<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from............to............
Commission File Number 0-12114
---------------------
CADIZ LAND COMPANY, INC.
(Exact name of registrant specified in its charter)
Delaware 77-0313235
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10535 Foothill Boulevard, Suite 150
Rancho Cucamonga, CA 91730
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 980-2738
____________________________________
Securities registered pursuant to Section 12(b) of the Act: None
Name of each exchange
Title of each class on which registered
------------------- -------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
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 during the 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 the past 90 days.
Yes X No
______ ______
The number of shares outstanding of each of the Registrant's classes of
Common Stock at February 9, 1995, was 16,813,454 shares of Common Stock, par
value $0.01.
<PAGE>
CADIZ LAND COMPANY, INC.
For the Nine Month Period Ended December 31, 1994
TABLE OF CONTENTS
PAGE
I. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. Balance Sheet........................................ 1-2
B. Statement of Cash Flows.............................. 3
C. Statement of Operations.............................. 4-5
D. Statement of Stockholders' Equity.................... 6
E. Notes................................................ 7-9
II. SUPPLEMENTARY INFORMATION
A. Management's Discussion and Analysis of
Financial Condition and results of Operations... 10-17
B. Other Information.................................... 18
C. Signatures........................................... 19
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
CADIZ LAND COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
Assets
(in thousands)
<CAPTION>
December 31, March 31,
1994 1994
___________ _________
(unaudited)
<S> <C> <C>
Cash $ 1,706 $ 4,408
Notes receivable 22 118
Net assets of discontinued segment - 57
Property and equipment, net 1,457 1,137
Land and improvements:
Developed property, net 9,800 10,044
Unimproved land 11,836 11,563
Excess of purchase price over net
assets acquired, net 5,448 5,623
Other assets 2,065 1,108
________ ________
$32,334 $34,058
<FN>
See Accompanying Notes to Financial Statements.
</TABLE>
1
<PAGE>
<TABLE>
CADIZ LAND COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(in thousands except number of shares)
<CAPTION>
December 31, March 31,
1994 1994
___________ _________
(unaudited)
<S> <C> <C>
Accounts payable $ 437 $ 1,034
Other liabilities 302 558
Debt 14,031 13,740
Contingencies (Note 6)
Stockholders' equity:
Common stock - $.01 par value;
shares issued and outstanding -
16,813,454 at December 31, 1994
and 15,430,864 at March 31, 1994 168 154
Additional paid-in capital 61,964 59,890
Accumulated deficit (44,568) (41,318)
_______ ________
Total Stockholders' equity 17,564 18,726
_______ ________
$32,334 $34,058
<FN>
See Accompanying Notes to Financial Statements.
</TABLE>
2
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<TABLE>
CADIZ LAND COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<CAPTION>
Nine months Ended
December 31,
_____________
1994 1993
_________ _________
<S> <C> <C>
Cash flows from operating activities:
Loss from continuing operations $ (3,250) $ (2,598)
Adjustments to reconcile loss from
continuing operations to net cash
used for operating activities:
Depreciation and amortization 1,085 703
Extraordinary gain on debt settlement (114) (343)
The effect on net cash used for
continuing operating activities from
changes in assets and liabilities:
Accounts and notes receivable 96 25
Debt issue costs and other assets (196) (290)
Accounts payable and other liabilities (191) (369)
________ ________
Net cash used for continuing operating
activities (2,570) (2,872)
Net cash provided by (used for)
discontinued operating activities 57 (55)
________ ________
Net cash used for operating activities (2,513) (2,927)
________ ________
Cash flows from investing activities:
Land purchase and development (342) (1,468)
Surplus Water Project (973) -
Additions to property and equipment (563) (164)
________ ________
Net cash used for investing activities (1,878) (1,632)
________ ________
Cash flows from financing activities:
Net proceeds from issuance of common stock 2,088 7,843
Proceeds from issuance of debt - 391
Principal payments on debt (399) (444)
________ ________
Net cash provided by financing activities 1,689 7,790
________ ________
Net increase (decrease) in cash (2,702) 3,231
Cash, beginning of year 4,408 59
________ ________
Cash, end of period $ 1,706 $ 3,290
<FN>
See Accompanying Notes To Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
CADIZ LAND COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands except per share data)
(unaudited)
<CAPTION>
Three Months Ended
December 31,
_____________
1994 1993
________ ________
<S> <C> <C>
Revenues $ - $ -
________ ________
Costs and expenses:
Resource development 319 224
General and administrative 312 500
Amortization 58 58
________ ________
689 782
________ ________
Operating loss (689) (782)
Interest expense, net 315 206
________ ________
Loss before discontinued operations
and extraordinary item (1,004) (988)
Gain on disposal of discontinued
segment (Note 4) - 145
Loss before extraordinary item (1,004) (843)
Extraordinary Item:
Gain on debt settlement (Note 5) - 43
________ ________
Net loss $ (1,004) $ (800)
________ ________
Earnings (loss) per share:
Loss before discontinued operations
and extraordinary item $ (0.06) $ (0.07)
Gain on disposal of discontinued segment - 0.01
Extraordinary item - -
________ ________
Net loss per share $ (0.06) $ (0.06)
<FN>
See Accompanying Notes to Financial Statements.
</TABLE>
4
<PAGE>
<TABLE>
CADIZ LAND COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands except per share data)
(unaudited)
<CAPTION>
Nine months Ended
December 31,
_____________
1994 1993
________ ________
<S> <C> <C>
Revenues $ - $ -
________ ________
Costs and expenses:
Resource development 1,155 818
General and administrative 1,134 1,443
Amortization 175 175
________ ________
2,464 2,436
________ ________
Operating loss (2,464) (2,436)
Interest expense, net 900 650
________ ________
Loss before discontinued operations
and extraordinary item (3,364) (3,086)
Gain on disposal of discontinued
segment (Note 4) - 145
Loss before extraordinary item (3,364) (2,941)
Extraordinary Item:
Gain on debt settlement (Note 5) 114 343
________ ________
Net loss $ (3,250) $ (2,598)
________ ________
Earnings (loss) per share:
Loss before discontinued operations
and extraordinary item $ (0.21) $ (0.26)
Gain on disposal of discontinued
segment - 0.01
Extraordinary item 0.01 0.03
________ ________
Net loss per share $ (0.20) $ (0.22)
<FN>
See Accompanying Notes to Financial Statements.
</TABLE>
5
<PAGE>
<TABLE>
CADIZ LAND COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Nine months Ended December 31, 1994
(in thousands except number of shares)
(unaudited)
<CAPTION>
Common Stock Total
-------------------- Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Equity
__________ ______ _______ _________ _________
<S> <C> <C> <C> <C> <C>
Balance as of
March 31, 1994 15,430,864 $154 $59,890 $(41,318) $18,726
Exercise of stock
options (Note 3) 1,268,890 13 1,791 - 1,804
Exercise of stock
warrants (Note 3) 113,700 1 283 - 284
Net loss - - - (3,250) (3,250)
__________ ______ _______ ________ ________
Balance as of
December 31, 1994 16,813,454 $168 $61,964 $(44,568) $17,564
<FN>
See Accompanying Notes To Financial Statements.
</TABLE>
6
<PAGE>
CADIZ LAND COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - CURRENT STATUS AND DESCRIPTION OF BUSINESS
BUSINESS OF THE COMPANY
The primary business of Cadiz Land Company, Inc. (the "Company") is the
development of the land and water resources associated with properties
owned and controlled by the Company in the desert regions of Southern
California totalling 41,625 acres. The Company's land and water development
activities to date have been concentrated on the largest property, totalling
approximately 31,800 acres at Cadiz, California. Over the last eight years
the Company has developed 1,360 acres of land at Cadiz to permanent crops,
which has demonstrated both the commercial agricultural viability of this
region and the quantity and quality of the water resources associated with
the Company's Cadiz property.
The Company is continuing its negotiations with the Mojave Water Agency
("MWA") and with additional potential third party purchasers of water
concerning the development of a water delivery system capable of delivering
between 30,000 to 50,000 acre-feet of water per year (the "Surplus Water
Project"). In addition to these negotiations, the Company has delivered
the Final Draft Feasibility Report to the MWA Board. The Company is now in
the process of finalizing, for submission to the MWA, the various documents
required by MWA to commence their environmental review of the proposed water
transfer. The Company is also continuing to analyze and evaluate the various
financing and ownership alternatives available regarding the pipeline and
delivery system. Management believes the Company will be able to enter into
agreements with the MWA and/or other third party purchasers which will provide
for the realization by the Company of a revenue stream from its land and water
resources starting in 1996. Accordingly, commencing in the second half of
the Company's 1994 fiscal year, costs related to this Surplus Water Project
have been capitalized. Such costs, which are reflected in the Company's
balance sheet in Other Assets, totalled $1,189,000 at December 31, 1994 and
$217,000 at March 31, 1994.
BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared by the
Company without audit and should be read in conjunction with the consolidated
financial statements and notes hereto included in the Company's latest
Form 10-K for the period ended March 31, 1994. The foregoing condensed
consolidated financial statements include all adjustments, consisting only of
normal recurring adjustments which the Company considers necessary for a fair
presentation. The results of operations for the nine months ended December 31,
1994 are not necessarily indicative of the results to be expected for the full
fiscal year.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
See Note 2 to the Consolidated Financial Statements included in the Company's
latest Form 10-K for a discussion of the Company's accounting policies.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3 - STOCK OPTIONS AND WARRANTS EXERCISED
During the quarter ended June 30, 1994, 1,268,890 previously outstanding
stock options were exercised resulting in gross proceeds to the Company
of $1,804,000.
During the quarter ended December 31, 1994, the Company received proceeds of
$284,250 from the exercise of warrants for 113,700 shares of the Company's
common shares at an exercise price of $2.50 per share. These warrants had
been issued in December 1991 as consideration for assistance with debt
restructuring and were scheduled to expire in December 1994.
NOTE 4 - GAIN ON DISPOSAL OF DISCONTINUED SEGMENT
During the quarter ended December 31, 1993, the Company reversed valuation
reserves and liabilities related to discontinued operations totalling
$145,000 for items which were originally charged to loss on disposal of a
discontinued segment.
NOTE 5 - GAIN ON DEBT SETTLEMENT
In June 1994, the Company retired a note payable in the amount of $249,000
to an individual at a discounted amount, resulting in an extraordinary gain
of $114,000. The note, which originated in 1985, was scheduled to be
retired with a balloon payment in December 1996.
In June 1993, the Company entered into a transaction by which debt was
exchanged for commercial property resulting in a gain of $300,000. In
addition, during the quarter ended December 31, 1993, the Company recorded
an additional gain of $43,000 on the settlement of a debt at less than book
value.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 6 - CONTINGENCIES
See Note 10 to the Consolidated Financial Statements included in the
Company's latest Form 10-K for a discussion of contingencies.
NOTE 7 - SUBSEQUENT EVENT
In February 1995, the Company reached an agreement with Cooperative
Raiffeisen-Boerleenbank, B.A. ("Rabobank") and Henry Ansbacher & Co.,
Limited ("Ansbacher"), collectively the "Banks", whereby Ansbacher will
provide a loan facility of up to $3,000,000 with interest to accrue and
capitalize at the rate of 1% above the Libor rate until January 31, 1997,
the maturity date. The Company will apply $2,325,000 of the loan proceeds
toward its estimated working capital requirements for the fiscal year ending
March 31, 1996, reduce its obligation to Rabobank in the amount of $125,000
and apply the remaining amount of the loan toward working capital requirements
for the fiscal year ending March 31, 1997.
9
<PAGE>
CADIZ LAND COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(unaudited)
GENERAL
Cadiz Land Company, Inc. (formerly known as Pacific Agricultural Holdings,
Inc.) was incorporated in Delaware on May 26, 1992. On May 6, 1992,
the shareholders of Pacific Agricultural Holdings, Inc. approved its
reincorporation as a Delaware corporation, a one-for-five reverse stock
split, and the change of its name to Cadiz Land Company, Inc. ("the Company").
The reincorporation, reverse split, and name change became effective on
May 26, 1992. All references to the common stock of the Company have been
adjusted to reflect the one-for-five reverse stock split.
RESULTS OF OPERATIONS
QUARTER ENDED DECEMBER 31, 1994 COMPARED TO QUARTER ENDED DECEMBER 31, 1993
During the quarter ended December 31, 1994, the Company had a net loss of
$1,004,000 compared to a loss of $800,000 during the same period in 1993.
No revenues were recognized from the Company's operations in either period.
The following table summarizes the net loss for both periods (in thousands):
1994 1993
______ _____
Resource development $ 319 $ 224
General and administrative 312 500
Amortization 58 58
Interest expense, net 315 206
Gain on disposal of discontinued segment - (145)
Extraordinary item - gain on debt - (43)
______ _____
$1,004 $ 800
RESOURCE DEVELOPMENT
Expenses recorded in this category consist of costs incurred in the
agricultural, land and water resource development of the Company's
landholdings. As an integral part of its strategy to control the ultimate
use of the resources associated with the Cadiz project, the Company
continues to maintain control of management of both the infrastructure
associated with this property as well as the development of the area for
agricultural use. Accordingly, costs related to the Company's management of
its infrastructure and agricultural development are included in Resource
Development. Additionally, operating costs associated with the Company's
continual evaluation of additional potential land acquisition sites, such as
overhead, legal and travel are included within this category.
10
<PAGE>
RESOURCE DEVELOPMENT (Continued)
Resource development expenses totalled $319,000 for the quarter ended
December 31, 1994 as compared to $224,000 for the same period in 1993,
resulting in an increase of $95,000. Costs attributable to the Company's
Agricultural Development Department, which was created in April 1994 to
help spur further agricultural development at Cadiz, were offset by the
capitalization of certain expenses related to the Surplus Water Project due
to the Company's increased efforts in this area.
GENERAL AND ADMINISTRATION
General and administrative expenses decreased by approximately $188,000 in
1994 compared to 1993 due to reduced legal fees and an overall decrease in
overhead.
INTEREST EXPENSE
Net interest expense totalled $315,000 during the quarter ended December 31,
1994 as compared to $206,000 during the same period in 1993.
The following table summarizes the components of net interest expense for
the three month periods ended December 31, 1994 and 1993 (in thousands):
1994 1993
____ ____
Interest expense on outstanding debt $217 $240
Amortization of financing costs 120 48
Interest on citrus orchard capitalized - (63)
Interest income (22) (19)
____ ____
Net interest expense $315 $206
Interest expense on outstanding debt decreased during the period as a result
of a lower outstanding balance. This reduction was offset by the
amortization of debt issue costs and the debt discount issued in connection
with the January 1994 refinancing arrangements (see Form 10-K for March 31,
1994). Such costs are being amortized over the term of the debt, which
matures January 1997. In addition, during the 1993 period interest expense
related to the development of the Cadiz citrus orchard was capitalized, as
the orchard had not yet reached maturity during the period. As this orchard
is no longer in the developmental stage, interest relating to orchard
development is no longer capitalized.
11
<PAGE>
NINE MONTHS ENDED DECEMBER 31, 1994 COMPARED TO NINE MONTHS ENDED
DECEMBER 31, 1993
During the nine months ended December 31, 1994, the Company had a net loss
of $2,246,000 compared to a loss of $1,798,000 during the same period in
1993. No revenues were recognized from the Company's operations in either
period. The following table summarizes the net loss for both periods (in
thousands):
1994 1993
______ ______
Resource development $1,155 $ 818
General and administrative 1,134 1,443
Amortization 175 175
Interest expense, net 900 650
Gain on disposal of discontinued segment - (145)
Gain on debt settlement (114) (343)
______ ______
$3,250 $2,598
RESOURCE DEVELOPMENT
Resource development expenses totalled $1,155,000 for the nine months ended
December 31, 1994 as compared to $818,000 for the same period in 1993. The
increase of $337,000 is due to the creation of an Agricultural Development
Department in April 1994 ($240,000) and increased depreciation due to
infrastructure development at Cadiz ($163,000), mitigated in part, by the
capitalization of certain expenses related to the Surplus Water Project.
GENERAL AND ADMINISTRATIVE
General and administrative expenses during both periods consisted primarily
of salaries and professional expenses. These expenses decreased by $309,000
during the nine months ended December 31, 1994, as compared to the same period
in 1993. This decrease was primarily due to reduced legal fees and an overall
decrease in overhead.
INTEREST EXPENSE
The following table summarizes the components of net interest expense for the
nine month period ended December 31, 1994 and 1993 (in thousands):
1994 1993
______ ______
Interest expense on outstanding debt $ 640 $ 642
Amortization of financing costs 359 165
Interest on citrus orchard capitalized - (126)
Interest income (99) (31)
______ ______
Net interest expense $ 900 $ 650
12
<PAGE>
INTEREST EXPENSE (Continued)
Net interest expense increased by $250,000 during the 1994 period as
compared to the 1993 period due to a combination of items. As discussed
more fully above, amortization of debt issue costs and debt discount issued
in connection with new debt arrangements increased by $194,000. In addition,
in 1994 the Cadiz citrus orchard reached maturity and produced its first
commercial harvest, as a result of which interest expenses relating to the
orchard are no longer capitalized. These above increases were partially
offset by a decrease in interest on outstanding debt due to an overall
reduction in the underlying debt and to increased interest income due to
larger cash balances maintained during the 1994 period.
GAIN ON SETTLEMENT OF DEBT
In June 1994, the Company retired a note payable in the amount of $249,000
to an individual at a discounted amount resulting in an extraordinary gain
on settlement of debt of $114,000. The note, which originated in 1985,
was scheduled to be retired with a balloon payment in December 1996. During
the quarter ended June 1993, the Company concluded a settlement agreement
regarding a $925,000 note obligation which resulted in a extraordinary gain
of $300,000 on settlement of debt. During the quarter ended December 31,
1993, the Company recorded an additional gain of $43,000 which resulted from
the forgiveness of debt due under a note payable issued several years earlier.
LIQUIDITY AND CAPITAL RESOURCES
Pursuant to its business strategy, the Company has not yet received revenues
from its resource development operations and has therefore been required
to address its liquidity and working capital needs through outside funding
sources. Since the beginning of the 1992 fiscal year, the Company has
addressed these needs primarily through private equity placements and
agreements with its lenders.
OPERATIONAL ARRANGEMENTS
Following the appointment of a Vice President of Agricultural Development in
April 1994, the Company has been negotiating with various grower-marketers
to encourage their participation in new agricultural development at Cadiz.
As a result of these negotiations, the Company has recently entered into
agreements with several unrelated third party grower-marketers, whereby the
Company shall provide the land and water resources and the grower-marketers
will provide both the technical support and the majority of the working
capital to facilitate the harvesting of honeydew melons and seedless
watermelons. In order to accomodate this additional agricultural development,
the Company provided funds for an additional well and manifold system.
However, in management's view, these expenditures will allow the Company to
encourage further third party participation which is likely to lead to a
positive revenue stream within the next fiscal year and will increase the
prominence of the Cadiz area in the produce industry.
13
<PAGE>
OPERATIONAL ARRANGEMENTS (Continued)
The Company continues to lease the Cadiz vineyard to an unrelated third party
whereby the working capital obligations of the vineyard are the responsibility
of the lessee. Under the terms of this lease arrangement, the Company receives
as rent a percentage of the gross crop revenues and a monthly fee to cover
reimbursement of a portion of the Cadiz infrastructure overhead. Any income
received from the vineyard has been offset against related expenses.
The Company's 560 acres of citrus at Cadiz reached maturity during the
current fiscal year, when its first commercial harvest was produced. It
is expected that this orchard will be slightly cash flow positive in fiscal
1995, and as the orchard matures further, is expected to remain cash flow
positive. As is the case with the vineyard, any revenue received from the
orchard has been offset against the related expenses.
CURRENT FINANCING ARRANGEMENTS
The Company's two primary lenders are Cooperative Centrale Raiffeisen-
Boerenleenbank B.A., a Netherlands commercial bank ("Rabobank") and Henry
Ansbacher & Co., Limited, a banking corporation organized under the laws of
England ("Ansbacher") (collectively, the "Banks").
As previously reported in the Company's annual report on Form 10-K for
the year ended March 31, 1994, in January 1994 the Banks entered into an
arrangement regarding the Company's debt. Under terms of this arrangement,
the Banks extended the maturity dates of the debt from December 31, 1994
until January 31, 1997, fixed the interest rates for the period, and agreed
to accrue and capitalize interest payments.
Additional financing may be required in connection with the Company's Surplus
Water Project. The nature of such additional financing, if any, will depend
upon how the development and ownership of the Project is ultimately structured,
and how much of the Project's funding will be the Company's responsibility.
Should the Company determine that it will be able to maximize its profit
potential through construction and ownership of the water delivery system
used in the Project, the Company will be required to obtain long term project
financing.
Before actual construction of the delivery system can begin, the Company
must obtain various environmental and entitlement approvals. In order to
provide the additional short-term funding which will be needed to expedite
this process and to provide for the anticipated working capital requirements
for the next fiscal year, Ansbacher has agreed to provide an additional loan
facility of $3,000,000 which will accrue and capitalize interest at a fixed
rate. This loan will mature on January 31, 1997. In addition to providing
the operating capital necessary for the entitlement process, the loan proceeds
will provide for a reduction in the Company's obligation to Rabobank in the
amount of $125,000.
14
<PAGE>
EQUITY PLACEMENTS
During the fiscal year ended March 31, 1994, the Company raised gross
proceeds of $12.3 million through private placements of the Company's
common stock. Additionally, during the nine months ended December 31, 1994,
the Company raised additional proceeds of $2.088 million through the exercise
of outstanding stock options and warrants. Such proceeds are being used to
fund the Company's operating activities, additional property acquisitions and
debt reduction.
WORKING CAPITAL RESOURCES
The Company has adopted an unclassified balance sheet (eliminating the
distinction between current assets and long-term assets and current
liabilities and long-term liabilities). Accordingly, any historical or
forward looking discussion of the Company's working capital resources
should focus on the receipt and use of cash as opposed to the broader
concepts of working capital and current ratio.
Cash used for continuing operations for the nine month period ended
December 31, 1994 decreased to $2,570,000 as compared to $2,872,000 for the
same period in 1993. This decrease is primarily related to the incremental
net effect of noncash items offset by smaller reductions in accounts payable
and other liabilities compared to the same period in 1994. Cash provided by
discontinued operations of $57,000 during the 1994 quarter was from the sale
of property.
Cash used for investing activities increased by $246,000 during the nine
month period ended December 31, 1994 compared to the same period in 1993.
During the 1994 period, the Company capitalized expenses relating to the
Surplus Water Project totalling $973,000 as compared to none during the
prior period. During the 1994 period, the Company purchased for cash
approximately 1,025 acres and entered into an option agreement giving the
Company the right to purchase an additional 3,359 acres, all located in San
Bernardino County. During the 1993 period, the Company completed the purchase
of approximately 2,552 acres located in San Bernardino County. Expenditures
for property and equipment increased by $399,000 in 1994 compared to 1993.
The majority of the 1994 expenditures were related to well development and
irrigation for the Cadiz agriculturally developed landholdings.
Cash provided by financing activities was $1,689,000 during the nine months
ended December 31, 1994 compared to $7,790,000 during the same period in
1993. Proceeds from the issuance of common stock totalled $2,088,000 during
the period as a result of the exercise of previously existing stock options
and warrants. Principal payments on debt decreased by $45,000 compared to
the 1993 period.
15
<PAGE>
WORKING CAPITAL RESOURCES (Continued)
SHORT-TERM OUTLOOK
During fiscal 1994, the Company completed private placements yielding gross
proceeds of $12.3 million. During the current fiscal year, outstanding
stock options and warrants have also been exercised for an aggregate
exercise price of $2.088 million including $1.7 million for options which
were exercised by directors and executive officers. These transactions
have provided the Company with sufficient cash to support its short term
operational requirements.
LONG-TERM OUTLOOK
Management believes that ongoing agricultural development is an expeditious
way to accelerate the appreciation of property in the Cadiz area and,
consequently, to enhance the potential for returns to the Company's
shareholders. To facilitate such development, effective April 11, 1994,
the Company filled a newly created position of Vice President of Agricultural
Development, as discussed previously. This officer's experience and trade
relationships within the agricultural industry are anticipated to not only
enhance the return on existing agricultural operations, but will also
encourage further agricultural development of the Cadiz area by way of
leases and/or joint ventures with third parties.
As discussed in further detail in the Company's annual report on Form
10-K for the year ended March 31, 1994, the Company is actively pursuing
the development of its water resources. In this regard, in January 1994,
the Company entered into a Memorandum of Understanding with the Mojave Water
Agency ("MWA").
On June 14, 1994, the MWA Board of Directors authorized MWA staff to
undertake initial consultation with other affected agencies regarding
the proposed water transfer. The MWA Board also authorized its staff to
proceed with the environmental assessment of the proposed project upon
submission of an acceptable Final Draft Feasibility Report and reaffirmed
MWA's willingness to serve as Lead Agency for purposes of complying with the
California Environmental Quality Act ("CEQA"). The Final Draft Feasibility
Report has been submitted to MWA. The Company is now in the process of
finalizing, for submission to the MWA, the various documents required by MWA
to commence their environmental review of the proposed water transfer.
Negotiations are continuing between the Company, MWA and other water agencies
regarding remaining institutional arrangements, financing, pricing concepts
and formulas and ownership of the pipeline and the delivery system.
16
<PAGE>
LONG-TERM OUTLOOK (Continued)
Prudential Securities, Inc. ("PSI"), as Investment Banker to the Company, has
performed various economic analyses of the Surplus Water Project and has
advised the Company as to various alternatives means of implementing this
project. The various alternatives available for structuring the delivery
of this water to third parties include the construction by the Company of
a water delivery system for off-site delivery to third party purchasers as
well as the sale of water at the well head or as in-ground reserve, with
the purchaser or another third party assuming responsibility for transport of
the water off-site. PSI is continuing to assist management in evaluating
these delivery alternatives and in determining which alternatives maximize
the Company's profit potential in addition to assisting in determining which
financial structure will best accommodate such a plan.
Historically, the Company has financed both its working capital and resource
development cash requirements from outside resources via a combination of
equity and debt placements. Although the Company expects a revenue stream
will commence in 1996 from its landholdings and associated resources, no
assurance can be given as to whether such revenues will be of sufficient
levels by the end of fiscal 1996 to fund the Company's ongoing cash
requirements. Management believes that the combination of the exercise of
outstanding options and warrants which provided in excess of $2.088 million
in cash to the Company and the additional loan facility of $3,000,000 will
serve as the bridge for any gap in cash needs including the funding of project
environmental assessments and entitlements that might be required in connection
with the Surplus Water Project within the next fiscal year, although no
assurance can be given.
17
<PAGE>
PART II
CADIZ LAND COMPANY, INC.
OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Not applicable.
ITEM 2 - CHANGE IN SECURITIES
Not applicable.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4 - SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5 - OTHER INFORMATION
Not applicable.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
1. Exhibit 27. Financial Data Schedule.
B. Reports on Forms 8-K
1. None
18
<PAGE>
CADIZ LAND COMPANY, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CADIZ LAND COMPANY, INC.
Registrant
/s/ Keith Brackpool February 13, 1995
____________________________________ ___________________
Keith Brackpool Date
Chief Executive Officer and Director
/s/ Susan K. Chapman February 13, 1995
_____________________________________ ___________________
Susan K. Chapman Date
Chief Financial Officer and Secretary
19
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