10-K: Cadiz 2025 Annual Report: Water Project & ATEC Growth

Cadiz Inc.'s 2025 annual report details significant progress on its Mojave Groundwater Bank project, record revenue growth for its ATEC Water Systems subsidiary, and ongoing efforts to secure substantial capital for infrastructure development.

Summary

• Cadiz Inc. is a water solutions provider with land, water, pipeline, and water filtration assets in Southern California, including 2.5 million acre-feet of permitted water supply and 1 million acre-feet of groundwater storage capacity.
• The company's portfolio includes a 220-mile Northern Pipeline, 43 miles of right-of-way for the Southern Pipeline, and ATEC Water Systems, a water filtration technology subsidiary.
• ATEC Water Systems achieved record revenue of $14.5 million in 2025, a significant increase from $7.9 million in 2024, and experienced 74% growth in business orders.
• Net loss increased to $34.2 million for the year ended December 31, 2025, compared to $31.1 million in 2024.
• The estimated cost to construct the Mojave Groundwater Bank, including pipeline conversions and related facilities, has increased from approximately $800 million to between $1.25 billion and $1.5 billion.
• Cadiz Inc. secured a $51 million unsecured loan facility from Lytton Rancheria of California, convertible into a majority interest in storage cash flows from the Mojave Groundwater Bank, as the first tranche of a targeted $451 million in total equity capital for the project.
• The company received an invitation from the U.S. Environmental Protection Agency (EPA) to apply for up to $194 million under the Water Infrastructure Finance and Innovation Act (WIFIA) program for Northern Pipeline conversion costs.
• Agreements are in place with multiple public water systems for the purchase of 21,275 acre-feet per year (AFY) of annual water supply from the Mojave Groundwater Bank, to be delivered via the Northern Pipeline.
• Cadiz Inc. is committed to delivering clean, affordable water to disadvantaged communities, with over 250,000 AF of supply committed, and has donated ATEC filtration systems to improve water quality in affected areas, leading to the EPA lifting a bottled water order in one tribal community.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed filing. While ATEC's strong revenue growth and significant progress in securing initial project financing are positive, the substantial increase in estimated project costs and continued net losses raise concerns about the overall financial trajectory and the long path to profitability for the core water infrastructure business.

Positives

• ATEC Water Systems achieved record revenue of $14.5 million in 2025, a significant increase from $7.9 million in 2024, and 74% growth in business orders.
• Secured a $51 million unsecured loan facility from Lytton Rancheria of California, representing the first tranche of a targeted $451 million in equity capital for the Mojave Groundwater Bank.
• Received an invitation from the U.S. EPA to apply for up to $194 million under the WIFIA program for Northern Pipeline conversion costs, reserving federal funding for the project.
• Mojave Groundwater Bank project permits and entitlements were upheld by California courts in 2014 and 2016 and are no longer subject to legal challenge.
• Successfully obtained approval for the 2nd Addendum to the EIR for Northern Pipeline conversion, with the statute of limitations for challenge expired.
• Entered into agreements with multiple public water systems for the purchase of 21,275 AFY of annual water supply from the Mojave Groundwater Bank.
• Partnering with Lytton Rancheria of California for tribal ownership in the Mojave Groundwater Bank, aiming for the first major water infrastructure project off tribal lands to be majority-owned by Native American Tribes in U.S. history.
• Donated ATEC filtration systems to communities in the Coachella Valley, leading to the EPA lifting a bottled water order in January 2026 due to successful arsenic level reduction.
• Converted three diesel-operated agricultural wells to natural gas in 2025 to reduce emissions.
• Engaged Stantec Inc. as Owners Engineer and W.M. Lyles as CMAR for the Mojave Groundwater Bank, progressing design and pre-construction services.

Negatives

• Net loss increased to $34.2 million in 2025 from $31.1 million in 2024.
• Total estimated cost for Mojave Groundwater Bank construction significantly increased from approximately $800 million to between $1.25 billion and $1.5 billion.
• Increased net operating loss related to the alfalfa crop in 2025 ($2.3 million) compared to 2024 ($1.7 million) due to a contractor delay in converting wells from diesel to natural gas.
• General and administrative expenses increased to $24.2 million in 2025 (excluding stock-based compensation) from $19.7 million in 2024, primarily due to increased legal and consulting fees for project development and ATEC marketing.
• Interest expense increased to $8.6 million in 2025 from $7.9 million in 2024, primarily due to increased borrowing under the Lytton Credit Agreement.
• The company continues to incur a net loss from operations and has not received significant revenues from its water supply, storage, or conveyance assets to date.
• Cash used for operating activities was $18.9 million in 2025, indicating ongoing cash burn.
• The exclusive marketing agreement with EPCOR for 25,000 AFY of conserved water was terminated in December 2025.

Risks

• Development activities have not generated significant revenues, leading to continued net losses and uncertainty about future profitability.
• Water supply agreements are subject to financial and regulatory conditions precedent that may not be satisfied, impacting revenue generation.
• Development of properties is heavily regulated, requiring governmental approvals and permits that could be denied or granted with unfavorable conditions, causing delays or precluding development.
• Opposition from third parties (environmental, community groups) can cause delays, increase costs, or preclude development entirely.
• Litigation challenging governmental approvals and permits could adversely impact timelines, development plans, and ultimately the return on investments.
• Inability to execute plans for Mojave Groundwater Bank construction and obtain the requisite total funding, as current agreements with private equity investors are non-binding.
• A portion of total assets consists of goodwill and intangibles, which are subject to periodic impairment analysis, and a significant impairment determination could have an adverse effect on the statement of operations.
• Failure to make timely payments of principal and interest on indebtedness or to obtain additional financing will impact the ability to implement asset development programs.
• The issuance of equity securities and management equity incentive plans will cause dilution of ownership interests for current stockholders.
• The volatility of the stock price of equity securities could adversely affect current and future stockholders due to various factors beyond the company's control.
• Information technology failures and data security breaches could harm the business, leading to theft of data, litigation, penalties, and significant remediation costs.
• Increased cybersecurity requirements, vulnerabilities, threats, and more sophisticated and targeted computer crime pose a risk to systems, networks, products, solutions, services, and data, potentially resulting in security breaches, reputational damage, and regulatory action.

Future Outlook

The company expects to continue raising additional capital through equity or debt placements, or asset sales, to finance working capital needs and capital expenditures for the Mojave Groundwater Bank and ATEC operations. Future capital expenditures depend on the progress of the Mojave Groundwater Bank, including MWI funding, ATEC operational needs, and agricultural asset expansion. The company is evaluating cash needs and financing methods on an ongoing basis, aiming to minimize dilution to existing stockholders. ATEC is expected to further expand its reach in the PFAS and Chromium-6 treatment markets in 2026 and plans to file for two additional patents.

Management Comments

• "We are 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."
• "Our diversified portfolio of related water assets enables us to offer products and services to public water systems and other water industry customers in an integrated manner to meet the growing need for reliable access to clean water."
• "We believe the Mojave Groundwater Bank could play a positive role in long-term management of the Colorado River system."
• "Our current experience suggests that the market opportunity [for groundwater treatment] is very large, our products and services are highly competitively, and there is no clear dominant or preferred competitor in the markets in which we compete."
• "We believe that our water supply, storage, pipeline conveyance and treatment solutions will provide a significant source of future cash flow for the business and our stockholders."
• "We believe these commitments [to sustainable stewardship, good governance, and corporate social responsibility] are important investments that will assist in maintenance of sustained stockholder value."

Industry Context

StockSavvy.ai notes that Cadiz Inc.'s focus on integrated water solutions, including supply, storage, conveyance, and filtration, directly addresses critical industry trends such as increasing water scarcity due to climate change, rising pollution, and the urgent need for infrastructure modernization in Southern California and the Southwestern United States. The company's strategy to partner with public agencies and tribal entities for large-scale water projects like the Mojave Groundwater Bank positions it to capitalize on the growing demand for reliable and affordable water resources, especially in underserved communities. The expansion of ATEC Water Systems into PFAS and Chromium-6 treatment markets aligns with stricter state and federal regulations, indicating a proactive response to evolving water quality standards and a growing market segment.

Comparison to Industry Standards

• The Mojave Groundwater Bank's storage capacity of up to 1 million acre-feet is comparable to Southern California's largest surface reservoir, Diamond Valley Lake, but unlike a surface reservoir, it would not suffer significant losses from surface evaporation.
• Water supply from the Mojave Groundwater Bank is expected to be among the lowest cost supplemental water supply available in the region when compared to other supplemental water supply programs such as desalination, recycling, stormwater capture, and surface storage.
• The partnership with Lytton Rancheria of California aims to make the Mojave Groundwater Bank the first major water infrastructure project off tribal lands to be majority-owned by Native American Tribes in U.S. history, setting a new benchmark for tribal involvement in large-scale infrastructure.

Corporate Governance

Legal Proceedings

• The FEIR and GMMMP permits for the Mojave Groundwater Bank were challenged through litigation and upheld by California Superior Court in 2014 and California Court of Appeal in 2016, and are no longer subject to legal challenge.
• The 2nd Addendum to the EIR for Northern Pipeline conversion was not challenged in court, and the statute of limitations has expired.
• The assignment of the Northern Pipeline right-of-way by BLM and US Air Force was not challenged in court, and the statute of limitations has expired.
• The company is not aware of any pending or threatened litigation that is expected to have a material effect on its business, financial condition, liquidity, or operating results.

Related Party Transactions

• Lytton Rancheria of California (a federally recognized Native American Tribe) provided a $51 million unsecured loan facility, convertible into a majority interest in storage cash flows from the Mojave Groundwater Bank, and will contribute this right to MWI in exchange for equity.
• Heerema (HHC $ Fund 2012), a significant shareholder, purchased outstanding secured non-convertible term loans and provided a new tranche of senior secured convertible term loans.
• Heerema received a warrant to purchase 1,000,000 shares of common stock with an exercise price of $4.75 per share (adjusted from $5.00).

Stakeholder Impact

• Shareholders face potential dilution from future equity financings but could benefit from long-term value creation if water projects succeed, balanced against continued net losses and increased project costs.
• Employees are offered opportunities for skill development, advancement, competitive compensation, and benefits, with a focus on workforce diversity.
• Customers, including public and private water systems, government agencies, and commercial businesses, gain access to reliable, affordable water supply and storage, as well as innovative water filtration solutions and improved water quality.
• Disadvantaged communities are positively impacted by the company's commitment to providing clean, affordable water, including over 250,000 AF of supply committed and donated ATEC filtration systems improving water quality.
• Native American Tribes, specifically Lytton Rancheria, are key partners in the Mojave Groundwater Bank, with a potential for significant economic interest and lasting ownership in the project.
• The environment benefits from the repurposing of fossil fuel assets (Northern Pipeline), generation of renewable hydropower, conversion of diesel wells to natural gas, siting of a green hydrogen facility, and dedication of 7,400 acres to conservation.
• Creditors are impacted by secured debt obligations, increased borrowing under the Lytton Credit Agreement, and the potential for future debt financing to fund large-scale projects.

Next Steps

• Complete due diligence with private equity investors for up to $400 million in equity commitment to MWI.
• Complete definitive agreements for additional equity capital investments in MWI.
• Contribute pipeline infrastructure assets to MWI upon completion of definitive agreements.
• Lytton Rancheria to contribute Storage Cash Flows Right to MWI.
• MWI investors to coordinate with Cadiz Inc. and project participants to seek available infrastructure grants and/or other financing alternatives, including potential revenue bond issuances.
• Stantec to continue progressing 30% design on the Northern Pipeline.
• Anticipate updating the CMAR contract with W.M. Lyles to include a Guaranteed Maximum Price (GMP) for the Northern Pipeline during Q2 2026.
• Expect a GMP for the Southern Pipeline after design and pre-construction services during H2 2026.
• Submit a 3rd Addendum to the Final EIR analyzing storage operations in Q2 2026 for consideration by the County of San Bernardino and FVWA.
• RIC Energy is expecting to begin processing state and local environmental permitting for the hydrogen production facility in 2026.
• ATEC is expected to further expand its reach in the PFAS and Chromium-6 treatment markets in 2026.
• ATEC plans to file for two additional patents in 2026.
• Reclamation is expected to issue final guidelines for Colorado River system operations by October 2026.
• Obtain change of use authorizations from BLM, Air Force, and California State Lands Commission for Northern Pipeline water conveyance.
• Obtain agreement with Metropolitan Water District of Southern California (MWD) to move water supplies via the CRA for Southern Pipeline.
• Obtain a finding by CSLC that conveying water from Cadiz Ranch will not adversely affect the desert environment for Southern Pipeline.

Key Dates

Recommendation

The filing presents a mixed bag for investors. While Cadiz Inc. shows strong operational growth in its ATEC Water Systems segment and has made significant strides in securing initial financing and regulatory approvals for the Mojave Groundwater Bank, the substantial increase in the project's estimated cost to $1.25-$1.5 billion and the continued net losses are significant concerns. The ongoing need for substantial capital raises, including a targeted $400 million in private equity, introduces execution risk and potential for further dilution. The long-term potential of the water assets is clear, but the path to profitability remains capital-intensive and subject to regulatory and financing uncertainties. A 'hold' recommendation is appropriate, acknowledging the progress while advising caution due to increased costs and funding requirements.

Keywords

water solutions, Mojave Groundwater Bank, water infrastructure, water filtration, ATEC Water Systems, Cadiz Inc., Southern California water, groundwater storage, pipeline conversion, environmental justice, tribal investment, SEC 10-K, water scarcity, renewable energy, California water rights