Press release·03/28/2025 13:11:39

Results of Operations

We currently operate in two reportable segments: Land and Water Resources, and Water Filtration Technology. The Land and Water Resources segment comprises all activities regarding our properties in the eastern Mojave Desert, pre-revenue development of the Mojave Groundwater Bank (supply, storage and conveyance), and agricultural operations. The Water Filtration Technology segment includes ATEC, which provides innovative water filtration technology solutions for impaired or contaminated groundwater sources.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

The key financial highlights for the year ended December 31, 2024 compared to the prior year are:

(in thousands)	Land and Water Resources	Water Filtration Technology	Total
Revenues	$1,708	$7,900	$9,608
Cost of sales	$2,984	$4,314	$7,298
General and administrative	$22,525	$1,820	$24,345
Depreciation	$1,159	$55	$1,214
Operating income (loss)	$(24,960)	$1,711	$(23,249)

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 $31.1 million for the year ended December 31, 2024, compared with a net loss of $31.4 million for the year ended December 31, 2023.

Our primary expenses are our ongoing overhead costs associated with the development of our water supply, storage and conveyance assets (i.e., general and administrative expense), farming expenses at the Cadiz Ranch, manufacturing operations of ATEC and our interest expense.

Revenues Revenues totaled $9.6 million during the year ended December 31, 2024, primarily related to ATEC sales of $7.9 million, sales from the harvest of our 760 acres of commercial alfalfa crop of $1.3 million, and rental income from agricultural leases of $0.4 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.

Cost of Sales Cost of sales totaled $7.3 million during the year ended December 31, 2024, comprised of $4.3 million related to ATEC (45.5% gross margin) and $3.0 million related to our alfalfa crop harvest. The 2024 alfalfa crop harvest net operating loss of $1.7 million primarily related to continued suppressed market conditions for alfalfa on the West Coast.

General and Administrative Expenses General and administrative expenses during the year ended December 31, 2024, exclusive of stock-based compensation costs, totaled $19.7 million compared with $17.3 million for the year ended December 31, 2023. The increase in 2024 was primarily a result of increased professional fees incurred in advancing the development of the Mojave Groundwater Bank and increased marketing outreach campaign activity. General and administrative expense for ATEC totaled $1.8 million for 2024 compared to $0.8 million for 2023, driven by the growth in the ATEC operations.

Compensation costs from stock and option awards for the year ended December 31, 2024, totaled $4.6 million compared with $1.5 million for the year ended December 31, 2023. The higher 2024 expense was primarily due to an increase in stock-based non-cash awards to employees and consultants.

Interest Expense, Net Interest expense totaled $7.9 million during the year ended December 31, 2024, compared to $4.9 million during the year ended December 31, 2023. The increase was primarily due to increased borrowing under the Third Amended Credit Agreement.

Liquidity and Capital Resources

As we have not received significant revenues or gross profits from our water, agriculture or water filtration technology activities to date, we have been required to obtain financing to bridge the gap between the time water resource and other development expenses are incurred and the time that significant revenue will commence. We have addressed these needs primarily through secured debt financing arrangements and private equity placements.

Equity Offerings In January 2023, we completed a registered direct offering of 10,500,000 shares of common stock for gross proceeds of $40.32 million. A portion of the net proceeds were used to repay $15 million of debt, with the remaining proceeds used for capital expenditures, working capital, and general corporate purposes.

In November 2024, we completed a registered direct offering of 7,000,000 shares of common stock for gross proceeds of $23.4 million. $5 million of the net proceeds were used to secure an option to purchase steel pipe for the Mojave Groundwater Bank, with the remaining proceeds intended to be used for the development and construction of the Mojave Groundwater Bank.

In March 2025, we completed a registered direct offering of 5,715,000 shares of common stock for gross proceeds of $20.0 million. The net proceeds are intended to be used for the development and construction of the Mojave Groundwater Bank, including the acquisition of equipment and materials.

Debt Offerings In July 2021, we entered into a $50 million credit agreement, which was subsequently amended in February 2023 and March 2024. The amendments provided for a new tranche of $20 million in senior secured convertible debt, increased the aggregate principal amount of the secured non-convertible term loans to $21.2 million, and extended the maturity date of the existing debt to June 30, 2027.

Outlook In the short-term, the net proceeds from the March 2025 direct offering, together with cash on hand, provide us with sufficient funds to meet our working capital needs. Our ATEC operations are expected to be funded using existing capital and cash profits generated from operations during 2025.

In the longer term, we may need to raise additional capital to finance working capital needs and capital expenditures, particularly for the development of the Mojave Groundwater Bank and any further expansion of our agricultural assets. We are evaluating the amount of cash needed and the manner in which such cash will be raised on an ongoing basis, which may include equity or debt placements, or the sale or other disposition of assets.