Cadiz Inc.
Annual Report 2016

Plain-text annual report

CADIZ INC FORM 10-K (Annual Report) Filed 03/16/17 for the Period Ending 12/31/16 Address Telephone CIK 550 SOUTH HOPE STREET SUITE 2850 LOS ANGELES, CA 90071 213-271-1600 0000727273 Symbol CDZI SIC Code Industry 4941 - Water Supply Fishing & Farming Sector Consumer Non-Cyclicals Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2017, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D. C. 20549FORM 10-K☑ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934for the fiscal year ended December 31, 2016OR☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934for the transition period from …… to …….COMMISSION FILE NUMBER 0-12114CADIZ INC.( EXACT NAME OF REGISTRANT SPECIFIED IN ITS CHARTER)DELAWARE77-0313235(State or other jurisdiction of(I.R.S. Employerincorporation or organization)Identification No.)550 S. Hope Street, Suite 2850 Los Angeles, CA90071(Address of principal executive offices)(Zip Code)(213) 271-1600(Registrant's telephone number, including area code)Securities Registered Pursuant to Section 12(b) of the Act:Common Stock, par value $0.01 per shareThe NASDAQ Global Market(Title of Each Class)(Name of Each Exchange on Which Registered)Securities Registered Pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the Registrant is a well-known seasoned issuer, as defined in rule 405 under the Securities Act of 1933.Yes ☐ No ☒Indicate by a check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.Yes ☐ No ☒Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for thepast 90 days.Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submitand post such files).Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§220.405 of this chapter) is not contained herein, and will not becontained to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment of this Form 10-K. ☐Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined inExchange Act Rule 12b-2).Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller Reporting Company ☐Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2).Yes ☐ No ☒The aggregate market value of the common stock held by nonaffiliates as of June 30, 2016 was approximately $92,899,031 based on 15,826,070 shares of commonstock outstanding held by nonaffiliates and the closing price on that date. Shares of common stock held by each executive officer and director and by each entitythat owns more than 5% of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliatestatus is not necessarily a conclusive determination for other purposes.As of March 10, 2017, the Registrant had 22,174,925 shares of common stock outstanding.Documents Incorporated by ReferencePortions of the Registrant's definitive Proxy Statement to be filed for its 2017 Annual Meeting of Stockholders are incorporated by reference into Part III of thisReport. The Registrant is not incorporating by reference any other documents within this Annual Report on Form 10-K except those footnoted in Part IV under theheading "Item 15. Exhibits, Financial Statement Schedules". CADIZ INC. TABLe oF CoNTeNTS Part I Item 1.Business1 Item 1A.Risk Factors13 Item 1B.Unresolved Staff Comments17 Item 2.Properties17 Item 3.Legal Proceedings19 Item 4.Mine Safety Disclosures20 Part II Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities21 Item 6.Selected Financial Data23 Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations24 Item 7A.Quantitative and Qualitative Disclosures about Market Risk40 Item 8.Financial Statements and Supplementary Data41 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure41 Item 9A.Controls and Procedures41 Item 9B.Other Information42 Part III Item 10.Directors, Executive Officers and Corporate Governance43 Item 11.Executive Compensation43 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters43 Item 13.Certain Relationships and Related Transactions, and Director Independence43 Item 14.Principal Accounting Fees and Services43 Part IV Item 15.Exhibits, Financial Statement Schedules44 PARt iITEM 1. Business This Form 10-K contains forward-looking statements with regard to financial projections, proposed transactions such as those concerning the furtherdevelopment of our land and water assets, information or expectations about our business strategies, results of operations, products or markets, or otherwise makesstatements about future events. Such forward-looking statements can be identified by the use of words such as "intends", "anticipates", "believes", "estimates","projects", "forecasts", "expects", "plans" and "proposes". Although we believe that the expectations reflected in these forward-looking statements are based onreasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. These include, among others, the cautionary statements under the caption "Risk Factors", as well as other cautionary language contained in this Form 10-K. Thesecautionary statements identify important factors that could cause actual results to differ materially from those described in the forward-looking statements. Whenconsidering forward-looking statements in this Form 10-K, you should keep in mind the cautionary statements described above.overview We are a land and water resource development company with 45,000 acres of land in three areas of eastern San Bernardino County, California. Virtually allof this land is underlain by high-quality, naturally recharging groundwater resources, and is situated in proximity to the Colorado River and the Colorado RiverAqueduct ("CRA"), California's primary mode of water transportation for imports from the Colorado River into the State. Our properties are suitable for varioususes, including large-scale agricultural development, groundwater storage and water supply projects. Our main objective is to realize the highest and best use of ourland and water resources in an environmentally responsible way. We believe that the long-term highest and best use of our land and water assets can best be realized through the development of a combination of watersupply and storage projects at our properties. Therefore, the Company has been primarily focused on the development of the Cadiz Valley Water Conservation,Recovery and Storage Project ("Water Project" or "Project"), which will capture and conserve millions of acre-feet 1 of native groundwater currently being lost toevaporation from the aquifer system beneath our 34,000-acre property in the Cadiz and Fenner valleys of eastern San Bernardino County (the "Cadiz/FennerProperty"), and deliver it to water providers throughout Southern California (see "Water Resource Development") . A second phase of the Water Project wouldoffer storage of up to one million acre-feet of imported water in the aquifer system. We believe that the ultimate implementation of this Water Project willprovide a significant source of future cash flow.___________________________________ 1 One acre-foot is equal to approximately 326,000 gallons or the volume of water that will cover an area of one acre to a depth of one-foot. An acre-foot isgenerally considered to be enough water to meet the annual water needs of one average California household.1  The primary factor driving the value of such projects is ongoing pressure on California's traditional water supplies and the resulting demand for new, reliablesupply solutions that can meet both immediate and long-term water needs. Available supply is constrained by environmental and regulatory restrictions on each ofthe State's three main water sources: the CRA, the State Water Project, which provides water supplies from Northern California to the central and southern parts ofthe state, and the Los Angeles Aqueduct, which delivers water from the eastern Sierra Nevada mountains to Los Angeles. Southern California's water providersrely on imports from these systems for a majority of their water supplies, but deliveries from all three into the region have been below capacity over the last severalyears. Availability of supplies in California also differs greatly from year to year due to natural hydrological variability. Over the last several years, California hasstruggled through an historic drought featuring record-low winter precipitation and reservoir storage levels. However, following a series of strong storms throughthe 2016-2017 winter, California has received record amounts of rain and snow, eliminating drought conditions in much of Northern California and easing droughtin the South. The rapid swing from drought to an extremely wet year has challenged California's traditional infrastructure system, and deliveries into SouthernCalifornia from the State Water Project, Colorado River Aqueduct and Los Angeles Aqueduct remain below capacity. The Water Project is a local supply option in Southern California that could help address the region's water supply challenges by providing new reliablesupply and local groundwater storage opportunities (see "Water Resource Development" below) in both dry and wet years. The Project has received permits inaccordance with the California Environmental Quality Act ("CEQA") which allow the capture and conservation of 2.5 million acre-feet of groundwater over 50years under the terms of a groundwater management plan approved by San Bernardino County, which is responsible for groundwater use at the Project area. Our 2017 working capital requirements relate largely to the final development activities associated with the Water Project and those activities consistent withthe Water Project related to further development of our land and agricultural assets. While we continue to believe that the ultimate implementation of the WaterProject will provide the primary source of our future cash flow, we also believe there is significant additional value in our underlying agricultural assets. Demandfor agricultural land with water rights is at an all-time high; therefore, in addition to our Water Project proposal, we are engaged in agricultural joint ventures at theCadiz/Fenner Property that put some of the groundwater currently being lost to evaporation from the underlying aquifer system to immediate beneficial use. Wehave farmed portions of the Cadiz/Fenner Property since the late 1980s relying on groundwater from the aquifer system for irrigation and have found the site iswell suited for various permanent and seasonal crops. Presently, the property has 2,100 acres leased to third parties for a variety of crops, including citrus, dried-on-the-vine raisins and seasonal vegetables. We also continue to explore additional uses of our land and water resource assets, including renewable energy development, the marketing of our approveddesert tortoise land conservation bank, which is located on our properties outside the Water Project area, and other long-term legacy uses of our properties, such ashabitat conservation and cultural development.2 (a) General Development of Business We are a Delaware corporation formed in 1992. As part of our historical business strategy, we have conducted our land acquisition, water developmentactivities, agricultural operations, and other land development initiatives to maximize the long-term value of our properties and future prospects (see "NarrativeDescription of Business"). Our initial focus was on the acquisition of land and the assembly of contiguous land holdings through property exchanges to prove the quantity and quality ofwater resources in this Mojave Desert region of eastern San Bernardino County. We subsequently established agricultural operations on our properties in theCadiz/Fenner Valley and sought to develop the water resources underlying that site. In 1993, we secured permits to develop up to 9,600 acres of agriculture at theCadiz/Fenner Property and withdraw more than one million acre-feet of groundwater from the underlying aquifer system. The agricultural operations initiallybegan on 1,900 acres and featured vineyards, citrus orchards and seasonal vegetables. The agricultural development demonstrated that the geology and hydrology of the property is also uniquely suited and able to support a project that couldoffer additional water supplies and water storage opportunities in Southern California. In 1997, we entered into the first of a series of agreements with the Metropolitan Water District of Southern California ("Metropolitan"), the largest waterwholesaler in the region and owner of the nearby CRA, to jointly design, permit, and build such a project ("2002 Project"). Between 1997 and 2002, we andMetropolitan received substantially all of the state and federal approvals required to construct and operate the 2002 Project, including a Record of Decision("ROD") from the U.S. Department of the Interior, which approved the 2002 Project and offered a right-of-way for construction of facilities, including a 35-milewater conveyance pipeline from the Cadiz/Fenner Property to the CRA across federal lands. In October 2002, Metropolitan's staff brought the right-of-way matterbefore its Board of Directors. By a very narrow margin, the Metropolitan Board voted not to accept the right-of-way grant nor proceed with the 2002 Project. Following Metropolitan's decision, we began to pursue new partnerships and redesigned the 2002 Project to meet the changing needs of Southern California'swater providers. We refocused on the safe and sustainable management of the aquifer system beneath our Cadiz/Fenner Property with the goal of providing areliable, annual water supply for the region. To assist with these sustainable management priorities, we entered into a Memorandum of Understanding with theNatural Heritage Institute, a leading global environmental organization committed to protecting aquatic ecosystems. As part of this "Green Compact", we followstringent plans for groundwater management and habitat conservation. In September 2008 we entered into a lease agreement with the Arizona & California Railroad Company ("ARZC") to utilize its existing right-of-way betweenthe Cadiz property and the CRA to construct a pipeline able to deliver water from the property into the existing Southern California water transportation system. In2009, the Department of the Interior evaluated the Water Project's proposed use of an existing railroad right-of-way for a water conveyance pipeline andsummarized that the proposed pipeline was within the scope of the right-of-way and required no federal BLM permitting.3  Before we began state and local permitting, we commissioned environmental consulting firm CH2M HILL to complete a comprehensive study of the waterresources at the Project area. Following more than one year of analysis, CH2M HILL released its study of the aquifer system in February 2010. Utilizing newmodels produced by the U.S. Geological Survey in 2006 and 2008, the study estimated the total groundwater in storage in the aquifer system to be between 17 and34 million acre-feet, a quantity on par with Lake Mead, the nation's largest surface reservoir. The study also identified a renewable annual supply of nativegroundwater in the aquifer system currently being lost to evaporation. CH2M HILL's findings, which were peer reviewed by leading groundwater experts,confirmed that the aquifer system could sustainably support the Water Project. Between 2010 and 2011 six Southern California water providers executed option agreements to participate in the new Water Project. Under our leaseagreement, the ARZC also reserved water from the Water Project to further a variety of critical railroad purposes. In accordance with the CEQA, the Water Project began an environmental review and permitting process in 2011 led by Santa Margarita Water District("SMWD"), one of the Project participants. After an extensive review process, the SMWD Board of Directors certified the Final Environmental Impact Report onJuly 31, 2012 and became the first participating agency to convert its option agreement to a Water Purchase and Sale Agreement for firm supplies from the WaterProject. On October 1, 2012, San Bernardino County ("County"), a Responsible Agency under CEQA, also adopted CEQA findings and approved the Project'sGroundwater Monitoring, Management and Mitigation Plan ('GMMMP", "Plan") and the withdrawal of 50,000 acre-feet (AF) of water per year for 50 years. Following receipt of these important approvals, we were named as a real-party-in-interest in nine lawsuits brought by parties seeking a reconsideration of theenvironmental documents and limitation of the Project approvals granted by SMWD and the County. Three of these cases were subsequently dismissed orotherwise settled and six lawsuits brought by two petitioners proceeded to trial in Orange County Superior Court ("Court") before one judge in December 2013. InSeptember 2014, the Court issued final signed judgments ("Judgments") formally denying all claims brought in the six remaining lawsuits. The Judgments upheldthe environmental review and approvals of the Water Project and also awarded costs to SMWD, the County, Cadiz and Fenner Valley Mutual Water Company asthe prevailing parties in the cases. During the fourth quarter of 2014, the petitioners in the six original Court cases filed independent appeals of the six Judgments with the California Court ofAppeals, Fourth District. The appeals cases were heard before a three-judge panel in March 2016. In May 2016, the panel unanimously ruled in favor of the WaterProject and in sweeping opinions sustained the lower court rulings. Thereafter, the Petitioners did not seek any additional judicial review and in July 2016, theopportunity for the California State Supreme Court to independently review the six Appellate Court opinions on its own motion passed and all litigation wasdismissed. As a result, the County of San Bernardino's approval of the Project is now final and the Company's conservation and extraction of 2.5 million acre-feetof groundwater over 50 years under the terms of the groundwater management plan has vested under applicable law.4  While defending the Project's CEQA permits, the Company and the Water Project participants also worked to complete transportation arrangements toconvey Project supplies to end users via a pipeline to be constructed within the ARZC right-of-way and the Colorado River Aqueduct ("CRA"), owned by theMetropolitan Water District of Southern California ("Metropolitan"). Following approval of the Project's permits in 2012, the Company and the Projectparticipants began a dialogue with BLM regarding the Project pipeline in response to federal appropriations language that required the Interior Department tocertify that the Project's proposed use of the ARZC right-of-way was within its scope. The dialogue with the BLM occurred over more than two years andculminated in a controversial guidance opinion issued by the BLM California office in October 2015 that did not certify the Project's proposed use. The Company,the ARZC, Water Project participants, Water Project supporters and members of Congress immediately voiced concern about the guidance opinion via letters,statements and meetings with the BLM. As a result, legislation is pending before Congress that contains provisions that would clarify the scope of the railroadright-of-way to allow third parties to co-locate infrastructure without additional BLM right-of-way permitting. We believe that if signed into law, the language nowcontained in the House appropriations bill will enable third parties, including the Company, to carry on existing and future activities within existing railroad ROWsover federal lands without the need to secure a separate ROW grant from BLM. In 2017, we have continued our efforts in support of this legislation and expect to finalize contracts with Project participating agencies, as well as continuefinal design and implementation planning for Project construction. Given the strong demand for agricultural land with access to water, in addition to our ongoing efforts to implement the Water Project, we also continue tofarm the Cadiz/Fenner Property. In February 2016 we entered into lease arrangements that allow our farming tenants to further develop the existing agriculturalwell-field to supply water for their expanded farming use and also enable the Company to acquire the well-field within a twenty-year period through a call featurein the lease and employ these wells as part of the Water Project. The well-field infrastructure and related improvements are substantially similar, regardless ofwhether the water is applied for agricultural use or conserved for the Water Project. See "Narrative Description of Business" below for more detail. (b) Financial Information about Industry Segments Our primary business is to acquire and develop land with water resources for various uses, including groundwater supply, groundwater storage andagriculture. As a result, our financial results are reported in a single segment. See Consolidated Financial Statements. See also Item 7, "Management's Discussionand Analysis of Financial Condition and Results of Operations".(c) Narrative Description of Business Our business strategy is to pursue the development of our landholdings for their highest and best uses. At present, our development activities include waterresource, land and agricultural development.W ater Resource Development Our portfolio of water resources is located in proximity to the Colorado River and the Colorado River Aqueduct ("CRA"), the principal source of importedwater for Southern California, and provides us with the opportunity to participate in a variety of water supply, water storage, and conservation programs with publicwater agencies and other partners.5  The Cadiz Valley Water Conservation, Recovery and Storage Project We own approximately 34,000 acres of land and the subsurface strata, inclusive of the unsaturated soils and appurtenant water rights in the Cadiz and Fennervalleys of eastern San Bernardino County (the "Cadiz/Fenner Property"). The aquifer system underlying this property is naturally recharged by precipitation (bothrain and snow) within a watershed of approximately 1,300 square miles. See Item 2, "Properties – The Cadiz/Fenner Valley Property". The Cadiz Valley Water Conservation, Recovery and Storage Project (the "Water Project" or "Project") is designed to supply, capture and conserve billionsof gallons of renewable native groundwater currently being lost annually to evaporation from the aquifer system underlying our Cadiz/Fenner Property, and providea new, reliable water supply for approximately 400,000 people in Southern California. The total quantity of groundwater to be recovered and conveyed to WaterProject participants will not exceed a long-term annual average of 50,000 acre-feet per year for 50 years. The Water Project also offers participants the ability tocarry-over their annual supply, and store it in the groundwater basin from year to year. A second phase of the Water Project, Phase II, will offer up to one millionacre-feet of underground storage capacity that can be used to hold imported water supplies at the Water Project area. Water Project facilities required for Phase I primarily include, among other things:·High-yield wells designed to efficiently recover available native groundwater from beneath the Water Project area;·A water conveyance pipeline to deliver water from the well-field to the CRA for further delivery to Project participants; and·An energy source to provide power to the well-field, pipeline and pumping facilities.If an imported water storage component of the Water Project is ultimately implemented in Phase II, the following additional facilities would be required,among other things:·Facilities to pump water through the conveyance pipeline from the CRA to the Water Project well-field and/or through the Company's pipelinefrom Cadiz to Barstow, CA; and·Spreading basins, which are shallow settling ponds that will be configured to efficiently percolate water from the ground surface down to thewater table using subsurface storage capacity for the storage of water. In 2016, the Company focused on completing the remaining steps to implement the Project, including clearance to use an existing railroad right-of-way for itsconveyance pipeline and defending the Water Project's CEQA permits in the California Court of Appeal. Prior to construction, the Water Project must (1) completeefforts to secure its pipeline right-of-way, (2) finalize contracts with Project participating agencies and secure transportation arrangements to deliver water into eachparticipant's service area, and (3) secure private construction financing. Below is a discussion of present activities to advance these objectives.6 (1) Water Conveyance Pipeline Right-of-WayPipeline from Cadiz to CRA In September 2008, we secured a right-of-way for the Water Project's water conveyance pipeline by entering into a lease agreement with the Arizona &California Railroad Company ("ARZC"), which operates an active shortline railroad extending from Cadiz to Matthie, Arizona. The agreement allows for the useof a portion of the railroad's right-of-way to construct and operate a water conveyance pipeline for a period up to 99 years. The buried pipeline would beconstructed parallel to the railroad tracks and be used to convey water between our Cadiz/Fenner Property and the CRA in Freda, California. Our lease agreement with the ARZC also expressly requires that the Project further several railroad purposes and, under the terms of the lease agreement, theARZC reserved water supplies from the Project for its operational needs as well as access to Project facilities, such as roads and power appurtenances, for thebenefit of its railroad operation. In September 2013, we also entered into a trackage rights agreement with the ARZC that would enable the operation of steam-powered, passenger excursion trains on the line powered by water made available from the pipeline. The pipeline route was fully analyzed in the Water Project's Final Environmental Impact Report ("EIR") as part of the CEQA environmental review processcompleted in 2012. As an existing transportation corridor, the route, which avoids sensitive habitats, was found to be the environmentally preferred route for thepipeline. In 2009, the federal government stated that no federal environmental review of the pipeline route was required under the National Environmental PolicyAct ("NEPA"), because the pipeline was within the scope of the ARZC's right-of-way grant. Our plan to construct the Project pipeline within the railroad right-of-way is similar to, and modeled after, the thousands of other existing longitudinal uses ofrail corridors across the United States today, such as telecommunications lines, natural gas and petroleum product lines and other water lines. Under the GeneralRailroad Right-of-Way Act of March 3, 1875 ("1875 Act") , according to which many of these railroad corridors were established, a railroad can lease its propertyfor third party uses without permitting of the federal government so long as the use also derives from or furthers railroad purposes, at least in part. Thisinterpretation of the 1875 Act was confirmed by Memorandum Opinion M-37025 issued by the Solicitor of the US Department of the Interior on November 4, 2011("2011 M-Opinion"), which state in relevant part:"Within an 1875 Act ROW, a railroad's authority to undertake or authorize activities is limited to those activities that derive from or further a railroadpurpose, which allows a railroad to undertake, or others to undertake, activities that have both railroad and commercial purposes , but does not permit arailroad to authorize activities that bear no relationship to the construction and operation of a railroad." (Emphasis added, M-37025) The Project includes the following features, enabled by the conveyance pipeline, provided in furtherance of railroad purposes:7  ·A new access road along the entire pipeline route to enable maintenance, emergency access and shorten routes for crew-changes,·Remotely operated fire-suppression systems at each of the existing creosote-treated wooden trestles,·Inline power generation for crossing operations and lighting, heating and cooling for existing railroad transloading operations,·Fiber optic information transmission to convey track-speed and cameras in aid of emergency and to discourage vandalism; and·The distribution of water for the operation of a steam-powered locomotive, fire-suppression and other miscellaneous uses. In response to inquiries from the BLM beginning in 2012 about these purposes, the Company, the ARZC and Water Project participants had numerousmeetings with the BLM and provided several documents over multiple years for background about the railroad purposes that would be furthered by the Project overseveral years. In April 2015 BLM California notified the Company that it was analyzing the Project's proposed use of the ARZC right-of-way and expected toprovide the results of this evaluation to the BLM Washington D.C. office by the end of summer 2015. On October 2, 2015, the Director of the California Office of the BLM signed a letter that would later be sent to ARZC and the Company summarizing that theProject pipeline is outside the scope of the ARZC right-of-way, because a water pipeline would not primarily further a railroad purpose or originate from a railroadpurpose, and would therefore require a new federal right-of-way permit prior to construction. We believe this finding disregards federal law and policy and straysfrom the framework provided for in the binding 2011 M-Opinion, and therefore we immediately pursued steps to rescind the October determination. Several Members of Congress raised concerns about the 2015 guidance and its inconsistencies with existing federal policy governing third party railroadright-of-way use. As a result of inquiries from Congress, BLM California's newly appointed Director met with the Company, the ARZC and Project participants inMarch 2016. However, BLM representatives at the meeting were not prepared to discuss the framework utilized to evaluate the Water Project's proposed use of theARZC right-of-way. Following the production of documents produced via a Freedom of Information Act request in (June) 2016 regarding BLM's evaluation of the Project's use ofthe railroad right-of-way, we have had no further formal consultation with BLM California. The guidance letter is under investigation by the House ofRepresentatives Oversight & Government Reform Committee and the Interior Department Inspector General. Meanwhile, numerous United States congressional representatives have worked to clarify the scope of the congressionally granted 1875 Act right-of-way(ROW) for all who rely on them for necessary infrastructure, including, for example, fiber optics and communications lines, energy, electricity, water, wastewater,sewer, and natural gas lines. In July 2016, language that would clarify the scope of railroad ROW was included in the fiscal year 2017 (FY17) House Interior andEnvironment Appropriations Bill (H.R.5538), an annual funding measure for the Department of the Interior, the Environmental Protection Agency, the US ForestService, and various related agencies, including the BLM. HR 5538 passed the US House of Representatives in July 2016, but consideration of the bill has beencontinued until April 2017. If this language is not considered in April 2017, it could be delayed until the Fall of 2017. We believe that if signed into law, thelanguage now contained in the House appropriations bill will enable third parties, including the Company, to carry on existing and future activities within existingrailroad ROWs over federal lands without the need to secure a separate ROW grant from BLM.8 Northern Pipeline We currently own a 96-mile existing idle natural gas pipeline from the Cadiz/Fenner Property to Barstow, California that we intend to convert for thetransportation of water. The Barstow area serves as a hub for water delivered from northern and central California to communities in Southern California's HighDesert. In addition, the Company holds an option to purchase a further 124-mile segment of this pipeline from Barstow to Wheeler Ridge, California for $20million. This option expires in December 2018. Initial feasibility studies indicated that, upon conversion, the 30-inch line could transport between 20,000 and 30,000 acre-feet of water per year between theWater Project area and various points along the Central and Northern California water transportation network. As a result this line could create significantopportunities for our water resource development efforts. If this pipeline were to become operational, then the Water Project would link two major water delivery systems in California, providing flexibleopportunities for both supply and storage. The Northern Pipeline could deliver Phase I supplies, either directly or via exchange, to existing and potential customersof Phase I of the Project. It could also be used to import water to the Project area and provide additional groundwater storage for the region's water providers. Suchuse is currently being contemplated as part of Phase II of the Water Project. The 96-mile pipeline segment was evaluated in the Water Project's EIR during the CEQA process. Any use of the pipeline would be conducted in conformitywith the Project's GMMMP and is subject to further CEQA evaluation and potentially federal environmental permitting. The Northern Pipeline also represents new opportunities for the Company independent of the Water Project to offer water transportation to locations alongthe pipeline route that are not presently interconnected by existing water infrastructure. The entire 220-mile pipeline crosses California's major water infrastructureas well as urban and agricultural centers and can be utilized to transport water, independent of the Water Project, between users who presently lack directinterconnections along the pipeline route. We are presently engaged in discussions with parties that may be interested in such transportation.(2)Agreements with Public Water Agencies or Private Water Utilities & Conveyance Arrangements The Company has executed Letters of Intent, option agreements and purchase agreements (collectively, "Agreements") with public water agencies and privatewater utilities in California during the Project's development. These participating agencies serve more than one million customers in cities throughout California'sSan Bernardino, Riverside, Los Angeles, Orange, Imperial and Ventura Counties.9  Santa Margarita Water District ("SMWD") was the first participant to convert its option agreement and adopt resolutions approving a Water Purchase andSale Agreement for 5,000 acre-feet of water. The structure of the SMWD purchase agreement calls for an annually adjusted water supply payment, plus a pro rataportion of the capital recovery charge and operating and maintenance costs. The capital recovery charge is calculated by amortizing the total capital investment bythe Company over a 30-year term. Agreements entered into prior to the beginning of the CEQA review process provide the right to acquire an annual supply of 5,000 acre-feet of water at $775per acre-foot (2010 dollars, subject to adjustment), which is competitive with the incremental cost of new water. In addition, these agencies have options to acquirestorage rights in the Water Project to allow for the management of their Water Project supplies in complement with their other water resources. Up to 150,000acre-feet of carry-over storage is available for reservation by the agencies prior to construction commencement. Participants that elect to achieve year-to-yearflexibility in their use of Project water by utilizing carry-over storage will reserve storage capacity for $1,500 per acre-foot prior to construction. Letters of Intent ("LOIs") that have been entered into since completion of the CEQA review process reserve supplies from the Water Project at $960 per acre-foot (2014 dollars, subject to adjustment). These LOIs also include the option to reserve carry-over storage capacity for $1,500 per acre-foot prior to construction. Presently, total reservations of supplies from the Water Project via these Agreements are in excess of Water Project capacity and we are workingcollaboratively with the participating water agencies to account for any oversubscription in the final definitive Purchase and Sale Agreements we enter into withthese agencies. In addition, prior to construction of the Water Project, terms for moving water supplies in the CRA must be negotiated with Metropolitan, which owns andcontrols the CRA. Water Project supplies entering the CRA will comply with Metropolitan's published engineering, design and water quality standards and will besubject to all applicable fees and charges routinely established by Metropolitan for the conveyance of water within its service territory. Any agreement as to theterms and conditions of the Water Project's use of the CRA will be negotiated between and entered into by Metropolitan and the Project participating agencies, notthe Company. Discussions with Metropolitan regarding conveyance of Project water in the CRA have been led by SMWD. We expect arrangements would beapproved by Metropolitan staff and considered by its Board following resolution of BLM discussions related to the conveyance pipeline, discussed above. Oncearrangements are reached, Metropolitan must take action as a responsible agency under CEQA regarding the terms and conditions of the Water Project's use of theCRA to transport water to its participating agencies.(3)Construction Financing As described above, construction of Phase I of the Water Project would primarily consist of wellfield facilities at the Project site, a conveyance pipeline, andan energy source to pump water through the conveyance pipeline between the Project well-field and the CRA. The construction of these facilities, which we expectwould cost approximately $250 million, will require capital financing that we expect will be secured by the proceeds of our definitive Purchase and SaleAgreements and the new facility assets. The Company's existing corporate term debt provides us the flexibility to incorporate Water Project construction financingup to $300 million within our current debt structure.10 Agricultural Development Within the Cadiz/Fenner Property, all of the existing 34,000 acres are currently zoned for agriculture. In 1993, we secured conditional use permits to developagriculture on up to 9,600 acres of the property and withdraw groundwater from the underlying aquifer system for irrigation. We have since maintained variouslevels of crops on the Property as we developed the Water Project. In 2013, we entered into a lease agreement with a third party to develop up to 1,480 acres oflemons at the site, 520 acres of which have been planted to date. In February 2016, we entered into a lease agreement with Fenner Valley Farms LLC ("FVF"), a subsidiary of Water Asset Management LLC, a related party,pursuant to which FVF leased, for a 99-year term, 2,100 acres at the Cadiz/Fenner property to be used to plant, grow and harvest agricultural crops ("FVF Lease"). As consideration for the lease, FVF paid the Company a one-time payment of $12,000,000 in February 2016. The acreage that was historically farmed by theCompany and the acreage that is leased to a third party to develop lemons was included within the leased acreage and assumed by FVF. Following entry into thislease, the Company is no longer directly involved in the current agricultural operations at the site and all of our agricultural revenue is derived pursuant to the FVFlease. As part of the agricultural development to be conducted under the lease arrangements, the groundwater production capacity of the property's existing well-field is expected to be enhanced through infrastructure improvements that are complementary to the Water Project. While any additional well-field developmentfor agricultural use would be financed by our agricultural partners as provided under our agricultural lease arrangements, the Company retained a call feature thatallows us, at any time in the initial 20 years, to acquire the well-field and integrate any new agricultural well-field infrastructure developed into the Water Project'sfacilities.Additional eastern mojave Properties We also own approximately 11,000 acres outside of the Cadiz/Fenner Valley area in two locations within the Mojave Desert in eastern San BernardinoCounty. Our primary landholding outside of the Cadiz area is approximately 9,000 acres in the Piute Valley. This landholding is located approximately 15 miles fromthe resort community of Laughlin, Nevada, and about 12 miles from the Colorado River town of Needles, California. Extensive hydrological studies, including thedrilling and testing of a full-scale production well, have demonstrated that this landholding is underlain by high-quality groundwater. The aquifer systemunderlying this property is naturally recharged by precipitation (both rain and snow) within a watershed of approximately 975 square miles and could be suitablefor a water supply project, agricultural development or solar energy production. These properties are located in or adjacent to areas designated by the federalgovernment as National Monument, Critical Desert Tortoise Habitat and/or Desert Wilderness Areas and are suitable candidates for preservation and conservation.(see "Land Conservation Bank" below).11  Additionally, we own acreage located near Danby Dry Lake in Ward Valley, approximately 30 miles southeast of our Cadiz/Fenner Valley properties. TheDanby Dry Lake property is located approximately 10 miles north of the CRA. Initial hydrological studies indicate that the area has excellent potential for a watersupply project. Certain of the properties in this area may also be suitable for agricultural development, solar energy development and/or preservation andconservation.land conservation Bank Approximately 10,000 acres of our properties outside of the Cadiz/Fenner Valley area are located within terrain designated by the federal government asCritical Desert Tortoise Habitat and/or Desert Wilderness Areas and have limited development opportunities. In February 2015, the California Department of Fishand Wildlife approved our establishment of the Fenner Valley Desert Tortoise Conservation Bank ("Fenner Bank"), a land conservation bank that makes availableapproximately 7,500 acres of our properties located within Critical Desert Tortoise Habitat for mitigation of impacts to tortoise and other sensitive species thatwould be caused by development in the Southern California desert. Under its enabling documents, the Fenner Bank offers credits that can be acquired by entitiesthat must mitigate or offset impacts linked to planned development. For example, this bank can service the mitigation requirements of renewable energy, military,residential and commercial development mitigation requirements for projects being considered throughout the desert. Credits sold by the Fenner Bank will fundour permanent preservation of the land as well as research by outside entities, including San Diego Zoo Global, into desert tortoise health and species protection.other opportunities Other opportunities in the water and agricultural or related infrastructure business complementary to our current objectives could provide new opportunitiesfor our Company. Over the longer-term, we believe the population of Southern California, Nevada and Arizona will continue to grow, and that, in time, the economics ofcommercial and residential development at our properties may become attractive. We remain committed to the sustainable use of our land and water assets, and will continue to explore all opportunities for environmentally responsibledevelopment of these assets. We cannot predict with certainty which of these various opportunities will ultimately be utilized.seasonality Our water resource development activities are not seasonal in nature. Our farming operations have been limited to the cultivation of lemons and grapes/raisins and spring and fall plantings of vegetables on the Cadiz Valleyproperties. These operations have been subject to the general seasonal trends that are characteristic of the agricultural industry.12 competition We face competition for the acquisition, development and sale of our properties from a number of competitors. We may also face competition in thedevelopment of water resources and agriculture associated with our properties. Since California has scarce water resources and an increasing demand for availablewater, we believe that location, price and reliability of delivery are the principal competitive factors affecting transfers of water in California.employees As of December 31, 2016, we employed 9 full-time employees (i.e. those individuals working more than 1,000 hours per year). We believe that ouremployee relations are good.Regulation Our operations are subject to varying degrees of federal, state and local laws and regulations. As we proceed with the development of our properties,including the Water Project, we will be required to satisfy various regulatory authorities that we are in compliance with the laws, regulations and policies enforcedby such authorities. Groundwater development, and the export of conserved groundwater for sale to entities such as public water agencies, is subject to regulationby specific existing statutes, in addition to general environmental statutes applicable to all development projects. Additionally, we must obtain a variety ofapprovals and permits from state and federal governments with respect to issues that may include environmental issues, issues related to special status species,issues related to the public trust, and others. Because of the discretionary nature of these approvals and concerns, which may be raised by various governmentalofficials, public interest groups and other interested parties during both the development and the approval process, our ability to develop properties and realizeincome from our projects, including the Water Project, could be delayed, reduced or eliminated.Access to our information Our annual, quarterly and current reports, proxy statements and other information are filed with the Securities and Exchange Commission ("SEC") and areavailable free of charge through our web site, www.cadizinc.com , as soon as reasonably practical after electronic filing of such material with the SEC. Our SEC filings are also available to the public at the SEC website at www.sec.gov . You may also read and copy any document we file at the SEC's publicreference room located at 100 F Street N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the publicreference room.ITEM 1A. Risk Factors Our business is subject to a number of risks, including those described below.13 We May Not Be Able To Obtain the Financing We Need To Implement Our Asset Development Programs We presently have sufficient funds to meet our expected working capital needs through April 2018, but will continue to require additional working capital tomeet our cash resource needs until such time as our asset development programs, including the Water Project, produce revenues. If we cannot raise funds if andwhen needed, we might be forced to make substantial reductions in our operating expenses, which could adversely affect our ability to implement our currentbusiness plan and ultimately our viability as a company. We cannot assure you that our current lenders, or any other lenders, will give us additional credit shouldwe seek it. If we are unable to obtain additional credit, we may engage in further financings. Our ability to obtain financing will depend, among other things, onthe status of our asset development programs and general conditions in the capital markets at the time funding is sought. Any further equity or convertible debtfinancings would result in the dilution of ownership interests of our current stockholders.Our Development Activities Have Not Generated Significant Revenues At present, our development activities include water resource and agricultural development at our San Bernardino County properties. We have not receivedsignificant revenues from our development activities to date and we do not know when, if ever, we will receive operating revenues sufficient to offset the costs ofour development activities. As a result, we continue to incur a net loss from operations.We May Never Generate Significant Revenues or Become Profitable Unless We Are Able to Successfully Implement Programs to Develop Our LandAssets and Related Water Resources We do not know the terms, if any, upon which we may be able to proceed with our water and other development programs. Regardless of the form of ourwater development programs, the circumstances under which supplies or storage of water can be developed and the profitability of any supply or storage project aresubject to significant uncertainties, including the risk of variable water supplies and changing water allocation priorities. Additional risks include our ability toobtain all necessary regulatory approvals and permits, litigation by environmental or other groups, unforeseen technical difficulties, general market conditions forwater supplies, and the time needed to generate significant operating revenues from such programs after operations commence.The Development of Our Properties Is Heavily Regulated, Requires Governmental Approvals and Permits That Could Be Denied, and May HaveCompeting Governmental Interests and Objectives In developing our land assets and related water resources, we are subject to local, state, and federal statutes, ordinances, rules and regulations concerningzoning, resource protection, environmental impacts, infrastructure design, subdivision of land, construction and similar matters. Our development activities aresubject to the risk of adverse interpretations or changes to U.S. federal, state and local laws, regulations and policies. Further, our development activities requiregovernmental approvals and permits. If such permits were to be denied or granted subject to unfavorable conditions or restrictions, our ability to successfullyimplement our development programs would be adversely impacted. 14  In this regard, federal government appropriations currently direct the U.S. Department of the Interior (the "DOI") to confirm that the Water Project's proposeduse of a portion of the railroad right-of-way leased from the ARZC for the Project's conveyance pipeline is within the scope of the original right-of-way grant. According to existing federal law and direction from the DOI in Memorandum Opinion M-23075, a railroad has the authority to grant third party uses of its right-of-way without BLM permitting if those uses will further, in part, a railroad purpose. The Project and pipeline will further numerous railroad purposes by providingfire suppression, hydropower generation creating additional rail transloading opportunities, fiber optic communications, increased traffic, access to water forbusiness operations, and other benefits. In October 2015, the outgoing Director of the BLM's California State Office notified the Company and the ARZC that, inspite of the railroad purposes furthered by the Project pipeline, he had determined that the Project's pipeline is outside the scope of the ARZC right-of-way becausethe benefits derive from a pipeline that is not an original railroad purpose. The letter also stated that if the Project would like to move ahead with the constructionof a pipeline within the ARZC right-of-way, then the Company would need to file a new right-of-way application with the BLM. The October 2015 guidance notedit was not a final determination and could be reconsidered with the presentation of additional information and in the public interest. Several Members of Congress have raised concerns about the 2015 guidance and have supported legislative language that would clarify federal policygoverning third party use of railroad right-of-way over federal lands. We believe that if this language were to be signed into law it will enable third parties,including the Company, to carry on existing and future activities within existing railroad ROWs over federal lands without the need to secure a separate ROWgrant. The language is expected to be considered as part of a federal appropriations package in April 2017. If this language is not considered in April 2017, it couldbe delayed until the Fall of 2017. In addition, prior to construction of the Water Project, terms for moving water supplies in the CRA must be negotiated with Metropolitan, which owns andcontrols the CRA. Water Project supplies entering the CRA will comply with Metropolitan's published engineering, design and water quality standards and will besubject to all applicable fees and charges routinely established by Metropolitan for the conveyance of water within its service territory. Any agreement as to theterms and conditions of the Water Project's use of the CRA will be negotiated between and entered into by Metropolitan and the Project participating agencies, notthe Company. Discussions with Metropolitan regarding conveyance of Project water in the CRA have been led by SMWD. We expect arrangements would beapproved by Metropolitan staff and considered by its Board following resolution of BLM discussions related to the conveyance pipeline, discussed above. Oncearrangements are reached, Metropolitan must take action as a responsible agency under CEQA regarding the terms and conditions of the Water Project's use of theCRA to transport water to its participating agencies. Finally, the statutes, regulations and ordinances governing the approval processes provide third parties the opportunity to challenge proposed plans andapprovals. Opposition from third parties will cause delays and increase the costs of our development efforts or preclude such development entirely. While we haveworked with representatives of various environmental and third party interests and agencies to minimize and mitigate the impacts of our planned projects, certaingroups may remain opposed to our development plans and pursue legal action.15 Our Failure to Make Timely Payments of Principal and Interest on Our Indebtedness May Result in a Foreclosure on Our Assets As of December 31, 2016, we had total indebtedness outstanding to our lenders of approximately $112.5 million. Approximately $43.5 million of ourindebtedness is secured by our assets and is due in September 2019 (see Item 7, "Management's Discussion and Analysis of Financial Condition and Results ofOperations – Liquidity and Capital Resources"). To the extent that we do not make principal and interest payments on the indebtedness when due, or if weotherwise fail to comply with the terms of agreements governing our indebtedness, we may default on our obligations. The Conversion of Our Outstanding Convertible Notes into Common Stock Would Dilute the Percentage of Our Common Stock Held by CurrentStockholders In connection with our March 2013 debt refinance (see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations –Liquidity and Capital Resources"), we issued approximately $53.5 million in convertible notes, under which principal and accrued interest can be converted intocommon stock at $8.05 per share at the election of our noteholders prior to maturity in March 2018 (the "2018 Convertible Notes"). In December 2015, certain ofthe noteholders exchanged their 2018 Convertible Notes for new convertible notes under which principal and accrued interest can be converted into common stockat $6.75 per share at the election of the noteholders prior to a maturity date in March 2020 (the "2020 Convertible Notes"). A total of $48.929 million in originalprincipal amount of the 2018 Convertible Notes were exchanged for 2020 Convertible Notes, leaving $3.390 million in original principal amount of the 2018Convertible Notes outstanding. In April 2016, we issued an additional $8.0 million in original principal amount of the 2020 Notes. As of December 31, 2016, ourlenders had converted $8.746 million in original principal amount of the notes, leaving a balance of $52.724 million in original principal amount of these notes. Anelection by our lenders to convert all or a portion of principal and accrued interest under the 2018 and 2020 Convertible Notes into common stock will dilute thepercentage of our common stock held by current stockholders up to 10.2 million shares as of December 31, 2016, and up to an additional 2.5 million shares if heldto maturity.The Issuance of Equity Securities Under Management Equity Incentive Plans Will Impact Earnings Our compensation programs for management emphasize long-term incentives, primarily through the issuance of equity securities and options to purchaseequity securities. It is expected that plans involving the issuance of shares, options, or both will be submitted from time to time to our stockholders for approval. Inthe event that any such plans are approved and implemented, the issuance of shares and options under such plans may result in the dilution of the ownership interestof other stockholders and will, under currently applicable accounting rules, result in a charge to earnings based on the value of our common stock at the time ofissue and the fair value of options at the time of their award. The expense would be recorded over the vesting period of each stock and option grant.16 The Volatility of Our Stock Price Could Adversely Affect Current and Future Stockholders The market price of our common stock is volatile and fluctuates in response to various factors which are beyond our control. Such fluctuations areparticularly common in companies such as ours, which have not generated significant revenues. The following factors, in addition to other risk factors described inthis section, could cause the market price of our common stock to fluctuate substantially: ·developments involving the execution of our business plan;·disclosure of any adverse results in litigation;·regulatory developments affecting our ability to develop our properties;·the dilutive effect or perceived dilutive effect of additional debt or equity financings;·perceptions in the marketplace of our company and the industry in which we operate; and·general economic, political and market conditions. In addition, the stock markets, from time to time, experience extreme price and volume fluctuations that may be unrelated or disproportionate to the operatingperformance of companies. These broad fluctuations may adversely affect the market price of our common stock. Price volatility could be worse if the tradingvolume of our common stock is low.ITEM 1B. Unresolved Staff Comments Not applicable at this time.ITEM 2. Properties Following is a description of our significant properties.the cadiz/Fenner Valley Property We own approximately 34,000 acres of largely contiguous land in the Cadiz and Fenner valleys of eastern San Bernardino County, California (the"Cadiz/Fenner Property"). This area is located approximately 30 miles north of the Colorado River Aqueduct ("CRA"). We first began acquiring this land in 1983and shortly thereafter conducted investigations into the feasibility of agricultural development at these lands and overall access to groundwater. Theseinvestigations confirmed the availability of high-quality groundwater in quantities appropriate for agricultural development. Additional independent geotechnical and engineering studies conducted since 1985 have confirmed that the Cadiz/Fenner Property overlies a significantaquifer system that would not only support agricultural development, but also is ideally suited for the conservation and recovery of indigenous groundwater, as wellas the storage of conserved or imported water, as contemplated by the Water Project. See Item 1, "Business – Narrative Description of Business – Water ResourceDevelopment".17 other eastern mojave Properties In addition to the Cadiz/Fenner Valley property, we also own approximately 11,000 additional acres in the eastern Mojave Desert portion of San BernardinoCounty, California at two separate properties. The first property consists of approximately 9,000 acres in the Piute Valley. This landholding is located approximately 15 miles from the resort communityof Laughlin, Nevada, and about 12 miles from the Colorado River town of Needles, California. Extensive hydrological studies, including the drilling and testing ofa full-scale production well, have demonstrated that this landholding is underlain by high-quality groundwater. The aquifer system underlying this property isnaturally recharged by precipitation (both rain and snow) within a watershed of approximately 975 square miles and could be suitable for a water supply project,agricultural development or solar energy production. Certain of these properties are located in or adjacent to areas designated by the federal government as CriticalDesert Tortoise Habitat and/or Desert Wilderness Areas and are suitable candidates for preservation and conservation. In February 2015, the CaliforniaDepartment of Fish and Wildlife approved our establishment of the Fenner Valley Desert Tortoise Conservation Bank on approximately 7,500 acres of our PiuteValley properties. The Fenner Bank, which is the largest land bank in California dedicated to protecting the desert tortoise, offers credits that can be acquired bypublic and private entities required to mitigate or offset impacts to the desert tortoise linked to planned development. We are presently marketing these credits to avariety of planned developments in the region. Additionally, we own nearly 2,000 acres near Danby Dry Lake in Ward Valley, approximately 30 miles southeast of our Cadiz/Fenner landholdings. OurDanby Dry Lake property is located approximately 10 miles north of the Colorado River Aqueduct. Initial hydrological studies indicate that it has excellentpotential for water supply, agricultural development and related uses. Certain of the properties in this area may also be suitable for agricultural development and/orpreservation and conservation.executive offices We lease approximately 7,200 square feet of office space in Los Angeles, California for our executive offices. The lease terminates in April 2019. Currentbase rent under the lease is approximately $15,500 per month.cadiz Real estate In December 2003, we transferred substantially all of our assets (with the exception of our office sublease, and certain office furniture and equipment) toCadiz Real Estate LLC, a Delaware limited liability company ("Cadiz Real Estate"). We hold 100% of the equity interests of Cadiz Real Estate and, therefore, wecontinue to hold 100% beneficial ownership of the properties that we transferred to Cadiz Real Estate. The Board of Managers of Cadiz Real Estate currentlyconsists of two managers appointed by us. Cadiz Real Estate is a co-obligor under our senior secured term loan, for which assets of Cadiz Real Estate have been pledged as security.18  Because the transfer of our properties to Cadiz Real Estate has no effect on our ultimate beneficial ownership of these properties, we refer throughout thisReport to properties owned of record either by Cadiz Real Estate or by us as "our" properties.Debt secured by Properties Our assets have been pledged as collateral for $43.5 million of senior secured debt outstanding as of December 31, 2016. Information regarding interest ratesand principal maturities is provided in Note 6 to the Consolidated Financial Statements.ITEM 3. Legal Proceedingssecurities Related class Action lawsuit 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 andcertain of its directors and officers ("Defendants") in the United States District Court for the Central District of California purporting to assert claims for violationof §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint, which was purportedly brought on behalf ofall Cadiz shareholders, alleged that the Company's public disclosures were inadequate in relation to the Cadiz Valley Water Conservation, Recovery and StorageProject (the "Water Project"). The complaint sought unspecified monetary damages and other relief. The Company believed that the claims alleged in thepurported class action lawsuit were baseless and without merit. On December 2, 2015, Defendants filed a Motion to Dismiss the lawsuit and a hearing on themotion was held in late February 2016. Following court-mandated mediation discussions in April 2016, and notwithstanding that the Company disputes theallegations in the complaint, the parties agreed to settle the case and filed a notice of settlement with the Court on May 6, 2016. On May 9, 2016, the Courtdismissed the case without prejudice. On June 16, 2016, the plaintiffs filed a motion seeking preliminary approval of the settlement and supplemented such motionon July 14, 2016 at the request of the Court. On September 30, 2016, the Court issued an order granting preliminary approval of the settlement. In the settlement,the Company made no admission of liability or wrongdoing and did not concede the validity of any of the allegations or legal claims made in the litigation. OnFebruary 8, 2017, the Court issued its Order and Final Judgment dismissing the federal class action and finalizing the settlement. This matter is now closed. Acash settlement will be paid in accordance with our corporate insurance policy and not from our cash resources.shareholder Derivative lawsuit On February 6, 2016, a shareholder derivative lawsuit, entitled Herman Boschken v. Keith Brackpool et. al. , was filed against certain Cadiz directors andofficers ("Derivative Defendants") in the Superior Court of California State of California County of Los Angeles ("Superior Court") purporting to assert claims forbreach of fiduciary duty, corporate waste, gross mismanagement, and unjust enrichment. The Complaint, which purports to be brought on behalf of all Cadizshareholders, alleges that the Derivative Defendants made false and misleading statements regarding the Company's business and prospects. This complaint wasfiled 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 factualallegations. Among other things, the Complaint seeks unspecified monetary damages and certain changes to corporate governance policies. The Company believesthat the lawsuit is without merit. N otwithstanding that the Company disputes the allegations in the complaint, the parties agreed to settle the case and on January25, 2017, the Superior Court entered an order preliminarily approving a proposed settlement and approving for dissemination the Notice of Derivative Settlement(the "Notice") to our current shareholders. The proposed settlement is subject to final approval by the Superior Court of California. In the settlement, the Companymakes no admission of liability or wrongdoing and does not concede the validity of any of the allegations or legal claims made in the litigation. Subject to finalapproval of the settlement by the Superior Court, and in exchange for a release of all claims by the plaintiffs and a dismissal of the Derivative Action withprejudice, the Company has agreed to implement certain corporate governance reforms, and pay certain plaintiffs' attorney fees and expenses. The cash portion ofthe settlement will be paid in accordance with our corporate insurance policy and not from our cash resources. 19 other Proceedings There are no other material legal proceedings pending to which we are a party or of which any of our property is the subject.ITEM 4. Mine Safety Disclosures Not Applicable.20 PARt iiITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities Our common stock is currently traded on The NASDAQ Global Market ("NASDAQ") under the symbol "CDZI." The following table reflects actual salestransactions for the dates that we were trading on NASDAQ, as reported by NASDAQ. High Low Quarter Ended Sales Price Sales Price 2015: March 31 $10.66 $10.21 June 30 $8.70 $8.53 September 30 $7.37 $7.24 December 31 $5.45 $5.15 2016: March 31 $5.43 $5.03 June 30 $5.93 $5.64 September 30 $7.63 $7.04 December 31 $12.65 $12.05 On March 10, 2017, the high, low and last sales prices for the shares were $14.20, $13.60, and $14.10, respectively. As of March 10, 2017, the number of stockholders of record of our common stock was 91. To date, we have not paid a cash dividend on our common stock and do not anticipate paying any cash dividends in the foreseeable future. Our seniorsecured term loan has covenants that prohibit the payment of dividends. All securities sold by us during the three years ended December 31, 2016, which were not registered under the Securities Act of 1933, as amended, have beenpreviously reported in accordance with the requirements of Rule 12b-2 of the Securities Exchange Act of 1934, as amended.21 STOCK PRICE PERFORMANCE The stock price performance graph below compares the cumulative total return of Cadiz Inc. common stock against the cumulative total return of theStandard & Poor's Small Cap 600 NASDAQ U.S. index and the Russell 2016 ® index for the past five fiscal years. The graph indicates a measurement point ofDecember 31, 2011, and assumes a $100 investment on such date in Cadiz Inc. common stock, the Standard & Poor's Small Cap 600 and the Russell 2016 ®indices. With respect to the payment of dividends, Cadiz Inc. has not paid any dividends on its common stock, but the Standard & Poor's Small Cap 600 and theRussell 2016 ® indices assume that all dividends were reinvested. The stock price performance graph shall not be deemed incorporated by reference by any generalstatement incorporating by reference this annual report on Form 10-K into any filing under the Securities Act of 1933, as amended, except to the extent that CadizInc. specifically incorporates this graph by reference, and shall not otherwise be deemed filed under such acts. 22 ITEM 6. Selected Financial Data The following selected financial data insofar as it relates to the years ended December 31, 2016, 2015, 2014, 2013, and 2012 has been derived from ouraudited financial statements. The information that follows should be read in conjunction with the audited consolidated financial statements and notes thereto forthe period ended December 31, 2016 included in Part IV of this Form 10-K. See also Item 7, "Management's Discussion and Analysis of Financial Condition andResults of Operations". ($ in thousands, except for per share data) Year Ended December 31, 2016 2015 2014 2013 2012 Statement of Operations Data: Total revenues$412 $304 $336 $301 $362 Net loss$(26,339) $(24,013) $(18,881) $(22,677) $(19,574)Net loss applicable to common stock$(26,339) $(24,013) $(18,881) $(22,677) $(19,574)Per share: Net loss (basic and diluted)$(1.41) $(1.35) $(1.15) $(1.46) $(1.27)Weighted-average common shares outstanding 18,719 17,782 16,370 15,570 15,438 Year Ended December 31, 2016 2015 2014 2013 2012 Balance Sheet Data: Total assets$67,099 $54,790 $67,375 $63,106 $50,437 Long-term debt$102,374 $107,592 $103,547 $95,349 $63,169 Common stock and additional paid-in capital$355,554 $327,034 $319,781 $304,140 $301,193 Accumulated deficit$(409,871) $(383,532) $(359,519) $(340,638) $(317,961)Stockholders' (deficit) equity$(54,317) $(56,498) $(39,738) $(36,498) $(16,768) Common shares issued and outstanding have increased from 15,438,961 at December 31, 2012 to 21,768,864 as of December 31, 2016. The increase isprimarily due to the issuance of shares to investors in registered offerings, private placements, the issuance of shares to investors upon warrant exercises,conversions of notes, debt interest payments in the form of shares and the issuance of shares to employees, vendors and lenders.23 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the following discussion contains trend analysis andother forward-looking statements. Forward-looking statements can be identified by the use of words such as "intends", "anticipates", "believes", "estimates","projects", "forecasts", "expects", "plans" and "proposes". Although we believe that the expectations reflected in these forward-looking statements are based onreasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. These include, among others, our ability to maximize value from our land and water resources and our ability to obtain new financings as needed to meet ourongoing working capital needs. See additional discussion under the heading "Risk Factors" above.overview We are a land and water resource development company with 45,000 acres of land in three areas of eastern San Bernardino County, California. Virtually allof this land is underlain by high-quality, naturally recharging groundwater resources, and is situated in proximity to the Colorado River and the Colorado RiverAqueduct ("CRA"), California's primary mode of water transportation for imports from the Colorado River into the State. Our properties are suitable for varioususes, including large-scale agricultural development, groundwater storage and water supply projects. Our main objective is to realize the highest and best use ofthese land and water resources in an environmentally responsible way. We believe that the long-term highest and best use of our land and water assets can best be realized through the development of a combination of watersupply and storage projects at our properties. Therefore, the Company has been primarily focused on the development of the Cadiz Valley Water Conservation,Recovery and Storage Project ("Water Project" or "Project"), which will capture and conserve millions of acre-feet 2 of native groundwater currently being lost toevaporation from the aquifer system beneath our 34,000-acre property in the Cadiz and Fenner valleys of eastern San Bernardino County (the "Cadiz/FennerProperty"), and deliver it to water providers throughout Southern California (see "Water Resource Development") . A second phase of the Water Project wouldoffer storage of up to one million acre-feet of imported water in the aquifer system. We believe that the ultimate implementation of this Water Project will providea significant source of future cash flow. The primary factor driving the value of such projects is ongoing pressure on California's traditional water supplies and the resulting demand for new, reliablesupply solutions that can meet both immediate and long-term water needs. Available supply is constrained by environmental and regulatory restrictions on each ofthe State's three main water sources: the CRA, the State Water Project, which provides water supplies from Northern California to the central and southern parts ofthe state, and the Los Angeles Aqueduct which delivers water from the eastern Sierra Nevada mountains to Los Angeles. Southern California's water providers relyon imports from these systems for a majority of their water supplies, but deliveries from all three into the region have been below capacity over the last severalyears. ____________________________________________ 2 One acre-foot is equal to approximately 326,000 gallons or the volume of water that will cover an area of one acre to a depth of one-foot. An acre-foot isgenerally considered to be enough water to meet the annual water needs of one average California household.24  Availability of supplies in California also differs greatly from year to year due to natural hydrological variability. Over the last several years, California hasstruggled through an historic drought featuring record-low winter precipitation and reservoir storage levels. However, following a series of strong storms throughthe 2016-2017 winter, California has received record amounts of rain and snow, eliminating drought conditions in much of Northern California and easing droughtin the South. The rapid swing from drought to an extremely wet year has challenged California's traditional infrastructure system, and deliveries into SouthernCalifornia from the State Water Project, Colorado River Aqueduct and Los Angeles Aqueduct remain below capacity. The Water Project is a local supply option in Southern California that could help address the region's water supply challenges by providing new reliablesupply and local groundwater storage opportunities (see "Water Resource Development" below) in both dry and wet years. The Project has received permits inaccordance with the California Environmental Quality Act ("CEQA") which allow the capture and conservation of 2.5 million acre-feet of groundwater over 50years under the terms of a groundwater management plan approved by San Bernardino County, which is responsible for groundwater use at the Project area. Our 2017 working capital requirements relate largely to the final development activities associated with the Water Project and those activities consistent withthe Water Project related to further development of our land and agricultural assets. While we continue to believe that the ultimate implementation of the WaterProject will provide the primary source of our future cash flow, we also believe there is significant additional value in our underlying agricultural assets. Demandfor agricultural land with water rights is at an all-time high; therefore, in addition to our Water Project proposal, we are engaged in agricultural joint ventures at theCadiz/Fenner Property that put some of the groundwater currently being lost to evaporation from the underlying aquifer system to immediate beneficial use. Wehave farmed portions of the Cadiz/Fenner Property since the late 1980s relying on groundwater from the aquifer system for irrigation and have found the site iswell suited for various permanent and seasonal crops. Presently, the property has 2,100 acres leased to third parties for a variety of crops, including citrus, dried-on-the-vine raisins and seasonal vegetables. We also continue to explore additional uses of our land and water resource assets, including renewable energy development, the marketing of our approveddesert tortoise land conservation bank, which is located on our properties outside the Water Project area, and other long-term legacy uses of our properties, such ashabitat conservation and cultural development.W ater Resource Development The Water Project is designed to supply, capture and conserve billions of gallons of renewable native groundwater currently being lost annually toevaporation from the aquifer system underlying our Cadiz/Fenner Property, and provide a new reliable water supply for approximately 400,000 people in SouthernCalifornia. The total quantity of groundwater to be recovered and conveyed to Water Project participants will not exceed a long-term annual average of 50,000acre-feet per year for 50 years. The Water Project also offers participants the ability to carry-over their annual supply and store it in the groundwater basin fromyear to year. A second phase of the Water Project, Phase II, will offer up to one million acre-feet of storage capacity that can be used to hold imported watersupplies at the Water Project area.25  Water Project facilities required for Phase I primarily include, among other things:·High-yield wells designed to efficiently recover available native groundwater from beneath the Water Project area;·A water conveyance pipeline to deliver water from the well-field to the CRA for further delivery to Project participants; and·An energy source to provide power to the well-field, pipeline and pumping facilities. If an imported water storage component of the Project is ultimately implemented in Phase II, the following additional facilities would be required, amongother things:·Facilities to pump water through the conveyance pipeline from the CRA to the Water Project well-field and/or through the Company's pipelinefrom Cadiz to Barstow, CA; and·Spreading basins, which are shallow settling ponds that will be configured to efficiently percolate water from the ground surface down to thewater table using subsurface storage capacity for the storage of water. In 2016, the Company focused on completing the remaining steps to implement the Project, including clearance to use an existing railroad right-of-way for itsconveyance pipeline and defending the Water Project's CEQA permits in the California Court of Appeal. Prior to construction, the Water Project must (1) completeefforts to secure its pipeline right-of-way, (2) finalize contracts with Project participating agencies and secure transportation arrangements to deliver water into eachparticipant's service area, and (3) secure private construction financing. Below is a discussion of present activities to advance these objectives.(1)Water Conveyance Pipeline Right-of-WayPipeline from Cadiz to CRA In September 2008, we secured a right-of-way for the Water Project's water conveyance pipeline by entering into a lease agreement with the Arizona &California Railroad Company ("ARZC"), which operated an active shortline railroad extending from Cadiz to Matthie, Arizona. The agreement allows for the useof a portion of the railroad's right-of-way to construct and operate a water conveyance pipeline for a period up to 99 years. The buried pipeline would beconstructed parallel to the railroad tracks and be used to convey water between our Cadiz Valley property and the CRA in Freda, California. Our lease agreement with the ARZC also expressly requires that the Project further several railroad purposes and, under the terms of the lease agreement, theARZC reserved water supplies from the Project for its operational needs as well as access to Project facilities, such as roads and power appurtenances, for thebenefit of its railroad operation. In September 2013, we also entered into a trackage rights agreement with the ARZC that would enable the operation of steam-powered, passenger excursion trains on the line powered by water made available from the pipeline.26  The pipeline route was fully analyzed in the Water Project's Final Environmental Impact Report ("EIR") as part of the CEQA environmental review processcompleted in 2012. As an existing transportation corridor, the route, which avoids sensitive habitats, was found to be the environmentally preferred route for thepipeline. In 2009, the federal government stated that no federal environmental review of the pipeline route was required under the National Environmental PolicyAct ("NEPA"), because the pipeline was within the scope of the ARZC's right-of-way grant. Our plan to construct the Project pipeline within the railroad right-of-way is similar to, and modeled after, the thousands of other existing longitudinal uses ofrail corridors across the United States today, such as telecommunications lines, natural gas and petroleum product lines and other water lines. Under the GeneralRailroad Right-of-Way Act of March 3, 1875 ("1875 Act") , according to which many of these railroad corridors were established, a railroad can lease its propertyfor third party uses without permitting of the federal government so long as the use also derives from or furthers railroad purposes, at least in part. Thisinterpretation of the 1875 Act was confirmed by Memorandum Opinion M-37025 issued by the Solicitor of the US Department of the Interior on November 4, 2011("2011 M-Opinion"), which state in relevant part:"Within an 1875 Act ROW, a railroad's authority to undertake or authorize activities is limited to those activities that derive from or further a railroadpurpose, which allows a railroad to undertake, or others to undertake, activities that have both railroad and commercial purposes , but does not permit arailroad to authorize activities that bear no relationship to the construction and operation of a railroad." (Emphasis added, M-37025) The Project includes the following features, enabled by the conveyance pipeline, provided in furtherance of railroad purposes:·A new access road along the entire pipeline route to enable maintenance, emergency access and shorten routes for crew-changes,·Remotely operated fire-suppression systems at each of the existing creosote-treated wooden trestles,·Inline power generation for crossing operations and lighting, heating and cooling for existing railroad transloading operations,·Fiber optic information transmission to convey track-speed and cameras in aid of emergency and to discourage vandalism; and·The distribution of water for the operation of a steam powered locomotive, fire-suppression and other miscellaneous uses. In response to inquiries from the BLM beginning in 2012 about these purposes, the Company, the ARZC and Water Project participants had numerousmeetings with the BLM and provided several documents over multiple years for background about the railroad purposes that would be furthered by the Project overseveral years. In April 2015 BLM California notified the Company that it was analyzing the Project's proposed use of the ARZC right-of-way and expected toprovide the results of this evaluation to the BLM Washington D.C. office by the end of summer 2015.27  On October 2, 2015, the Director of the California Office of the BLM signed a letter that would later be sent to ARZC and the Company summarizing that theProject pipeline is outside the scope of the ARZC right-of-way, because a water pipeline would not primarily further a railroad purpose or originate from a railroadpurpose, and would therefore require a new federal right-of-way permit prior to construction. We believe this finding disregards federal law and policy and straysfrom the framework provided for in the binding 2011 M-Opinion, and therefore we immediately pursued steps to rescind the October determination. Several Members of Congress raised concerns about the 2015 guidance and its inconsistencies with existing federal policy governing third party railroadright-of-way use. As a result of inquiries from Congress, BLM California's newly appointed Director met with the Company, the ARZC and Project participants inMarch 2016. However, BLM representatives at the meeting were not prepared to discuss the framework utilized to evaluate the Water Project's proposed use of theARZC right-of-way. Following the production of documents produced via a Freedom of Information Act request in (June) 2016 regarding BLM's evaluation of the Project's use ofthe railroad right-of-way, we have had no further formal consultation with BLM California. The guidance letter is under investigation by the House ofRepresentatives Oversight & Government Reform Committee and the Interior Department Inspector General. Meanwhile, numerous United States congressional representatives have worked to clarify the scope of the congressionally granted 1875 Act right-of-way(ROW) for all who rely on them for necessary infrastructure, including, for example, fiber optics and communications lines, energy, electricity, water, wastewater,sewer, and natural gas lines. In July 2016, language that would clarify the scope of railroad ROW was included in the fiscal year 2017 (FY17) House Interior andEnvironment Appropriations Bill (H.R.5538), an annual funding measure for the Department of the Interior, the Environmental Protection Agency, the US ForestService, and various related agencies, including the BLM. HR 5538 passed the US House of Representatives in July 2016, but consideration of the bill has beencontinued until April 2017. If this language is not considered in April 2017, it could be delayed until the Fall of 2017. We believe that if signed into law, thelanguage now contained in the House appropriations bill will enable third parties, including the Company, to carry-on existing and future activities within existingrailroad ROWs over federal lands without the need to secure a separate ROW grant from BLM.Northern Pipeline We currently own a 96-mile existing idle natural gas pipeline from the Cadiz/Fenner Property to Barstow, California that we intend to convert for thetransportation of water. The Barstow area serves as a hub for water delivered from northern and central California to communities in Southern California's HighDesert. In addition, the Company holds an option to purchase a further 124-mile segment of this pipeline from Barstow to Wheeler Ridge, California for $20million. This option expires in December 2018. Initial feasibility studies indicated that, upon conversion, the 30-inch line could transport between 20,000 and 30,000 acre-feet of water per year between theWater Project area and various points along the Central and Northern California water transportation network. As a result this line could create significantopportunities for our water resource development efforts.28  If this pipeline were to become operational, then the Water Project would link two major water delivery systems in California, providing flexibleopportunities for both supply and storage. The Northern Pipeline could deliver Phase I supplies, either directly or via exchange, to existing and potential customersof Phase I of the Project. It could also be used to import water to the Project area and provide additional groundwater storage for the region's water providers. Suchuse is currently being contemplated as part of Phase II of the Water Project. The 96-mile pipeline segment was evaluated in the Water Project's EIR during the CEQA process. Any use of the pipeline would be conducted in conformitywith the Project's GMMMP and is subject to further CEQA evaluation and potentially federal environmental permitting. The Northern Pipeline also represents new opportunities for the Company independent of the Water Project to offer water transportation to locations alongthe pipeline route that are not presently interconnected by existing water infrastructure. The entire 220-mile pipeline crosses California's major water infrastructureas well as urban and agricultural centers and can be utilized to transport water, independent of the Water Project, between users who presently lack directinterconnections along the pipeline route. We are presently engaged in discussions with parties that may be interested in such transportation. (2)Agreements with Public Water Agencies or Private Water Utilities & Conveyance Arrangements The Company has executed Letters of Intent, option agreements and purchase agreements (collectively, "Agreements") with public water agencies and privatewater utilities in California during the Project's development. These participating agencies serve more than one million customers in cities throughout California'sSan Bernardino, Riverside, Los Angeles, Orange, Imperial and Ventura Counties. Santa Margarita Water District ("SMWD") was the first participant to convert its option agreement and adopt resolutions approving a Water Purchase andSale Agreement for 5,000 acre-feet of water. The structure of the SMWD purchase agreement calls for an annually adjusted water supply payment, plus a pro rataportion of the capital recovery charge and operating and maintenance costs. The capital recovery charge is calculated by amortizing the total capital investment bythe Company over a 30-year term. Agreements entered into prior to the beginning of the CEQA review process provide the right to acquire an annual supply of 5,000 acre-feet of water at a$775 per acre-foot (2010 dollars, subject to adjustment), which is competitive with the incremental cost of new water. In addition, these agencies have options toacquire storage rights in the Water Project to allow for the management of their Water Project supplies in complement with their own water resources. Up to150,000 acre-feet of carry-over storage is available for reservation by the agencies prior to construction commencement. Participants that elect to achieve year-to-year flexibility in their use of Project water by utilizing carry-over storage will reserve storage capacity for $1,500 per acre-foot prior to construction.29  Letters of Intent ("LOIs") that have been entered into since completion of the CEQA review process reserve supplies from the Water Project at $960 per acre-foot (2014 dollars, subject to adjustment). These LOIs also include the option to reserve carry-over storage capacity for $1,500 per acre-foot prior to construction. Presently, total reservations of supplies from the Water Project via these Agreements are in excess of Water Project capacity and we are workingcollaboratively with the participating water agencies to account for any oversubscription in the final definitive Purchase and Sale Agreements we enter into withthese agencies. In addition, prior to construction of the Water Project, terms for moving water supplies in the CRA must be negotiated with Metropolitan, which owns andcontrols the CRA. Water Project supplies entering the CRA will comply with Metropolitan's published engineering, design and water quality standards and will besubject to all applicable fees and charges routinely established by Metropolitan for the conveyance of water within its service territory. Any agreement as to theterms and conditions of the Water Project's use of the CRA will be negotiated between and entered into by Metropolitan and the Project participating agencies, notthe Company. Discussions with Metropolitan regarding conveyance of Project water in the CRA have been led by SMWD. We expect arrangements would beapproved by Metropolitan staff and considered by its Board following resolution of BLM discussions related to the conveyance pipeline, discussed above. Oncearrangements are reached, Metropolitan must take action as a responsible agency under CEQA regarding the terms and conditions of the Water Project's use of theCRA to transport water to its participating agencies.(3)Construction Financing As described above, construction of Phase I of the Water Project would primarily consist of wellfield facilities at the Project site, a conveyance pipeline, andan energy source to pump water through the conveyance pipeline between the Project well-field and the CRA. The construction of these facilities, which we expectwould cost approximately $250 million, will require capital financing that we expect will be secured by the proceeds of our definitive Purchase and SaleAgreements and the new facility assets. The Company's existing corporate term debt provides us the flexibility to incorporate Water Project construction financingup to $300 million within our current debt structure (see "Liquidity and Capital Resources", below).Agricultural Development Within the Cadiz/Fenner Property, all of the existing 34,000 acres are currently zoned for agriculture. In 1993, we secured conditional use permits to developagriculture on up to 9,600 acres of the property and withdraw groundwater from the underlying aquifer system for irrigation. We have since maintained variouslevels of crops on the Property as we developed the Water Project. In 2013, we entered into a lease agreement with a third party to develop up to 1,480 acres oflemons at the site, 520 acres of which have been planted to date. In February 2016, we entered into a lease agreement with Fenner Valley Farms LLC ("FVF"), a subsidiary of Water Asset Management LLC, a related party,pursuant to which FVF leased, for a 99-year term, 2,100 acres at the Cadiz/Fenner property to be used to plant, grow and harvest agricultural crops ("FVF Lease").As consideration for the lease, FVF paid the Company a one-time payment of $12,000,000 in February 2016. The acreage that was historically farmed by theCompany and the acreage that is leased to a third party to develop lemons was included within the leased acreage. Following entry into this lease, the Company isno longer directly involved in the current agricultural operations at the site and all of our agricultural revenue is derived pursuant to the FVF lease.30  As part of the agricultural development to be conducted under the lease arrangements, the groundwater production capacity of the property's existing well-field is expected to be enhanced through infrastructure improvements that are complementary to the Water Project. While any additional well-field developmentfor agricultural use would be financed by our agricultural partners as provided under our agricultural lease arrangements, the Company retained a call feature thatallows us, at any time in the initial 20 years, to acquire the well-field and integrate any new agricultural well-field infrastructure developed into the Water Project'sfacilities.Additional eastern mojave Properties We also own approximately 11,000 acres outside of the Cadiz/Fenner Valley area in two locations within the Mojave Desert in eastern San BernardinoCounty. Our primary landholding outside of the Cadiz area is approximately 9,000 acres in the Piute Valley. This landholding is located approximately 15 miles fromthe resort community of Laughlin, Nevada, and about 12 miles from the Colorado River town of Needles, California. Extensive hydrological studies, including thedrilling and testing of a full-scale production well, have demonstrated that this landholding is underlain by high-quality groundwater. The aquifer systemunderlying this property is naturally recharged by precipitation (both rain and snow) within a watershed of approximately 975 square miles and could be suitablefor a water supply project, agricultural development or solar energy production. These properties are located in or adjacent to areas designated by the federalgovernment as National Monument, Critical Desert Tortoise Habitat and/or Desert Wilderness Areas and are suitable candidates for preservation and conservation(see "Land Conservation Bank" below). Additionally, we own acreage located near Danby Dry Lake in Ward Valley, approximately 30 miles southeast of our Cadiz/Fenner Valley properties. TheDanby Dry Lake property is located approximately 10 miles north of the CRA. Initial hydrological studies indicate that the area has excellent potential for a watersupply project. Certain of the properties in this area may also be suitable for agricultural development and/or preservation and conservation.land conservation Bank Approximately 10,000 acres of our properties outside of the Cadiz/Fenner Valley area are located within terrain designated by the federal government asCritical Desert Tortoise Habitat and/or Desert Wilderness Areas and have limited development opportunities. In February 2015, the California Department of Fishand Wildlife approved our establishment of the Fenner Valley Desert Tortoise Conservation Bank ("Fenner Bank"), a land conservation bank that makes availableapproximately 7,500 acres of our properties located within Critical Desert Tortoise Habitat for mitigation of impacts to tortoise and other sensitive species thatwould be caused by development in the Southern California desert. Under its enabling documents, the Fenner Bank offers credits that can be acquired by entitiesthat must mitigate or offset impacts linked to planned development. For example, this bank can service the mitigation requirements of renewable energy, military,residential and commercial development mitigation requirements for projects being considered throughout the desert. Credits sold by the Fenner Bank will fund ourpermanent preservation of the land as well as research by outside entities, including San Diego Zoo Global, into desert tortoise health and species protection.31 other opportunities Other opportunities in the water and agricultural or related infrastructure business complementary to our current objectives could provide new opportunitiesfor our Company. Over the longer-term, we believe the population of Southern California, Nevada and Arizona will continue to grow, and that, in time, the economics ofcommercial and residential development at our properties may become attractive. We remain committed to the sustainable use of our land and water assets, and will continue to explore all opportunities for environmentally responsibledevelopment of these assets. We cannot predict with certainty which of these various opportunities will ultimately be utilized.Results of operations(a)year ended December 31, 2016 compared to year ended December 31, 2015 We have not received significant revenues from our water resource and real estate development activity to date. Our revenues have been limited to ouragricultural operations. As a result, we have historically incurred a net loss from operations. We had revenues of $412 thousand for the year ended December 31,2016, and $304 thousand for the year ended December 31, 2015. The net loss totaled $26.3 million for the year ended December 31, 2016, compared with a netloss of $24.0 million for the year ended December 31, 2015. The higher loss in 2016 was primarily related to a $2.25 million loss on extinguishment of debt. Thehigher 2016 loss was also related to higher interest expense on additional convertible debt issued and higher amortization expense, offset by a decrease in litigationcosts related to the Water Project due to the timing of the appellate litigation. Our primary expenses are our ongoing overhead costs associated with the development of the Water Project (i.e., general and administrative expense) and ourinterest expense. We will continue to incur non-cash expense in connection with our management and director equity incentive compensation plans. Revenues. Revenue totaled $412 thousand during the year ended December 31, 2016, compared to $304 thousand during the year ended December 31,2015. The 2016 revenue is primarily related to rental income from the FVF Lease (see "Agricultural Development", above). cost of sales. Cost of sales were zero for the year ended December 31, 2016, compared with $334 thousand during the year ended December 31, 2015.32  general and Administrative expenses. General and administrative expenses during the year ended December 31, 2016, totaled $9.3 million compared with$13.7 million for the year ended December 31, 2015. Non-cash compensation costs related to stock and option awards are included in general and administrativeexpenses. General and administrative expenses, exclusive of stock-based compensation costs, totaled $8.0 million in the year ended December 31, 2016, compared with$12.6 million for the year ended December 31, 2015. The decrease in general and administrative expense in 2016 was primarily due to lower litigation costsrelated to the Water Project due to the timing of the appellate litigation (see Item 1. – "Business, (a) General Development of Business", above.) Compensation costs from stock and option awards for the year ended December 31, 2016, totaled $1.3 million compared with $1.1 million for the year endedDecember 31, 2015. The higher 2016 expense was primarily due to higher stock-based non-cash compensation costs related to shares awarded to the Brownsteinlaw firm for certain legal and advisory services to the Company. Depreciation. Depreciation expense totaled $292 thousand for the year ended December 31, 2016, and $270 thousand for the year ended December 31,2015. interest expense, net . Net interest expense totaled $14.9 million during the year ended December 31, 2016, compared to $10.1 million during 2015. Thefollowing table summarizes the components of net interest expense for the two periods (in thousands): Year EndedDecember 31, 2016 2015 Interest on outstanding debt $9,664 $8,237Amortization of debt discount 4,973 1,635Amortization of deferred loan costs 238 198 $14,875 $10,070 The interest on outstanding debt increased from $8.2 million to $9.7 million due to the compounded interest on the debt facilities resulting in a higherprincipal balance. Amortization of debt discount increased from $1.6 million to $5.0 million primarily due to the acceleration of unamortized debt discount relatedto the conversion of approximately $2.8 million in original principal amount of the 2020 Notes that were issued in April 2016. See Note 6 to the ConsolidatedFinancial Statements, "Long-Term Debt". Debt Refinancings. In April 2016, we entered into a note purchase agreement with new and existing investors (the "Investors"). Pursuant to the agreement,we issued approximately $10.0 million of our 7.00% Convertible Senior Notes due 2020 ("2020 Notes) in aggregate principal and accrued interest. The proceedsfrom the issuance of the 2020 Notes (such 2020 Notes, the "New Notes"), are 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, areconvertible at any time into the Company's common stock at a price of $6.75 per share, pursuant to the terms of the Indenture dated as of December 10, 2015, byand between the Company and US Bank National Association (the "Indenture"), under which the New Notes were issued. As a result of this transaction, werecorded a debt discount in the amount of $2.0 million which is the difference between the proceeds from this transaction and the principal and accrued interest ofNew Notes on the day of the issuance. In addition, based on the conversion rate of $6.75 per share, the fair value of the shares receivable on conversion exceed the$8.0 million in net proceeds; therefore, a beneficial conversion feature was recorded in the amount of $1.48 million. This amount was recorded as additional debtdiscount with a corresponding amount recorded as additional paid-in capital. Such debt discount is accreted to the redemption value of the instrument over theremaining term of the loan. Furthermore, we incurred $400 thousand in placement agent fees which was recorded as additional debt discount and is beingamortized over the remaining term of the loan.33  In November 2016, we entered into an agreement with our senior lenders which (i) extended the maturity date of our secured senior debt from September2017 to September 2019 and (ii) permits us to satisfy the cash interest payment obligations through the issuance of shares of the Company's common stock. Inconnection with the agreement, we issued to our senior lenders an aggregate of 357,500 shares of the Company's common stock and warrants to purchase anaggregate of 357,500 shares of its common stock. The Company recorded a debt discount in the amount of $3.4 million which is the fair value of the 357,500shares issued. Such debt discount is accreted over the remaining term of the loan. The warrants have a five- year term and an exercise price of $0.01 per share, andbecome exercisable on May 28, 2017 only if the secured senior debt remains outstanding. The warrants will be valued at the time they become exercisable whichcould trigger extinguishment accounting and result in a loss on extinguishment.(b)year ended December 31, 2015 compared to year ended December 31, 2014 We had revenues of $304 thousand for the year ended December 31, 2015, and $336 thousand for the year ended December 31, 2014. The net loss totaled$24.0 million for the year ended December 31, 2015, compared with a net loss of $18.9 million for the year ended December 31, 2014. Revenues. Revenue totaled $304 thousand during the year ended December 31, 2015, compared to $336 thousand during the year ended December 31,2014. cost of sales. Cost of sales totaled $334 thousand during the year ended December 31, 2015, compared with $357 thousand during the year endedDecember 31, 2014. general and Administrative expenses. General and administrative expenses during the year ended December 31, 2015, totaled $13.7 million comparedwith $10.1 million for the year ended December 31, 2014. Non-cash compensation costs related to stock and option awards are included in general andadministrative expenses. General and administrative expenses, exclusive of stock-based compensation costs, totaled $12.6 million in the year ended December 31, 2015, comparedwith $9.0 million for the year ended December 31, 2014. The increase in general and administrative expense in 2015 was primarily due to higher litigation costsrelated to the Water Project due to the timing of the appellate litigation (see Item 1. – "Business, (a) General Development of Business", above.)and costs related topre-construction engineering activities in connection with the Water Project.34  Compensation costs from stock and option awards for the year ended December 31, 2015, totaled $1.1 million compared with $1.1 million for the year endedDecember 31, 2014. Depreciation. Depreciation expense totaled $270 thousand for the year ended December 31, 2015, and $254 thousand for the year ended December 31,2014. interest expense, net . Net interest expense totaled $10.1 million during the year ended December 31, 2015, compared to $8.5 million during 2014. Thefollowing table summarizes the components of net interest expense for the two periods (in thousands): Year EndedDecember 31, 2015 2014 Interest on outstanding debt $8,237 $7,659Amortization of debt discount 1,635 633Amortization of deferred loan costs 198 226 $10,070 $8,518 The interest on outstanding debt increased from $7.7 million to $8.2 million due to the compounded interest on the debt facilities resulting in a higherprincipal balance. See Note 6 to the Consolidated Financial Statements, "Long-Term Debt".Prior Debt Refinancings. In November 2015, we entered into an agreement with our senior lenders which granted us the right to extend the maturitydate of an original $30 million first tranche of our secured senior debt from March 2016 to June 2017. We paid our senior lenders an amendment fee of $2.25million in additional debt for this right to extend the maturity date, which was recorded as additional debt discount and is being amortized over the remaining termof the loan as additional interest expense.Also in November 2015, we entered into agreements with 94% of our convertible note holders to exchange their outstanding convertible notes, whichwere due in March 2018 ("2018 Convertible Notes"), for substantially similar convertible notes now due in March 2020 ("2020 Convertible Notes"). In exchangefor this maturity extension, the conversion rate on the 2020 Notes was reduced from $8.05 to $6.75 of accreted principal amount per share. As a result, the changein fair value of the instrument's conversion feature increased by $5.2 million. This amount was recorded as additional debt discount with a corresponding amountrecorded as additional paid-in capital. Such debt discount is accreted to the redemption value of the instrument over the new term of the loan as additional interestexpense. Furthermore, approximately $400 thousand of remaining unamortized deferred financing costs associated with the 2018 Convertible Notes that werepreviously recorded is now being amortized over the new term of the 2020 Convertible Notes.35 liquidity and capital Resources(a) current Financing Arrangements As we have not received significant revenues from our development activities to date, we have been required to obtain financing to bridge the gap betweenthe time water resource and other development expenses are incurred and the time that revenue will commence. Historically, we have addressed these needsprimarily through secured debt financing arrangements, private equity placements and the exercise of outstanding stock options and warrants. We have alsoworked with our secured lenders to structure our debt in a way which allows us to continue development of the Water Project and minimize the dilution of theownership interests of common stockholders.credit Agreement In November 2015, we entered into a First Amendment to the Credit Agreement ("First Amendment") with our senior lenders which granted us the right toextend the maturity date of the first tranche of our Senior Secured Debt ("First Mortgage") from March 2016 to June 2017, which was concurrent with the thenexisting due date of the second tranche of our Senior Secured Debt. In consideration of this right, we paid our senior lenders an amendment fee of $2.25 million inadditional debt. On February 8, 2016, we entered into a Second Amendment to the Credit Agreement with our senior lenders to (i) provide for the application of $10.5 millionof a $12 million payment pursuant to the Amended and Restated Fenner Valley Farm Lease (see "Agricultural Development" above) which satisfied the repaymentcondition 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 inaccretion to principal, beginning with the quarterly interest payment due June 5, 2016; and (iii) to provide for certain related matters. On February 25, 2016, weexercised our right to extend the maturity date of our First Mortgage and, at that time, incurred an additional extension fee of $2.25 million which is to be paid atthe election of the lenders in either additional debt or Cadiz common stock to be issued at a predetermined price. On March 4, 2016, we entered into a Third Amendment to the Credit Agreement which provided the lenders an additional 90 days to make their election toreceive the extension fee in additional debt or Cadiz common stock in exchange for extending the due date of our Senior Secured Debt from June 30, 2017 toSeptember 28, 2017. In May 2016, the lenders elected to receive the extension fee in Cadiz common stock. On April 28, 2016, we entered into a Fourth Amendment to the Credit Agreement with our senior lenders to permit the issuance of additional NewConvertible Notes (see "Convertible Notes", below). On November 29, 2016, we entered into a Fifth Amendment to the Credit Agreement with our senior lenders to (i) permit us to satisfy the cash interestpayment obligations under the Credit Agreement through the issuance of shares of the Company's common stock, and (ii) extend the maturity date of the CreditAgreement from September 28, 2017 to September 28, 2019.36 convertible notes In November 2015, we entered into agreements with 94% of our convertible note holders to exchange their outstanding 2018 Convertible Notes due in March2018 for substantially similar convertible notes due in March 2020 ("2020 Convertible Notes"), at a ratio of $1.00 in principal amount of new 2020 ConvertibleNotes for each $1.00 of accreted principal amount of existing 2018 Convertible Notes exchanged. Holders of $49.025 million in aggregate original principalamount of the Company's existing 2018 Convertible Notes agreed to exchange them for 2020 Convertible Notes. In exchange for this maturity extension, theconversion rate on the 2020 Convertible Notes was reduced from $8.05 to $6.75 of accreted principal amount per share. Interest on the 2020 Convertible Noteswill continue to accrue at 7% per annum with no payment due until maturity. In April 2016, we issued approximately $10.0 million in aggregate principal andaccrued interest of our 2020 Convertible Notes. The Senior Secured Debt and the convertible notes contain representations, warranties and covenants that are typical for agreements of this type, includingrestrictions that would limit our ability to incur additional indebtedness, incur liens, pay dividends or make restricted payments, dispose of assets, make investmentsand merge or consolidate with another person. However, while there are affirmative covenants, there are no financial maintenance covenants and no restrictions onour ability to issue additional common stock to fund future working capital needs. The debt covenants associated with the new loans were negotiated by the partieswith a view towards our operating and financial condition as it existed at the time the agreements were executed. At December 31, 2016, we were in compliancewith our debt covenants. As we continue to actively pursue our business strategy, additional financing will continue to be required. See "Outlook" below. The covenants in the termdebt do not prohibit our use of additional equity financing and allow us to retain 100% of the proceeds of any equity financing. We do not expect the loancovenants to materially limit our ability to finance our water development activities. At December 31, 2016, we had no outstanding credit facilities other than the Senior Secured Debt and the convertible notes. Cash Used for Operating Activities . Cash used for operating activities totaled $9.5 million for the year ended December 31, 2016, $12.6 million for theyear ended December 31, 2015, and $10.1 million for the year ended December 31, 2014. The cash was primarily used to fund general and administrative expensesrelated to our water development efforts and litigation costs. Cash Used For Investing Activities . Cash used for investing activities in the year ended December 31, 2016, was zero, compared with $906 thousand forthe year ended December 31, 2015, and $72 thousand for the year ended December 31, 2014. The 2015 period primarily included additional investments in well-field and environmental work related to progressing the Water Project. Cash Provided by (Used for) Financing Activities . Cash provided by financing activities totaled $19.0 million for the year ended December 31, 2016,compared with cash used for financing activities of $42 thousand for the year ended December 31, 2015, and cash provided by financing activities of $14.5 millionfor the year ended December 31, 2014. The 2016 results include receipt of approximately $12.0 million related to the FVF Lease (see "Agricultural Development",above), $8.0 million in net proceeds related to the Convertible Note Financing and approximately $10.5 million in proceeds from the issuance of shares under ashelf takedown offering, offset by approximately $960 thousand in recorded debt issuance costs and a principal payment of approximately $10.6 million on theSenior Secured Debt.37 (b) outlook short-term outlook. Our cash resources of $12.2 million as of December 31, 2016 provide us with sufficient funds to meet our expected working capitalneeds through April 2018. Should we require additional working capital to fund operations, we expect to continue our historical practice of structuring ourfinancing arrangements to match the anticipated needs of our development activities. See "Long-Term Outlook" below. No assurances can be given, however, asto the availability or terms of any new financing. Long-Term Outlook . In the longer term, we will need to raise additional capital to finance working capital needs, capital expenditures and any paymentsdue under our Senior Secured Debt or our convertible notes at maturity (see "Current Financing Arrangements" above). Our future working capital needs willdepend upon the specific measures we pursue in the entitlement and development of our water resources and other developments. Future capital expenditures willdepend primarily on the progress of the Water Project. We are evaluating the amount of cash needed, and the manner in which such cash will be raised, on an ongoing basis. We plan to meet any future cashrequirements through a variety of means, including equity or debt placements. Limitations on our liquidity and ability to raise capital may adversely affect us. Sufficient liquidity is critical to meet our resource development activities. Although we currently expect our cash resources on hand to be sufficient to meet ourliquidity needs through April 2018, if we cannot raise needed funds, the Company might default on its debt obligations, and accordingly, there would be substantialdoubt about the Company's ability to continue as a going concern.(c) critical Accounting Policies As discussed in Note 2 to our Consolidated Financial Statements, the preparation of financial statements in conformity with accounting principles generallyaccepted in the United States requires management to make estimates and assumptions that affect amounts reported in the accompanying consolidated financialstatements and related footnotes. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in thefinancial statements based on all relevant information available at the time and giving due consideration to materiality. We do not believe there is a great likelihoodthat materially different amounts would be reported related to the accounting policies described below. However, application of these policies involves the exerciseof judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Management has concluded that thefollowing critical accounting policies described below affect the most significant judgments and estimates used in the preparation of the consolidated financialstatements. (1) intangible and other long-lived Assets . Property, plant and equipment, intangible and certain other long-lived assets are depreciated or amortizedover their useful lives. Useful lives are based on management's estimates of the period over which the assets will generate revenue.38  (2) goodwill. As a result of a merger in May 1988 between two companies, which eventually became known as Cadiz Inc., goodwill in the amount of$7,006,000 was recorded. Approximately $3,193,000 of this amount was amortized until the adoption of Accounting Standards Codification 350, "Intangibles –Goodwill and Other" ("ASC 350") on January 1, 2002. (3) Valuation of goodwill and long-lived Assets. The Company assesses long-lived assets, excluding goodwill, for recoverability whenever events orchanges in circumstances indicate that their carrying value may not be recoverable through the estimated undiscounted future cash flows resulting from the use ofthe assets. If it is determined that the carrying value of long-lived assets may not be recoverable, the impairment is measured by using the projected discountedcash-flow method. The Company uses a two-step impairment test to identify potential goodwill impairment and measure the amount of a goodwill impairment loss to berecognized (if any) for the Company. The first step, which is performed at least annually, considers whether there are qualitative factors present such that it is morelikely than not a goodwill impairment exists. If based on qualitative factors it is more likely than not a goodwill impairment exists, the Company performs "Step 2"as described below. The step 2 calculation of the impairment test compares the implied fair value of the goodwill to the carrying value of goodwill. The implied fair value ofgoodwill represents the excess of the estimated fair value above the fair value of the Company's identified assets and liabilities. If the carrying value of goodwillexceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess (not to exceed the carrying value of goodwill). Thedetermination of the fair value of its assets and liabilities is performed as of the measurement date using observable market data before and after the measurementdate (if that subsequent information is relevant to the fair value on the measurement date). (4) Deferred tax Assets and Valuation Allowances. To date, the Company has not generated significant revenue from its water development programs, andit has a history of net operating losses. As such, the Company has generated significant deferred tax assets, including large net operating loss carryforwards forfederal and state income taxes for which it has recorded a full valuation allowance. Management is currently working on water storage, water supply, agricultureand solar energy development projects, including the Water Project, that are designed to generate future taxable income, although there can be no guarantee thatthis will occur. If taxable income is generated in future years, some portion or all of the valuation allowance will be reversed, and an increase in net income wouldconsequently be reported. (5) stock-Based compensation. The Company applies the Black-Scholes valuation model in determining the fair value of options granted to employees andconsultants. For employees, the fair value is then charged to expense on the straight-line basis over the requisite service period. For consultants, the fair value isremeasured at each reporting period and recorded as a liability until the award is settled.39  ASC 718 also requires the Company to estimate forfeitures in calculating the expense related to stock-based compensation as opposed to only recognizingforfeitures and the corresponding reduction in expense as they occur. As of December 31, 2016, all options outstanding are fully vested; therefore, there is nopotential impact of forfeitures.(d) new Accounting Pronouncements See Note 2 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies". (e) off Balance sheet Arrangements The Company does not have any off balance sheet arrangements at this time. (f) certain known contractual obligations Payments Due by PeriodContractual Obligation Total Less than 1year 1-3 years 4-5 years After 5 years(in thousands) Long-term debt and lease obligations $125,404 $45 $45,789 $66,815 $12,755 Interest payable 103,799 1,789 8,823 16,812 76,375 Operating leases 1,990 524 866 600 - $231,193 $2,358 $55,478 $84,227 $89,130 * The above table does not reflect unrecognized tax benefits of $2.8 million, the timing of which is uncertain. See Note 7 to the Consolidated Financial Statements,"Income Taxes". Long-term debt included in the table above primarily reflects the Senior Secured Term Loan and the convertible notes, which is described above in Item 7,"Management's Discussion and Analysis of Financial Condition and Results of Operation; Liquidity and Capital Resources". Operating leases include the lease ofthe Company's executive offices, as described in Item 2, "Properties", and the right-of-way lease with the Arizona & California Railroad Company, as described inItem 1, "Business".ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk As of December 31, 2016, all of our indebtedness bore interest at fixed rates; therefore, we are not exposed to market risk from changes in interest rates onlong-term debt obligations.40 ITEM 8. Financial Statements and Supplementary Data The information required by this item is submitted in response to Part IV below. See the Index to Consolidated Financial Statements.ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. ITEM 9A. Controls and Procedures Disclosure Controls and Procedures We have established disclosure controls and procedures to ensure that material information related to the Company, including its consolidated entities, isaccumulated and communicated to senior management, including Chief Executive Officer (the "Principal Executive Officer") and Chief Financial Officer (the"Principal Financial Officer") and to our Board of Directors. Based on their evaluation as of December 31, 2016, our Principal Executive Officer and PrincipalFinancial Officer have concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the SecuritiesExchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under theSecurities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rulesand forms, and such information is accumulated and communicated to management, including the principal executive and principal financial officers asappropriate, to allow timely decisions regarding required disclosures.Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange ActRule 13a-15(f). Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, weevaluated the effectiveness of our internal control over financial reporting based on the criteria in the Internal Control-Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under that framework, our management concluded that ourinternal control over financial reporting was effective as of December 31, 2016. The effectiveness of our internal control over financial reporting as of December31, 2016, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.41 Changes in Internal Control Over Financial Reporting In connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act, there was no change identified in the Company's internalcontrol over financial reporting that occurred during the last fiscal year that has materially affected, or is reasonably likely to materially affect, the Company'sinternal control over financial reporting.ITEM 9B. Other InformationNot Applicable.42 PART IIIITEM 10. Directors, Executive Officers and Corporate Governance The information called for by this item is incorporated herein by reference to the definitive proxy statement involving the election of directors which weintend to file with the SEC pursuant to Regulation 14A under the Securities and Exchange Act of 1934 not later than 120 days after December 31, 2016.ITEM 11. Executive Compensation The information called for by this item is incorporated herein by reference to the definitive proxy statement involving the election of directors which weintend to file with the SEC pursuant to Regulation 14A under the Securities and Exchange Act of 1934 not later than 120 days after December 31, 2016.ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information called for by this item is incorporated herein by reference to the definitive proxy statement involving the election of directors which weintend to file with the SEC pursuant to Regulation 14A under the Securities and Exchange Act of 1934 not later than 120 days after December 31, 2016.ITEM 13. Certain Relationships and Related Transactions, and Director Independence The information called for by this item is incorporated herein by reference to the definitive proxy statement involving the election of directors which weintend to file with the SEC pursuant to Regulation 14A under the Securities and Exchange Act of 1934 not later than 120 days after December 31, 2016.ITEM 14. Principal Accounting Fees and Services The information called for by this item is incorporated herein by reference to the definitive proxy statement involving the election of directors which weintend to file with the SEC pursuant to Regulation 14A under the Securities and Exchange Act of 1934 not later than 120 days after December 31, 2016.43 PART IVITEM 15. Exhibits, Financial Statement Schedules1.Financial Statements. See Index to Consolidated Financial Statements. 2.Financial Statement Schedule. See Index to Consolidated Financial Statements.3.Exhibits.The following exhibits are filed or incorporated by reference as part of this Form 10-K.3.1Cadiz Certificate of Incorporation, as amended (1)3.2Amendment to Cadiz Certificate of Incorporation dated November 8, 1996 (2)3.3Amendment to Cadiz Certificate of Incorporation dated September 1, 1998 (3)3.4Amendment to Cadiz Certificate of Incorporation dated December 15, 2003 (4)3.5Certificate of Amendment to the Certificate of Incorporation of Cadiz Inc. effective June 10, 2016 (41)3.6Certificate of Elimination of Series D Preferred Stock, Series E-1 Preferred Stock and Series E-2 Preferred Stock of Cadiz Inc. datedDecember 15, 2003 (4)3.7Certificate of Elimination of Series A Junior Participating Preferred Stock of Cadiz Inc., dated March 25, 2004 (4)3.8Amended and Restated Certificate of Designations of Series F Preferred Stock of Cadiz Inc. (5)3.9Cadiz Bylaws, as amended (6)3.10Amendment to the Bylaws of Cadiz Inc. effective June 10, 2016 (41)3.11Second Amended and Restated Certificate of Designations of Series F Preferred Stock of Cadiz Inc. dated June 30, 2006, as corrected byCertificate of Correction dated March 14, 2007 (8)3.12Certificate of Elimination of Series F Preferred Stock of Cadiz Inc. (as filed August 3, 2007) (9)4.1Form of Senior Indenture, between Cadiz Inc. and The Bank of New York Mellon Trust Company, N.A. (27)44  4.2Form of Subordinated Indenture, between Cadiz Inc. and The Bank of New York Mellon Trust Company, N.A. (27)4.3First Supplemental Indenture, dated as of October 30, 2013 between Cadiz Inc. and the Bank of New York Mellon Trust Company, N.A.(28)4.4Second Supplemental Indenture, dated as of November 23, 2015 between Cadiz Inc. and U.S. Bank National Associations (34)4.5Indenture, dated as of December 10, 2015 between Cadiz Inc. and U.S. Bank National Association (35)4.6First Supplemental Indenture, dated as of April 28, 2016, by and between Cadiz Inc. and U.S. Bank National Association (40)4.7Form of Senior Indenture between Cadiz Inc. and U.S. Bank National Association (42)4.8Form of Subordinated Indenture between Cadiz Inc. and U.S. Bank National Association (42)4.9MSD Credit Opportunity Master Fund, L.P. Warrant to Purchase Common Stock of Cadiz Inc., Original Issue Date of November 29, 2016(43)4.10MILFAM II L.P. Warrant to Purchase Common Stock of Cadiz Inc., Original Issue Date of November 29, 2016 (43)4.11WPI-Cadiz Farm CA, LLC Warrant to Purchase Common Stock of Cadiz Inc., Original Issue Date of November 29, 2016 (43)10.1Limited Liability Company Agreement of Cadiz Real Estate LLC dated December 11, 2003 (4)10.2Amendment No. 1, dated October 29, 2004, to Limited Liability Company Agreement of Cadiz Real Estate LLC (7)10.3Amendment No. 2 dated March 5, 2013, to Limited Liability Company Agreement of Cadiz Real Estate LLC (25)10.4Amendment No. 2 dated October 1, 2007 to Reorganization Plan and Agreement for Purchase and Sale of Assets dated as of February 18,1998 among Cadiz Inc. and Mark A. Liggett in his capacity as successor in interest to Exploration Research Associates, Incorporated., aCalifornia corporation (" ERA ") and in his individual capacity as former sole shareholder of ERA and as the successor in interest to ERA(10)10.5Longitudinal Lease Agreement dated September 17, 2008 between Arizona and California Railroad Company and Cadiz Real Estate,LLC (11)45 10.62009 Equity Incentive Plan (12)10.7Services and Exclusivity Agreement with Layne Christensen Company dated November 2, 2009, as amended by amendments datedJanuary 4, 2010, January 27, 2010 (13)10.8Form of Option Agreement with Santa Margarita Water District (14)10.9Form of Environmental Processing and Cost Sharing Agreement with Santa Margarita Water District (14)10.10Form of Environmental Processing and Cost Sharing Agreement with Three Valleys Municipal Water District (14)10.11Option Agreement with Golden State Water Company dated June 25, 2010 (15)10.12Option Agreement with Suburban Water Systems dated October 4, 2010 (16)10.13Amendment No. 3 to the Services and Exclusivity Agreement with Layne Christensen Company dated April 8, 2010 (17)10.14Letter agreement with Scott S. Slater dated April 12, 2011 (18)10.15Option Agreement with California Water Service Company dated December 1, 2011 (19)10.16Option Agreement with Questar Southern Trails Pipeline Company dated August 12, 2011 (20)10.17Form of Memorandum of Understanding by and among Cadiz Inc., County of San Bernardino and Santa Margarita Water District (21)10.18First Amended Agreement to Option Agreement with Questar Southern Trails Pipeline Company dated June 29, 2012 (22)10.19Water Purchase and Sale Agreement among Cadiz Inc., Cadiz Real Estate LLC, Fenner Valley Mutual Water Company and SantaMargarita Water District dated July 31, 2012 (23)10.20Groundwater Management, Monitoring, and Mitigation Plan for the Cadiz Valley Groundwater Conservation, Recovery and StorageProject approved by the Santa Margarita Water District and the County of San Bernardino Board of Supervisors effective October 1, 2012(23)10.21Second Amended Option Agreement with El Paso Natural Gas Company dated December 7, 2012 (24)46 10.22Revised Terms of Engagement with Brownstein Hyatt Farber and Schreck dated January 9, 2013 (25)10.23Letter agreement with Scott Slater dated January 10, 2013 (25)10.24Indenture among Cadiz Inc., as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of March 5, 2013(25)10.25Private Placement Purchase Agreement among Cadiz Inc. and Purchasers (as defined therein) dated as of March 4, 2013 (25)10.26Exchange Agreement among Cadiz Inc. and Holders (as defined therein) dated March 4, 2013 (25)10.27Lease Agreement, dated as of July 1, 2013, by and between Cadiz Inc. and Limoneira Company (26)10.28Amended and Restated Lease Agreement, dated February 3, 2015, by and between Cadiz Inc. and Limoneira Company (33)10.29Amended and Restated Credit Agreement, dated as of October 30, 2013, by and among Cadiz Inc. and Cadiz Real Estate LLC, as theborrowers, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrative agent (28)10.30First Amendment to Amended and Restated Credit Agreement, dated as of November 23, 2015, by and among Cadiz Inc. and Cadiz RealEstate LLC, as the borrowers, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrativeagent (34)10.31Second Amendment to Amended and Restated Credit Agreement, dated as of February 8, 2016, by and among Cadiz Inc. and Cadiz RealEstate LLC, as the borrowers, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrativeagent (35)10.32Third Amendment to Amended and Restated Credit Agreement, dated as of March 4, 2016, by and among Cadiz Inc. and Cadiz RealEstate LLC, as the borrowers, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrativeagent (38)10.33Fourth Amendment to Amended and Restated Credit Agreement, dated as of April 28, 2016, by and among Cadiz Inc. and Cadiz RealEstate LLC, as the borrowers, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (40)10.34Fifth Amendment to Amended and Restated Credit Agreement, dated as of November 29, 2016, by and among Cadiz Inc. and Cadiz RealEstate LLC, as the borrowers, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (43)47 10.35Form of Note Exchange Agreement, by and between Cadiz Inc. and the convertible note holder party thereto (34)10.36Track Utilization Agreement dated September 16, 2013, between Arizona & California Railroad Company and Cadiz Real Estate LLC (29)10.37Amended and Restated Employment Agreement between Keith Brackpool and Cadiz Inc. dated June 13, 2014 (30)10.38Amended and Restated Employment Agreement between Timothy J. Shaheen and Cadiz Inc. dated June 13, 2014 (30)10.39Form of Securities Purchase Agreement, dated as of November 7, 2014, by and between Cadiz Inc. and the purchaser party thereto (31)10.40Form of Water Purchase and Sale Agreement, dated as of December 29, 2014, by and between Cadiz Inc. and San Luis Water District (32)10.41Lease Agreement, dated as of December 23, 2015, by and among Cadiz Real Estate LLC, Cadiz Inc. and Water Asset Management LLC(36)10.42Amended and Restated Lease Agreement, dated as of February 8, 2016, by and among Cadiz Real Estate LLC, Cadiz Inc. and FennerValley Farm, LLC (37)10.43Waiver Agreement under Amended and Restated Credit Agreement, dated as of March 9, 2016, by and among Cadiz Inc., Cadiz RealEstate LLC and the Required Lenders (39)10.44Private Placement Purchase Agreement, dated as of April 26, 2016, by and among Cadiz Inc. and the purchasers party thereto (40)10.45Placement Agent Agreement, dated as of April 26, 2016, by and between Cadiz Inc. and B. Riley & Co. LLC (40)10.46Registration Rights Agreement, dated as of April 28, 2016, by and among Cadiz Inc. and the holders party thereto (40)10.53Closing Share and Warrant Issuance Agreement by and between Cadiz Inc. and MSD Credit Opportunity Master Fund, L.P., dated as ofNovember 29, 2016 (43)10.54Closing Share and Warrant Issuance Agreement by and between Cadiz Inc. and MILFAM II L.P., dated as of November 29, 2016 (43)10.55Closing Share and Warrant Issuance Agreement by and between Cadiz Inc. and WPI-Cadiz Farm CA, LLC, dated as of November 29,2016 (43)48 10.56Form of Interest Share Issuance Agreement (43)21.1Subsidiaries of the Registrant23.1Consent of Independent Registered Public Accounting Firm31.1Certification of Scott Slater, Chief Executive Officer of Cadiz Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2Certification of Timothy J. Shaheen, Chief Financial Officer and Secretary of Cadiz Inc. pursuant to Section 302 of the Sarbanes-OxleyAct of 200232.1Certification of Scott Slater, Chief Executive Officer of Cadiz Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 200232.2Certification of Timothy J. Shaheen, Chief Financial Officer and Secretary of Cadiz Inc. pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002________________________________________________________________________ (1)Previously filed as an Exhibit to our Registration Statement on Form S-1 (Registration No. 33-75642) declared effective May 16, 1994filed on February 23, 1994(2)Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 filed on November 14,1996(3)Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 filed on November 13,1998(4)Previously filed as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 2003 filed on November 2, 2004(5)Previously filed as an Exhibit to our Current Report on Form 8-K dated November 30, 2004 filed on December 2, 2004(6)Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 filed on August 13, 1999(7)Previously filed as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2004 filed on March 31, 2005(8)Previously filed as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 filed on March 16, 2007(9)Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 filed on August 6, 2007 49 (10)Previously filed as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 filed on March 14, 2008 (11)Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 filed on November 10, 2008 (12)Previously filed as Appendix A to our definitive proxy dated November 3, 2009, and filed on November 5, 2009(13)Previously filed as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed on March 15, 2010(14)Previously filed as an Exhibit to our Current Report on Form 8-K dated June 23, 2010 and filed on June 24, 2010(15)Previously filed as an Exhibit to our Current Report on Form 8-K dated June 25, 2010 and filed on June 30, 2010(16)Previously filed as an Exhibit to our Current Report on Form 8-K dated October 4, 2010 and filed on October 7, 2010(17)Previously filed as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed on March 16,2011(18)Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed on May 9, 2011(19)Previously filed as an Exhibit to our Current Report on Form 8-K dated December 1, 2011, and filed on December 7, 2011(20)Previously filed as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed on March 15, 2012(21)Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed on May 9, 2012(22)Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed on August 9, 2012(23)Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, filed on November 8,2012(24)Previously filed as an Exhibit to our Current Report on Form 8-K dated December 7, 2012, and filed on December 12, 2012(25)Previously filed as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed on March 15,2013(26)Previously filed as an Exhibit to our Current Report on Form 8-K dated July 1, 2013 and filed on July 2, 2013(27)Previously filed as an Exhibit to our registration statement on Form S-3 (Registration No. 333-190288) filed on July 31, 2013(28)Previously filed as an Exhibit to our Current Report on Form 8-K dated October 30, 2013 and filed on October 31, 2013(29)Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, filed on November 8,2013(30)Previously filed as an Exhibit to our Current Report on Form 8-K dated June 10, 2014 and filed on June 13, 2014(31)Previously filed as an Exhibit to our Current Report on Form 8-K dated November 7, 2014 and filed on November 10, 2014(32)Previously filed as an Exhibit to our Current Report on Form 8-K dated December 19, 2014 and filed on December 22, 2014(33)Previously filed as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed on March 9, 2015(34)Previously filed as an Exhibit to our Current Report on Form 8-K dated November 23, 2015 and filed on November 30, 2015(35)Previously filed as an Exhibit to our Current Report on Form 8-K dated December 10, 2015 and filed on December 16, 2015(36)Previously filed as an Exhibit to our Current Report on Form 8-K dated December 23, 2015 and filed on December 30, 2015(37)Previously filed as an Exhibit to our Current Report on Form 8-K dated February 8, 2016 and filed on February 12, 201650  (38)Previously filed as an Exhibit to our Current Report on Form 8-K dated March 4, 2016 and filed on March 10, 2016(39)Previously filed as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed on March 14,2016(40)Previously filed as an Exhibit to our Current Report on Form 8-K dated April 26, 2016 and filed on April 29, 2016(41)Previously filed as an Exhibit to our Current Report on Form 8-K dated June 9, 2016 and filed on June 14, 2016(42)Previously filed as an Exhibit to our registration statement on Form S-3 (Registration No. 333-214318) filed on October 28, 2016(43)Previously filed as an Exhibit to our Current Report on Form 8-K dated November 29, 2016 and filed on December 1, 201651 CADIZ INC. CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm53 Consolidated Statements of Operations and Comprehensive Loss for the three years ended December 31, 201655 Consolidated Balance Sheets as of December 31, 2016 and 201556 Consolidated Statements of Cash Flows for the three years ended December 31, 201657 Consolidated Statements of Stockholders' Deficit for the three years ended December 31, 201658 Notes to the Consolidated Financial Statements59 Financial Statement Schedule78 (Schedules other than those listed above have been omitted since they are either not required, inapplicable, or the required information is included on the financialstatements or notes thereto.)52 Report of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of Cadiz Inc.: In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of CadizInc. and its subsidiaries at December 31, 2016 and December 31, 2015, and the results of their operations and their cash flows for each of the three years in theperiod ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, thefinancial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunctionwith the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financialreporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework ( 2013) issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule,for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included inManagement's Report on Internal Control Over Financial Reporting . Our responsibility is to express opinions on these financial statements, on the financialstatement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained inall material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that amaterial weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also includedperforming such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control overfinancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.53  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPLos Angeles, CaliforniaMarch 16, 201754 CADIZ INC. consoliDAteD stAtements oF oPeRAtions AnD comPRehensiVe loss Year Ended December 31, (in thousands, except per share date) 2016 2015 2014 Total revenues $412 $304 $336 Costs and expenses: Cost of sales (exclusive of depreciation shown below) - 334 357 General and administrative 9,330 13,709 10,084 Depreciation 292 270 254 Total costs and expenses 9,622 14,313 10,695 Operating loss (9,210) (14,009) (10,359) Interest expense, net (14,875) (10,070) (8,518) Loss on extinguishment of debt and debt refinancing (2,250) - - Other income, net - 70 - Loss before income taxes (26,335) (24,009) (18,877) Income tax (benefit) expense 4 4 4 Net loss and comprehensive loss $(26,339) $(24,013) $(18,881) Basic and diluted net loss per share $(1.41) $(1.35) $(1.15) Weighted-average shares outstanding 18,719 17,782 16,370 See accompanying notes to the consolidated financial statements.55 CADIZ INC. consoliDAteD BAlAnce sheets December 31, ($ in thousands, except per share data) 2016 2015 ASSETS Current assets: Cash and cash equivalents $12,172 $2,690 Accounts receivable 39 187 Prepaid expenses and other 3,391 309 Total current assets 15,602 3,186 Property, plant, equipment and water programs, net 44,182 44,474 Goodwill 3,813 3,813 Other assets 3,502 3,317 Total assets $67,099 $54,790 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $439 $309 Accrued liabilities 3,953 1,665 Current portion of long term debt 170 49 Total current liabilities 4,562 2,023 Long-term debt 102,374 107,592 Long-term lease obligations with related party, netDeferred revenue 12,287750 -750 Other long-term liabilities 1,443 923 Total liabilities 121,416 111,288 Commitments and contingencies (Note 11) Stockholders' deficit: Common stock - $0.01 par value; 70,000,000 shares authorized; shares issued and outstanding: 21,768,864 at December 31, 2016, and 17,876,016 at December 31, 2015 218 179 Additional paid-in capital 355,336 326,855 Accumulated deficit (409,871) (383,532)Total stockholders' deficit (54,317) (56,498) Total liabilities and stockholders' deficit $67,099 $54,790 See accompanying notes to the consolidated financial statements.56 CADIZ INC. consoliDAteD stAtements oF cAsh FloWs Year Ended December 31, ( $ in thousands) 2016 2015 2014 Cash flows from operating activities: Net loss $(26,339) $(24,013) $(18,881)Adjustments to reconcile net loss to net cash used for operating activities: Depreciation 292 270 254 Amortization of deferred loan costs 238 198 226 Amortization of debt discount 3,739 1,635 633 Interest expense added to loan principal 7,636 8,237 7,659 Interest added to lease liability 755 - - Loss on debt conversion 1,234 - - Loss on early extinguishment of debt and debt refinancing 2,250 - - Compensation charge for stock awards and share options 1,296 1,116 1,077 Changes in operating assets and liabilities: Decrease in accounts receivable 148 52 52 (Increase) decrease in prepaid expenses and other (3,082) 37 4 Increase in other assets (185) (186) (186)Increase (decrease) in accounts payable 130 9 (533)Increase (decrease) in accrued liabilities 2,374 77 (426) Net cash used for operating activities (9,514) (12,568) (10,121) Cash flows from investing activities: Additions to property, plant and equipment - (906) (72) Net cash used for investing activities - (906) (72) Cash flows from financing activities: Net proceeds from issuance of common stock 10,510 - 14,523 Up-front payment related to lease liability 12,000 - - Net proceeds from issuance of long-term debt 8,000 - - Debt issuance costs (960) - - Principal payments on long-term debt (10,554) (42) (11) Net cash provided by (used for) financing activities 18,996 (42) 14,512 Net increase (decrease) in cash and cash equivalents 9,482 (13,516) 4,319 Cash and cash equivalents, beginning of period 2,690 16,206 11,887 Cash and cash equivalents, end of period $12,172 $2,690 $16,206 See accompanying notes to the consolidated financial statements.57 CADIZ INC. consoliDAteD stAtements oF stockholDeRs' DeFicit Additional Total ($ in thousands) Common Stock Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Deficit Balance as of December 31, 2013 16,152,756 $161 $303,979 $(340,638) $(36,498) Issuance of shares pursuant to stock awards 29,327 - - - - Issuance of shares pursuant to shelf takedown 1,435,713 14 14,443 - 14,457 Issuance of shares pursuant to warrant exercise 24,441 - - - - Issuance of stock pursuant to bond conversion 39,037 1 310 - 311 Stock compensation expense - 1 872 - 873 Net Loss - - - (18,881) (18,881)Balance as of December 31, 2014 17,681,274 177 319,604 (359,519) (39,738) Issuance of shares pursuant to stock awards 68,109 - - - - Issuance of stock pursuant to bond conversion 126,633 1 1,005 - 1,006 Convertible term loan conversion option - - 5,139 - 5,139 Stock compensation expense - 1 1,107 - 1,108 Net Loss - - - (24,013) (24,013)Balance as of December 31, 2015 17,876,016 179 326,855 (383,532) (56,498) Issuance of shares pursuant to stock awards 207,868 - - - - Issuance of shares to lenders 1,128,257 11 6,075 - 6,086 Issuance of shares pursuant to shelf takedown 1,150,000 12 10,498 - 10,510 Issuance of stock pursuant to bond conversion 1,406,723 14 9,566 - 9,580 Beneficial conversion feature - - 1,482 - 1,482 Stock compensation expense - 2 860 - 862 Net Loss - - - (26,339) (26,339)Balance as of December 31, 2016 21,768,864 $218 $355,336 $(409,871) $(54,317) See accompanying notes to the consolidated financial statements.58 CADIZ INC. notes to the consoliDAteD FinAnciAl stAtements NOTE 1 – DESCRIPTION OF BUSINESS Cadiz Inc. ("Cadiz" or "the Company") is a land and water resource development company with 45,000 acres of land in three areas of eastern San BernardinoCounty, California. Virtually all of this land is underlain by high-quality, naturally recharging groundwater resources, and is situated in proximity to the ColoradoRiver and the Colorado River Aqueduct ("CRA"), California's primary mode of water transportation for imports from the Colorado River into the State. TheCompany's properties are suitable for various uses, including large-scale agricultural development, groundwater storage and water supply projects. The Company'smain objective is to realize the highest and best use of its land and water resources in an environmentally responsible way. The Company has been primarily focused on the development of the Cadiz Valley Water Conservation, Recovery and Storage Project ("Water Project" or"Project"), which will capture and conserve millions of acre-feet of native groundwater currently being lost to evaporation from the aquifer system beneath theCompany's 34,000-acre property in the Cadiz and Fenner valleys of eastern San Bernardino County (the "Cadiz/Fenner Property"), and deliver it to water providersthroughout Southern California.NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of Presentation The Consolidated Financial Statements of the Company have been prepared assuming that the Company will continue as a going concern, which assumedrealization of assets and settlement of liabilities in the normal course of business. The Company incurred losses of $26.3 million, $24.0 million and $18.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. TheCompany had working capital of $11.0 million at December 31, 2016, including cash of $12.2 million, and used cash in operations of $9.5 million for the yearended December 31, 2016. Cash requirements during the year ended December 31, 2016, primarily reflect certain administrative and litigation costs related to theCompany's water project development efforts. Currently, the Company's sole focus is the development of its land and water assets. In April 2016, the Company issued approximately $10.0 million in aggregate principal and accrued interest of its 7.00% Convertible Senior Notes due 2020("2020 Notes"), and in December 2016, the Company raised approximately $10.6 million with the sale of 1,150,000 shares at $9.75 per share by way of takedownfrom its shelf registration. The agreement with its lenders to allow the Company to pay all interest either in-kind or through the issuance of shares combined with the proceeds from theissuance of the 2020 Notes, and from the shelf takedown, provides the Company with sufficient funds to meet its expected working capital needs through April2018. In addition, the Company is able to control certain of its costs and can reduce expenditures if needed to coincide with future capital raises.59  The Company may meet future working capital requirements beyond April 2018 through a variety of means, including equity or debt placements, through thesale or other disposition of assets or reductions in operating costs. Equity placements may be made using our existing shelf registration. Equity placements, ifmade, 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. Limitations on the Company's liquidity and ability to raise capital may adversely affect it. Sufficient liquidity is critical to meet the Company's resourcedevelopment activities. Although the Company currently expects its sources of capital to be sufficient to meet its near-term liquidity needs, there can be noassurance that its liquidity requirements will continue to be satisfied. If the Company cannot raise needed funds, it might be forced to make substantial reductionsin its operating expenses, which could adversely affect its ability to implement its current business plan and ultimately its viability as a company.Principles of consolidation The consolidated financial statements include the accounts of Cadiz Inc. and all subsidiaries. All significant intercompany transactions and balances havebeen eliminated in consolidation.use of estimates in Preparation of Financial statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period. In preparing these financial statements, management has made estimates with regard to goodwilland other long-lived assets, stock compensation and deferred tax assets. Actual results could differ from those estimates.Revenue Recognition The Company recognizes agricultural revenue through its lease with Fenner Valley Farms LLC.stock-Based compensation General and administrative expenses include $1.3 million, $1.1 million and $1.1 million of stock-based compensation expenses in the years ended December31, 2016, 2015 and 2014, respectively. The Company applies the Black-Scholes valuation model in determining the fair value of options granted to employees and consultants. For employees, thefair value is then charged to expense on the straight-line basis over the requisite service period. For consultants, the fair value is remeasured at each reportingperiod and recorded as a liability until the award is settled.60  ASC 718 also requires the Company to estimate forfeitures in calculating the expense related to stock-based compensation as opposed to only recognizingforfeitures and the corresponding reduction in expense as they occur. As of December 31, 2016, all options outstanding are fully vested; therefore, there is nopotential impact of forfeitures. The Company is in a tax loss carryforward position and is not expected to realize a benefit from any additional compensationexpense recognized under ASC 718. See Note 7, "Income Taxes".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 lossper share because their inclusion would have been antidilutive. Had these instruments been included, the fully diluted weighted average shares outstanding wouldhave increased by approximately 11,070,000 shares, 8,453,000 shares and 8,237,000 shares for the years ended December 31, 2016, 2015 and 2014, respectively.Property, Plant, equipment and Water Programs Property, plant, equipment and water programs are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives ofthe assets, generally ten to forty-five years for land improvements and buildings, and five to fifteen years for machinery and equipment. Leasehold improvementsare amortized over the shorter of the term of the relevant lease agreement or the estimated useful life of the asset. Water rights, storage and supply programs are stated at cost. Certain costs directly attributable to the development of such programs have been capitalized bythe Company. These costs, which are expected to be recovered through future revenues, consist of direct labor, drilling costs, consulting fees for variousengineering, hydrological, environmental and additional feasibility studies, and other professional and legal fees. While interest on borrowed funds is currentlyexpensed, interest costs related to the construction of project facilities will be capitalized at the time construction of these facilities commences.goodwill and other Assets As a result of a merger in May 1988 between two companies which eventually became known as Cadiz Inc., goodwill in the amount of $7,006,000 wasrecorded. Approximately $3,193,000 of this amount was amortized prior to the adoption of ASC 350 on January 1, 2002. Since the adoption of ASC 350, therehave been no goodwill impairments recorded. Deferred loan costs represent costs incurred to obtain debt financing. Such costs are amortized over the life of the related loan using the interest method. AtDecember 31, 2016, the deferred loan fees relate to the corporate term loan, as described in Note 6, "Long-Term Debt".impairment of goodwill and long-lived Assets The Company assesses long-lived assets, excluding goodwill, for recoverability whenever events or changes in circumstances indicate that their carryingvalue may not be recoverable through the estimated undiscounted future cash flows resulting from the use of the assets. If it is determined that the carrying value oflong-lived assets may not be recoverable, the impairment is measured by using the projected discounted cash-flow method.61  The Company uses a two-step impairment test to identify potential goodwill impairment and measure the amount of a goodwill impairment loss to berecognized (if any) for the Company. The first step, which is performed at least annually, considers whether there are qualitative factors present such that it is morelikely than not a goodwill impairment exists. If based on qualitative factors it is more likely than not a goodwill impairment exists, the Company performs "Step 2"as described below. The step 2 calculation of the impairment test compares the implied fair value of the goodwill to the carrying value of goodwill. The implied fair value ofgoodwill represents the excess of the estimated fair value above the fair value of the Company's identified assets and liabilities. If the carrying value of goodwillexceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess (not to exceed the carrying value of goodwill). Thedetermination of the fair value of its assets and liabilities is performed as of the measurement date using observable market data before and after the measurementdate (if that subsequent information is relevant to the fair value on the measurement date). income taxes Income taxes are provided for using an asset and liability approach which requires the recognition of deferred tax assets and liabilities for the expected futuretax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable enacted tax rates. A valuationallowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized.Fair Value of Financial instruments Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carryingvalues approximating fair value include accounts payable and accrued liabilities due to their short-term nature. The carrying value of the Company's debtapproximates fair value, based on interest rates available to the Company for debt with similar terms. See Note 6, "Long-Term Debt", for discussion of fair valueof debt.supplemental cash Flow information The Company is required to pay 50% of all future quarterly interest payments in cash or stock on the corporate secured debt, rather than in accretion toprincipal, beginning with the quarterly interest payment due June 5, 2016. No other payments are due on the corporate secured debt or convertible notes prior totheir maturities. During the year ended December 31, 2016, approximately $434 thousand in interest payments on the corporate secured debt was paid in stock. Asa result, 46,236 shares of common stock were issued to the lenders. In November 2016, the Company issued 357,500 shares of common stock to its lenders in connection to an amendment to the corporate secured debt. TheCompany recorded a debt discount in the amount of $3.4 million which is the fair value of the 357,500 shares issued. 62  In April 2016, the Company recorded a beneficial conversion feature in the amount of $1.48 million in connection with the issuance of approximately $10.0million in aggregate principal and accrued interest of its convertible notes. During the year ended December 31, 2016, approximately $9.9 million in convertible notes were converted by certain of the Company's lenders. As a result,1,406,723 shares of common stock were issued to the lenders. Cash payments for income taxes were $4,000 for each of the years ended December 31, 2016, 2015, and 2014. Recent Accounting PronouncementsAccounting Guidance Not Yet Adopted In May 2014, the FASB issued an accounting standards update on revenue recognition including enhanced disclosures. Under the new standard, revenue isrecognized 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 FASBapproved a one-year deferral, updating the effective date to January 1, 2018. The Company is currently evaluating this new guidance, and expects this new standwill not have a material impact on the consolidated financial statements. In February 2016, the FASB issued an accounting standards update related to lease accounting including enhanced disclosures. Under the new standard, alease 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 leaseliability. 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 directcosts. 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. In March 2016, the FASB issued an accounting standards update to simplify the accounting for share-based payments. Under this new guidance, the taxeffects related to share based payments will be recorded through the income statement. Currently, tax benefits in excess of compensation cost ("windfalls") arerecorded in equity, and tax deficiencies ("shortfalls") are recorded in equity to the extent of previous windfalls, and then to the income statement. This guidance iseffective January 1, 2017, but early adoption is permitted. The new standard also revised reporting on the statement of cash flows. The Company is currentlyevaluating this new guidance and cannot determine the impact of this standard at this time. In August 2016, the FASB issued an accounting standards update which eliminates the diversity in practice related to the classification of certain cashreceipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. This guidance is effective for fiscal yearsbeginning after December 15, 2017, and interim periods within those fiscal years, but early adoption is permitted. The Company is currently evaluating this newguidance and cannot determine the impact of this standard at this time.63  In January 2017, the FASB issued an accounting standards update which eliminates Step 2 from the goodwill impairment test. Entities should perform theirgoodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which thecarrying amount exceeds the reporting unit's fair value. The amendments in this update are effective prospectively during interim and annual periods beginningafter December 15, 2019, with early adoption permitted. The Company is currently evaluating this new guidance and cannot determine the impact of this standardat this time. Accounting Guidance Adopted 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 financialstatements are issued (or within one year after the date that the financial statements are available to be issued when applicable). The Company adopted thisguidance on December 31, 2016. In April 2015, the FASB issued an accounting standards update that requires debt issuance costs to be presented in the balance sheet as a direct deductionfrom the carrying amount of the related debt liability, consistent with debt discounts. Previously, accounting guidance required these costs to be presented as adeferred charge asset. The Company adopted this guidance in the first quarter of 2016. The Amount of debt issuance costs that have been reclassified from "Otherlong-term assets" as a deduction of "Long-term debt" for December 31, 2015 was $626 thousand.64 NOTE 3 – PROPERTY, PLANT, EQUIPMENT AND WATER PROGRAMS Property, plant, equipment and water programs consist of the following (dollars in thousands): December 31, 2016 2015 Land and land improvements $24,781 $24,781 Water programs 21,324 21,324 Buildings 1,572 1,572 Leasehold improvements 570 570 Furniture and fixtures 461 461 Machinery and equipment 1,313 1,313 Construction in progress 112 112 50,134 50,133 Less accumulated depreciation (5,951) (5,659) $44,182 $44,474 NOTE 4 – OTHER ASSETS Other assets consist of the following (dollars in thousands): December 31, 2016 2015 Prepaid rent $3,369 $3,184Security deposits 133 133 $3,502 $3,317 Prepaid rent primarily consists of fees incurred to obtain the right-of-way for the Water Project. Amortization of prepaid rent was approximately $115,000,$115,000 and $115,000 in 2016, 2015 and 2014, respectively.65 NOTE 5 – ACCRUED LIABILITIES At December 31, 2016 and 2015, accrued liabilities consist of the following (dollars in thousands): December 31, 2016 2015 Payroll, bonus, and benefits $317 $19Legal and consulting 167 1,092Stock-based compensation 171 283Litigation settlement 3,000 -Other accrued expenses 298 271 $3,953 $1,665 NOTE 6 – LONG-TERM DEBT AND LEASE OBLIGATION At December 31, 2016 and 2015, the carrying amount of the Company's outstanding debt is summarized as follows (dollars in thousands): December 31, 2016 2015 Senior secured debt due September 28, 2019 Interest accrues at 8% per annum $43,550 $51,815 Convertible note instrument due March 5, 2018 Interest accrues at 7% per annum 2,154 4,018 Convertible note instrument due March 5, 2020 Interest accrues at 7% per annum 66,800 59,804 Lease Obligation 12,755 - Other loans 144 193 Debt discount and debt issuance costs, net of accumulatedaccretion (10,572) (7,564) 114,831 108,266 Less current portion 170 48 $114,661 $108,218 The carrying value of the Company's debt approximates fair value. The fair value of the Company's debt (Level 2) is determined based on an estimation ofdiscounted future cash flows of the debt at rates currently quoted or offered to the Company by its lenders for similar debt instruments of comparable maturities byits lenders. Pursuant to the Company's loan agreements, annual maturities of long-term debt outstanding on December 31, 2016, are as follows:66 Year EndingDecember 31 ($ in thousands) 2017 $452018 2,1952019 43,5932020 66,8152021 12,755 $125,403credit Agreement In November 2015, the Company entered into a First Amendment to the Credit Agreement ("First Amendment") with its senior lenders which granted it theright 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 theexisting 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 $2.25million in additional debt. On February 8, 2016, the Company entered into a lease agreement with Fenner Valley Farms LLC ("FVF") (the "lessee"), a subsidiary of Water AssetManagement LLC, a related party, pursuant to which FVF is leasing, for a 99-year term, 2,100 acres owned by Cadiz in San Bernardino County, California, to beused to plant, grow and harvest agricultural crops ("FVF Lease Agreement"). As consideration for the lease, FVF paid the Company a one-time payment of $12.0million upon closing. 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 theeffective date of the lease ("Termination Option Period") upon (1) repayment of the one-time $12 million lease payment plus a ten percent (10%) compoundedannual return (provided that the amount of such payment shall be not less than $14,400,000), (2) reimbursement of water-related infrastructure on the leasedproperty plus 8% per annum as well as the actual costs of any farming-related infrastructure installed on the leased property and (3) reimbursement of certainpipeline-related development expenses, working in coordination with Cadiz, not to exceed $3,000,000 (such payments, the " Termination Payments "). If (x) Cadizdoes 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 SeniorSecured Debt and accelerates the indebtedness due and owing thereunder by Cadiz (or such indebtedness automatically accelerates under the terms of Cadiz'sSenior Secured Debt), then the lessee may purchase the leased property for $1.00. The Company has recorded the one-time payment of $12 million, before legalfees, paid by FVF as a long-term lease liability. The Company's consolidated statement of operations reflects a net charge equal to a 10% finance chargecompounding annually over the 20-year Termination Option Period. The net charge to the consolidated statement of operations reflects (1) rental incomeassociated 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 loantransaction. As a result of this transaction, the Company incurred approximately $490 thousand of legal fees which was recorded as a debt discount and is beingamortized over the 20-year Termination Option Period.67  Also on February 8, 2016, the Company entered into a Second Amendment to the Credit Agreement ("Second Amendment") with its senior lenders to (i)provide for the application of $10.5 million of a $12.0 million payment pursuant to the FVF Lease Agreement which satisfied the repayment condition of the FirstAmendment 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 itsright to extend the maturity date of its First Mortgage and, at that time, incurred an additional extension fee of $2.25 million. The Second Amendment does notconstitute a troubled debt restructuring and was accounted for as a debt extinguishment. The fair value of the credit facility was recorded at face value. TheCompany recorded a loss on extinguishment in the amount of $2.25 million which consisted of the additional extension fee. On March 4, 2016, the Companyentered into a Third Amendment to the Credit Agreement which provided the lenders an additional 90 days to make the election to receive the extension fee inadditional 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. In May2016, the lenders elected to receive the extension fee in Cadiz common Stock. On November 29, 2016, the Company entered into a Fifth Amendment to the Credit Agreement ("Fifth Amendment) with its senior lenders to (i) extendedthe maturity date of its Secured Senior Debt from September 2017 to September 2019 and (ii) permit the Company to satisfy the cash interest payment obligationsthrough the issuance of shares of the Company's common stock. In connection with the Fifth Amendment, the Company issued to its senior lenders an aggregate of357,500 shares of the Company's common stock and warrants to purchase an aggregate of 357,500 shares of its common stock. The Company recorded a debtdiscount in the amount of $3.4 million which is the fair value of the 357,500 shares issued. Such debt discount is accreted over the remaining term of the loan. Thewarrants generally have a five-year term and an exercise price of $0.01 per share, and become exercisable on May 28, 2017. The warrants will be valued at thetime they become exercisable which could trigger extinguishment accounting and result in a loss on extinguishment. Interest on the Senior Secured Debt willcontinue to accrue at 8%convertible notes On April 26, 2016, the Company entered into a note purchase agreement with new and existing investors (the "Investors"). On April 28, 2016, pursuant tothe agreement, the Company issued approximately $10.0 million of its 7.00% Convertible Senior Notes due 2020 ("2020 Notes)in aggregate principal and accruedinterest. The proceeds from the issuance of the 2020 Notes to the Investors (such 2020 Notes, the "New Notes"), approximately $8.0 million before fees andexpenses, are being used for general working capital purposes.68  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, includingoriginal principal and accrued interest, are convertible at any time into the Company's common stock at a price of $6.75 per share, pursuant to the terms of theIndenture dated as of December 10, 2015, by and between the Company and U.S. Bank National Association (the "Indenture"), under which the New Notes wereissued. As a result of this transaction, the Company recorded a debt discount in the amount of $2.0 million which is the difference between the proceeds from thistransaction and the principal and accrued interest of New Notes on the day of the issuance. In addition, based on the conversion rate of $6.75 per share, the fairvalue of the shares receivable on conversion exceed the $8.0 million in net proceeds; therefore, a beneficial conversion feature was recorded in the amount of $1.48million. This amount was recorded as additional debt discount with a corresponding amount recorded as additional paid-in capital. Such debt discount is accretedto the redemption value of the instrument over the remaining term of the loan. Furthermore, the Company incurred $400 thousand in placement agent fees whichwas recorded as additional debt discount and is being amortized over the remaining term of the loan. 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 andbetween the Company and U.S. Bank National Association. The Senior Secured Debt and the convertible notes contain representations, warranties and covenants that are typical for agreements of this type, includingrestrictions that would limit the Company's ability to incur additional indebtedness, incur liens, pay dividends or make restricted payments, dispose of assets, makeinvestments and merge or consolidate with another person. However, while there are affirmative covenants, there are no financial covenants and no restrictions onthe Company's ability to issue additional common stock to fund future working capital needs. At December 31, 2016, the Company was in compliance with itsdebt covenants.NOTE 7 – INCOME TAXES Deferred taxes are recorded based upon differences between the financial statement and tax bases of assets and liabilities and available carryforwards. Temporary differences and carryforwards which gave rise to a significant portion of deferred tax assets and liabilities as of December 31, 2016 and 2015 are asfollows (dollars in thousands): December 31, 2016 2015 Deferred tax assets: Net operating losses $74,195 $71,215 Fixed asset basis difference 10,662 6,457 Contributions carryover 5 5 Deferred compensation 2,375 2,513 Accrued liabilities 389 315 Total deferred tax assets 87,626 80,505 Valuation allowance for deferred tax assets (87,626) (80,505) Net deferred tax asset $- $- 69  The valuation allowance increased $7,121,000 and $8,566,000 in 2016 and 2015, respectively. The change in deferred tax assets resulted from current yearnet operating losses and changes to future tax deductions resulting from terms of stock compensation plans, fixed assets, and accrued liabilities. As of December 31, 2016, the Company had net operating loss (NOL) carryforwards of approximately $252.1 million for federal income tax purposes and$140.9 million for California income tax purposes. Such carryforwards expire in varying amounts through the year 2035. Use of the carryforward amounts issubject to an annual limitation as a result of a previous ownership change. As of December 31, 2016, the Company possessed unrecognized tax benefits totaling approximately $2.8 million. None of these, if recognized, would affectthe Company's effective tax rate because the Company has recorded a full valuation allowance against these assets. The Company's tax years 2013 through 2016 remain subject to examination by the Internal Revenue Service, and tax years 2012 through 2016 remain subjectto examination by the state of California. In addition, the Company's loss carryforward amounts are generally subject to examination and adjustment for a period ofthree 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. A reconciliation of the income tax benefit to the statutory federal income tax rate is as follows (dollars in thousands): Year Ended December 31, 2016 2015 2014 Expected federal income tax benefit at 34% $(8,955) $(8,163) $(6,418)Loss with no tax benefit provided 6,918 7,389 5,766 State income tax 4 4 4 Non-deductible expenses and other 2,037 774 652 Income tax expense $4 $4 $4 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 recorded in the accompanying consolidated balance sheets.NOTE 8 – COMMON STOCK As previously disclosed, in January 2013, the Company revised its then existing agreement with the law firm of Brownstein Hyatt Farber Schreck LLP("Brownstein"). Under this agreement, the Company is to issue up to a total of 400,000 shares of the Company's common stock, with 100,000 shares earned uponthe achievement of each of four enumerated milestones as follows:70  i.100,000 shares earned upon the execution of the revised agreement;ii.100,000 shares earned upon receipt by the Company of a final judicial order dismissing all legal challenges to the Final Environmental ImpactReport for the Project;iii.100,000 shares earned upon the signing of binding agreements for more than 51% of the Project's annual capacity; andiv.100,000 shares earned upon the commencement of construction of all of the major facilities contemplated in the Final Environmental ImpactReport necessary for the completion and delivery of the Project. All shares earned upon achievement of any of the four milestones will be payable three years from the date earned. The first of the four milestones was satisfied in January 2013, and at that time, the Company recorded a stock compensation expense for the first 100,000shares earned. In May 2016, the second milestone was earned when a three-judge Appellate judge panel unanimously sustained the six trial court decisions andvalidated the Project's environmental review and approvals. As a result, the Company accrued and recognized stock compensation during the third quarter in theamount of $520,000 for the second of the four milestones. Because the shares are payable three years from the date earned, the fair value of these shares wasmeasured by applying a discount which was determined by using the Finnerty model for discounts for lack of marketability. As previously disclosed, in June 2014, the Company entered into amended and restated employment agreements with certain senior management thatprovided for long-term equity incentive milestone awards of 200,000 shares of the Company's common stock in the form of 200,000 Restricted Stock Units("RSUs"). These RSUs will vest once construction financing necessary for the implementation of the Water Project is secured. These RSUs were granted on July1, 2014 and will expire on June 10, 2017, if the milestone has not been achieved by such date.NOTE 9 – 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 describedbelow.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 850,000shares and options to the Company's employees and consultants. The plan became effective when the Company filed a registration statement on Form S-8 onDecember 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 December 31, 2016, 507,500 common stock options remain outstanding under this plan.71 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 to675,000 shares and options to the Company's employees, directors and consultants. Upon approval of the 2014 Equity Incentive Plan, all shares of common stockthat remained available for award under the 2009 Equity Incentive Plan were cancelled. Following registration of the 2014 Plan on Form S-8, the Company enteredinto revised employment agreements with certain senior management that provide for the issuance of up to 162,500 Restricted Stock Units ("RSU's") during theperiod 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 WaterProject. As of December 31, 2016, 162,500 of the RSUs granted on July 1, 2014 pursuant to these employee agreements are vested. Under the 2014 Equity Incentive Plan, each outside director receives $30,000 of cash compensation and receives a deferred stock award consisting of sharesof 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 compensationand $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 theaward 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 topurchase 507,500 shares were unexercised and outstanding on December 31, 2016, under the 2009 and 2014 equity incentive plans. For consultants of the Company, the fair value of each option granted under the 2009 Equity Incentive Plan is estimated at each reporting period using theBlack-Scholes option pricing model and recorded as a liability until the award is settled. For officers and employees of the Company, the fair value of each option granted under the plans was estimated on the date of grant using the Black-Scholesoption pricing model. The risk-free interest rate is assumed to be equal to the yield of a U.S. Treasury bond of comparable maturity, as published in the Federal Reserve StatisticalRelease for the relevant date. The expected life estimate is based on an analysis of the employees receiving option grants and the expected behavior of eachemployee. The expected volatility is derived from an analysis of the historical volatility of the trading price per share of the Company's common stock on theNASDAQ Global Market. The Company does not anticipate that it will pay dividends to common stockholders in the future. The Company recognized no stock-option-related compensation costs for the years ended December 31, 2014, 2015 and 2016 relating to these options. Nostock options were exercised during 2016.72  No options were granted in 2016, 2015 and 2014. A summary of option activity under the plans as of December 31, 2016, and changes during the yearsended December 31, 2015 and 2014 are presented below: Average Aggregate Weighted- Reamining Intrinsic Average Contractual Term Value Shares Exercise Price Term ($000's) Outstanding at January 1, 2014 842,500 $11.84 4.5 $7,316 Granted - $ - - $- Forfeited, Expired or canceled (20,000) $12.60 - $135 Exercised - $- - $ - Outstanding at December 31, 2014 822,500 $11.82 3.4 $7,181 Granted - $- - $ - Forfeited, Expired or canceled (315,000) $ 12.09 - $ 3,247 Exercised - $ - - $ - Outstanding at December 31, 2015 507,500 $ 11.66 4.3 $ 3,934 Granted - $ - - $ - Forfeited, Expired or canceled - $ - - $ - Exercised - $ - - $ - Outstanding at December 31, 2016 507,500(a) $ 11.66 3.3 $ 3,934 Options exercisable at December 31,2016 507,500 $ 11.66 3.3 $ 3,934 Weighted-average years of remainingcontractual life of options outstanding atDecember 31, 2016 3.3 (a) Exercise prices vary from $9.88 to $12.51, and expirationdates vary from January 2020 to December 2021. stock Awards to Directors, officers, consultants and employees 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, and140,000 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 December 31, 2016. Upon approval of the2014 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, 208,186 shares have been awarded to the Company's directors, consultants and employees. Of the 208,186 sharesawarded, 17,365 shares were awarded for service during the plan year ended June 30, 2016, became effective on that date and vested on January 31, 2017.73  The accompanying consolidated statements of operations and comprehensive loss include approximately $1,296,000, $1,116,000 and $1,077,000 of stock-based compensation expense related to stock awards in the years ended December 31, 2016, 2015 and 2014, respectively. A summary of stock awards activity under the plans during the years ended December 31, 2016 and 2015 is presented below: Weighted- Average Grant-date Shares Fair Value Nonvested at December 31, 2014 144,514 $8.50 Granted 87,945 $6.37 Forfeited or canceled - $- Vested (155,609) $7.27 Nonvested at December 31, 2015 76,850 $8.54 Granted 84,383 $7.23 Forfeited or canceled - $- Vested (143,868) $8.11 Nonvested at December 31, 2016 17,365 $5.76 NOTE 10 – SEGMENT INFORMATION The primary business of the Company is to acquire and develop land and water resources. As a result, the Company's financial results are reported in a singlesegment.NOTE 11 – COMMITMENTS AND CONTINGENCIES The Company leases equipment and office facilities under operating leases that expire through April 2019. Aggregate rental expense under all operatingleases was approximately $157,000, $207,000 and $202,000 in the years ended December 31, 2016, 2015 and 2014, respectively. At December 31, 2016, thefuture minimum rental commitments under existing non-cancelable operating leases totaled $491,000. In the normal course of its agricultural operations, the Company handles, stores, transports and dispenses products identified as hazardous materials. Regulatory agencies periodically conduct inspections and, currently, there are no pending claims with respect to hazardous materials.74  The Company entered into a Services and Exclusivity Agreement with Layne Christensen Company ("Layne") on November 2009. The agreement providesthat the Company will contract exclusively with Layne for certain water related services, including drilling of boreholes, drilling of monitoring wells, completion oftest wells, completion of production wells, and completion of aquifer, storage and recovery wells. In exchange for the Services and Exclusivity Agreement, Laynehas agreed to forego $923,000 for work performed. This amount continues to be recorded as an other long-term liability as of December 31, 2016, and will becredited toward future work performed during the construction phase of the Water Project. Pursuant to cost-sharing agreements that have been entered into by participants in the Company's Water Project, $750,000 in funds has offset costs incurredin the environmental analysis of the Water Project. These funds may either be reimbursed or credited to participants participation in the Water Project and,accordingly, are fully reflected as deferred revenue as of December 31, 2016. 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 andcertain of its directors and officers ("Defendants") in the United States District Court for the Central District of California purporting to assert claims for violationof §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint, was purportedly brought on behalf of allCadiz shareholders, alleged that the Company's public disclosures were inadequate in relation to the Cadiz Valley Water Conservation, Recovery and StorageProject (the "Water Project"). The complaint sought unspecified monetary damages and other relief. The Company believed that the claims alleged in thepurported class action lawsuit were baseless and without merit. On December 2, 2015, Defendants filed a Motion to Dismiss the lawsuit and a hearing on themotion was held in late February 2016. Following court-mandated mediation discussions in April 2016, and notwithstanding that the Company disputes theallegations in the complaint, the parties agreed to settle the case and filed a notice of settlement with the Court on May 6, 2016. On May 9, 2016, the Courtdismissed the case without prejudice. On June 16, 2016, the plaintiffs filed a motion seeking preliminary approval of the settlement and supplemented such motionon July 14, 2016 at the request of the Court. On September 30, 2016, the Court issued an order granting preliminary approval of the settlement. In the settlement,the Company made no admission of liability or wrongdoing and did not concede the validity of any of the allegations or legal claims made in the litigation. OnFebruary 8, 2017, the Court issued its Order and Final Judgement dismissing the federal class action and finalizing the settlement. This matter is now closed. Acash settlement will be paid in accordance with the Company's insurance policy and not from its cash resources. On February 6, 2016, a shareholder derivative lawsuit, entitled Herman Boschken v. Keith Brackpool et. Al. , was filed against certain Cadiz directors andofficers ("Derivative Defendants") in the Superior Court of State of California County of Los Angeles ("Superior Court") purporting to assert claims for breach offiduciary 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 thewake 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 factualallegations. Among other things, the complaint seeks unspecified monetary damages and certain changes to corporate governance policies. The Company believesthat the lawsuit is without merit. N otwithstanding that the Company disputes the allegations in the complaint, the parties agreed to settle the case and on January25, 2017, the Superior Court entered an order preliminarily approving a proposed settlement and approving for dissemination the Notice of Derivative Settlement(the "Notice") to the Company's current shareholders. The proposed settlement is subject to final approval by the Superior Court of California. In the settlement,the Company makes no admission of liability or wrongdoing and does not concede the validity of any of the allegations or legal claims made in the litigation. Subject to final approval of the settlement by the Superior Court, and in exchange for a release of all claims by the plaintiffs and a dismissal of the DerivativeAction with prejudice, the Company has agreed to implement certain corporate governance reforms, and pay certain plaintiffs' attorney fees and expenses. Thecash portion of the settlement will be paid in accordance with the Company's corporate insurance policy and not from its cash resources. 75  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 12 – QUARTERLY FINANCIAL INFORMATION (UNAUDITED ) (in thousands, except per share data) Quarter Ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 Revenues $75 $108 $120 $109 Gross profit 75 108 120 109 Operating loss (2,353) (2,606) (1,930) (2,321)Net loss (8,795) (5,645) (5,175) (6,724) Basic and diluted net loss per common share $(0.49) $(0.31) $(0.28) $(0.34) Quarter Ended March 31, June 30, September 30, December 31, 2015 2015 2015 2015 Revenues $18 $38 $227 $21 Gross profit (loss) 18 38 (64) (22)Operating loss (2,718) (3,751) (3,651) (3,889)Net loss (4,842) (5,990) (5,965) (7,216) Basic and diluted net loss per common share $(0.27) $(0.34) $(0.33) $(0.40)76 NOTE 13 – SUBSEQUENT EVENTS On February 8, 2017, a federal class action lawsuit , entitled Van Wingerden v. Cadiz Inc., et al. , No. 2:15-cv-03080-JAK-JEM, which was filed againstCadiz and certain of its directors and officers ("Defendants") in the United States District Court for the Central District of California (see Note 11, "Commitmentsand Contingencies"), was dismissed and a cash settlement was finalized. This matter is now closed. The liability of $3 million recorded by the Company as ofDecember 31, 2016 will be eliminated upon payment by its insurance carrier.77 CADIZ INC. scheDule ii - VAluAtion AnD QuAliFying Accounts For the years ended December 31, 2016, 2015 and 2014 ($ in thousands) Balance at Additions Charged to Balance Beginning Costs and Other at End Year ended December 31, 2016 of Period Expenses Accounts Deductions of Period Deferred tax asset valuation allowance $80,505 $7,121 $- $- $87,626 Year ended December 31, 2015 Deferred tax asset valuation allowance $71,939 $8,566 $- $- $80,505 Year ended December 31, 2014 Deferred tax asset valuation allowance $65,272 $6,667 $- $- $71,939 78 CADIZ INC. By: /s/ Scott Slater Scott Slater, Chief Executive Officer Date:March 16, 2017SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereto duly authorized. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the datesindicated.Name and PositionDate /s/ Keith BrackpoolMarch 16, 2017Keith Brackpool, Chairman /s/ Scott SlaterMarch 16, 2017Scott Slater, Chief Executive Officer, President and Director(Principal Executive Officer) /s/ Timothy J. ShaheenMarch 16, 2017Timothy J. Shaheen, Chief Financial Officer and Director (Principal Financial and Accounting Officer) /s/ Geoffrey GrantMarch 16, 2017Geoffrey Grant, Director /s/ Winston H. HickoxMarch 16, 2017Winston H. Hickox, Director /s/ Murray H. HutchisonMarch 16, 2017Murray H. Hutchison, Director /s/ Raymond J. PaciniMarch 16, 2017Raymond J. Pacini, Director /s/ Stephen E. CourterMarch 16, 2017Stephen E. Courter, Director /s/ Richard Nevins Richard Nevins, DirectorMarch 16, 2017 79EXHIBIT 21.1 CADIZ INC. SUBSIDIARIES OF THE COMPANY Cadiz Real Estate LLCRancho Cadiz Mutual Water CompanySWI Estate, Inc.EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-214318, 333-211383, 333-203085) and Form S-8 (No.333-196701) of Cadiz Inc. of our report dated March 16, 2017 relating to the financial statements, financial statement schedule and the effectiveness of internalcontrol over financial reporting, which appears in this Form 10-K./s/ PricewaterhouseCoopers LLPLos Angeles, CAMarch 16, 2017EXHIBIT 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THESARBANES-OXLEY ACT OF 2002I, Scott Slater, certify that: 1. I have reviewed this annual report on Form 10-K of Cadiz Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly duringthe period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles.c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscalquarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, theregistrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant'sauditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the registrant's ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting.Dated: March 16, 2017/s/ Scott SlaterScott SlaterChief Executive OfficerEXHIBIT 31.2CERTIFICATION PURSUANT TO SECTION 302 OF THESARBANES-OXLEY ACT OF 2002I, Timothy J. Shaheen, certify that: 1. I have reviewed this annual report on Form 10-K of Cadiz Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly duringthe period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles.c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscalquarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, theregistrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant'sauditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the registrant's ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting.Dated: March 16, 207/s/ Timothy J. ShaheenTimothy J. ShaheenChief Financial Officer and Secretary EXHIBIT 32.1STATEMENT PURSUANT TO SECTION 906 THE SARBANES-OXLEY ACT OF 2002BY PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER I, Scott Slater, herby certify, to my knowledge, that: 1. the accompanying Annual Report on Form 10-K of Cadiz Inc. for the year ended December 31, 2016 (the "Report") fully complies with the requirements ofSection 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Cadiz Inc. IN WITNESS WHEREOF, the undersigned has executed this Statement as of the date first written above.Dated: March 16, 2017/s/ Scott SlaterScott SlaterChief Executive Officer EXHIBIT 32.2STATEMENT PURSUANT TO SECTION 906 THE SARBANES-OXLEY ACT OF 2002BY PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER I, Timothy J. Shaheen, herby certify, to my knowledge, that: 1. the accompanying Annual Report on Form 10-K of Cadiz Inc. for the year ended December 31, 2016 (the "Report") fully complies with the requirements ofSection 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Cadiz Inc. IN WITNESS WHEREOF, the undersigned has executed this Statement as of the date first written above.Dated: March 16, 2017/s/ Timothy J. ShaheenTimothy J. ShaheenChief Financial Officer and Secretary

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