CADIZ INC

Cadiz Inc. is a water solutions provider with a unique combination of land, water, pipeline and water filtration assets 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, 1 million acre-feet of groundwater storage capacity, 220 miles of existing, underground pipeline, 43 miles of right-of-way entitlements for pipeline construction, and versatile, scalable and cost-effective water filtration technology that removes contaminants and constituents of concern from groundwater. The water industry value chain today includes water supply, water storage, wastewater treatment, long-range conveyance, local distribution systems, and a wide range of products, technologies and services for monitoring, moving, trading, treating and integrating water resources. Climate change has disrupted hydrological cycles around the world, creating extreme unpredictability regarding water supply for human consumption and an urgent demand for technologies, services and infrastructure investment to capture, store and transport fresh water.

In the groundwater treatment market, the company competes with companies that offer products similar to its own, some of which have greater financial resources, operational experience, and technical capabilities. However, the company's current experience suggests that the market opportunity is very large, its products and services are highly competitive, and there is no clear dominant or preferred competitor in the markets in which it competes. The company believes that location, price and reliability of delivery are the principal competitive factors affecting agriculture and the demand for water supply and storage in California, and it believes the Cadiz Ranch and Mojave Groundwater Bank projects are competitive with other sources of water and farmland.

The company generates revenue through two reportable segments: Land and Water Resources, which comprises all activities regarding its properties in the eastern Mojave Desert, pre-revenue development of the Mojave Groundwater Bank (supply, storage and conveyance), and agricultural operations; and Water Filtration Technology, comprised of ATEC, which provides innovative water filtration technology solutions for impaired or contaminated groundwater sources. The company's customers are public and private water systems, government agencies and commercial businesses. ATEC and the company's agricultural operations provide its current principal source of revenue, although working capital needs are not fully supported by these operations at this time.

The Land and Water Resources segment includes the Cadiz Property, which encompasses 46,000 acres of landholdings consisting of 9,600 acres of land permitted for agriculture, 9,600 acres of land adjacent to the existing permit area that could be used for future agricultural development but are not yet permitted, and 26,800 acres of rangeland, some of which is considered sensitive habitat for Desert Tortoise and other wildlife. The company currently farms approximately 1,000 acres of grain crops, primarily in alfalfa plantings, and has leased 2,100 acres for farming activities by Fenner Valley Farms LLC. The agricultural wellfield currently includes six wells, with a production capacity of up to 25,000 AFY. In 2024, the company entered into a lease agreement with RIC Energy to build a hydrogen production facility at the Cadiz Ranch on up to 3,000 acres of land, under which RIC makes lease payments of $35,000 per year ¹ during the development phase, with lease payments increasing to $1,000 per acre ² (2024 dollars) upon approval of permitting and start of construction, and RIC is expected to purchase water for $850 per AF ³ (2024 dollars) once operational. The water supply component is supported by permits approved in 2012 to conserve an average of 50,000 acre-feet per year from the aquifer system for 50 years (2.5 million acre-feet in total). In 2024, the company entered into agreements with multiple water providers for the purchase of a total of 21,275 AFY ⁴ of annual water supply to be delivered via the Northern Pipeline. The water storage component offers storage capacity for up to one-million acre-feet of fresh water that would be imported and held in storage underground, and is also approved for up to 150,000 acre-feet of storage capacity that could be used to carryover and store water purchases. The company entered into option agreements in 2010 that reserved storage capacity for $1,500 per AF ⁵ of carryover storage, a market rate that it expects has escalated and may be as much as $3,000 per AF ⁶. Agencies with water storage contracts are also expected to pay annual maintenance fees up to approximately $35 per AF ⁷ subject to annual inflation adjustments.

The Water Filtration Technology segment, operated through wholly owned subsidiary ATEC Water Systems, LLC, provides innovative water treatment solutions for impaired or contaminated water sources. ATEC has produced water treatment systems since 1982 and pioneered technology to provide cost-effective, high-rate removal of iron and manganese, expanding to a full range of contaminants including arsenic, Chromium-6, nitrates, PFAS and other contaminants. ATEC has four U.S. patent applications pending for unique treatment processes and filter designs and plans to file for two additional patents in 2026. ATEC manufactures and sells an array of small, modular vertical steel tanks ranging from 14-inch to 60-inch in diameter coupled with filter media, with system treatment capacities up to 60 million gallons per day (MGD). During the 4th quarter of 2025, the company added a second welding line to provide an anticipated increase of 100% in its production capacity. ATEC has built more than 500 water filtration systems for cities, water districts, investor-owned utilities and small communities and businesses throughout the U.S., Canada, and Asia. In 2025, ATEC delivered the largest project in its history, completing 320 filters for the Central Utah Water Conservancy District 60 MGD Vineyard Wellfield Groundwater Polishing Project. ATEC revenues reached $14.5 million ⁸ in 2025 (compared to $7.9 million ⁹ in 2024), and the company saw 74% growth ¹⁰ in business orders during the year.

In October 2025, the company entered into a definitive agreement (Lytton Credit Agreement) with Lytton Rancheria of California, pursuant to which the company may require Lytton to provide up to $51 million ¹¹ in an unsecured loan facility, convertible into a majority interest in the storage cash flows from the Mojave Groundwater Bank, which Lytton would then contribute to MWI in exchange for equity interests. The Lytton Credit Agreement represents the first tranche of up to approximately $451 million ¹² in total equity capital being raised through MWI to construct, own and operate the Mojave Groundwater Bank. The company is currently engaged in the completion of due diligence with private equity investors for up to a targeted $400 million ¹³ in equity commitment to MWI. In 2025, the company entered into an agreement with Stantec Inc. to oversee engineering, procurement and construction management for the Mojave Groundwater Bank as Owner's Engineer, and selected W.M. Lyles as Construction Manager at Risk for the Northern Pipeline, executing a CMAR contract for pre-construction services. The company entered into an option agreement for purchase of up to 180 miles of existing 36" steel pipe at $155 per linear foot ¹⁴ for a $5 million ¹⁵ initial payment. In February 2026, the company qualified to receive an invitation from the EPA to apply for up to $194 million ¹⁶ under the WIFIA program to support Northern Pipeline conversion costs. The company also converted three of its diesel operated agricultural wells to natural gas to reduce emissions. Approximately $3.1 million ¹⁷ has been invested in farmworker and tribal communities at the Torres Martinez tribal reservation to provide residential well treatment systems.

For the year ended December 31, 2025, total revenues were $16.3 million ¹⁸, compared to $9.6 million ¹⁹ for the year ended December 31, 2024. The company incurred a net loss of $34.2 million ²⁰ for the year ended December 31, 2025, compared with a net loss of $31.1 million ²¹ for the year ended December 31, 2024. Operating loss was $25.6 million ²² for 2025 compared to $23.2 million ²³ for 2024. Cash used for operating activities totaled $18.9 million ²⁴ for 2025 and $21.5 million ²⁵ for 2024.

A primary growth vector is the development of the Mojave Groundwater Bank, which will conserve 2.5 million acre-feet of water from the aquifer system over a 50-year period (average of 50,000 acre-feet per year) for off-property beneficial uses and store up to 1 million acre-feet of imported water. The company has entered into agreements with multiple public water systems for their purchase of 21,275 AFY ²⁶ of annual water supply to be delivered via the Northern Pipeline, and expects the remaining approximately 30,000 AFY ²⁷ of water supply available under its current permit to be contracted for delivery via the Southern Pipeline, with approximately 15,000 AFY ²⁸ under option or conditional definitive agreements for delivery to Southern California based water users. The company is in discussion with several parties interested in contracting for remaining supply from the Southern Pipeline, including multiple water providers, municipalities and tribes in Arizona. In August 2025, the company entered into a non-binding Memorandum of Understanding with EPCOR NR Holdings Inc. to support development of the Mojave Groundwater Bank to provide long-term water for the benefit of EPCOR customers in Arizona. In October 2025, the company executed a Memorandum of Understanding with the US Bureau of Reclamation to explore opportunities to integrate its project into long-term planning for the Colorado River system. The company anticipates submitting a 3rd Addendum to the Final EIR analyzing storage operations in Q2 2026 for consideration by the County of San Bernardino and FVWA.

Another growth vector is the expansion of the Water Filtration Technology segment through ATEC. In 2026, ATEC is expected to further expand its reach in the PFAS and Chromium-6 treatment markets, which are growing following implementation of more stringent state and federal regulations, as it continues to develop its market position beyond its traditional iron and manganese treatment business. ATEC has four U.S. patent applications pending for unique treatment processes and filter designs and plans to file for two additional patents in 2026. During the 4th quarter of 2025, the company added a second welding line to provide an anticipated increase of 100% in its production capacity. The company also expanded its geographic and marketing channel reach, seeing 74% growth ²⁹ in business orders during the year.

The estimated cost 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, has increased from the previous estimate of approximately $800 million ³⁰ to a current estimate of between $1.25 and $1.5 billion ³¹. The increase is due to factors including higher anticipated labor and installation costs, increased cost of generating power for the pump stations and wellfield to meet air quality requirements, increased anticipated costs for performing work in a remote location, and overall inflationary increases in construction costs. These costs are expected to be capped under Guaranteed Maximum Prices in the construction contracts and recovered in fees collected from agencies contracting for water supply and storage. The company is progressing toward a GMP for the Northern Pipeline during the second quarter of 2026 prior to the start of construction activities and expects a GMP for the Southern Pipeline during the second half of 2026.

The company has advanced a capital strategy for project financing of the Mojave Groundwater Bank centered on the combination of equity investment through public or private investors and tribal interests, low-cost federal loans or municipal bonds, and grant funding. The target capital structure includes approximately $451 million ³² of equity, supplemented by municipal and government debt financing and grant funding to fund total expected capital infrastructure costs of between approximately $1.25 to $1.5 billion ³³ to complete a full buildout. In February 2026, the company qualified to receive an invitation from the EPA to apply for up to $194 million ³⁴ under the WIFIA program to support Northern Pipeline conversion costs. The company is also evaluating the potential issuance of other debt financing including revenue bonds or other municipal debt instruments through a to-be-formed Joint Powers Authority. The company continues to coordinate with partners through the Fenner Gap Mutual Water Company to pursue a range of state and federal grant opportunities.

The company's target capital structure includes approximately $451 million ³⁵ of equity, supplemented by municipal and government debt financing and grant funding. The Lytton Credit Agreement represents the first tranche of up to approximately $451 million ³⁶ in total equity capital being raised through MWI. The company is currently engaged in the completion of due diligence with private equity investors for up to a targeted $400 million ³⁷ in equity commitment to MWI. Under the Lytton Credit Agreement, the company may draw up to $51 million ³⁸ in an unsecured term loan, with an initial draw of $15 million ³⁹ in November 2025 and a second draw of $15 million ⁴⁰ in March 2026. The company made a $5 million ⁴¹ initial payment for an option to purchase up to 180 miles of steel pipe.

A key headwind is that the company's development activities have not generated significant revenues, and it has not received significant revenues from its water supply, storage, or conveyance assets to date. The company continues to incur a net loss from operations. The company's water supply agreements are subject to financial and regulatory conditions precedent, which may not be satisfied. The development of the company's properties is heavily regulated and requires governmental approvals and permits that could be denied, and may have competing governmental interests and objectives. The company may not be able to execute its plans for the construction, ownership, and operation of the Mojave Groundwater Bank and obtain the requisite funding. Any agreements announced with potential investors are not binding and there is no guarantee that the company will be able to enter into binding definitive agreements.

Additional headwinds include the company's significant indebtedness. As of December 31, 2025, the company had total indebtedness outstanding of approximately $78.3 million ⁴², of which $63.3 million ⁴³ is secured by its assets. The company will continue to require additional working capital to meet its cash resource needs until such time as its asset development programs and water filtration technology business produce revenues sufficient to fund operations. If the company cannot raise funds when needed, it might be forced to make substantial reductions in operating expenses. The company also faces risks related to the volatility of its stock price, information technology failures and data security breaches, and increased cybersecurity requirements.

The company's development activities have not generated significant revenues, and it has not received significant revenues from its water supply, storage, or conveyance assets to date, resulting in a net loss from operations of $34.2 million ⁴⁴ for 2025. The company's water supply agreements are subject to financial and regulatory conditions precedent which may not be satisfied, and the development of its properties is heavily regulated, requiring governmental approvals and permits that could be denied. The company may not be able to execute its plans for the construction, ownership, and operation of the Mojave Groundwater Bank and obtain the requisite funding, as any agreements with potential investors are not binding and there is no guarantee of entering into definitive agreements. As of December 31, 2025, the company had total indebtedness outstanding of approximately $78.3 million ⁴⁵, of which $63.3 million ⁴⁶ is secured by its assets, and failure to make timely payments or obtain additional financing would impact its ability to implement asset development programs. The company has goodwill of approximately $5.7 million ⁴⁷ including $1.9 million ⁴⁸ associated with the ATEC acquisition, which is subject to periodic impairment analysis, and a significant impairment determination could have an adverse effect on the statement of operations.

Management's message emphasizes the company's transformation into a water solutions provider with a unique combination of land, water, pipeline and water filtration assets, and highlights significant progress in advancing contract negotiations for water supply with public water systems. Key strategic priorities emphasized for the period ahead include: completing the financing and construction of the Mojave Groundwater Bank, including the conversion of the Northern Pipeline and construction of the Southern Pipeline; expanding the Water Filtration Technology segment through ATEC, which experienced record revenue growth with revenues reaching $14.5 million ⁴⁹ in 2025; and advancing the partnership with Lytton Rancheria of California, which represents the first tranche of up to approximately $451 million ⁵⁰ in total equity capital being raised through MWI. Management also emphasizes the company's commitments to sustainable stewardship, including making available clean affordable water supply to disadvantaged communities, partnering with Native American Tribes for ownership of water infrastructure, repurposing fossil fuel assets, and creating new renewable energy. The forward-looking statements include expectations that the company will contribute its pipeline infrastructure assets to MWI upon completion of definitive agreements for additional equity capital investments, and that the company expects to receive an upfront capital reimbursement payment at closing and an equity interest in MWI.