CADIZ INC 10-K

ITEM 9A. Controls and Procedures Disclosure Controls and Procedures We have established disclosure controls and procedures to ensure that material information related to the Company, including its consolidated entities, is accumulated and communicated to senior management, including Chief Executive Officer (the “Principal Executive Officer”) and Chief Financial Officer (the “Principal Financial Officer”) and to our Board of Directors. Based on their evaluation as of December 31, 2025, our Principal Executive Officer and Principal Financial Officer have concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and such information is accumulated and communicated to management, including the principal executive and principal financial officers as appropriate, to allow timely decisions regarding required disclosures. Management ’ s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of our internal control over financial reporting based on the criteria in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under that framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2025. Changes in Internal Control Over Financial Reporting In connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act, there was no change identified in the Company's internal control over financial reporting that occurred during the last fiscal quarter ended December 31, 2025, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 36 Cadiz Inc. 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. 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. ITEM 9B. Other Information Not applicable. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 37 Cadiz Inc. PART III ITEM 10. Directors, Executive Officers and Corporate Governance The information called for by this item is incorporated herein by reference to the definitive proxy statement involving the election of directors which we intend to file with the SEC pursuant to Regulation 14A under the Securities and Exchange Act of 1934 not later than 120 days after December 31, 2025. ITEM 11. Executive Compensation The information called for by this item is incorporated herein by reference to the definitive proxy statement involving the election of directors which we intend to file with the SEC pursuant to Regulation 14A under the Securities and Exchange Act of 1934 not later than 120 days after December 31, 2025. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information called for by this item is incorporated herein by reference to the definitive proxy statement involving the election of directors which we intend to file with the SEC pursuant to Regulation 14A under the Securities and Exchange Act of 1934 not later than 120 days after December 31, 2025. ITEM 13. Certain Relationships and Related Transactions, and Director Independence The information called for by this item is incorporated herein by reference to the definitive proxy statement involving the election of directors which we intend to file with the SEC pursuant to Regulation 14A under the Securities and Exchange Act of 1934 not later than 120 days after December 31, 2025. ITEM 14. Principal Accounting Fees and Services The information called for by this item is incorporated herein by reference to the definitive proxy statement involving the election of directors which we intend to file with the SEC pursuant to Regulation 14A under the Securities and Exchange Act of 1934 not later than 120 days after December 31, 2025. 38 Cadiz Inc. PART IV ITEM 15. Exhibits and Financial Statement Schedule 1. Financial Statements. See Index to Consolidated Financial Statements. 2. Financial Statement Schedule. See Index to Consolidated Financial Statements. *** 3. Exhibits. The following exhibits are filed or incorporated by reference as part of this Form 10-K. **3.1 Cadiz Certificate of Incorporation, as amended **3.2 Cadiz Bylaws, as amended **3.3 Certificate of Designation of Series 1 Preferred Stock of Cadiz Inc. **3.4 Certificate of Designation of 8.875% Series A Cumulative Perpetual Preferred Stock of Cadiz Inc. **4.1 Form of Senior Indenture **4.2 Form of Subordinated Indenture **4.3 Deposit Agreement, dated effective as of July 2, 2021, by and among the Company, Continental Stock Transfer & Trust Company, as depositary, and the holders of the depositary receipts issued thereunder **4.4 Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934 **4.5 Common Stock Purchase Warrant dated as of March 6, 2024 **10.1 Limited Liability Company Agreement of Cadiz Real Estate LLC dated December 11, 2003 **10.2 Amendment No. 1, dated October 29, 2004, to Limited Liability Company Agreement of Cadiz Real Estate LLC **10.3 Amendment No. 2 dated March 5, 2013, to Limited Liability Company Agreement of Cadiz Real Estate LLC **10.4 Longitudinal Lease Agreement dated September 17, 2008, between Arizona & California Railroad Company and Cadiz Real Estate, LLC †*10.5 2019 Equity Incentive Plan, as amended 39 Cadiz Inc. **10.6 Form of Option Agreement with Santa Margarita Water District **10.7 Option Agreement with Golden State Water Company dated June 25, 2010 **10.8 Key Terms for First Amendment to Option and Golden State Water Company’s Conditional Exercise of its Option dated March 13, 2024 **10.9 Option Agreement with Suburban Water Systems dated October 4, 2010 **10.10 Option Agreement with California Water Service Company dated December 1, 2011 **10.11 Form of Memorandum of Understanding by and among Cadiz Inc., County of San Bernardino and Santa Margarita Water District **10.12 First Amendment to the Memorandum of Understanding, dated November 2, 2023, by and among the Santa Margarita Water District, Cadiz Inc., Fenner Gap Mutual Water Company and San Bernardino County **10.13 Water Purchase and Sale Agreement among Cadiz Inc., Cadiz Real Estate LLC, Fenner Valley Mutual Water Company and Santa Margarita Water District dated July 31, 2012 **10.14 Groundwater Management, Monitoring, and Mitigation Plan for the Cadiz Valley Groundwater Conservation, Recovery and Storage Project approved by the Santa Margarita Water District and the County of San Bernardino Board of Supervisors effective October 1, 2012 **10.15 Summary of Key Terms Between Antelope Valley – East Kern Water Agency and Fenner Gap Mutual Water Company dated May 24, 2023 **10.16 Agreement for the Delivery of Water Made Available by Cadiz Inc. and Fenner Gap Mutual Water Company to Public Water Systems, dated February 28, 2024, among Cadiz Inc., Cadiz Real Estate LLC, Fenner Gap Mutual Water Company and Fontana Water Company **10.17 Term Sheet for the Delivery of Water Made Available by Cadiz Inc. 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 **10.18 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 **10.19 Track Utilization Agreement dated September 16, 2013, between Arizona & California Railroad Company and Cadiz Real Estate LLC 40 Cadiz Inc. †**10.20 Amended and Restated Employment Agreement between Timothy J. Shaheen and Cadiz Inc. dated June 13, 2014 †**10.21 Amendment No. 1 to Amended and Restated Employment Agreement between Timothy J. Shaheen and Cadiz Inc. dated March 10, 2020 †**10.22 Amendment No. 2 to Amended and Restated Employment Agreement between Timothy J. Shaheen and Cadiz Inc. dated as of May 21, 2020 †**10.23 Employment Agreement between Cadiz Inc. and Stanley E. Speer dated as of May 21, 2020 **10.24 Form of Water Purchase and Sale Agreement, dated as of December 29, 2014, by and between Cadiz Inc. and San Luis Water District **10.25 Amended and Restated Lease Agreement, dated as of February 8, 2016, by and among Cadiz Real Estate LLC, Cadiz Inc. and Fenner Valley Farm, LLC **10.26 Purchase and Sale Agreement between El Paso Natural Gas Company, LLC, and Cadiz Inc. dated December 31, 2018 **10.27 First Amendment to Purchase and Sale Agreement dated February 3, 2020, by and between El Paso Natural Gas Company, LLC, a Delaware limited liability company and Cadiz Inc., a Delaware corporation **10.28 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 **10.29 Credit Agreement, dated as of July 2, 2021, by and among Cadiz Inc. and Cadiz Real Estate LLC as borrowers, the lenders from time-to-time party thereto, and B. Riley Securities, Inc., as administrative agent **10.30 First Amendment to Credit Agreement, dated as of February 2, 2023, by and among Cadiz Inc. and Cadiz Real Estate LLC as borrowers, the lenders from time-to-time party thereto, and B. Riley Securities, Inc. as administrative agent **10.31 Second Amendment to Credit Agreement, dated as of August 14, 2023, by and among Cadiz Inc. and Cadiz Real Estate LLC as borrowers, the lenders from time-to-time party thereto, and B. Riley Securities, Inc. as administrative agent **10.32 Third Amendment to Credit Agreement and First Amendment to Security Agreement, dated as of March 6, 2024, by and among Cadiz Inc., Cadiz Real Estate LLC, ATEC Water Systems, LLC and Octagon Partners LLC as borrowers, and the lenders party thereto 41 Cadiz Inc. **10.33 Deed of Trust, Assignment of Leases and Rents, Security Agreement, Financing Statement and Fixture Filing, dated as of July 2, 2021 **10.34 First Amendment to Deed of Trust, Assignment of Leases and Rents, Securities Agreement, Financing Statement and Fixture Filing, dated as of February 2, 2023 †**10.35 Amended and Restated Employment Agreement between Cadiz Inc. and Susan P. Kennedy dated as of April 26, 2024 **10.36 Form of Board Observer and Nomination Right Agreement **10.37 Amendment No. 1 to Board Observer and Nomination Right Agreement, dated as of March 6, 2024, by and between Cadiz Inc. and Heerema International Group Services S.A. **10.38 Form of Underwriting Agreement **10.39 Form of Registration Rights Agreement **10.40 Form of Amendment No. 1 to Registration Rights Agreement **10.41 Form of Amendment No. 2 to Registration Rights Agreement **10.42 Amendment No. 3 to Registration Rights Agreement, dated as of March 6, 2024, by and between Cadiz Inc. and Heerema International Group Services S.A. **10.43 Amended and Restated Limited Liability Company Agreement of ATEC Water Systems, LLC dated as of November 6, 2022 **10.44 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 **10.45 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 †**10.46 Employment Agreement between Cadiz Inc. and Cathryn Rivera dated as of September 16, 2024 **10.47 Renewable Energy System Site Lease and Easement Agreement, dated October 21, 2024, between Cadiz Real Estate LLC and RIC Development, LLC 42 Cadiz Inc. **10.48 Placement Agent Agreement, dated as of November 4, 2024, by and between the Company and B. Riley Securities, Inc. **10.49 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. **10.50 Letter of Intent, dated November 21, 2024, by and between Lytton Rancheria of California and Cadiz Inc. **10.51 Placement Agent Agreement, dated as of March 7, 2025, by and between the Company and Roth Capital Partners, LLC **10.52 Credit Agreement, dated as of October 27, 2025, by and between the Company and Lytton Rancheria of California **10.53 Memorandum of Understanding, effective as of September 25, 2025, among the Bureau of Reclamation, Fenner Valley Water Authority, and Fenner Gap Mutual Water Company *19.1 Insider Trading Policy *21.1 Subsidiaries of the Registrant *23.1 Consent of Independent Registered Public Accounting Firm *31.1 Certification of Susan Kennedy, Chief Executive Officer of Cadiz Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *31.2 Certification of Stanley E. Speer, Chief Financial Officer and Secretary of Cadiz Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *32.1 Certification of Susan Kennedy, Chief Executive Officer of Cadiz Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *32.2 Certification of Stanley E. Speer, Chief Financial Officer and Secretary of Cadiz Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *97.1 Cadiz Clawback and Forfeiture Policy 43 Cadiz Inc. * 101.INS Inline XBRL Instance Document * 101.SCH Inline XBRL Taxonomy Extension Schema * 101.CAL Inline XBRL Taxonomy Extension Calculation * 101.DEF Inline XBRL Extension Definition * 101.LAB Inline XBRL Taxonomy Extension Label * 101.PRE Inline XBRL Taxonomy Extension Presentation 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) _________________________ † Management contract or compensatory plan or agreement. * Filed herewith. ** Previously filed. *** All financial statement schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto. ITEM 16. Form 10-K Summary None. 44 Cadiz Inc. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized. CADIZ INC. By: /s/ Susan P. Kennedy Susan P. Kennedy, Chief Executive Officer Date: March 31, 2026 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated. Name and Position Date /s/ Susan P. Kennedy March 31, 2026 Susan Kennedy, Chair and Chief Executive Officer (Principal Executive Officer) /s/ Stanley E. Speer March 31, 2026 Stanley E. Speer, Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Stephen E. Courter March 31, 2026 Stephen E. Courter, Director /s/ Maria Dreyfus March 31, 2026 Maria Dreyfus, Director /s/ Maria Echaveste March 31, 2026 Maria Echaveste, Director /s/ Winston H. Hickox March 31, 2026 Winston H. Hickox, Director /s/ Barbara Lloyd March 31, 2026 Barbara Lloyd, Director /s/ Kenneth Lombard March 31, 2026 Kenneth Lombard, Director /s/ David O ’ Hara David O’Hara, Director March 31, 2026 /s/ Richard Polanco March 31, 2026 Richard Polanco, Director 45 Cadiz Inc. Cadiz Inc. Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID Number 238 ) F-2 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024 F-4 Consolidated Balance Sheets as of December 31, 2025 and 2024 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 F-6 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025 and 2024 F-7 Notes to the Consolidated Financial Statements F-8 F-1 Cadiz Inc. Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Cadiz Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Cadiz Inc. and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, of stockholders’ equity and of cash flows for the years then ended, including the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 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 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. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F-2 Cadiz Inc. Accounting for the Lytton Credit Agreement As described in Notes 2 and 7 to the consolidated financial statements, on October 27, 2025, the Company entered into a definitive agreement (the “Lytton Credit Agreement”) with Lytton Rancheria of California (Lytton), pursuant to which Lytton will provide the first tranche of capital (the “Tribal Investment”) for construction of the Mojave Groundwater Bank. Under the Lytton Credit Agreement, the Company at its election may draw, as an unsecured term loan, up to $51 million in one or more installments ending April 30, 2027. The Tribal Investment matures on April 30, 2031 (“Initial Maturity Date”), which may be extended to April 30, 2036. In connection with the Lytton Credit Agreement, the Company agreed to issue shares of its common stock to Lytton upon execution of the Lytton Credit Agreement, on each funding date, and in the event the Tribal Investment is extended beyond the Initial Maturity Date. Management has evaluated whether the contracts to issue the Company’s common stock to secure funding should be classified as equity or a derivative liability. The Company’s obligation to deliver variable funding fee shares depending on the amount drawn on the facility by the Company was determined to be an equity contract and this obligation was recognized as a derivative liability of $7 million as of October 27, 2025. The principal considerations for our determination that performing procedures relating to the accounting for the Lytton Credit Agreement is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to the Company’s accounting for the Lytton Credit Agreement. 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) obtaining and evaluating the executed Lytton Credit Agreement; (ii) evaluating management’s assessment relating to the determination of whether to account for the contracts to issue the Company’s common stock to secure funding as equity or a derivative liability based on the terms and conditions of the Lytton Credit Agreement; and (iii) evaluating the sufficiency of the Company’s disclosures in the consolidated financial statements. /s/ PricewaterhouseCoopers LLP Los Angeles, California March 31, 2026 We have served as the Company ’ s auditor since at least 1995. We have not been able to determine the specific year we began serving as auditor of the Company. F-3 Cadiz Inc. Consolidated Statements of Operations and Comprehensive Loss December 31, (In thousands, except per share data) 2025 2024 Total revenues $ 16,313 $ 9,608 Costs and expenses: Cost of Sales 11,163 7,298 General and administrative 29,484 24,345 Depreciation 1,264 1,214 Total costs and expenses 41,911 32,857 Operating loss ( 25,598 ) (23,249 ) Interest expense, net ( 8,580 ) (7,880 ) Gain on derivative liability 38 - Loss before income taxes ( 34,140 ) (31,129 ) Income tax expense ( 11 ) (11 ) Net loss and comprehensive loss $ ( 34,151 ) $ (31,140 ) Less: Preferred stock dividend requirements $ 5,083 5,106 Net loss and comprehensive loss applicable to common stock $ ( 39,234 ) $ (36,246 ) Basic and diluted net loss per common share $ ( 0.48 ) $ (0.53 ) Basic and diluted weighted-average shares outstanding 81,064 68,847 See accompanying notes to the consolidated financial statements. F-4 Cadiz Inc. Consolidated Balance Sheets ($ in thousands, except per share data) December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 8,599 $ 17,292 Accounts receivable 5,613 4,586 Inventories 1,138 3,020 Prepaid expenses and other current assets 701 888 Total current assets 16,051 25,786 Property, plant, equipment and water programs, net 95,384 88,362 Long-term deposit/prepaid expenses 420 420 Goodwill 5,714 5,714 Right-of-use asset 3,394 3,746 Long-term restricted cash 2,759 134 Other assets 17,192 10,332 Total assets $ 140,914 $ 134,494 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,783 $ 2,261 Accrued liabilities 2,370 7,997 Current portion of long-term debt 51 120 Derivative liabilities 5,050 - Dividend payable 1,265 1,288 Contingent consideration liabilities - 1,200 Short-term deferred revenue 305 1,226 Operating lease liabilities 364 314 Total current liabilities 13,188 14,406 Long-term debt, net 72,705 56,708 Long-term lease obligations with related party, net 27,967 25,275 Long-term operating lease liabilities 3,122 3,473 Long-term deferred revenue 625 625 Other long-term liabilities 51 46 Total liabilities 117,658 100,533 Stockholders' equity: Preferred stock - $ .01 par value, 100,000 shares authorized at December 31, 2025, and December 31, 2024; shares issued and outstanding – 329 at December 31, 2025 and December 31, 2024 1 1 8.875 % Series A cumulative, perpetual preferred stock - $ .01 par value; 7,500 shares authorized at December 31, 2025, and December 31, 2024; shares issued and outstanding – 2,300 at December 31, 2025 and December 31, 2024 1 1 Common stock - $ 0.01 par value; 100,000,000 shares authorized at December 31, 2025 and December 31, 2024; shares issued and outstanding: 83,213,589 at December 31, 2025, and 75,353,889 at December 31, 2024 830 752 Additional paid-in capital 714,616 709,303 Accumulated deficit ( 692,192 ) ( 676,096 ) Total stockholders' equity 23,256 33,961 Total liabilities and stockholders' equity $ 140,914 $ 134,494 See accompanying notes to the consolidated financial statements. F-5 Cadiz Inc. Consolidated Statements of Cash Flows For the Year Ended December 31, ($ in thousands) 2025 2024 Cash flows from operating activities: Net loss Adjustments to reconcile net loss to net cash used in operating activities: $ ( 34,151 ) $ ( 31,140 ) Depreciation 1,264 1,214 Amortization of debt discount and issuance costs 1,595 1,316 Amortization of right-of-use asset 352 163 Interest expense added to loan principal 2,796 2,360 Interest expense added to lease liability 2,667 2,373 Finance expense 141 307 Compensation charge for stock and share option awards 5,299 4,605 Unrealized gain on derivative liabilities ( 38 ) - Changes in operating assets and liabilities: Accounts receivable ( 1,021 ) ( 3,682 ) Inventories 1,882 ( 914 ) Prepaid expenses and other current assets 187 ( 380 ) Other assets 1,129 106 Accounts payable 765 ( 392 ) Lease liabilities ( 301 ) ( 136 ) Deferred revenue ( 921 ) 853 Other accrued liabilities ( 575 ) 1,815 Net cash used in operating activities ( 18,930 ) ( 21,532 ) Cash flows from investing activities: Additions to property, plant and equipment and water programs ( 7,576 ) ( 934 ) Payments for contingent consideration liabilities - ( 250 ) Additions to deposits for asset purchase options ( 5,000 ) - Net cash used in investing activities ( 12,576 ) ( 1,184 ) Cash flows from financing activities: Net proceeds from issuance of common stock 18,335 22,135 Dividend payment ( 5,106 ) ( 5,106 ) Proceeds from the issuance of long-term debt 15,000 20,000 Issuance costs of long-term debt ( 1,231 ) ( 1,294 ) Principal payments on long-term debt ( 127 ) ( 177 ) Payment for contingent consideration liabilities ( 1,200 ) - Taxes paid related to net share settlement of equity awards ( 233 ) ( 52 ) Net cash provided by financing activities 25,438 35,506 Net (decrease) increase in cash, cash equivalents and restricted cash ( 6,068 ) 12,790 Cash, cash equivalents and restricted cash, beginning of period 17,426 4,636 Cash, cash equivalents and restricted cash, end of period $ 11,358 $ 17,426 See accompanying notes to the consolidated financial statements. F-6 Cadiz Inc. Consolidated Statements of Stockholders ’ Equity ($ in thousands, except per share data) 8.875% Series A Cumulative Additional Total Common Stock Preferred Stock Perpetual Preferred Stock Paid-in Accumulated Stockholders’ Shares Amount Shares Amount Shares Amount Capital Deficit Equity Balance as of December 31, 2023 66,710,795 $ 665 329 $ 1 2,300 $ 1 $ 679,150 $ ( 639,850 ) $ 39,967 Issuance of shares pursuant to direct offerings 7,000,000 70 - - - - 22,065 - 22,135 Dividends paid and declared on 8.875 % series A cumulative perpetual preferred shares ($ 2,220 per share) - - - - - - - ( 5,106 ) ( 5,106 ) Issuance of warrants - - - - - - 887 - 887 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 - - - - - - - ( 31,140 ) ( 31,140 ) Balance as of December 31, 2024 75,353,889 $ 752 329 $ 1 2,300 $ 1 $ 709,303 $ ( 676,096 ) $ 33,961 Issuance of shares pursuant to direct offerings 5,715,000 57 - - - - 18,278 - 18,335 Dividends paid and declared on 8.875 % series A cumulative perpetual preferred shares ($ 2,210 per share) - - - - - - ( 3,818 ) ( 1,265 ) ( 5,083 ) Reclassification of dividends paid on 8.875 % series A cumulative perpetual preferred shares - - - - - - ( 19,320 ) 19,320 - Issuance of shares to lenders 975,000 9 - - - - 5,119 - 5,128 Stock-based compensation expense, net of taxes 1,169,700 12 - - - - 5,054 - 5,066 Net loss and comprehensive loss - - - - - - - ( 34,151 ) ( 34,151 ) Balance as of December 31, 2025 83,213,589 $ 830 329 $ 1 2,300 $ 1 $ 714,616 $ ( 692,192 ) $ 23,256 See accompanying notes to the consolidated financial statements. F-7 Cadiz Inc. Notes To The Consolidated Financial Statements NOTE 1 – BUSINESS Cadiz Inc. (“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 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. The Company owns approximately 46,000 acres of land with high-quality, naturally-recharging groundwater resources in Southern California’s Mojave Desert (“Cadiz Property”). Land holdings with vested water rights were assembled by the Company’s founders in the early 1980s, relying on NASA imagery that identified a significant desert aquifer system at the base of a vast Southern California watershed. Since its founding in 1983, the Company has developed its land assets in California for sustainable farming and groundwater management, and in recent years, has invested in wellfield and pipeline infrastructure as well as water filtration technology that will enable the Company to play a critical role in serving the needs of people and communities that lack access to clean, reliable and affordable water. 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 Company's groundwater storage project (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 Basis of Presentation 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 a net loss and comprehensive loss of $ 34.2 million and $ 31.1 million for the years ended December 31, 2025 and 2024, respectively. The Company had working capital of $ 2.9 million at December 31, 2025 and used cash in operating activities of $ 18.9 million for the year ended December 31, 2025. The higher loss in 2025 was primarily due to increased professional fees incurred in advancing the development of the Mojave Groundwater Bank offset by improved profitability from ATEC Water Systems, LLC ("ATEC") driven by increased filter sales. F- 8 Cadiz Inc. Notes To The Consolidated Financial Statements Cash requirements during the year ended December 31, 2025, primarily reflect certain operating and administrative costs related to 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 that provide water security against inevitable drought periods in the Southwestern United States. 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”). 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”); (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 ( see Note 7 – “Long-Term Debt”, below). 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. 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. 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. 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. On October 27, 2025, the Company entered into a definitive agreement (the “Lytton Credit Agreement”) with Lytton Rancheria of California, a federally recognized Native American tribe (“Lytton”), pursuant to which Lytton will provide the first tranche of capital (the “Tribal Investment”) for construction of the Mojave Groundwater Bank. Under the Lytton Credit Agreement, the Company at its election may draw, as an unsecured term loan, up to $ 51 million in one or more installments prior to April 30, 2027 ( see Note 7 - “Long-Term Debt”, below). Under the Lytton Credit Agreement, the proceeds from the Tribal Investment will be used by the Company to fund the construction, development, ownership, operation, and other ongoing costs of the Mojave Groundwater Bank, and to reimburse the Company’s expenses related thereto. On November 4, 2025, the company made an initial draw of $ 15 million for reimbursement of Mojave Groundwater Bank project expenses and to support development activities. A second draw of $ 15 million was completed in March 2026. F- 9 Cadiz Inc. Notes To The Consolidated Financial Statements 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. The covenants in the senior secured debt do not prohibit the Company’s use of additional equity financing and allow the Company to retain 100% of the proceeds of any common equity financing. The Company does not expect the loan covenants to materially limit its ability to finance its Mojave Groundwater Bank, agricultural operations and water filtration business activities. Management assesses whether the Company has sufficient liquidity to fund its costs for the next twelve months from the financial statement issuance date. Management evaluates the Company’s liquidity to determine if there is a substantial doubt about the Company’s ability to continue as a going concern. 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) 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. Limitations on the Company’s liquidity and ability to raise capital may adversely affect it. Sufficient liquidity is critical to meet the Company’s resource development activities. Although the Company currently expects its sources of capital to be sufficient to meet its near-term liquidity needs, there can be no assurance that its liquidity requirements will continue to be satisfied. If the Company cannot raise needed funds, it might be forced to make substantial reductions in its operating expenses, which could adversely affect its ability to implement its current business plan and ultimately impact its viability as a company. Principles of Consolidation The consolidated financial statements include the accounts of Cadiz Inc. and all subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates in Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In preparing these financial statements, management has made estimates with regard to goodwill and other long-lived assets, stock compensation and deferred tax assets. Actual results could differ from those estimates. F- 10 Cadiz Inc. 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 Mojave Groundwater Bank (supply, storage and conveyance), and agricultural operations. The Company’s second operating segment is its Water Filtration Technology business, ATEC, which provides innovative water filtration solutions for impaired or contaminated groundwater sources. 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 years ended December 31, 2025 and 2024. Revenue Recognition The Company’s revenue is currently derived from sales of water filtration systems by ATEC, sales of farm crops, and rental revenue from its agricultural lease. 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 in accordance with the customer contract which generally occurs when filters are delivered to the customer. $ 1.2 million of deferred revenue recorded as of December 31, 2024, was recognized as revenue during the year ended December 31, 2025. Stock-Based Compensation General and administrative expenses include $ 5.3 million and $ 4.6 million of stock-based compensation expenses in the years ended December 31, 2025 and 2024, 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, as amended. For stock awards, PSUs or RSUs granted, the Company determines the fair value of the stock award, PSUs or RSUs 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. Net Loss Per Common Share Basic net loss per share is computed by dividing the net loss and comprehensive loss applicable to common stock by the weighted-average common shares outstanding. 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 10,802,000 shares and 9,861,000 shares for the years ended December 31, 2025 and 2024, respectively. F- 11 Cadiz Inc. Notes To The Consolidated Financial Statements Property, Plant, Equipment and Water Programs Property, plant, equipment and water programs are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, generally five to forty-five years for land improvements and buildings, and five to fifteen years for machinery and equipment. Leasehold improvements are amortized over the shorter of the term of the relevant lease agreement or the estimated useful life of the asset. Water rights, storage and supply programs are stated at cost. Certain costs directly attributable to the development of such programs have been capitalized by the Company. 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 Mojave Groundwater Bank is not operating. While interest on borrowed funds is currently expensed, interest costs related to the construction of water project facilities is capitalized at the time construction of these facilities commences. During the fourth quarter of 2025, the Company began capitalizing interest related to the Mojave Groundwater Bank which totaled $ 75 thousand. Goodwill and Other Intangibles Resulting from Business Acquisitions As a result of a merger in May 1988 between two companies which eventually became known as Cadiz Inc., goodwill in the amount of $ 7,006,000 was recorded. 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, 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. The reporting units to which $ 5.7 million of goodwill is allocated had a positive carrying amount on December 31, 2025 and 2024. The Company accounts for business combinations using the acquisition method, with the excess of the acquisition cost over the fair value of net tangible assets and identified intangible assets acquired considered goodwill. As a result, the Company discloses goodwill separately from other intangible assets. Other identifiable intangibles related to the ATEC acquisition included non-compete agreements. Contingent consideration arrangements are initially recorded based on management’s best estimate of the amount of contingent consideration that will be realized. Changes in fair value of contingent consideration that are not measurement period adjustments are recognized in earnings. Impairment of Goodwill and Long-Lived Assets The Company assesses long-lived assets, excluding goodwill, for recoverability whenever events or changes in circumstances indicate that their carrying value may not be recoverable through the estimated undiscounted future cash flows resulting from the use of the assets. If it is determined that the carrying value of long-lived assets may not be recoverable, the potential impairment charge is measured by using the projected discounted cash-flow method. No impairment charge was recorded during the current fiscal year. F- 12 Cadiz Inc. Notes To The Consolidated Financial Statements The Company performs an annual impairment test to identify potential goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any). In performing the impairment test, the Company has the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative assessment for goodwill impairment. If the qualitative assessment indicates that it is more-likely-than- not that the fair value of the reporting unit is less than its carrying value, the Company performs a quantitative assessment. This impairment assessment is performed at least annually in the fourth quarter. An impairment loss will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill in that reporting unit. The Company uses the market approach to assess impairment for the Land and Water Resources reporting unit, as its common stock price is an important component of the fair value calculation. If the Company’s stock price experiences price declines, this will impact the fair value of the reporting unit and could lead to potential impairment charges in future periods. Accordingly, no assurances can be given that the Company will not record an impairment loss on goodwill in the future. The Company uses the income approach to assess impairment for the Water Filtration Technology reporting unit. In the Company’s annual impairment analysis for the fourth quarter 2025, the goodwill was evaluated utilizing a qualitative assessment. Based on this assessment, the Company determined that the fair value of the reporting units was more-likely-than- not greater than its respective carrying value; therefore, no impairment charge was recorded during the current fiscal year. Debt Discount Debt discount created upon the issuance of debt is deferred and amortized over the life of the related loan using the effective interest method and is presented as a reduction of long-term debt. The Company recorded $ 8.0 million of debt discount for the year ended December 31, 2025, and $ 4.7 million for the year ended December 31, 2024. Amortization of debt discounts is included in interest expense on the Consolidated Statement of Operations. Income Taxes 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. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. F- 13 Cadiz Inc. Notes To The Consolidated Financial Statements Fair Value of Financial Instruments Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carrying values approximating fair value include accounts payable and accrued liabilities due to their short-term nature. The carrying value of the Company’s secured debt approximates fair value, based on interest rates available to the Company for debt with similar terms. See Note 7 – “Long-Term Debt”, for discussion of fair value of debt. Supplemental Cash Flow Information During the year ended December 31, 2025, approximately $ 1.7 million in interest payments on the Company’s debt was paid in cash. 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, 2025, accruals for cash dividends payable on the Series A Preferred Stock were $ 1.27 million (see Note 9 – “Common and Preferred Stock”). The cash dividends were paid on January 15, 2026. At December 31, 2025, accruals for capitalized costs related to the Mojave Groundwater Bank included in property, plant and equipment and water programs were approximately $ 2.5 million and are expected to be paid in 2026. During the year ended December 31, 2025, the Company issued 975,000 shares of its common stock in conjunction with the execution and the initial draw of $ 15 million under the Lytton Credit Agreement. The value of these shares issued totaling $ 5,128 was booked as a non-cash debt discount and will be amortized into interest expense over the remaining term of the loan (see Note 7 – “Long-term Debt”). The balance of cash, cash equivalents, and restricted cash as shown in the consolidated statements of cash flows is comprised of the following: Cash, Cash Equivalents and Restricted Cash December 31, 2025 December 31, 2024 (in thousands) Cash and Cash Equivalents $ 8,599 $ 17,292 Long-Term Restricted Cash 2,759 134 Cash, Cash Equivalents and Restricted Cash in the Consolidated Statement of Cash Flows $ 11,358 $ 17,426 The restricted cash amounts primarily represented funds deposited into a segregated account as cash collateral supporting a letter of credit issued by the Company related to a performance and reclamation bond for the Northern Pipeline. Cash payments for income taxes were $ 11 thousand for each of the years ended December 31, 2025 and 2024. F- 14 Cadiz Inc. Notes To The Consolidated Financial Statements Recent Accounting Pronouncements Accounting Guidance Not Yet Adopted 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 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. 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. ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024. The adoption of this new standard as of January 1, 2025, had no material impact on the Company’s consolidated financial statements. NOTE 3 – REPORTABLE SEGMENTS We evaluate our performance based on segment operating (loss). 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 years ended December 31, 2025 and 2024: F- 15 Cadiz Inc. Notes To The Consolidated Financial Statements Twelve Months Ended December 31, 2025 (in thousands) Land and Water Resources Water Filtration Technology Total Revenues $ 1,835 $ 14,478 $ 16,313 Costs and expenses: Cost of sales 3,687 7,476 11,163 General and administrative 25,013 4,471 29,484 Depreciation 1,228 36 1,264 Total costs and expenses 29,928 11,983 41,911 Operating income (loss) $ ( 28,093 ) $ 2,495 $ ( 25,598 ) Twelve Months Ended December 31, 2024 (in thousands) Land and Water Resources Water Filtration Technology Total Revenues $ 1,708 $ 7,900 $ 9,608 Costs and expenses: Cost of sales 2,984 4,314 7,298 General and administrative 22,525 1,820 24,345 Depreciation 1,159 55 1,214 Total costs and expenses 26,668 6,189 32,857 Operating income (loss) $ ( 24,960 ) $ 1,711 $ ( 23,249 ) Assets by operating segment, inclusive of goodwill, are as follows (dollars in thousands): December 31, 2025 December 31, 2024 Operating Segment: Water and Land Resources $ 130,900 $ 123,786 Water Filtration Technology 10,014 10,708 $ 140,914 $ 134,494 Goodwill by operating segment is as follows (dollars in thousands): December 31, 2025 December 31, 2024 Operating Segment: Water and Land Resources $ 3,813 $ 3,813 Water Filtration Technology 1,901 1,901 $ 5,714 $ 5,714 Property, plant, equipment and water programs consist of the following (dollars in thousands): F- 16 Cadiz Inc. Notes To The Consolidated Financial Statements December 31, 2025 Water and Land Resources Water Filtration Technology Land and land improvements $ 39,211 $ - Water programs 32,023 - Pipeline 22,106 - Buildings 1,805 - Leasehold improvements, furniture and fixtures 1,616 7 Machinery and equipment 4,032 395 Construction in progress 5,940 78 106,733 480 Less accumulated depreciation ( 11,625 ) ( 204 ) $ 95,108 $ 276 December 31, 2024 Water and Land Resources Water Filtration Technology Land and land improvements $ 33,069 $ - Water programs 29,383 - Pipeline 22,100 - Buildings 1,805 - Leasehold improvements, furniture and fixtures 1,605 4 Machinery and equipment 3,870 247 Construction in progress 6,851 6 98,683 257 Less accumulated depreciation ( 10,397 ) ( 181 ) $ 88,286 $ 76 NOTE 4 – PROPERTY, PLANT, EQUIPMENT AND WATER PROGRAMS Property, plant, equipment and water programs consist of the following (dollars in thousands): December 31, 2025 2024 Land and land improvements $ 39,211 $ 33,069 Water programs 32,023 29,383 Pipeline 22,106 22,100 Buildings 1,805 1,805 Leasehold improvements, furniture and fixtures 1,623 1,609 Machinery and equipment 4,427 4,117 Construction in progress 6,018 6,857 107,213 98,940 Less accumulated depreciation ( 11,829 ) ( 10,578 ) $ 95,384 $ 88,362 Land and land improvements primarily include land acquisitions, well development, irrigation systems and other related land infrastructure. 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. F- 17 Cadiz Inc. Notes To The Consolidated Financial Statements During the year ended December 31, 2025, $ 6.1 million of construction in progress was placed into service, which included the conversion of the Company's diesel operated agricultural wells to natural gas to reduce emissions. Depreciation expense on land improvements, buildings, leasehold improvements, machinery and equipment and furniture and fixtures was $ 1.3 million and $ 1.2 million for the years ended December 31, 2025 and 2024, respectively. NOTE 5 – OTHER ASSETS Other assets include the following (dollars in thousands): December 31, 2025 2024 Prepaid rent $ 4,137 $ 4,252 Pipeline purchase option 5,000 5,000 Deferred finance costs 3,040 - Loan commitment asset 4,949 - Deposits and other 66 1,080 $ 17,192 $ 10,332 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, 2025 and 2024. NOTE 6 – ACCRUED LIABILITIES At December 31, 2025 and 2024 accrued liabilities consist of the following (dollars in thousands): December 31, 2025 2024 Payroll, bonus, and benefits $ 523 $ 110 Legal and consulting 221 1,444 Water project, pipeline development and well development 283 559 Pipeline purchase option - 5,000 Commission expense 490 - Other accrued expenses 853 884 $ 2,370 $ 7,997 F- 18 Cadiz Inc. Notes To The Consolidated Financial Statements NOTE 7 – LONG-TERM DEBT At December 31, 2025 and 2024, the carrying amount of the Company’s outstanding debt is summarized as follows (dollars in thousands): December 31, 2025 2024 Senior secured debt $ 21,200 $ 21,200 Interest rate of 7 % per annum Unsecured debt Interest rate of 8 % per annum 15,000 - Convertible note instrument 42,055 39,259 Interest rate of 7 % per annum Other loans 51 171 Debt discount and debt issuance costs, net of accumulated accretion ( 5,550 ) ( 3,802 ) Total outstanding long-term debt 72,756 56,828 Less current portion 51 120 Total outstanding debt $ 72,705 $ 56,708 The carrying value of the Company’s senior secured debt and the Company’s convertible note instrument approximates fair value. The effective interest rate on the Company’s debt was 12.1 % for the year ended December 31, 2025. Pursuant to the Company’s loan agreements, annual maturities of long-term debt outstanding on December 31, 2025, are as follows: Year Ending December 31 ($ in thousands) 2026 $ 51 2027 63,255 2028 - 2029 - 2030+ 15,000 Total $ 78,306 On July 2, 2021, the Company entered into a $ 50 million senior secured credit agreement (“Credit Agreement”) with Lenders and B. Riley Securities ("BRS"), as administrative agent for the Lenders (“Current Senior Secured Debt”). Interest is paid quarterly at a rate of seven percent per annum. The obligations under the Current Senior Secured Debt are secured by substantially all of the Company’s assets on a first -priority basis. In connection with any repayment or prepayment of the debt, the Company is required to pay a repayment fee equal to the principal amount being repaid or prepaid, multiplied by 6.0 %. 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. F- 19 Cadiz Inc. Notes To The Consolidated Financial Statements 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”). In connection with the First Amended Credit Agreement, the Company repaid $ 15 million of the Senior Secured Debt together with fees and interest required to be paid in connection with such repayment under the Credit Agreement. Under the First Amended Credit Agreement, the lenders have a right to convert up to $ 15 million of outstanding principal, plus any PIK interest and any accrued and unpaid interest (the “Convertible Loan”) into shares of the Company’s common stock at a conversion price of $ 4.80 per share (the “Conversion Price”). Additionally, the maturity date of the Credit Agreement was extended from July 2, 2024 to June 30, 2026. The annual interest rate remains unchanged at 7.00 %. Interest on $ 20 million of the principal amount will be paid in cash. Interest on the $ 15 million principal amount of the Convertible Loan will be paid in kind on a quarterly basis by adding such amount to the outstanding principal amount of the outstanding Convertible Loan. The amendment was recorded as a debt extinguishment. 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”); (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. 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. F- 20 Cadiz Inc. Notes To The Consolidated Financial Statements 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. As a result of a registered direct offering that was completed in March 2025, the exercise price of the Heerema Warrant was reduced to $ 4.75 per share. 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. In the event of any additional issuance of depositary receipts (“Depositary Receipts”) representing interests in shares of 8.875 % Series A Cumulative Perpetual Preferred Stock (“Series A Preferred Stock”) by the Company, the Company will be required to, within five business days after the receipt of the net cash proceeds, apply 75 % of the net cash proceeds to prepay amounts due under the debt (including the applicable repayment fee described above). The Credit Agreement includes customary affirmative and negative covenants, including delivery of financial statements and other reports. The negative covenants limit the ability of the Company to, among other things, incur debt, incur liens, make investments, sell assets, pay dividends and enter into transactions with affiliates. In addition, the Credit Agreement includes customary events of default and remedies. The Company was in compliance with all covenants under the Credit Agreement as of December 31, 2025. On October 27, 2025 ( the “Effective Date”), the Company entered the Lytton Credit Agreement pursuant to which Lytton committed to provide an unsecured term loan facility with a maximum of $ 51 million in principal to be drawn in installments through April 30, 2027 to fund the construction, development, ownership, operation, and other ongoing costs of the Mojave Groundwater Bank, and to reimburse the Company’s expenses related thereto (the “Tribal Investment”). The unsecured term loan bears interest at a fixed rate of 8 % per annum, payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year. Interest may be paid in cash or, upon mutual agreement between the Company and Lytton, in shares of the Company’s common stock determined in accordance with the Lytton Credit Agreement. The Tribal Investment matures on April 30, 2031 ( “Initial Maturity Date”) which may be extended to April 30, 2036. In connection with the Lytton Credit Agreement, the Company agreed to issue shares of its common stock to Lytton as follows: ● upon execution of the Lytton Credit Agreement, a commitment fee of 600,000 shares; ● on each funding date, a funding fee of 25,000 shares per $1 million of principal amount funded; and ● in the event the Tribal Investment is extended beyond the Initial Maturity Date, an extension fee of 800,000 shares. F- 21 Cadiz Inc. Notes To The Consolidated Financial Statements The Company has evaluated whether the contracts to issue the Company’s common stock to secure funding should be classified as equity or a derivative liability pursuant to ASC 815 - 40. The Company’s obligation to deliver variable funding fee shares depending on the amount drawn on the facility by the Company was determined to be an equity contract and this obligation is recognized as a derivative liability of $ 7 million at inception on October 27, 2025 and $ 5 million as of December 31, 2025, subject to reassessment at each reporting period. The value of the commitment shares and the derivative liability at inception were capitalized in other noncurrent assets, $ 7,989 as of December 31, 2025. A portion of the asset is recognized as a debt discount when the loan is drawn. The extension fee is an equity contract that is not separately recognized as the probability of extending the maturity date was considered by the Company to be remote. At any time following the funding of the full $ 51 million Tribal Investment amount under the Lytton Credit Agreement or on the maturity date, at Lytton’s election, any outstanding principal and accrued interest of the Tribal Investment may be converted into a contractual right to receive a share of future cash flows from the Company’s water-storage rights (the “Storage Cash Flows Right”), which will entitle Lytton to receive up to 51 % of the cash flows generated from the Company’s water-storage operations, provided that Lytton contributes the Storage Cash Flows Right to Mojave Water Infrastructure Company, LLC (“MWI”), the Company’s special purpose entity formed to construct, own and operate the Mojave Groundwater Bank, in exchange for an ownership interest in MWI alongside other expected equity investors in MWI on the same economic terms whereby such interest in MWI remains subject to definitive agreements to be mutually agreed upon by the parties including the Company. On November 4, 2025 the Company made an initial draw of $ 15 million for reimbursement of Mojave Groundwater Bank project expenses and to support development activities. A second draw of $ 15 million was made in March 2026. NOTE 8 – INCOME TAXES Deferred taxes are recorded based upon differences between the financial statement and tax basis of assets and liabilities and available carryforwards. Temporary differences and carryforwards which gave rise to a significant portion of deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows (dollars in thousands): F- 22 Cadiz Inc. Notes To The Consolidated Financial Statements December 31, 2025 2024 Deferred tax assets: Net operating losses $ 87,976 $ 82,076 Fixed asset basis difference 4,934 4,839 Contributions carryover 163 43 Deferred compensation 306 332 Accrued liabilities and other 2,132 980 Total deferred tax assets 95,511 88,270 Valuation allowance for deferred tax assets ( 95,511 ) ( 88,270 ) Net deferred tax asset $ - $ - The change in deferred tax assets resulted from current year net operating losses and changes to future tax deductions resulting from expiring net operating losses, terms of stock compensation plans, fixed assets, and accrued liabilities. A full valuation allowance continues to be recorded given the Company continues to be incurring losses. As of December 31, 2025, the Company had net operating loss (NOL) carryforwards of approximately $ 376 million for federal income tax purposes and $ 358 million for California income tax purposes. Such carryforwards expire in varying amounts through the year 2037 and 2045 for federal and California purposes, respectively. For federal losses arising in tax years ending after December 31, 2017, the NOL carryforwards are allowed indefinitely. Use of the carryforward amounts is subject to an annual limitation as a result of a previous ownership change and a tax ownership change that occurred in June of 2021. The Company’s tax years 2022 through 2025 remain subject to examination by the Internal Revenue Service, and tax years 2021 through 2025 remain subject to examination by California tax jurisdictions. In addition, the Company’s loss carryforward amounts are generally subject to examination and adjustment for a period of three years for federal tax purposes and four years for California purposes, beginning when such carryovers are utilized to reduce taxes in a future tax year. Beginning in 2025 annual reporting, we adopted Accounting Standards Update (ASU) No. 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures (ASU 2023 - 09 ) on a prospective basis. A reconciliation of the U.S. federal statutory income tax rate to our effective tax rate pursuant to the disclosure requirements of ASU 2023 - 09 for the year ended December 31, 2025 is as follows (in thousands, except percentages): F- 23 Cadiz Inc. Notes To The Consolidated Financial Statements Year Ended December 31, 2025 US federal statutory income tax rate $ ( 7,169 ) 21.0 % State and local income taxes, net of federal income tax effect (1) 11 ( 0.0 ) Valuation allowance 5,249 ( 15.4 ) Expiring carryforwards 745 ( 2.2 ) Non-deductible expenses and other 1,175 ( 3.4 ) Effective tax rate $ 11 0.0 % ( 1 ) California represents the full tax effect in this category. A reconciliation of the U.S. federal statutory income tax rates to our effective tax rate for the years ended December 31, 2024 is as follows (in thousands, except percentages): Year Ended December 31, 2024 US federal statutory income tax rate $ ( 6,537 ) 21.0 % State and local income taxes, net of federal income tax effect (1) 11 ( 0.0 ) Valuation allowance 4,942 ( 15.9 ) Expiring carryforwards 716 ( 2.3 ) Non-deductible expenses and other 879 ( 2.8 ) Effective tax rate $ 11 0.0 % ( 1 ) California represents the full tax effect in this category. Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023 - 09 for the year ended December 31, 2025 and 2024 are as follows (in thousands): Year Ended December 31, 2024 2025 2024 Federal $ - - State 11 11 Cash paid for income taxes, net of refunds received $ 11 $ 11 Because it is more likely than not that the Company will not realize its net deferred tax assets, it has recorded a full valuation allowance against these assets. Accordingly, no deferred tax asset has been recorded in the accompanying balance sheet. F- 24 Cadiz Inc. Notes To The Consolidated Financial Statements On July 4, 2025, the One Big Beautiful Bill Act (OBBBA or the Act) was enacted. Changes to bonus depreciation, interest expense limitations and domestic research and development expenses (among others) were implemented in the Act. The Company does not believe that the enactment of the OBBBA will have a material impact on its income tax expense or deferred tax assets. NOTE 9 – COMMON AND PREFERRED STOCK Common Stock The Company is authorized to issue 100 million shares of Common Stock at a $ 0.01 par value. As of December 31, 2025, and December 31, 2024, the Company had 83,213,589 and 75,353,889 shares issued and outstanding, respectively. 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. 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. 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. 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. Series 1 Preferred Stock The Company has issued a total of 10,000 shares of Series 1 Preferred Stock (“Series 1 Preferred Stock”) to certain holders (“Holders”) under certain conversion and exchange agreements entered into in March 2020. Each share of Series 1 Preferred Stock is convertible at any time at the option of the Holder into 405.05 shares of Common Stock. As of December 31, 2025, Holders of Series 1 Preferred Stock had exercised their option to convert 9,671 shares of Series 1 Preferred Stock into 3,917,235 shares of Common Stock. The Company has 329 shares of Series 1 Preferred Stock issued and outstanding as of December 31, 2025. Series A Preferred Stock On June 29, 2021, the Company entered into an Underwriting Agreement with BRS as representative of the several underwriters named there, to issue and sell an aggregate of 2,000,000 depositary shares (the “Depositary Shares”), as well as up to 300,000 Depositary Shares that may be sold pursuant to the exercise of an option to purchase additional Depositary Shares (“Depositary Share Offering”), each representing 1/1000 th of a share of the 8.875 % Series A Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”). The Depositary Share Offering was completed on July 2, 2021 for net proceeds of approximately $ 54 million. F- 25 Cadiz Inc. Notes To The Consolidated Financial Statements On July 1, 2021, the Company filed the Certificate of Designation (“Certificate of Designation”) for the Series A Preferred Stock with the Secretary of State of the State of Delaware, which became effective upon acceptance for record. The Certificate of Designation classified a total of 7,500 shares of the Company’s authorized shares of preferred stock, $ 0.01 par value per share, as Series A Preferred Stock. As set forth in the Certificate of Designation, the Series A Preferred Stock will rank, as to dividend rights and rights upon the Company’s liquidation, dissolution or winding up: (i) senior to Common Stock of the Company; (ii) junior to the Series 1 Preferred Stock with respect to the distribution of assets upon the Company’s voluntary or involuntary liquidation, dissolution or winding up; (iii) senior to the Series 1 Preferred Stock with respect to the payment of dividends and (iv) effectively junior to all the Company’s existing and future indebtedness (including indebtedness convertible into Common Stock or preferred stock) and to the indebtedness and other liabilities of (as well as any preferred equity interests held by others in) the Company’s existing or future subsidiaries. Holders of Series A Preferred Stock, when and as authorized by the Company’s Board of Directors, are entitled to cumulative cash dividends at the rate of 8.875 % of the $ 25,000.00 ($ 25.00 per Depositary Share) liquidation preference per year (equivalent to $ 2,218.75 per share per year or $ 2.21875 per Depositary Share per year). Dividends will be payable quarterly in arrears, on or about the 15 th of January, April, July and October, beginning on or about October 15, 2021. As of December 31, 2025, the Company has paid cash dividends in the amount of $ 21,873,000 . As of June 30, 2025, the Company reclassified $ 19,320,000 in aggregate cash dividends paid from the accumulated deficit balance to additional paid in capital. The Company has assessed this misclassification, individually and in the aggregate, and concluded that this correction was not material to the current period or any prior period interim or annual financial statements. On December 23, 2025, the Company’s Board of Directors declared that holders of Series A Preferred stock will receive a cash dividend equal to $ 550.00 per whole share; therefore, holders of Depositary Shares will receive a cash dividend equal to $ 0.55 per Depositary Share. The dividend was paid on January 15, 2026 to respective holders of record as of the close of business on January 5, 2026. 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. Holders of depositary shares representing interests in the Series A Preferred Stock generally will have no voting rights. However, if the Company does not pay dividends on any outstanding shares of Series A Preferred Stock for six or more quarterly dividend periods (whether or not declared or consecutive), holders of the Series A Preferred Stock (voting separately as a class with all other outstanding series of preferred stock upon which like voting rights have been conferred and are exercisable) will be entitled to elect two additional directors to the Board of Directors to serve until all unpaid dividends have been fully paid or declared and set apart for payment. F- 26 Cadiz Inc. Notes To The Consolidated Financial Statements On and after July 2, 2026, the shares of Series A Preferred Stock will be redeemable at the Company’s option, in whole or in part, at a redemption price equal to $ 25,000.00 per share ($ 25.00 per Depositary Share), plus any accrued and unpaid dividends. Furthermore, upon a change of control or delisting event (each as defined in the Certificate of Designation), the Company will have a special option to redeem the Series A Preferred Stock at $ 25,000.00 per share ($ 25.00 per Depositary Share), plus any accrued and unpaid dividends. Shares of Series A Preferred Stock are convertible into shares of Common Stock if, and only if, a change of control or delisting event (each as defined in the Certificate of Designation) has occurred, and the Company has not elected to redeem the Series A Preferred Stock prior to the applicable conversion date. Upon any conversion, each share of Series A Preferred Stock will be converted into that number of shares of Common Stock equal to the lesser of (i) the quotient obtained by dividing (A) the sum of ( x ) the $ 25,000 liquidation preference per share plus (y) the amount of an accrued and unpaid dividends to, but not including, the conversion date by (B) the Common Stock Purchase Price (as defined in the Certificate of Designation), and (ii) 3,748.13 (the “Share Cap”), subject to certain adjustments. The Company has 2,300 shares of Series A Preferred Stock issued and outstanding as of December 31, 2025. NOTE 10 – STOCK-BASED COMPENSATION PLANS The Company has issued options and has granted stock awards pursuant to its 2019 Equity Incentive Plan, as described below. 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 amendments to the plan approved by stockholders at the July 12, 2022 Annual Meeting, the June 11, 2024 Annual Meeting and the June 12, 2025 Annual Meeting. The plan, as amended, provides for the grant and issuance of up to 7,200,000 shares and options to the Company’s employees, directors and consultants. 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. The award accrues on a quarterly basis, with $ 18,750 of cash compensation and $ 6,250 of stock earned for each fiscal quarter in which a director serves. The deferred stock award vests automatically on the January 31 that first follows the award date. F- 27 Cadiz Inc. Notes To The Consolidated Financial Statements Stock Awards to Directors, Officers, Consultants and Employees The Company has granted stock awards pursuant to its 2019 EIP. Of the total 7,200,000 shares reserved under the 2019 EIP, 6,398,526 shares and restricted stock units (“RSUs”) have been awarded to the Company’s directors, employees and consultants as of December 31, 2025. In January 2024, 60,000 RSUs were granted to employees which vested on January 2, 2025. In April 2024, the Company granted 1.6 million RSUs and performance stock units (“PSUs”) in conjunction with entering into an amended and restated employment agreement with the Company’s Chief Executive Officer 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 contract for water delivery or storage, and delivery of water (“milestone RSUs”), and (c) 300,000 PSUs that will vest upon a Price Hurdle of $ 15 per share for 20 consecutive days. In 2025, the Company’s Chief Executive Officer and the Company mutually agreed to cancel 300,000 PSUs and 10,000 RSUs so that the underlying shares can be utilized for grants to other key employees and consultants. Of the 590,000 milestone RSUs, 50,000 vested and were issued in October 2025 upon achievement of certain milestones. 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. 150,000 RSUs were granted to consultants in January 2025 ( “January 2025 RSU Grant”). Of the 150,000 RSUs granted under the January 2025 RSU Grant, 16,250 RSUs vested and were issued immediately, 50,000 RSUs vested in February 2025 upon achievement of certain milestones and 50,000 RSUs vested in July 2025 upon achievement of certain milestones. The remaining 33,750 RSUs granted under the January 2025 RSU Grant vested in equal quarterly installments through December 2025. In February 2025, 420,000 RSUs for bonus awards were granted to employees which vested and became issuable immediately. Of these 420,000 RSUs, the Company issued 382,477 shares net of taxes withheld and paid in cash by the Company. In March 2025, 145,000 RSUs were granted to consultants ( “March 2025 RSU Grant”). Of the 145,000 RSUs granted under the March 2025 RSU Grant, 85,000 RSUs were subject to vesting upon achievement of certain milestones and 60,000 RSUs vest over a period of one year. In June 2025, 55,000 of the shares underlying these RSUs vested upon achievement of certain milestones. In September 2025, 150,000 RSUs and PSUs were granted to a consultant ( “September 2025 RSU Grant”). Of the 150,000 units granted under the September 2025 RSU Grant, 25,000 RSUs vested on September 30, 2025. The remaining 125,000 PSUs vest upon the company’s stock achieving certain price hurdles. F- 28 Cadiz Inc. Notes To The Consolidated Financial Statements In October 2025, 1,060,600 RSUs were granted to employees ( “October 2025 RSU Grant”). Of the 1,060,600 RSUs granted under the October 2025 RSU Grant, 700,000 RUSs were subject to vesting upon achievement of milestones related to completion of certain permits, entering into binding contracts for water delivery and storage and delivery of water, and 360,600 RSUs vest in quarterly installments through December 31, 2027. In October 2025, 50,000 of the shares underlying these RSUs vested upon achievement of certain milestones. A summary of RSU activity under the plans during the years ended December 31, 2025 and 2024 is presented below: Weighted- Average Grant-date Shares Fair Value Nonvested at December 31, 2023 589,077 $ 4.80 Granted 2,533,053 $ 2.54 Forfeited or canceled - $ - Vested ( 1,627,216 ) $ 3.74 Nonvested at December 31, 2024 1,494,914 $ 2.49 Granted 1,902,568 $ 4.73 Forfeited or canceled ( 78,335 ) $ 3.07 Vested ( 1,334,339 ) $ 4.00 Nonvested at December 31, 2025 1,984,808 $ 3.60 As of December 31, 2025, the Company had approximately $ 1.3 million of unrecognized stock compensation expense related to nonvested PSUs and RSUs. NOTE 11 – COMMITMENTS AND CONTINGENCIES In the normal course of its agricultural operations, the Company handles, stores, transports and dispenses products identified as hazardous materials. 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 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, 2025 and December 31, 2024. F- 29 Cadiz Inc. Notes To The Consolidated Financial Statements In conjunction with the 26 -year right-of-way agreement with the United States Bureau of Land Management ("BLM") with respect to the Company’s Northern Pipeline asset, the Company deposited approximately $ 420,000 towards a performance and reclamation bond with the BLM which has been recorded in Other Long-Term Deposits/Prepaid Expenses. The Company is from time to time involved in various lawsuits and legal proceedings that arise in the ordinary course of business. At this time, the Company is not aware of any other pending or threatened litigation that it expects will have a material adverse effect on its business, financial condition, liquidity, or operating results. Legal claims are inherently uncertain, however, and it is possible that the Company’s business, financial condition, liquidity and/or operating results could be adversely affected in the future by legal proceedings. NOTE 12 – LEASES 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 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 10 months to 24 years as of December 31, 2025, 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. The Company’s lease population does not include any residual value guarantees, and therefore none were considered in the calculation of the lease balances. The Company has leases with variable payments, most commonly in the form of common area maintenance charges which are based on actual costs incurred. 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. F- 30 Cadiz Inc. 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. The Company has lease agreements with lease and non-lease components and has elected the practical expedient to account for lease and non-lease components as a single lease component for real-estate class of leases only. For leases with terms greater than 12 months, the Company records the related asset and lease liability at the present value of lease payments over the lease term. Leases with an initial term of 12 months or less with purchase options or extension options that are not reasonably certain to be exercised are not recorded on the Consolidated Balance Sheets; the Company recognizes lease expense for these leases on a straight-line basis over the term of the lease. Lease balances . Amounts recognized in the accompanying consolidated balance sheet as of December 31, 2025 and 2024 are as follows (in thousands): As of December 31, 2025 Activity Balance Sheet Location Balance ROU assets Right-of-use asset $ 3,394 Short-term lease liability Operating lease liabilities $ 364 Long-term lease liability Long-term operating lease liabilities $ 3,122 As of December 31, 2024 Activity Balance Sheet Location Balance ROU assets Right-of-use asset $ 3,746 Short-term lease liability Operating lease liabilities $ 314 Long-term lease liability Long-term operating lease liabilities $ 3,473 Lease cost. The Company’s operating lease cost for the year ended December 31, 2025 was $ 748 thousand. Lease commitments. The table below summarizes the Company’s scheduled future minimum lease payments under operating, recorded on the balance sheet as of December 31, 2025 ( in thousands): 2026 $ 706 2027 550 2028 554 2029 500 2030+ 4,553 Total lease payments 6,863 Less: Imputed interest ( 3,377 ) Present value of lease payments 3,486 Less: current maturities of lease obligations ( 364 ) Long-term lease obligations $ 3,122 Most of the Company’s lease agreements do not provide a readily determinable implicit rate nor is it available to us from its lessors. Instead, the Company estimates its incremental borrowing rate based on information available at either the implementation date of Topic 842 or at lease commencement for leases entered into thereafter in order to discount lease payments to present value. The table below presents additional information related to the Company’s leases as of December 31, 2025: F- 31 Cadiz Inc. Notes To The Consolidated Financial Statements Weighted Average Remaining Lease Term Operating leases (in years) 16 Weighted Average Discount Rate Operating leases 11 % 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”). As consideration for the lease, FVF paid the Company a one -time payment of $ 12.0 million upon closing. The Company expects to record rental income of $ 420 thousand annually over the next five years related to the FVF Lease Agreement. NOTE 13 – FAIR VALUE MEASUREMENTS Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. The Company considers a security that trades at least weekly to have an active market. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In 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. $ 250 thousand of this liability was paid during 2024 and $ 1.2 million of this liability was paid during the second quarter of 2025 constituting payment in full of the remaining balance of this contingent consideration liability. On October 27, 2025, the Company recorded a derivative liability in the amount of $ 7 million related to funding fee shares to be issued under the Lytton Credit Agreement (see Note 7 – Long-Term Debt, above). $ 1.9 million of the derivative liability was reclassified to additional paid-in capital for the settlement of funding fee shares upon an initial borrowing of $ 15 million under the Lytton Credit Agreement. The fair value of the derivative liability was estimated using the equity spot price approach, which involves remeasuring the liability at each reporting date based on the Company's closing common stock price. The number of shares expected to be issued is determined in accordance with the funding fee formula specified in the debt agreement (i.e., 25,000 shares per $1 million of principal funded at each funding date).The change in fair value is recorded as an adjustment to the recorded derivative liability with the unrealized gains and losses reflected on the income statement. F- 32 Cadiz Inc. Notes To The Consolidated Financial Statements (in thousands) Level 3 Liabilities Balance at December 31, 2024 $ ( 1,200 ) Payment of contingent consideration liabilities 1,200 Derivative liabilities ( 7,000 ) Reclassification of derivative liabilities to additional paid-in capital 1,912 Unrealized gain on derivative liability 38 Balance at December 31, 2025 $ ( 5,050 ) Investments at Fair Value as of December 31, 2025 (in thousands) Level 1 Level 2 Level 3 Total Liabilities Derivative Liabilities $ - $ - $ 5,050 $ 5,050 Total Liabilities $ - $ - $ 5,050 $ 5,050 F-33