CADIZ INC

Previous wording

In 2024, we entered into agreements with multiple public water systems for their purchase of 21,275 AFY of annual water supply from us to be delivered via the Northern Pipeline. These agreements cumulatively represent 85% of the full capacity (25,000 AFY) of the Northern Pipeline.

Current wording

In 2024, we entered into agreements with public water systems, private utility and other private water providers for their purchase of 21,275 AFY of annual water supply from us to be delivered via the Northern Pipeline. These agreements cumulatively represent 85% of the full capacity (25,000 AFY) of the Northern Pipeline.

Previous wording

Through membership in Fenner Gap Mutual Water Company, a mutual water company to be owned by the participating water agencies, these agreements provide for delivery of purchased annual water supply over a 40-year term (take or pay), at an agreed upon market price estimated to start at approximately $850/AFY and subject to annual adjustment. Participating public agencies are also expected to pay a portion of operating costs and the capital costs for conversion of facilities.

Current wording

Through membership in Fenner Gap Mutual Water Company, a mutual water company to be owned by the participating water agencies, these agreements provide for delivery of purchased annual water supply over a 40-year term (take or pay), at an agreed upon market price estimated to start at approximately $850/AFY and subject to annual adjustment. Participating water providers are also expected to pay a portion of operating costs and the capital costs for conversion of facilities.

Previous wording

We estimate that it will cost approximately $800 million to construct all required facilities to complete the Mojave Groundwater Bank, including conversion of the Northern Pipeline to water conveyance and construction of the Southern Pipeline, the wellfield and power facilities. In December 2024, we established a new business entity, Mojave Groundwater Storage Company LLC to fund these capital costs in partnership with public sector, tribal and other investors that we expect will contribute up to $401 million equity capital in exchange for ownership of the pipeline facilities and a 51% share of the long-term cash flows from the groundwater banking and storage operations. In May 2025, the name of the business entity was changed to Mojave Water Infrastructure Company, LLC (“MWI”). As of May 2025, we have entered into letters of intent and a letter of agreement with potential MWI investors for up to $425 million. The letters of intent and letter of agreement are non-binding and subject to on-going due diligence. The parties will also coordinate with us to seek available infrastructure grants and/or other financing alternatives including potential bond issuances through a to-be-formed financing Joint Powers Authority to fund the remaining construction costs.

Current wording

We estimate that it will cost approximately $800 million to construct all required facilities to complete the Mojave Groundwater Bank, including conversion of the Northern Pipeline to water conveyance and construction of the Southern Pipeline, the wellfield and power facilities. We have established a new business entity, Mojave Water Infrastructure Company, LLC (“MWI”), to fund these capital costs in partnership with public sector, tribal and other investors that we expect will contribute up to $401 million equity capital into MWI. In the fourth quarter of 2024 and 1 st quarter of 2025, we have entered into non-binding letters of intent and a letter of agreement with potential MWI investors for up to $425 million. Due diligence is ongoing with these and other potential MWI investors. The parties will also coordinate with us to seek available infrastructure grants and/or other financing alternatives including potential revenue bond issuances through a to-be-formed financing Joint Powers Authority to fund the remaining construction costs.

Previous wording

Upon closing of definitive agreements, we would contribute our pipeline infrastructure assets, including the Northern Pipeline and the Southern Pipeline right-of-way, and an expected 51% share of the long-term cash flows from the groundwater banking and storage operations, to MWI in exchange for the equity capital funding. In consideration of our transfer of assets, MWI is expected to pay us approximately $76 million among other considerations and we would retain 49% of the water storage rights.

Current wording

Upon closing of definitive agreements, we would expect to contribute our pipeline infrastructure assets, including the Northern Pipeline and the Southern Pipeline right-of-way, and an expected 51% share of the long-term cash flows from the groundwater banking and storage operations, to MWI in exchange for the equity capital funding. Under this potential structure, in consideration of our transfer of assets, MWI would be expected to pay us up to approximately $76 million among other considerations and we would expect to retain 49% of the water storage rights.

Previous wording

We have not received significant revenues from our water supply, storage, or conveyance assets to date. Our revenues have been limited primarily to ATEC sales and sales from our alfalfa plantings and rental income from our agricultural leases. As a result, we have historically incurred a net loss from operations. We incurred a net loss of $9.6 million in the three months ended March 31, 2025, compared to a $6.9 million net loss during the three months ended March 31, 2024. The higher loss in 2025 was primarily due to increased professional fees incurred in advancing the development of the Mojave Groundwater Bank and higher compensation costs related to stock based non-cash bonus awards.

Current wording

We have not received significant revenues from our water supply, storage, or conveyance assets to date. Our revenues have been limited primarily to ATEC sales and sales from our alfalfa plantings and rental income from our agricultural leases. As a result, we have historically incurred a net loss from operations. We incurred an operating loss of $5.8 million in the three months ended June 30, 2025, compared to a $6.9 million operating loss during the three months ended June 30, 2024. The higher loss in 2025 was primarily due to increased professional fees incurred in advancing the development of the Mojave Groundwater Bank and higher compensation costs related to stock based non-cash bonus awards offset by improved profitability from ATEC driven by increased filter sales. Net loss for the three months ended June 30, 2025 was $7.7 million compared to a $8.9 million net loss during the three months ended June 30, 2024.

Previous wording

Revenues Revenue totaled $3.0 million during the three months ended March 31, 2025, primarily related to ATEC sales totaling $2.4 million, sales from the harvest from our 890 acres of commercial alfalfa crop totaling $0.5 million and rental income from agricultural leases totaling $0.1 million. Revenue totaled $1.1 million during the three months ended March 31, 2024, primarily related to ATEC sales totaling $0.5 million, sales from the harvest from our commercial alfalfa crop totaling $0.5 million and rental income from our agricultural leases totaling $0.1 million. The increase in ATEC sales primarily relates to revenues under a contract to deliver 320 filters for the Central Utah Water Conservancy District’s Vineyard Wellfield Groundwater Polishing Project announced in 2023.

Current wording

Revenues Revenue totaled $4.1 million during the three months ended June 30, 2025, primarily related to ATEC sales totaling $3.7 million, sales from the harvest from our 890 acres of commercial alfalfa crop totaling $0.3 million and rental income from agricultural leases totaling $0.1 million. Revenue totaled $0.5 million during the three months ended June 30, 2024, primarily related to ATEC sales totaling $0.2 million, sales from the harvest from our then 760 acres of commercial alfalfa crop totaling $0.2 million and rental income from our agricultural leases totaling $0.1 million. The increase in ATEC sales primarily relates to revenues from shipment of 115 filters in 2025 compared to shipment of 4 filters in 2024.

Previous wording

Cost of Sales** **Cost of sales totaled $2.1 million during the three months ended March 31, 2025, comprised of $1.6 million related to ATEC (35.2% gross margin) and $0.5 million related to our alfalfa crop harvest. Cost of sales totaled $1.0 million during the three months ended March 31, 2024, comprised of $0.7 million related to our alfalfa crop harvest and $0.3 million related to ATEC.

Current wording

Cost of Sales** **Cost of sales totaled $2.7 million during the three months ended June 30, 2025, comprised of $2.1 million related to ATEC (44.5% gross margin) and $0.6 million related to our alfalfa crop harvest. Cost of sales totaled $0.9 million during the three months ended June 30, 2024, comprised of $0.7 million related to our alfalfa crop harvest and $0.2 million related to ATEC (6% negative gross margin). The improved ATEC gross margin is driven by the increase in filter sales over which the fixed costs included in cost of sales can be spread.

Previous wording

General and Administrative Expenses*** ***General and administrative expenses during the three months ended March 31, 2025, exclusive of stock-based compensation costs, totaled $5.3 million compared to $3.5 million for the three months ended March 31, 2024. The increase in 2025 was primarily a result of increased legal and consulting fees incurred in advancing the development of the Mojave Groundwater Bank.

Current wording

General and Administrative Expenses*** ***General and administrative expenses during the three months ended June 30, 2025, exclusive of stock-based compensation costs, totaled $6.4 million compared to $5.2 million for the three months ended June 30, 2024. The increase in 2025 was primarily a result of increased legal and consulting fees incurred in advancing the development of the Mojave Groundwater Bank and increased marketing commissions and sales expenses related to ATEC growth.

Previous wording

Compensation costs for stock and option awards for the three months ended March 31, 2025, were $2.8 million, compared to $1.3 million for the three months ended March 31, 2024. The higher 2025 expense was primarily due to an increase in stock-based non-cash awards to employees and consultants in 2025 compared to 2024 (see Note 4 to the Condensed Consolidated Financial Statements – “Stock-Based Compensation Plans”).

Current wording

Compensation costs for stock and option awards for the three months ended June 30, 2025, were $0.5 million, compared to $1.1 million for the three months ended June 30, 2024. The higher 2024 expense was primarily due to higher stock-based non-cash awards to employees and consultants in 2024 compared to 2025 (see Note 4 to the Condensed Consolidated Financial Statements – “Stock-Based Compensation Plans”).

Previous wording

Interest Expense, net Net interest expense totaled $2.1 million during the three months ended March 31, 2025 compared to $1.9 million during the same period in 2024. The following table summarizes the components of net interest expense for the two periods (in thousands):

Current wording

Interest Expense, net Net interest expense totaled $2.0 million during the three months ended June 30, 2025 compared to $1.9 million during the same period in 2024. The following table summarizes the components of net interest expense for the two periods (in thousands):

Previous wording

As we continue to actively pursue our business strategy, additional financing will continue to be required (see “Outlook”, below). The covenants in the Credit Agreement, as amended, do not prohibit our use of additional equity financing and allow us to retain 100% of the proceeds of any common equity financing. We do not expect the loan covenants to materially limit our ability to finance our water and agricultural development activities.

Current wording

As we continue to actively pursue our business strategy, additional financing will continue to be required (see “Outlook”, below). The covenants in the Credit Agreement, as amended, do not prohibit our use of additional equity financing and allow us to retain 100% of the proceeds of any common equity financing. We do not expect the loan covenants to materially limit our ability to finance Mojave Groundwater Bank, agricultural operations and water filtration business activities .

Previous wording

Cash Used in Operating Activities. Cash used in operating activities totaled $3.6 million and $2.9 million for the three months ended March 31, 2025 and 2024, respectively. The cash was primarily used to fund general and administrative expenses related to our water development efforts, agricultural development efforts, and our ATEC business including increased working capital needs related to accounts receivable offset by increased accounts payable.

Current wording

Cash Used in Operating Activities. Cash used in operating activities totaled $5.0 million and $9.9 million for the six months ended June 30, 2025 and 2024, respectively. The cash was primarily used to fund general and administrative expenses related to our water development efforts, agricultural development efforts, and our ATEC business. The decrease in cash used in operating activities was primarily driven by a decrease in working capital needs at ATEC due to completion of the final shipment of the contracted 320 filters for the Central Utah Water Conservancy District’s Vineyard Wellfield Groundwater Polishing Project during the second quarter of 2025.

Previous wording

Cash Used in Investing Activities. Cash used in investing activities totaled $6.3 million for the three months ended March 31, 2025, and $0.2 million for the three months ended March 31, 2024. The cash used in 2025 was primarily related to securing an exclusive option to purchase up to 180 miles of steel pipeline intended to be used for the development of the Mojave Groundwater Bank for $5.0 million. The cash used in the 2024 period primarily related to the development cost for the planting of 125 additional acres of alfalfa.

Current wording

Cash Used in Investing Activities. Cash used in investing activities totaled $10.8 million for the six months ended June 30, 2025, and $0.5 million for the six months ended June 30, 2024. The cash used in 2025 was primarily related to securing an exclusive option to purchase up to 180 miles of steel pipeline intended to be used for the development of the Mojave Groundwater Bank for $5.0 million. The cash used in the 2024 period primarily related to the development cost for the planting of 125 additional acres of alfalfa.

Previous wording

Cash Provided by Financing Activities***.***Cash provided by financing activities totaled $16.8 million for the three months ended March 31, 2025, compared with cash provided of $17.8 million for the three months ended March 31, 2024. Proceeds from the financing activities in the 2025 period primarily related to the issuance of shares under a direct offering. Proceeds from financing activities for the 2024 period related to the issuance of long-term debt under the Third Amended Credit Agreement.

Current wording

Cash Provided by Financing Activities***.***Cash provided by financing activities totaled $14.3 million for the six months ended June 30, 2025, compared with cash provided of $16.0 million for the six months ended June 30, 2024. Proceeds from the financing activities in the 2025 period primarily related to the issuance of shares under a direct offering and the payment of a deferred portion of the purchase price related to the ATEC acquisition. Proceeds from financing activities for the 2024 period related to the issuance of long-term debt under the Third Amended Credit Agreement.

Previous wording

Long-Term Outlook*.* In the longer term, we may need to raise additional capital to finance working capital needs and capital expenditures (see “Current Financing Arrangements”, above). Our future working capital needs will depend upon the specific measures we pursue in the entitlement and development of our water supply, storage, conveyance resources and other developments. Future capital expenditures will depend on the progress of the Mojave Groundwater Bank, including the funding of MWI, ATEC operational needs and any further expansion of our agricultural assets. Additionally, timing of reimbursement of development costs advanced related to the Mojave Groundwater Bank and the expected receipt of approximately $76 million for the anticipated transfer of assets into MWI will impact the need to raise additional capital.

Current wording

Long-Term Outlook*.* In the longer term, we may need to raise additional capital to finance working capital needs and capital expenditures (see “Current Financing Arrangements”, above). Our future working capital needs will depend upon the specific measures we pursue in the entitlement and development of our water supply, storage, conveyance resources and other developments. Future capital expenditures will depend on the progress of the Mojave Groundwater Bank, including the funding of MWI, ATEC operational needs and any further expansion of our agricultural assets. Additionally, timing of reimbursement of development costs advanced related to the Mojave Groundwater Bank and the timing of receipt of funds for the anticipated transfer of assets into MWI will impact the need to raise additional capital.