DELAWARE
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77-0313235
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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550 South Hope Street, Suite 2850
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Los Angeles, California
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90071
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(Address of principal executive offices)
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(Zip Code)
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For the Three Months ended March 31, 2016
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Page
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PART I – FINANCIAL INFORMATION
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ITEM 1. Financial Statements
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Cadiz Inc. Consolidated Financial Statements
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1
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2
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3
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4
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5
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13 | |
27
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28
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PART II – OTHER INFORMATION
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29
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29
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29
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29
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29
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29
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30
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For the Three Months
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||||||||
Ended March 31,
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||||||||
($ in thousands except per share data)
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2016
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2015
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Revenues
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$ | 75 | $ | 18 | ||||
Costs and expenses:
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Cost of sales
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- | - | ||||||
General and administrative
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2,355 | 2,675 | ||||||
Depreciation
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73 | 61 | ||||||
Total costs and expenses
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2,428 | 2,736 | ||||||
Operating loss
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(2,353 | ) | (2,718 | ) | ||||
Interest expense, net
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(4,191 | ) | (2,193 | ) | ||||
Loss on extinguishment of debt and debt refinancing
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(2,250 | ) | - | |||||
Other income
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- | 70 | ||||||
Loss before income taxes
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(8,794 | ) | (4,841 | ) | ||||
Income tax provision
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1 | 1 | ||||||
Net loss and comprehensive loss applicable to common stock
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$ | (8,795 | ) | $ | (4,842 | ) | ||
Basic and diluted net loss per common share
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$ | (0.49 | ) | $ | (0.27 | ) | ||
Basic and diluted weighted average shares outstanding
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17,897 | 17,707 | ||||||
March 31,
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December 31,
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|||||||
($ in thousands except share data)
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2016
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2015
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||||||
ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 2,103 | $ | 2,690 | ||||
Accounts receivable
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38 | 187 | ||||||
Prepaid expenses and other
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562 | 309 | ||||||
Total current assets
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2,703 | 3,186 | ||||||
Property, plant, equipment and water programs, net
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44,401 | 44,474 | ||||||
Goodwill
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3,813 | 3,813 | ||||||
Other assets
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3,588 | 3,317 | ||||||
Total assets
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$ | 54,505 | $ | 54,790 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current liabilities:
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Accounts payable
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$ | 504 | $ | 309 | ||||
Accrued liabilities
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2,379 | 1,665 | ||||||
Current portion of long-term debt
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49 | 49 | ||||||
Total current liabilities
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2,932 | 2,023 | ||||||
Long-term debt, net
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100,983 | 107,592 | ||||||
Long-term lease obligations, net
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11,633 | - | ||||||
Deferred revenue
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750 | 750 | ||||||
Other long-term liabilities
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3,173 | 923 | ||||||
Total liabilities
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119,471 | 111,288 | ||||||
Stockholders’ deficit:
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||||||||
Common stock - $.01 par value; 70,000,000 shares
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||||||||
authorized; shares issued and outstanding – 17,934,223 at
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||||||||
March 31, 2016 and 17,876,016 at December 31, 2015
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179 | 179 | ||||||
Additional paid-in capital
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327,182 | 326,855 | ||||||
Accumulated deficit
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(392,327 | ) | (383,532 | ) | ||||
Total stockholders’ deficit
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(64,966 | ) | (56,498 | ) | ||||
Total liabilities and stockholders’ deficit
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$ | 54,505 | $ | 54,790 |
For the Three Months
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||||||||
Ended March 31,
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||||||||
($ in thousands)
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2016
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2015
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Cash flows from operating activities:
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Net loss | $ | (8,795 | ) | $ | (4,842 | ) | ||
Adjustments to reconcile net loss to
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||||||||
net cash used for operating activities:
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||||||||
Depreciation
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73 | 61 | ||||||
Amortization of debt discount and issuance costs
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1,949 | 222 | ||||||
Interest expense added to loan principal
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2,182 | 1,971 | ||||||
Loss on early extinguishment of debt
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2,250 | - | ||||||
Compensation charge for stock and share option awards
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165 | 260 | ||||||
Changes in operating assets and liabilities:
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Decrease in accounts receivable
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149 | 170 | ||||||
Increase in prepaid expenses and other
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(253 | ) | (478 | ) | ||||
Increase in other assets
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(271 | ) | (272 | ) | ||||
Increase in accounts payable
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195 | 315 | ||||||
Increase (decrease) in accrued liabilities
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876 | (43 | ) | |||||
Net cash used for operating activities
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(1,480 | ) | (2,636 | ) | ||||
Cash flows from investing activities:
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Additions to property, plant and equipment
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- | (19 | ) | |||||
Net cash used for investing activities
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- | (19 | ) | |||||
Cash flows from financing activities:
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Up-front payment related to lease liability
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11,509 | - | ||||||
Debt Issuance costs
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(102 | ) | - | |||||
Principal payments on long-term debt
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(10,514 | ) | (3 | ) | ||||
Net cash provided by (used for) financing activities
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893 | (3 | ) | |||||
Net decrease in cash and cash equivalents
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(587 | ) | (2,658 | ) | ||||
Cash and cash equivalents, beginning of period
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2,690 | 16,206 | ||||||
Cash and cash equivalents, end of period
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$ | 2,103 | $ | 13,548 |
Additional
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Total
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Common Stock
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Paid-in
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Accumulated
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Stockholders’
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|||||||||||||||||
Shares
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Amount
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Capital
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Deficit
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Deficit
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Balance as of December 31, 2015
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17,876,016 | $ | 179 | $ | 326,855 | $ | (383,532 | ) | $ | (56,498 | ) | |||||||||
Stock-based compensation expense
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58,207 | - | 327 | - | 327 | |||||||||||||||
Net loss and comprehensive loss
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- | - | - | (8,795 | ) | (8,795 | ) | |||||||||||||
Balance as of March 31, 2016
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17,934,223 | $ | 179 | $ | 327,182 | $ | (392,327 | ) | $ | (64,966 | ) |
·
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High yield wells designed to efficiently recover available native groundwater from beneath the Water Project area;
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·
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A water conveyance pipeline to deliver water from the well field to Project participants; and
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·
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An energy source to provide power to the well-field, pipeline and pumping plant.
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·
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A pumping plant to pump water through the conveyance pipeline from the CRA to the Water Project well-field; and
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·
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Spreading basins, which are shallow settling ponds that will be configured to efficiently percolate water from the ground surface down to the water table using subsurface storage capacity for the storage of water.
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(1)
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A Water Conveyance Pipeline Right-of-Way from the Water Project Area to a Delivery System
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·
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A new access road along the entire pipeline route to enable maintenance, emergency access and shorten routes for crew-changes,
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·
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Remotely operated fire-suppression systems at each of the existing creosote-treated wooden trestles,
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·
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Inline power generation for crossing operations and lighting, heating and cooling for existing railroad transloading operations,
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·
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Fiber optic information transmission to convey track-speed and cameras in aid of emergency and to discourage vandalism; and
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·
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The distribution of water for the operation of a steam powered locomotive, fire-suppression and other miscellaneous uses.
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(2)
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Storage and Supply Agreements with One or More Public Water Agencies or Private Water Utilities
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(3)
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Environmental/Regulatory Permits
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(4)
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Construction and Working Capital
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Three Months Ended
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||||||||
March 31,
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||||||||
2016
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2015
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Interest on outstanding debt
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$ | 2,242 | $ | 1,971 | ||||
Amortization of debt discount
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1,892 | 164 | ||||||
Amortization of deferred loan costs
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57 | 58 | ||||||
$ | 4,191 | $ | 2,193 |
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31.1
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Certification of Scott S. Slater, Chief Executive Officer of Cadiz Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification of Timothy J. Shaheen, Chief Financial Officer and Secretary of Cadiz Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certification of Scott S. Slater, 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
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32.2
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Certification of Timothy J. Shaheen, 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
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By: | /s/ Scott S. Slater | May 9, 2016 |
Scott S. Slater | Date | |
Chief Executive Officer and President | ||
(Principal Executive Officer) | ||
By: | /s/ Timothy J. Shaheen | May 9, 2016 |
Chief Financial Officer and Secretary | Date | |
(Principal Financial Officer) | ||
Document And Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2016 |
Apr. 27, 2016 |
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Entity Registrant Name | CADIZ INC | |
Entity Central Index Key | 0000727273 | |
Trading Symbol | cdzi | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Common Stock, Shares Outstanding (in shares) | 17,946,973 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Revenues | $ 75 | $ 18 |
Costs and expenses: | ||
Cost of sales | ||
General and administrative | $ 2,355 | $ 2,675 |
Depreciation | 73 | 61 |
Total costs and expenses | 2,428 | 2,736 |
Operating loss | (2,353) | (2,718) |
Interest expense, net | (4,191) | $ (2,193) |
Loss on extinguishment of debt and debt refinancing | $ (2,250) | |
Other income | $ 70 | |
Loss before income taxes | $ (8,794) | (4,841) |
Income tax provision | 1 | 1 |
Net loss and comprehensive loss applicable to common stock | $ (8,795) | $ (4,842) |
Basic and diluted net loss per common share (in dollars per share) | $ (0.49) | $ (0.27) |
Basic and diluted weighted average shares outstanding (in shares) | 17,897 | 17,707 |
Consolidated Balance Sheets ( Unaudited) (Parentheticals) - $ / shares |
Mar. 31, 2016 |
Dec. 31, 2015 |
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Common stock - par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock - shares authorized (in shares) | 70,000,000 | 70,000,000 |
Common stock - shares issued (in shares) | 17,934,223 | 17,876,016 |
Common stock - shares outstanding (in shares) | 17,934,223 | 17,876,016 |
Consolidated Statements of Stockholders' Deficit (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Total |
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Balance (in shares) at Dec. 31, 2015 | 17,876,016 | |||
Balance at Dec. 31, 2015 | $ 179 | $ 326,855 | $ (383,532) | $ (56,498) |
Stock-based compensation expense (in shares) | 58,207 | |||
Stock-based compensation expense | $ 327 | 327 | ||
Net loss and comprehensive loss | $ (8,795) | (8,795) | ||
Balance (in shares) at Mar. 31, 2016 | 17,934,223 | |||
Balance as of March 31, 2016 at Mar. 31, 2016 | $ 179 | $ 327,182 | $ (392,327) | $ (64,966) |
Note 1 - Description of Business and Summary of Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2016 | |
Notes to Financial Statements | |
Significant Accounting Policies [Text Block] | NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Consolidated Financial Statements have been prepared by Cadiz Inc., also referred to as “Cadiz” or “the Company”, without audit and should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2015. Basis of Presentation The foregoing Consolidated Financial Statements include the accounts of the Company and contain all adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair statement of the Company’s financial position, the results of its operations and its cash flows for the periods presented and have been prepared in accordance with generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates and such differences may be material to the financial statements. The results of operations for the three months ended March 31, 2016, are not necessarily indicative of results for the entire fiscal year ending December 31, 2016. Liquidity The Consolidated Financial Statements of the Company have been prepared using accounting principles applicable to a going concern, which assumes realization of assets and settlement of liabilities in the normal course of business. The Company incurred losses of $8.8 million for the three months ended March 31, 2016, and $4.8 million for the three months ended March 31, 2015. The Company had a working capital deficit of $229 thousand at March 31, 2016, and used cash in operations of $1.5 million for the three months ended March 31, 2016, and $2.6 million for the three months ended March 31, 2015. Cash requirements during the three months ended March 31, 2016, primarily reflect certain administrative and litigation costs related to the Company’s water project development efforts. Currently, the Company’s sole focus is the development of its land and water assets. On February 8, 2016, the Company entered into a Second Amendment to the Credit Agreement with its senior lenders to (i) provide for the application of $10.5 million of a $12 million payment pursuant to the Amended and Restated Fenner Valley Farm Lease (see Note 2) which satisfied a repayment condition of the First Amendment to extend the maturity date; (ii) to require Cadiz to pay 50% of all future quarterly interest payments in cash, rather than in accretion to principal, beginning with the quarterly interest payment due June 5, 2016; and (iii) to provide for certain related matters. On February 25, 2016, the Company exercised its right to extend the maturity date of the First Mortgage and, at that time, incurred an additional extension fee of $2.25 million which is to be paid at the election of the lenders in either additional debt or Cadiz common stock to be issued at a predetermined price. On March 4, 2016, Cadiz entered into a Third Amendment to the Credit Agreement which provides the lenders an additional 90 days to make their election to receive the extension fee in additional debt or Cadiz common stock in exchange for extending the due date of the Senior Secured Debt from June 30, 2017 to September 28, 2017. Interest on the Senior Secured Debt will continue to accrue at 8% per annum. On April 28, 2016, the Company entered into agreements with new and existing investors (“Investors”) in a private placement offering pursuant to which the Company issued $10 million in aggregate principal and accrued interest of its 2020 Convertible Notes (“Convertible Note Financing”). The proceeds from the Convertible Note Financing were approximately $8 million before fees and expenses, and will be used for general working capital purposes. The Senior Secured Debt and the convertible notes contain representations, warranties and covenants that are typical for agreements of this type, including restrictions that would limit the Company’s ability to incur additional indebtedness, incur liens, pay dividends or make restricted payments, dispose of assets, make investments and merge or consolidate with another person. However, while there are affirmative covenants, there are no financial maintenance covenants and no restrictions on the Company’s ability to issue additional common stock to fund future working capital needs. The debt covenants associated with the new loans were negotiated by the parties with a view towards the Company 's operating and financial condition as it existed at the time the agreements were executed. At March 31, 2016, the Company was in compliance with its debt covenants. Limitations on the Company’s liquidity and ability to raise capital may adversely affect it. Sufficient liquidity is critical to meet its resource development activities. After consideration of the Convertible Note Financing in April 2016, the Company currently expects its sources of capital to be sufficient to meet its liquidity needs through March 2017. To meet its cash needs beyond March 2017, the Company plans to increase liquidity through a variety of means, including equity or debt placements, through the lease, sale or other disposition of assets or reductions in operating costs. Equity placements, if made, would be undertaken only to the extent necessary, so as to minimize the dilutive effect of any such placements upon the Company’s existing stockholders. Supplemental Cash Flow Information The Company is required to pay 50% of all future quarterly interest payments in cash on the corporate secured debt, rather than in accretion to principal, beginning with the quarterly interest payment due June 5, 2016. No other payments are due on the corporate secured debt or convertible notes prior to their maturities. The Company recorded $60 thousand in non-cash rental revenue related to the Amended and Restated Fenner Valley Farm Lease (see Note 2). Recent Accounting Pronouncements Accounting Guidance Not Yet Adopted On May 28, 2014, the FASB issued an accounting standards update on revenue recognition including enhanced disclosures. Under the new standard, revenue is recognized when (or as) a good or service is transferred to the customer and the customer obtains control of the good or service. On July 9, 2015, the FASB approved a one-year deferral, updating the effective date to January 1, 2018. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time. In August 2014, the FASB issued an accounting standards update requiring an entity’s management to evaluate whether there are conditions or events, considered in aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). The Company is currently evaluating this new guidance which is effective for its 2016 Form 10-K filing, and believes this guidance will have an impact as there is currently substantial doubt about the Company’s ability to continue as a going concern. On February 25, 2016, the FASB issued an accounting standards update related to lease accounting including enhanced disclosures. Under the new standard, a lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified assets for a period of time in exchange for consideration. Lessees will classify leases with a term of more than one year as either operating or finance leases and will need to recognize a right-of-use asset and a lease liability. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. This guidance is effective January 1, 2019 but early adoption is permitted. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time. On March 30, 2016, the FASB issued an accounting standards update to simplify the accounting for share-based payments. Under this new guidance, the tax effects related to share based payments will be recorded through the income statement. Currently, tax benefits in excess of compensation cost ("windfalls") are recorded in equity, and tax deficiencies ("shortfalls") are recorded in equity to the extent of previous windfalls, and then to the income statement. This guidance is effective January 1, 2017 but early adoption is permitted. The new standard also revised reporting on the statement of cash flows. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time. Accounting Guidance Adopted On April 7, 2015, the FASB issued an accounting standards update that requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. Previously, accounting guidance required these costs to be presented as a deferred charge asset. The Company adopted this guidance in the first quarter of 2016. At March 31, 2016, the amount of debt issuance costs that are reflected as a deduction of "Long-term debt" was $671 thousand. At December 31, 2015 the amount of debt issuance costs that have been reclassified from "Other long-term assets" as a deduction of "Long-term debt" was $626 thousand. |
Note 2 - Long-term Debt |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | NOTE 2 – LONG-TERM DEBT The carrying value of the Company’s debt approximates fair value. The fair value of the Company’s debt (Level 2) is determined based on an estimation of discounted future cash flows of the debt at rates currently quoted or offered to the Company by its lenders for similar debt instruments of comparable maturities. In November 2015, the Company entered into a First Amendment to the Credit Agreement (“First Amendment”) with its senior lenders which granted it the right to extend the maturity date of the first tranche of its Senior Secured Debt (“First Mortgage”) from March 2016 to June 2017, which is concurrent with the existing due date of the second tranche of the Senior Secured Debt. In consideration of this right, the Company paid its senior lenders an amendment fee of $2.25 million in additional debt. Under the FVF Lease Agreement, the Company has a repurchase option to terminate the lease at any time during the twenty (20) year period following the effective date of the lease (“Termination Option Period”) upon (1) repayment of the one-time $12 million lease payment plus a ten percent (10%) compounded annual return (provided that the amount of such payment shall be not less than $14,400,000), (2) reimbursement of water related infrastructure on the leased property plus 8% per annum as well as the actual costs of any farming related infrastructure incurred on the leased property and (3) reimbursement of certain pipeline related development expenses, working in coordination with Cadiz, not to exceed $3,000,000 (such payments, the “ Termination Payments ”). If (x) Cadiz does not exercise its termination right within such 20-year period or (y) the Agent under Cadiz’s credit agreement declares an event of default under Cadiz’s senior secured indebtedness and accelerates the indebtedness due and owing thereunder by Cadiz (or such indebtedness automatically accelerates under the terms of Cadiz’s senior secured indebtedness), then the lessee may purchase the leased property for $1.00. The Company has recorded the one-time payment of $12 million, before legal fees, paid by FVF as long-term lease liability. The Company’s consolidated statement of operations will reflect a net charge equal to a 10% finance charge compounding annually over the 20-year Termination Option Period. The net charge to consolidated statement of operations reflects (1) rental income associated with the use of the land by FVF over the 20-year termination option period and (2) interest expense at a market rate reflective of a 20 year secured loan transaction. As a result of this transaction, the Company incurred approximately $490 thousand of legal fees which was recorded as a debt discount and is being amortized over the 20-year Termination Option Period.Also on February 8, 2016, the Company entered into a Second Amendment to the Credit Agreement with its senior lenders (i) to provide for the application of $10.5 million of the $12 million payment pursuant to the FVF Lease Agreement which satisfied the repayment condition of the First Amendment to extend the maturity date; (ii) to require Cadiz to pay 50% of all future quarterly interest payments in cash, rather than in accretion to principal, beginning with the quarterly interest payment due June 5, 2016; and (iii) to provide for certain related matters. On February 25, 2016, the Company exercised its right to extend the maturity date of its First Mortgage and, at that time, incurred an additional extension fee of $2.25 million which is to be paid at the election of the lenders in either additional debt or Cadiz common stock at a predetermined price. The Second Amendment to the Credit Agreement does not constitute a troubled debt restructuring and was accounted for as a debt extinguishment. The fair value of the credit facility was recorded at face value. The Company recorded a loss on extinguishment in the amount of $2.25 million which consisted of the additional extension fee. On March 4, 2016, the Company entered into a Third Amendment to the Credit Agreement which provides the lenders an additional 90 days to make the election to receive the extension fee in additional debt or Cadiz common stock in exchange for extending the due date of its Senior Secured Debt from June 30, 2017 to September 28, 2017. As of March 31, 2016, the Company had an accrued liability recorded in the amount of $2.25 million for the additional extension fee. Once the lenders make the election to receive the extension fee in additional debt or Cadiz common stock as described above, the Company will reclassify the liability accordingly. Interest on the Senior Secured Debt will continue to accrue at 8% per annum. |
Note 3 - Stock-based Compensation Plans and Warrants |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Notes to Financial Statements | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 3 – STOCK-BASED COMPENSATION PLANS AND WARRANTS The Company has issued options and has granted stock awards pursuant to its 2009 Equity Incentive Plan and 2014 Equity Incentive Plan, as described below. 2009 Equity Incentive Plan The 2009 Equity Incentive Plan was approved by stockholders at the 2009 Annual Meeting. The plan provides for the grant and issuance of up to 850,000 shares and options to the Company’s employees and consultants. The plan became effective when the Company filed a registration statement on Form S-8 on December 18, 2009. All options issued under the 2009 Equity Incentive Plan have a ten-year term with vesting periods ranging from issuance date to 24 months. As of March 31, 2016, 507,500 common stock options remain outstanding under this plan. 2014 Equity Incentive Plan The 2014 Equity Incentive Plan was approved by stockholders at the June 10, 2014 Annual Meeting. The plan provides for the grant and issuance of up to 675,000 shares and options to the Company’s employees, directors and consultants. Upon approval of the 2014 Equity Incentive Plan, all shares of common stock that remained available for award under the 2009 Equity Incentive Plan were cancelled. Following registration of the 2014 Plan on Form S-8, the Company entered into revised employment agreements with certain senior management that provide for the issuance of up to 162,500 Restricted Stock Units (“RSU’s”) during the period July 1, 2014 through December 31, 2016 and the issuance of up to 200,000 RSU’s in connection with obtaining construction financing for the Water Project. Of the 162,500 restricted stock units granted on July 1, 2014 pursuant to these employment agreements, 113,750 shares are vested as of March 31, 2016. Under the 2014 Equity Incentive Plan, each outside director receives $30,000 of cash compensation and receives a deferred stock award consisting of shares of the Company’s common stock with a value equal to $20,000 on June 30 of each year. The award accrues on a quarterly basis, with $7,500 of cash compensation and $5,000 of stock earned for each fiscal quarter in which a director serves. The deferred stock award vests automatically on January 31 in the year following the award date. All options that have been issued under the above plans have been issued to officers, employees and consultants of the Company. In total, options to purchase 507,500 shares were unexercised and outstanding on March 31, 2016, under the two equity incentive plans. The Company recognized no stock option related compensation costs in each of the three months ended March 31, 2016 and 2015. Additionally, no options were exercised during the three months ended March 31, 2016. Stock Awards to Directors, Officers, and Consultants The Company has granted stock awards pursuant to its 2009 Equity Incentive Plan and 2014 Equity Incentive Plan. Of the total 850,000 shares reserved under the 2009 Equity Incentive Plan, 115,000 restricted shares of common stock were granted on January 14, 2010, and 140,000 restricted shares of common stock were granted on January 10, 2011. Of the remaining 595,000 shares reserved under the 2009 Equity Incentive Plan, 42,265 shares of common stock were awarded to directors and 507,500 were issued as options as described above as of March 31, 2016. Upon approval of the 2014 Equity Incentive Plan in June 2014, 45,235 shares remaining available for award under the 2009 Equity Incentive Plan were cancelled. Under the 2014 Equity Incentive Plan, 146,160 shares have been awarded to the Company directors, consultants and employees as of March 31, 2015. Of the 146,160 shares awarded, 11,850 shares were awarded to the Company’s directors for services performed during the plan year ended June 30, 2015. These shares became effective on that date and vested on January 31, 2016. The Company recognized stock-based compensation costs of $165,000 and $260,000 for the three months ended March 31, 2016 and 2015, respectively. |
Note 4 - Income Taxes |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Notes to Financial Statements | |
Income Tax Disclosure [Text Block] | NOTE 4 – INCOME TAXES [SWENSON TO UPDATE] As of March 31, 2016, the Company had net operating loss (“NOL”) carryforwards of approximately $238 million for federal income tax purposes and $145 million for California state income tax purposes. Such carryforwards expire in varying amounts through the year 2035. Use of the carryforward amounts is subject to an annual limitation as a result of ownership changes. As of March 31, 2016, the Company possessed unrecognized tax benefits totaling approximately $2.8 million. None of these, if recognized, would affect the Company's effective tax rate because the Company has recorded a full valuation allowance against its net deferred tax assets. The Company's tax years 2012 through 2015 remain subject to examination by the Internal Revenue Service, and tax years 2011 through 2015 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. Cadiz Inc. 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 reflected in the accompanying consolidated balance sheets. |
Note 5 - Net Loss Per Common Share |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Notes to Financial Statements | |
Earnings Per Share [Text Block] | NOTE 5 – NET LOSS PER COMMON SHARE Basic net loss per share is computed by dividing the net loss by the weighted-average common shares outstanding. Options, deferred stock units, warrants and the zero coupon term loan convertible into or exercisable for certain shares of the Company’s common stock 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 10,142,000 and 8,597,000 for the three months ended March 31, 2016 and 2015, respectively. |
Note 6 - Contingencies |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Notes to Financial Statements | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 6 – CONTINGENCIES On April 24, 2015, a putative class action lawsuit, entitled Van Wingerden v. Cadiz Inc., et al., No. 2:15-cv-03080-JAK-JEM, was filed against Cadiz and certain of its directors and officers (“Defendants”) in the United States District Court for the Central District of California purporting to assert claims for violation of §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint, which purports to be brought on behalf of all Cadiz shareholders, alleges that the Company’s public disclosures were inadequate in relation to the Cadiz Valley Water Conservation, Recovery and Storage Project (the “Water Project”). The complaint seeks unspecified monetary damages and other relief. The Company believes that the claims alleged in the purported class action lawsuit are baseless and without merit and Cadiz intends to vigorously defend against the action. On December 2, 2015, Defendants filed a Motion to Dismiss the lawsuit and a hearing on the motion was held in late February 2016. The Judge has not yet issued a ruling and the Company cannot predict with certainty the outcome of this proceeding. On February 6, 2016, a shareholder derivative lawsuit, entitled Herman Boschken v. Keith Brackpool et. al. , was filed against certain Cadiz directors and officers (“Derivative Defendants”) in State of California County of Los Angeles Superior Court purporting to assert claims for breach of fiduciary duty, corporate waste, gross mismanagement, and unjust enrichment. The Complaint, which purports to be brought on behalf of all Cadiz shareholders, alleges that the Derivative Defendants made false and misleading statements regarding the Company’s business and prospects. This complaint was filed in the wake of Van Wingerden v. Cadiz , Case No. 2:15-cv-03080-JAK-JEM (C.D.C.A. Apr. 24, 2015), described above, and mirrors many of its factual allegations. Among other things, the Complaint seeks unspecified monetary damages and certain changes to corporate governance policies. The Company believes that the lawsuit is without merit and will vigorously defend the action. No case related activity has yet occurred before the Court.While the Company believes that the purported class action lawsuit is without merit, pursuant to applicable accounting requirements, the Company will evaluate this matter on an ongoing basis and record accruals for contingencies if the Company concludes that it is probable that a material loss will be incurred and the amount of the loss can be reasonably estimated. In many situations, including the purported class action, in which such matters are being contested, the outcome is not predictable and any potential loss is not estimable. There are no other material legal proceedings pending to which the Company is a party or of which any of the Company’s property is the subject. |
Note 7 - Subsequent Events |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Notes to Financial Statements | |
Subsequent Events [Text Block] | NOTE 7 – SUBSEQUENT EVENTS On April 26, 2016, the Company entered into a note purchase agreement with new and existing investors (the “Investors”). On April 28, 2016, pursuant to the agreement, the Company issued approximately $10.0 million in aggregate principal and accrued interest of its 7.00% Convertible Senior Notes due 2020 (“2020 Notes”). The proceeds from the issuance of the 2020 Notes to the Investors (such 2020 Notes, the “New Notes”), approximately $8.0 million before fees and expenses, will be used for general working capital purposes. The 2020 Notes accrue interest at 7.00% per year, with no principal or interest payments due prior to maturity on March 5, 2020. The 2020 Notes, including original principal and accrued interest, are convertible at any time into the Company’s common stock at a price of approximately $6.75 per share, pursuant to the terms of the Indenture dated as of December 10, 2015, by and between the Company and U.S. Bank National Association (the “Indenture”), under which the New Notes were issued. In connection with issuing the New Notes, the Company entered into a First Supplemental Indenture to the Indenture, dated as of April 28, 2016, by and between the Company and U.S. Bank National Association. |
Significant Accounting Policies (Policies) |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The foregoing Consolidated Financial Statements include the accounts of the Company and contain all adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair statement of the Company’s financial position, the results of its operations and its cash flows for the periods presented and have been prepared in accordance with generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates and such differences may be material to the financial statements. The results of operations for the three months ended March 31, 2016, are not necessarily indicative of results for the entire fiscal year ending December 31, 2016. |
Liquidity Accounting Policy Disclosure [Policy Text Block] | Liquidity The Consolidated Financial Statements of the Company have been prepared using accounting principles applicable to a going concern, which assumes realization of assets and settlement of liabilities in the normal course of business. The Company incurred losses of $8.8 million for the three months ended March 31, 2016, and $4.8 million for the three months ended March 31, 2015. The Company had a working capital deficit of $229 thousand at March 31, 2016, and used cash in operations of $1.5 million for the three months ended March 31, 2016, and $2.6 million for the three months ended March 31, 2015. Cash requirements during the three months ended March 31, 2016, primarily reflect certain administrative and litigation costs related to the Company’s water project development efforts. Currently, the Company’s sole focus is the development of its land and water assets. On February 8, 2016, the Company entered into a Second Amendment to the Credit Agreement with its senior lenders to (i) provide for the application of $10.5 million of a $12 million payment pursuant to the Amended and Restated Fenner Valley Farm Lease (see Note 2) which satisfied a repayment condition of the First Amendment to extend the maturity date; (ii) to require Cadiz to pay 50% of all future quarterly interest payments in cash, rather than in accretion to principal, beginning with the quarterly interest payment due June 5, 2016; and (iii) to provide for certain related matters. On February 25, 2016, the Company exercised its right to extend the maturity date of the First Mortgage and, at that time, incurred an additional extension fee of $2.25 million which is to be paid at the election of the lenders in either additional debt or Cadiz common stock to be issued at a predetermined price. On March 4, 2016, Cadiz entered into a Third Amendment to the Credit Agreement which provides the lenders an additional 90 days to make their election to receive the extension fee in additional debt or Cadiz common stock in exchange for extending the due date of the Senior Secured Debt from June 30, 2017 to September 28, 2017. Interest on the Senior Secured Debt will continue to accrue at 8% per annum. On April 28, 2016, the Company entered into agreements with new and existing investors (“Investors”) in a private placement offering pursuant to which the Company issued $10 million in aggregate principal and accrued interest of its 2020 Convertible Notes (“Convertible Note Financing”). The proceeds from the Convertible Note Financing were approximately $8 million before fees and expenses, and will be used for general working capital purposes. The Senior Secured Debt and the convertible notes contain representations, warranties and covenants that are typical for agreements of this type, including restrictions that would limit the Company’s ability to incur additional indebtedness, incur liens, pay dividends or make restricted payments, dispose of assets, make investments and merge or consolidate with another person. However, while there are affirmative covenants, there are no financial maintenance covenants and no restrictions on the Company’s ability to issue additional common stock to fund future working capital needs. The debt covenants associated with the new loans were negotiated by the parties with a view towards the Company 's operating and financial condition as it existed at the time the agreements were executed. At March 31, 2016, the Company was in compliance with its debt covenants. Limitations on the Company’s liquidity and ability to raise capital may adversely affect it. Sufficient liquidity is critical to meet its resource development activities. After consideration of the Convertible Note Financing in April 2016, the Company currently expects its sources of capital to be sufficient to meet its liquidity needs through March 2017. To meet its cash needs beyond March 2017, the Company plans to increase liquidity through a variety of means, including equity or debt placements, through the lease, sale or other disposition of assets or reductions in operating costs. Equity placements, if made, would be undertaken only to the extent necessary, so as to minimize the dilutive effect of any such placements upon the Company’s existing stockholders. |
Cash Flow Supplemental [Policy Text Block] | Supplemental Cash Flow Information The Company is required to pay 50% of all future quarterly interest payments in cash on the corporate secured debt, rather than in accretion to principal, beginning with the quarterly interest payment due June 5, 2016. No other payments are due on the corporate secured debt or convertible notes prior to their maturities. The Company recorded $60 thousand in non-cash rental revenue related to the Amended and Restated Fenner Valley Farm Lease (see Note 2). |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements Accounting Guidance Not Yet Adopted On May 28, 2014, the FASB issued an accounting standards update on revenue recognition including enhanced disclosures. Under the new standard, revenue is recognized when (or as) a good or service is transferred to the customer and the customer obtains control of the good or service. On July 9, 2015, the FASB approved a one-year deferral, updating the effective date to January 1, 2018. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time. In August 2014, the FASB issued an accounting standards update requiring an entity’s management to evaluate whether there are conditions or events, considered in aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). The Company is currently evaluating this new guidance which is effective for its 2016 Form 10-K filing, and believes this guidance will have an impact as there is currently substantial doubt about the Company’s ability to continue as a going concern. On February 25, 2016, the FASB issued an accounting standards update related to lease accounting including enhanced disclosures. Under the new standard, a lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified assets for a period of time in exchange for consideration. Lessees will classify leases with a term of more than one year as either operating or finance leases and will need to recognize a right-of-use asset and a lease liability. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. This guidance is effective January 1, 2019 but early adoption is permitted. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time. On March 30, 2016, the FASB issued an accounting standards update to simplify the accounting for share-based payments. Under this new guidance, the tax effects related to share based payments will be recorded through the income statement. Currently, tax benefits in excess of compensation cost ("windfalls") are recorded in equity, and tax deficiencies ("shortfalls") are recorded in equity to the extent of previous windfalls, and then to the income statement. This guidance is effective January 1, 2017 but early adoption is permitted. The new standard also revised reporting on the statement of cash flows. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time. Accounting Guidance Adopted On April 7, 2015, the FASB issued an accounting standards update that requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. Previously, accounting guidance required these costs to be presented as a deferred charge asset. The Company adopted this guidance in the first quarter of 2016. At March 31, 2016, the amount of debt issuance costs that are reflected as a deduction of "Long-term debt" was $671 thousand. At December 31, 2015 the amount of debt issuance costs that have been reclassified from "Other long-term assets" as a deduction of "Long-term debt" was $626 thousand. |
Note 2 - Long-term Debt (Details Textual) - USD ($) |
Feb. 08, 2016 |
Mar. 31, 2016 |
Mar. 01, 2016 |
Feb. 25, 2016 |
Nov. 30, 2015 |
---|---|---|---|---|---|
Senior Secured Debt [Member] | |||||
Debt Instrument, Fee Amount | $ 2,250,000 | $ 2.25 | $ 2,250,000 | $ 2,250,000 | |
Repayments of Senior Debt | $ 10,500,000 | ||||
Percentage of Future Quarterly Interest Payments | 50.00% | 50.00% | |||
Debt Instrument, Interest Rate, Stated Percentage | 8.00% | 8.00% | |||
Fenner Valley Farms LLC [Member] | |||||
Termination Period After Lease Effective Date | 20 years | ||||
Lease Compounded Annual Return, Percentage | 10.00% | ||||
Minimum Future Payments from Leases Held for Investment | $ 14,400,000 | ||||
Reimbursement of Water Related Infrastructure from Leased Property, Annual Percentage | 8.00% | ||||
Maximum Reimbursement of Pipeline Related Development Expenses from Leased Property | $ 3,000,000 | ||||
Leased Property, Sale Price | 1 | ||||
Long-term Debt | $ 12,000,000 | ||||
Legal Fees | 490,000 | ||||
Proceeds from Leases Held-for-investment | $ 12,000,000 |
Note 4 - Income Taxes (Details Textual) |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member] | Earliest Tax Year [Member] | |
Open Tax Year | 2011 |
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member] | Latest Tax Year [Member] | |
Open Tax Year | 2015 |
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member] | |
Operating Loss Carryforwards | $ 238,000,000 |
State and Local Jurisdiction [Member] | California Franchise Tax Board [Member] | |
Operating Loss Carryforwards | 145,000,000 |
Unrecognized Tax Benefits | 2,800,000 |
Deferred Tax Assets, Net | $ 0 |
Note 5 - Net Loss Per Common Share (Details Textual) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 10,142,000 | 8,597,000 |
Note 7 - Subsequent Events (Details Textual) - Subsequent Event [Member] - 2020 Convertible Senior Notes [Member] $ in Millions |
Apr. 26, 2016
USD ($)
|
---|---|
Investors [Member] | |
Convertible Debt | $ 10 |
Debt Instrument, Interest Rate, Stated Percentage | 7.00% |
Proceeds from Convertible Debt | $ 8 |
Debt Instrument, Convertible, Conversion Ratio | 6.75 |
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