, interest costs related to the construction of water project facilities will be capitalized at the time construction of these facilities commences.

Notes To The Consolidated Financial Statements

Goodwill and Other Intangibles Resulting from Business Acquisitions

1 unchanged sentence

Approximately $ 3,193,000 of this amount was amortized prior to the adoption of Accounting Standards Codification 350, “Intangibles – Goodwill and Other” (“ASC 350” ) on January 1, 2002.

In addition, as a result of the ATEC Acquisition (see Note 3 – “Acquisitions”), tax deductible goodwill in the amount of $ 1.9 million was recorded in November 2022.

In addition, as a result of the ATEC Acquisition, tax deductible goodwill in the amount of $ 1.9 million was recorded in November 2022.

Since the adoption of ASC 350, there have been no goodwill impairments recorded.

5 unchanged sentences

Changes in fair value of contingent consideration that are not measurement period adjustments are recognized in earnings.

Notes To The Consolidated Financial Statements

Impairment of Goodwill and Long-Lived Assets

11 unchanged sentences

The Company uses the income approach to assess impairment for the Water Filtration Technology reporting unit.

Notes To The Consolidated Financial Statements

In the Company’s annual impairment analysis for the fourth quarter 2023, the goodwill was evaluated utilizing a qualitative assessment.

5 unchanged sentences

Amortization of debt discounts is included in interest expense on the Consolidated Statement of Operations.

Notes To The Consolidated Financial Statements

Income taxes are provided for using an asset and liability approach which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable enacted tax rates.

5 unchanged sentences

See Note 7 – “Long-Term Debt”, for discussion of fair value of debt.

SoCal Hemp JV

In July 2019, SoCal Hemp JV LLC (the “JV”) was created by Cadiz Real Estate LLC (a fully owned subsidiary of Cadiz Inc.) and SoCal Hemp Co, LLC (a fully owned subsidiary of Glass House Brands, Inc., which is an unrelated company to Cadiz Inc.) when the two parties entered into a Limited Liability Company Agreement (“LLC Agreement”).

The JV was 50% owned by Cadiz Real Estate LLC and 50 % owned by SoCal Hemp Co., LLC (“SCHCO”, together the “Parties”).

On December 30, 2022, the Parties entered into an Agreement and Plan of Dissolution of the JV whereby the Company purchased fixed assets with a net book value to the JV of approximately $ 343 thousand for $ 171 thousand and reclaimed the buildings, tenant improvements and machinery and equipment with fair value of approximately $ 1 million which is included in Property, Plant, Equipment and Water Programs at December 31, 2022.

Notes To The Consolidated Financial Statements

Prior to the dissolution of the JV, the carrying value of the investment was approximately $ 1 million.

Loss from equity-method investments related to the JV immediately prior to the dissolution totaled $ 171 thousand.

At the time of the dissolution, the Company recorded a gain on the dissolution of the JV of approximately $ 211 thousand.

Total gain from equity-method investments for the year ended December 31, 2022, was $ 40 thousand.

The Company recorded rental income related to the JV of approximately $ 129 thousand for the year ended December 31, 2022.

The results of the JV have not been separately recorded in discontinued operations as the results were not material.

Supplemental Cash Flow Information

During the year ended December 31, 2024, approximately $ 1.5 million in interest payments on the Company’s senior secured debt was paid in cash.

There are no scheduled principal payments due on the Current Senior Secured Debt prior to its maturity.

There are no scheduled principal payments due on the Current Senior Secured Debt (see Note 7 - "Long-Term Debt") prior to its maturity.

At December 31, 2024, accruals for cash dividends payable on the Series A Preferred Stock was $ 1.29 million (see Note 9 – “Common and Preferred Stock”).

The cash dividends were paid on January 15, 2025.

At December 31, 2024, accruals for an exclusive three -year option to purchase up to 180 miles of steel pipe intended to be used for the development of the Mojave Groundwater Bank of $ 5 million was recorded in other assets and accrued liabilities.

The option payment was made in January 2025.

The balance of cash, cash equivalents, and restricted cash as shown in the condensed consolidated statements of cash flows is comprised of the following:

5 unchanged sentences

$ 17,292 $ 4,502

Restricted Cash

Long-Term Restricted Cash

1 unchanged sentence

$ 17,426 $ 4,636

The restricted cash amounts primarily represented funds deposited into a segregated account, representing an amount sufficient to pre-fund quarterly dividend payments on Series A Preferred Stock underlying the Depositary Shares issued in the Depositary Share Offering through approximately July 2023.

Cash payments for income taxes were $ 11 thousand and $ 11 thousand for the years ended December 31, 2024 and 2023, respectively.

2 unchanged sentences

Accounting Guidance Not Yet Adopted

In November 2023, the Financial Account Standards Board (“FASB”) issued an accounting standards update which modifies the disclosure and presentation requirements of reportable segments.

This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those financial years beginning after December 15, 2024, with early adoption permitted.

The Company is currently assessing this new guidance and expects this new standard will not have a material impact on the consolidated financial statements.

In December 2023, the FASB issued an accounting standards update which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash tax paid in the U.S.

In December 2023, the Financial Account Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023 - 09, Income Taxes (Topic 740 )(“ASU 2023 - 09” ).

ASU 2023 - 09 expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash tax paid in the U.S.

and foreign jurisdictions.

This update is effective for fiscal years beginning after December 15, 2024.

The Company is currently assessing this new guidance and expects this new standard will not have a material impact on the consolidated financial statements.

ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024.

The Company is currently assessing this new guidance and expects this standard will not have a material impact on the consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024 - 03, Disaggregation of Income Statement Expenses (Subtopic 220 - 40 )(“ASU 2024 - 03” ).

ASU 2024 - 03 which requires disaggregated disclosures of income statement expenses for public business entities.

ASU 2024 - 03 is effective for fiscal years beginning after December 15, 2025, and for interim reporting periods that begin after December 15, 2027.

The Company is currently assessing this new guidance and expect this standard will not have a material impact on the consolidated financial statements.

Accounting Guidance Adopted

In June 2016, the FASB issued an accounting standards update which introduces new guidance for the accounting for credit losses on certain financial instruments.

This update is effective for fiscal years beginning after December 15, 2022, and for interim periods within those fiscal years, with early adoption permitted.

The adoption of this new standard on January 1, 2023 had no impact on the Company’s consolidated financial statements.

NOTE 3 – ACQUISITIONS

On November 9, 2022, the Company completed the acquisition of the assets of ATEC Systems, Inc.

into ATEC Water Systems, LLC (“ATEC”), a water filtration technology company, at a purchase price of up to $ 2.2 million (“ATEC Acquisition”).

The ATEC Acquisition is intended to enable the Company to assist water agencies in increasing supplies of potable water from contaminated groundwater sources.

The table below summarizes the fair value of assets acquired and liabilities Assumed in the ATEC Acquisition:

($ in thousands)

Property, plant and equipment

Identifiable intangibles

Total estimated purchase price

Notes To The Consolidated Financial Statements

The impact of the ATEC Acquisition, which is a new water filtration technology segment for the Company, was not material to the proforma net revenue or net income of the Company’s combined operations for the year ended December 31, 2022.

Net revenue and net income related to ATEC post-acquisition were not material to the Consolidated Statements of Income for the year ended December 31, 2022.

The Company recorded a contingent consideration liability in the amount of $ 1.45 million related to the purchase price of the ATEC Acquisition for amounts payable upon the sale of a requisite number of water filtration units under an asset purchase agreement.

Following the acquisition, the Company entered into an agreement to grant 200,000 Class P Units of ATEC to the new Chief Operating Officer of ATEC which vest ratably on an annual basis over three years.

These units provide for a 20 % profit participation in ATEC following a return to the Company of its initial $ 2.2 million investment.

In November 2023, the Financial Account Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

ASU 2023 - 07, Segment Reporting (Topic 280 )(“ASU 2023 - 07” ).

ASU 2023 - 07 modifies the disclosure and presentation requirements of reportable segments.

ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and interim periods within those financial years beginning after December 15, 2024, with early adoption permitted.

Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements.

The adoption of this new standard as of December 31, 2024 had no material impact on the Company’s consolidated financial statements.

NOTE 3 – REPORTABLE SEGMENTS

1 unchanged sentence

Interest expense, income tax expense and losses related to equity method investments are excluded from the computation of operating (loss) for the segments.

Segment net revenue, segment operating expenses and segment operating (loss) information consisted of the following for the year ended December 31, 2023:

Year Ended December 31, 2023

Segment net revenue, segment operating expenses and segment operating (loss) information consisted of the following for the years ended December 31, 2024 and 2023:

Notes To The Consolidated Financial Statements

Twelve Months Ended December 31, 2024

(in thousands)

Total revenues

$ 1,708 $ 7,900 $ 9,608

7 unchanged sentences

26,668 6,189 32,857

Operating loss

Operating income (loss)

$ ( 24,960 ) $ 1,711 $ ( 23,249 )

The Company only operated in one segment during the year ended December 31, 2022, as the water filtration technology segment did not exist prior to the ATEC Acquisition in November 2022.

Twelve Months Ended December 31, 2023

(in thousands)

$ 1,251 $ 740 $ 1,991

Costs and expenses:

Cost of sales

2,241 646 2,887

General and administrative

18,042 755 18,797

1,096 151 1,247

Total costs and expenses

21,379 1,552 22,931

Operating income (loss)

$ ( 20,128 ) $ ( 812 ) $ ( 20,940 )

Assets by operating segment, inclusive of goodwill, are as follows (dollars in thousands):

4 unchanged sentences

$ 134,494 $ 107,374

Notes To The Consolidated Financial Statements

Goodwill by operating segment is as follows (dollars in thousands):

5 unchanged sentences

Property, plant, equipment and water programs consist of the following (dollars in thousands):

Notes To The Consolidated Financial Statements

December 31, 2024

19 unchanged sentences

( 9,238 ) (139 )

Notes To The Consolidated Financial Statements

$ 87,142 $ 75

NOTE 4 – PROPERTY, PLANT, EQUIPMENT AND WATER PROGRAMS

14 unchanged sentences

Water programs primarily include costs directly attributable to the Company’s water project development efforts, including consulting fees for various engineering, hydrological, environmental and additional feasibility studies, and other professional and legal fees.

During the year ended December 31, 2023, $ 1,906,000 of construction in progress was placed into service, which included land development, irrigation systems and stand establishment related to the planting of 150 acres of alfalfa.

Depreciation expense on land improvements, buildings, leasehold improvements, machinery and equipment and furniture and fixtures was $ 1.25 million and $ 0.7 million for the twelve months ended December 31, 2023 and 2022, respectively.

Notes To The Consolidated Financial Statements

During the year ended December 31, 2024, $ 646 thousand of construction in progress was placed into service, which included land development, irrigation systems and stand establishment related to the planting of 120 acres of alfalfa.

Depreciation expense on land improvements, buildings, leasehold improvements, machinery and equipment and furniture and fixtures was $ 1.2 million for each of the twelve months ended December 31, 2024 and 2023.

NOTE 5 – OTHER ASSETS

1 unchanged sentence

$ 4,252 $ 4,366

Pipeline purchase option 5,000 -

Deposits and other

$ 10,332 $ 5,438

Prepaid rent primarily consists of fees incurred to obtain the rights-of-way for the Water Project.

Prepaid rent primarily consists of fees incurred to obtain the rights-of-way for the Mojave Groundwater Bank.

Amortization of prepaid rent was approximately $ 115,000 for each of the years ended December 31, 2024 and 2023.

Notes To The Consolidated Financial Statements

NOTE 6 – ACCRUED LIABILITIES

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Legal and consulting

Water project and well development

Water project, pipeline development and well development

Pipeline purchase option 5,000 -

Other accrued expenses

$ 7,997 $ 1,170

Notes To The Consolidated Financial Statements

NOTE 7 – LONG-TERM DEBT

At December 31, 2024 and 2023, the carrying amount of the Company’s outstanding debt is summarized as follows (dollars in thousands):

Senior secured debt due

Senior secured debt Interest rate of 7 % per annum

$ 21,200 $ 21,200

Interest rate of 7 % per annum

Convertible note instrument due

Interest rate of 7 % per annum

Convertible note instrument Interest rate of 7 % per annum

39,259 16,895

Debt discount and debt issuance costs, net of accumulated accretion

5 unchanged sentences

$ 56,708 $ 37,711

The carrying value of the Company’s Senior Secured Debt is approximately $ 19.1 million.

The carrying value of the Company's convertible note instrument approximates fair value.

The carrying value of the Company’s senior secured debt and the Company’s convertible note instrument approximates fair value.

Pursuant to the Company’s loan agreements, annual maturities of long-term debt outstanding on December 31, 2024, are as follows:

Notes To The Consolidated Financial Statements

($ in thousands)

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At any time, the Company will be permitted to prepay the principal of the debt, in whole or in part, provided that such prepayment is accompanied by any accrued interest on such principal amount being prepaid plus the applicable repayment fee described above.

In connection with entering into the Credit Agreement, on July 2, 2021 ( the “Original Issue Date”) the Company issued to the Lenders two warrants (“A Warrants” and “B Warrants”), each granting an option to purchase 500,000 shares of the Company’s common stock (collectively, the “Warrants”).

The A Warrants and B Warrants expired on July 2, 2024.

Notes To The Consolidated Financial Statements

As a result of the issuance of the A and B Warrants, which met the criteria for equity classification under applicable GAAP, the Company recorded additional paid-in capital in the amount of $ 1.9 million which was the fair value of the Warrants on the issuance date.

In addition, the fair value of the Warrants was recorded as debt discount and was amortized over the term of the related debt.

On February 2, 2023, the Company entered into a First Amendment to Credit Agreement to amend certain provisions of the Credit Agreement (“First Amended Credit Agreement”).

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Notes To The Consolidated Financial Statements

On March 6, 2024, the Company entered into a Third Amendment to Credit Agreement and First Amendment to Security Agreement (“Third Amended Credit Agreement”) with HHC $ Fund 2012 (“Heerema”).

On March 6, 2024, the Company entered into the Third Amended Credit Agreement.

Before entering into the Third Amended Credit Agreement, Heerema purchased the outstanding secured non-convertible term loans under the Credit Agreement (“Assignment”) at a discount on behalf of the Company.

The Assignment was considered a debt extinguishment resulting in a gain of $ 1.9 million recorded as additional paid-in-capital as Heerema is a significant shareholder of the Company.

The acquired secured non-convertible term loans were issued to Heerema at a discount which is being amortized over the term of the non-convertible term loan.

In connection with the Assignment, the existing holders of both the Convertible Loan and non-convertible term loans consented to effectuate the Third Amended Credit Agreement in consideration of a consent fee in the aggregate amount of $ 479,845 payable in the form of the Company’s registered common stock (valued at $ 2.89 per share, or 166,036 shares).

The consent fee was capitalized as an additional debt discount and is being amortized over the remaining term of the Convertible Loan.

The Third Amended Credit Agreement provides, among other things, (a) a new tranche of senior secured convertible terms loans from Heerema in an aggregate principal amount of $ 20 million, having a maturity date of June 30, 2027 ( “New Secured Convertible Debt”);

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and (d) extension of the maturity date for the existing Convertible Loan and non-convertible loans to June 30, 2027.

The New Secured Convertible Debt will bear PIK interest at a rate of 7 % per annum, payable quarterly in arrears.

The initial conversion price of the New Secured Convertible Debt was $ 5.30 per share and is subject to anti-dilution adjustments.

As a result of a registered direct offering that was completed in November 2024, the conversion price of the New Secured Convertible Debt was reduced to $ 5.14 per share.

In connection with the debt issued to Heerema, the Company issued a warrant to purchase 1,000,000 shares of our common stock (the “Heerema Warrant”) to Heerema.

The Heerema Warrant has an exercise price of $ 5.00 per share, which will be subject to anti-dilution adjustments.

The Heerema Warrant expires on June 30, 2027.

The Company recorded the fair value of the Heerema Warrant on the issuance date in additional paid-in capital in the amount of $ 0.9 million.

In addition, the fair value of the Heerema Warrant was recorded as debt discount and is being amortized over the term of the secured debt issued to Heerema.

In the event of certain asset sales, the incurrence of indebtedness or a casualty or condemnation event, in each case, under certain circumstances as described in the Credit Agreement, the Company will be required to use a portion of the proceeds to prepay amounts under the debt.

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In addition, the Credit Agreement includes customary events of default and remedies.

In connection with the issuance of the Current Senior Secured Debt, on July 2, 2021 ( the “Original Issue Date”) the Company issued to the Lenders two warrants (“A Warrants” and “B Warrants”), each granting an option to purchase 500,000 shares of the Company’s common stock (collectively, the “Warrants”).

The A Warrants may be exercised any time prior to July 2, 2024 ( the “Expiration Date”) and have an exercise price of $ 17.38 equal to 120 % of the closing price per share of the Company’s common stock on the Original Issue Date.

The B Warrants may be exercised in the period from 180 days after the Original Issue Date to the Expiration Date and have an exercise price of $ 21.72 equal to 150 % of the closing price of the Company’s common stock on the Original Issue Date.

As a result of the issuance of the Warrants, which met the criteria for equity classification under applicable GAAP, the Company recorded additional paid-in capital in the amount of $ 1.9 million which was the fair value of the Warrants on the issuance date.

In addition, the fair value of the Warrants was recorded as debt discount and is being amortized over the term of the Current Senior Secured Debt.

The Company was in compliance with all covenants under the Credit Agreement as of December 31, 2024.

Notes To The Consolidated Financial Statements

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As of December 31, 2024, and December 31, 2023, the Company had 75,353,889 and 66,710,795 shares issued and outstanding, respectively.

During 2022, the Company completed the sale and issuance of 11,857,140 shares of its common stock to certain institutional and individual investors in two registered direct offerings with net proceeds totaling $ 21.6 million.

During 2023, the Company completed the sale and issuance of 10,500,000 shares of its common stock to certain institutional investors in a registered direct offering with net proceeds totaling $ 38.5 million.

In January 2013, the Company revised its then existing agreement with the law firm of Brownstein Hyatt Farber Schreck LLP (“Brownstein Agreement”), a related party.

Under the Brownstein Agreement, the Company was to issue up to a total of 400,000 shares of the Company’s common stock.

200,000 of these shares had been issued as of December 31, 2023 and 200,000 shares were to be earned upon the achievement of certain milestones.

Effective December 31, 2023, the unearned milestone shares were cancelled upon termination of the Brownstein Agreement.

Additionally, the Company incurred direct expenses to Brownstein of approximately $ 0.8 million and $ 1.5 million in 2023 and 2022, respectively.

Notes To The Consolidated Financial Statements

During 2024, the Company completed the sale and issuance of 7,000,000 shares of our common stock to certain institutional investors in a registered direct offering with net proceeds totaling $ 22.1 million.

Series 1 Preferred Stock

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The Company has 329 shares of Series 1 Preferred Stock issued and outstanding as of December 31, 2024.

Notes To The Consolidated Financial Statements

Series A Preferred Stock

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The dividend was paid on January 15, 2025 to respective holders of record as of the close of business on January 4, 2025.

Notes To The Consolidated Financial Statements

At the issuance of the Series A Preferred Stock, the Company pre-funded eight quarterly payments through July 2023 in a segregated account which appeared as Restricted Cash on the Balance Sheet.

Dividends on the Series A Preferred Stock underlying the depositary shares will continue to accumulate whether or not (i) any of the Company’s agreements prohibit the current payment of dividends, (ii) the Company has earnings or funds legally available to pay the dividends, or (iii) the Company’s Board of Directors does not declare the payment of the dividends.

Notes To The Consolidated Financial Statements

Holders of depositary shares representing interests in the Series A Preferred Stock generally will have no voting rights.

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2019 Equity Incentive Plan

The 2019 Equity Incentive Plan (as amended, the “2019 EIP”) was originally approved by stockholders at the July 10, 2019 Annual Meeting, with an amendment to the plan approved by stockholders at the July 12, 2022 Annual Meeting.

The 2019 Equity Incentive Plan (as amended, the “2019 EIP”) was originally approved by stockholders at the July 10, 2019 Annual Meeting, with amendments to the plan approved by stockholders at the July 12, 2022 Annual Meeting and the June 11, 2024 Annual Meeting.

The plan, as amended, provides for the grant and issuance of up to 5,200,000 shares and options to the Company’s employees, directors and consultants.

Notes To The Consolidated Financial Statements

Effective July 1, 2021, under the 2019 EIP, each outside director receives $ 75,000 of cash compensation and receives a deferred stock award consisting of shares of the Company’s common stock with a value equal to $ 25,000 on June 30 of each year.

1 unchanged sentence

The deferred stock award vests automatically on the January 31 that first follows the award date.

Notes To The Consolidated Financial Statements

Stock Awards to Directors, Officers, Consultants and Employees

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The RSUs granted under the July 2022 RSU Grant vested on January 2, 2024.

In January 2024, 60,000 additional RSUs were granted to employees which vested on January 2, 2025.

The RSU incentive awards are subject in each case to continued employment with the Company through the vesting date.

1 unchanged sentence

Of the 170,000 RSUs issued on March 1, 2023, the Company issued 102,871 shares net of taxes withheld and paid in cash by the Company.

The Company issued 450,000 performance stock units (“PSUs”) upon achievement of certain performance events.

The PSUs vest upon the Company’s common stock achieving price hurdles (“Price Hurdles”) but not sooner than three years from date of grant, including (a) 200,000 PSUs to vest upon a Price Hurdle of $ 7 per share, (b) 150,000 PSUs to vest upon a Price Hurdle of $ 9 per share, (c) 50,000 PSUs to vest upon a Price Hurdle of $ 11 per share, and (d) 50,000 PSUs to vest upon a Price Hurdle of $ 13 per share and are payable, at the option of the Compensation Committee, in either common stock or cash.

The PSU incentive award is subject to continued employment with the Company through the vesting date.

Of the 85,000 RSUs earned and issued in March 2024 upon the Supply Agreement Vesting Event, the Company issued 62,624 shares net of taxes withheld and paid in cash by the Company.

Additionally, in April 2022 the Company issued 450,000 performance stock units (“PSUs”) upon achievement of certain performance events.

The PSUs were to vest upon the Company’s common stock achieving price hurdles (“Price Hurdles”) but not sooner than three years from date of grant date.

These PSUs were cancelled in April 2024 in conjunction with entering into an amended and rested employment agreement with the Company’s Chief Executive Officer which provided a grant of 1.6 million RSUs and PSUs with (a) 700,000 RSUs that vest over a three -year period from 2024 to 2026;

(b) 600,000 RSUs that will vest upon achievement of milestones related to completion of certain permits, entering into binding contracts for water delivery or storage, and delivery of water, and (c) 300,000 PSUs that will vest upon a Price Hurdle of $ 15 per share for 20 consecutive days.

Notes To The Consolidated Financial Statements

Additionally, 400,000 RSUs were granted to a consultant on July 1, 2023 ( “July 2023 RSU Grant).

Of the 400,000 RSUs granted under the July 2023 RSU Grant, 200,000 RSUs were vested in March 2024 upon completion of the Third Amended Credit Agreement and Assignment discussed in Note 15 – “Subsequent Events”, below.

Of the remaining 200,000 RSUs granted, 100,000 RSUs vested and were issued on October 1, 2023, and 100,000 vested and were issued on February 1, 2024.

In September 2024, the Company granted 275,000 RSUs in conjunction with entering into an employment agreement with the Company’s Chief Operating Officer.

137,500 of these RSUs vest over a three -year period from September 2024 to September 2027 and the remaining 137,500 RSUs will vest upon achievement of milestones related to completion of certain permits, entering into binding contracts for water delivery or storage, and delivery of water.

400,000 RSUs were granted to a consultant on July 1, 2023 ( “July 2023 RSU Grant”).

Of the 400,000 RSUs granted under the July 2023 RSU Grant, 100,000 RSUs vested and were issued in October 2023, 200,000 RSUs vested and were issued in February 2024 and 100,000 RSUs vested and were issued in March 2024.

Additionally, 300,000 RSUs were granted to a consultant in January 2024 to vest upon achieving certain milestones.

As of September 30, 2024, all 300,000 of these RSUs vested and were issued upon entering into binding supply agreements for the Mojave Groundwater Bank.

A summary of RSU activity under the plans during the years ended December 31, 2024 and 2023 is presented below:

4 unchanged sentences

( 90,315 ) $ 10.75

( 468,116 ) $ 7.19

Nonvested at December 31, 2023

3 unchanged sentences

( 1,627,216 ) $ 3.74

( 468,116 ) $ 7.19

Nonvested at December 31, 2024

1,494,914 $ 2.49

As of December 31, 2023, the Company had approximately $ 315 thousand of unrecognized stock compensation expense related to nonvested PSUs and RSUs.

As of December 31, 2024, the Company had approximately $ 0.9 million of unrecognized stock compensation expense related to nonvested PSUs and RSUs.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

Regulatory agencies periodically conduct inspections and, currently, there are no pending claims with respect to hazardous materials.

Pursuant to cost-sharing agreements that have been entered into by participants in the Company’s Water Project, $ 625,000 in funds have been received in order to offset costs incurred in the environmental analysis of the Water Project.

These funds may either be reimbursed or credited to participants participation in the Water Project and, accordingly, are fully reflected as deferred revenue as of December 31, 2023 and December 31, 2022.

Notes To The Consolidated Financial Statements

Pursuant to cost-sharing agreements that have been entered into by participants in the Company’s Mojave Groundwater Bank, $ 625,000 in funds have been received in order to offset costs incurred in the environmental analysis of the Mojave Groundwater Bank.

These funds may either be reimbursed or credited to participants participation in the Mojave Groundwater Bank and, accordingly, are fully reflected as deferred revenue as of December 31, 2024 and December 31, 2023.

$ 250 thousand of this liability was paid during 2024.

The Company is from time to time involved in various lawsuits and legal proceedings that arise in the ordinary course of business.

2 unchanged sentences

NOTE 12 – LEASES

The Company has operating leases for its corporate offices and office equipment.

The Company’s leases have remaining lease terms of 1 month to 34 months as of December 31, 2023, some of which include options to extend or terminate the lease.

The Company has operating leases for its right-of-way agreements, corporate offices and office equipment.

Effective February 1, 2024, the Company entered into a 26 -year right-of-way agreement with the United States Bureau of Land Management (“BLM”) with respect to the Company’s Northern Pipeline asset which resulted in recording right-of-use assets and lease liabilities in the amount of $ 1.9 million resulting from $ 4.8 million in future lease payments over the 26 years less imputed interest of $ 2.9 million based upon a 10 % weighted average discount rate.

The right-of-way agreement has an annual rent expense of approximately $ 185,000 , with annual defined inflation increases.

In November and December 2024, the company entered into two new operating lease agreements for its corporate offices resulting in recording aggregate right-of-use assets and lease liabilities in the amount of $ 1.6 million resulting from $ 2.6 million in future lease payments over approximately 10 years less imputed interest of $ 1.0 million based upon a 12 % weighted average discount.

The Company’s leases have remaining lease terms of 22 months to 25 years as of December 31, 2024, some of which include options to extend or terminate the lease.

However, the Company is not reasonably certain to exercise options to renew or terminate, and therefore renewal and termination options are not included in the lease term.

2 unchanged sentences

These variable payments were excluded from the right-of-use asset and lease liability balances since they are not fixed or in-substance fixed payments.

Notes To The Consolidated Financial Statements

The Company elected to utilize the practical expedients permitted within the leasing standard, including the practical expedient not to reassess existing land easements, which among other things, allows the Company to carryforward the historical lease classification.

5 unchanged sentences

Amounts recognized in the accompanying consolidated balance sheet as of December 31, 2024 and 2023 are as follows (in thousands):

Notes To The Consolidated Financial Statements

As of December 31, 2024

Balance Sheet Location

Right-of-use asset

Short-term lease liability

Other liabilities

Operating lease liabilities

Long-term lease liability

Other long-term liabilities

Long-term operating lease liabilities

As of December 31, 2023

Balance Sheet Location

Right-of-use asset

Short-term lease liability

Other liabilities

Operating lease liabilities $ 127

Long-term lease liability

Other long-term liabilities

Long-term operating lease liabilities

The Company’s operating lease cost for the year ended December 31, 2024 was $ 401 thousand.

6 unchanged sentences

Long-term lease obligations

Notes To The Consolidated Financial Statements

Most of the Company’s lease agreements do not provide a readily determinable implicit rate nor is it available to us from its lessors.

1 unchanged sentence

The table below presents additional information related to the Company’s leases as of December 31, 2024:

Weighted Average Remaining Lease Term

Operating leases (in years)

Weighted Average Discount Rate

Operating leases

Weighted Average Remaining Lease Term Operating leases (in years)

Weighted Average Discount Rate Operating leases

As a lessor, in February 2016, the Company entered into a lease agreement with Fenner Valley Farms LLC (“FVF”) (the “lessee”), pursuant to which FVF is leasing, for a 99 -year term, 2,100 acres owned by Cadiz in San Bernardino County, California, to be used to plant, grow and harvest agricultural crops (“FVF Lease Agreement”).

1 unchanged sentence

The Company expects to record rental income of $ 420 thousand annually over the next five years related to the FVF Lease Agreement.

Notes To The Consolidated Financial Statements

NOTE 13 – FAIR VALUE MEASUREMENTS

5 unchanged sentences

(in thousands)

Level 1 Assets

Balance at December 31, 2022

Investments in Certificates of Deposit

Balance at December 31, 2023

(in thousands)

Level 3 Liabilities

Balance at December 31, 2023

Derivative liabilities

Unrealized losses on derivative liabilities, net

Reclassification of derivative liabilities to additional paid-in capital

Payment of contingent consideration liabilities

Balance at December 31, 2024

Notes To The Consolidated Financial Statements

Investments at Fair Value as of December 31, 2024

(in thousands)

Certificates of Deposit

$ 3,000 $ - $ - $ 3,000

Contingent consideration liabilities

2 unchanged sentences

$ - $ - $ 1,200 $ 1,200

Notes To The Consolidated Financial Statements

NOTE 14 – SUBSEQUENT EVENTS

On March 6, 2024, the Company entered into a Third Amendment to Credit Agreement and First Amendment to Security Agreement (“Third Amended Credit Agreement”) with HHC $ Fund 2012 (“Heerema”).

Before entering into the Third Amended Credit Agreement, Heerema purchased the outstanding secured non-convertible term loans under the Credit Agreement (“Assignment”).

In connection with the Assignment, the existing holders of both the Convertible Loan and non-convertible term loans consented to effectuate the Third Amended Credit Agreement in consideration of a consent fee in the aggregate amount of $ 479,845 payable in the form of our common stock (valued at $ 2.89 per share, or 166,036 shares), which will be registered pursuant to a shelf registration statement on Form S- 3 and a prospectus supplement thereunder.

(b) the aggregate principal amount of the secured non-convertible term loans acquired by Heerema has been increased from $ 20 million to $ 21.2 million and the applicable repayment fee in respect thereof has been eliminated;

(c) the Convertible Loan existing prior to the Third Amended Credit Agreement, in an aggregate principal amount of approximately $ 16 million plus interest accruing thereon, has become unsecured;

and (d) extension of the maturity date for the existing Convertible Loan and non-convertible loans to June 30, 2027.

On March 7, 2025, the Company completed the sale and issuance of 5,715,000 shares of its common stock to certain institutional investors in a registered direct offering ( March 2025 Direct Offering).

The shares of common stock were sold at a purchase price of $ 3.50 per share, for aggregate gross proceeds of approximately $ 20.0 million and aggregate net proceeds of approximately $ 18.3 million.

The Company intends to use the proceeds from the March 2024 Direct Offering for capital and other expenses related to the development and construction of the Mojave Groundwater Bank, which may include acquisition of equipment and materials intended to be used in construction of facilities related to our northern and/or southern pipeline, which the Company expects to begin in 2025.

Net proceeds from the offering may also be used for the equipment and materials related to wellfield infrastructure on land owned by the Company and its subsidiaries, business development activities, other capital expenditures, working capital, the expansion of the business and general corporate purposes.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures