Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-214318
PROSPECTUS
SUPPLEMENT
(to the prospectus dated
November
14, 2016)
Cadiz
Inc.
1,000,000
shares of Common Stock
We are offering up
to 1,000,000 shares of our common stock, par value $0.01 per share. Our common stock is listed on The NASDAQ Global Market under
the symbol “CDZI.” On November 30, 2016, the closing sale price of our common stock was $10.40 per share.
An investment
in our common stock involves a high degree of risk. See “Risk Factors” on page S-4 of this prospectus supplement for
more information on these risks. This prospectus supplement should be read in conjunction with and may not be delivered or utilized
without the prospectus dated November 14, 2016.
Neither
the SEC nor any state securities commission has approved or disapproved of these securities, or passed upon the adequacy or accuracy
of this prospectus supplement. Any representation to the contrary is a criminal offense.
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Per Share
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Total
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Public offering price
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$
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9.75
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$
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9,750,000
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Underwriting discounts and commissions
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$
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0.4875
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$
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487,500
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Proceeds to us (before expenses)
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$
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9.2625
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$
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9,262,500
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We
estimate the total expenses of this offering, excluding the underwriting discounts and commissions, will be approximately $250,000.
We have granted the underwriter a 30-day option to purchase up to an additional 150,000 shares of common stock from us on the
same terms and conditions set forth above. If the underwriter exercises the option in full, the total underwriting discount payable
by us will be $560,625 and the total proceeds to us, before the payment of expenses, will be $10,651,875. See the section of this
prospectus supplement titled “Underwriting.”
We
anticipate delivery of the shares will be made on or about December 6, 2016, subject to customary closing conditions.
Sole
Book-Runner
B.
Riley & Co.
The
date of this prospectus supplement is December 1, 2016.
TABLE
OF CONTENTS
PROSPECTUS
SUPPLEMENT
PROSPECTUS
ABOUT
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
This
prospectus supplement and the accompanying prospectus form part of a registration statement on Form S-3 that we filed with the
Securities and Exchange Commission (or the “Commission”) using a “shelf” registration process. This document
consists of two parts. The first part is this prospectus supplement, which describes the specific terms of this offering. The
second part is the accompanying prospectus, which contains more general information. Before you invest in shares of our common
stock or our warrants, you should read both this prospectus supplement and the accompanying prospectus, together with additional
information described below under the caption “Where You Can Find More Information.”
If
the description of this offering varies between this prospectus supplement and the accompanying prospectus, you should rely upon
the information in this prospectus supplement. Any statement made in the prospectus or in a document incorporated or deemed to
be incorporated by reference therein will be deemed to be modified or superseded for purposes of this prospectus supplement to
the extent that a statement contained in this prospectus supplement or in any other subsequently filed document that is also incorporated
or deemed to be incorporated by reference in this prospectus supplement modifies or supersedes that statement. Any statement so
modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement.
We
are responsible for the information contained in or incorporated by reference in this prospectus supplement, the accompanying
prospectus and any related free writing prospectus we have authorized for use in connection with this offering. This prospectus
supplement may be used only for the purpose for which it has been prepared. Neither we nor any other person has authorized anyone
to provide information different from the information contained in this prospectus supplement, the accompanying prospectus and
any related free writing prospectus and the documents incorporated by reference herein and therein.
We
are not making an offer to sell our common stock in any jurisdiction where the offer or sale is not permitted. You should not
assume that the information appearing in this prospectus supplement, the accompanying prospectus or any free writing prospectus
we have authorized for use in connection with this offering is accurate as of any date other than the date of the applicable document.
Neither this prospectus supplement nor the accompanying prospectus constitutes an offer or an invitation to subscribe for and
purchase any of our securities, and may not be used for or in connection with an offer or solicitation by any person, in any jurisdiction
in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
All
statements in this prospectus supplement and the documents incorporated by reference herein that are not historical facts should
be considered “Forward Looking Statements” within the meaning of the “Safe Harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Some of the forward-looking statements can be identified by the use words
such as “believe,” “expect,” “may,” “will,” “should,” “seek,”
“approximately,” “intend,” “plan,” “estimate,” “project,” “continue”
or “anticipates” or similar expressions or words, or the negatives of those expressions or words. These forward-looking
statements include, among others, our ability to maximize value from our Cadiz, California land and water resources and our ability
to obtain new financings as needed to meet our ongoing working capital needs. Although we believe that our plans, intentions and
expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such
plans, intentions, or expectations will be achieved.
Some
of the important factors that could cause actual results to differ materially from our expectations are disclosed under “Risk
Factors” and elsewhere in this prospectus supplement and the accompanying prospectus. All subsequent written and oral forward-looking
statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary
statements. Additional risks, uncertainties and other factors are incorporated herein by reference to our most recent Annual Report
on Form 10-K and our subsequent Quarterly Reports on Form 10-Q, as updated by our subsequent filings under the Exchange Act. Except
as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, changed circumstances, or any other reason, after the date
of this prospectus supplement.
This
summary highlights selected information included elsewhere in or incorporated by reference in this prospectus supplement and the
accompanying prospectus and does not contain all of the information that you should consider before investing in our common stock.
You should read the entire prospectus supplement and the accompanying prospectus carefully, especially “Risk Factors”
and the financial statements and related notes and other information incorporated by reference into this prospectus supplement,
before deciding whether to participate in the offering described in this prospectus supplement. Except where we state otherwise,
the information we present in this prospectus supplement assumes no exercise of the underwriter’s option to purchase additional
shares. In this prospectus supplement and the accompanying prospectus, unless expressly noted or the content indicates otherwise,
the words “we,” “us,” “our,” “Cadiz,” “company” and similar references
mean Cadiz Inc. and it subsidiaries.
SUMMARY
About
Cadiz
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 all of this land is underlain with high-quality, naturally recharging groundwater resources, and is situated in proximity
to the Colorado River and the Colorado River Aqueduct (“CRA”), a major source of imported water for Southern California.
Our properties are suitable for various uses, including large-scale agricultural development, groundwater storage and water supply
projects. Our main objective is to realize the highest and best use of our 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 water supply 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 to evaporation from the
aquifer system beneath our 34,000-acre property in the Cadiz and Fenner valleys of eastern San Bernardino County (the “Cadiz/Fenner
Property”), and deliver it to water providers throughout Southern California (see “Water Resource Development”).
We believe that the ultimate implementation of this Water Project will provide a significant source of future cash flow.
The
primary factor driving the value of such projects is ongoing pressure on water supplies throughout California, which has led Southern
California water providers to actively seek new, reliable supply solutions to plan for both short and long-term water needs. Available
supply is constrained by environmental and regulatory restrictions on each of the state’s three main water sources: the
State Water Project, which provides water supplies from Northern California to the central and southern parts of the state, the
CRA and the Los Angeles Aqueduct. Southern California’s water providers rely 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 several years.
Availability
of supplies in California also differs greatly from year to year due to natural hydrological variability. Over the last several
years, California has struggled through a historic drought featuring record-low winter precipitation and reservoir storage levels.
In 2015, for the first time in the state’s history, California Governor Jerry Brown mandated rationing of 25% statewide
in an effort to curtail urban demand. An “El Nino” weather pattern developed at the end of 2015 and brought wet conditions
to California, yet snowpack and precipitation remain average for the year, especially in Southern California. According to the
US Drought Monitor, as of February 2016, more than 99% of California remains abnormally dry. The Water Project is one of the few
nearly “shovel-ready” supply options in Southern California that could help alleviate the region’s water supply
challenges. See “Water Resource Development” below.
In
addition to an urgent need in California for new, reliable water supplies, demand for agricultural land with water rights is also
at an all-time high. Therefore, in addition to our Water Project proposal, we are pursuing ways in which the groundwater currently
being lost to evaporation from the aquifer system at the Cadiz/Fenner property can be immediately put to beneficial use through
sales, leasing, or agricultural joint ventures that are complementary to the Water Project.
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 is generally considered to be enough water to meet the annual water needs of one average
California household.
We
have farmed portions of the Cadiz/Fenner Property since the late 1980s relying on groundwater from the aquifer system for irrigation
and we believe the site is well suited for various permanent and seasonal crops. In 1993, we secured permits to develop agriculture
on up to 9,600 acres of the property and withdraw groundwater from the underlying aquifer system for irrigation. We initially
developed 1,900 acres of agriculture at the Property, including a well-field and manifold system and have since maintained various
levels of agriculture at the Property as we focused on developing the Water Project. In February 2016, we completed arrangements
to lease 2,100 acres of the Cadiz/Fenner Property for agricultural development as a result of significant interest from third
parties in expanding agricultural activity at the Cadiz/Fenner Property.
As
part of the agricultural expansion to be conducted under the lease arrangements, the groundwater production capacity of the Cadiz/Fenner
Property’s existing well-field is expected to be increased, which will provide additional infrastructure that is complementary
to the Water Project. Through work completed in 2015, including the drilling of three additional exploratory wells, we have now
identified suitable locations for the drilling of high-production wells powered by natural gas that could produce all of the water
allowable under our existing permit for implementation of the Water Project or alternatively to supply irrigation water for all
of the agricultural land. While any additional well-field development for agricultural use would be financed by our agricultural
partners as provided under our agricultural arrangements, the Company retained a call feature that allows 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’s facilities.
Our
2016 and 2017 working capital requirements relate largely to the final development activities associated with the Water Project
and those activities consistent with the Water Project related to further development of our land and agricultural assets. While
we continue to believe that the ultimate implementation of the Water Project will provide the primary source of our future cash
flow, we also believe there is significant additional value in our underlying agricultural assets.
We
also continue to explore additional uses of our land and water resource assets, including the marketing of our approved desert
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 as habitat conservation and cultural development.
Corporate
Information
We
are a Delaware corporation with our principal executive offices located at 550 South Hope Street, Suite 2850, Los Angeles, California
90071. Our telephone number is (213) 271-1600. We maintain a corporate website at www.cadizinc.com. The information contained
in, or that can be accessed through, our website is not a part of this prospectus.
Recent
Developments
On
March 5, 2013, we and Cadiz Real Estate LLC, our wholly owned subsidiary (collectively, the “Borrowers”), MSD Credit
Opportunity Master Fund, L.P., MILFAM II L.P. and Water Asset Management (collectively, the “Senior Lenders”) and
Wells Fargo Bank, National Association, as agent for the Senior Lenders, entered into that certain Amended and Restated Credit
Agreement (as amended, the “Credit Agreement”).
On
November 29, 2016, we entered into a Fifth Amendment to the Credit Agreement (“Fifth Amendment”) for the purpose of
(i) permitting the Borrowers to elect to satisfy the cash interest payment obligations under the Credit Agreement through the
issuance of shares of the Company’s common stock, based on a per-share price equal to the 10-day volume weighted average
trading price of the common stock on the date of the election and (ii) extending the maturity date of the Credit Agreement from
September 28, 2017 to September 28, 2019. Following each election by the Company to pay cash interest by the issuance of shares
of its common stock, the Company will make each issuance on the applicable interest payment date to the Senior Lenders pursuant
to a form of interest share issuance agreement to be executed by the Company with each Senior Lender. In connection with entering
into the Fifth Amendment, the Company issued to the Senior Lenders, in accordance with their respective pro rata interests of
the loans outstanding under the Credit Agreement, an aggregate of 357,500 shares of its common stock and warrants to purchase
an aggregate 357,500 shares of its common stock. Such shares of common stock and the warrants were offered to the Senior Lenders
pursuant to an effective registration statement on Form S-3 (File No. 333-214318) and were issued to the Senior Lenders pursuant
to a form of closing share and warrant issuance agreement executed by the Company with each Senior Lender. The shares of common
stock underlying the warrants and the shares of common stock to be paid as interest to the Senior Lenders will be offered under
such foregoing or similar registration statement, as available at exercise or issuance, as applicable. Any payment of any interest
by the Company via shares of common stock under the Fifth Amendment is subject to the satisfaction of certain equity conditions,
including the effectiveness a registration statement for such shares and a minimum 10-day volume weighted average trading price
of the common stock on the date of payment of $1.00 per share.
The
warrants have a five year term and an exercise price of $0.01 per share, subject to adjustment for corporate actions including,
but not limited to, stock dividends, stock splits, reverse stock splits, corporate reorganizations and mergers (collectively,
“Price Adjustments”) as well as certain dilutive issuances at a price per share (subject to Price Adjustments) below
either of (i) the fair market value of the common stock, or (ii) $9.05, as provided pursuant to the terms of the warrants. A holder
of a warrant may exercise the warrant, from time-to-time, commencing on the 180th day following the execution date of the Fifth
Amendment and only if any principal or interest amounts are outstanding under the Credit Agreement at the time of exercise.
THE
OFFERING
Issuer
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Cadiz
Inc.
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Common
stock offered by us pursuant to this prospectus supplement
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1,000,000
shares
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Common
stock outstanding before this offering
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19,753,506
shares (1)
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Common
stock to be outstanding after this offering
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20,753,506
shares
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Price
per share
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$9.75
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Option
to Purchase Additional Shares
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We
have granted the underwriter an option to purchase from us within 30 days following the date of this prospectus supplement
up to an additional 150,000 shares of common stock.
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Use
of proceeds
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We
intend to use the net proceeds from the sale of our common stock in this offering to fund our Water Project and general corporate
purposes, which may include business development activities, capital expenditures, working capital and general and administrative
expenses.
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Risk
factors
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Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning on page S-6 of this prospectus
supplement and page S-2 of the accompanying base prospectus for a discussion of factors you should carefully consider before
deciding to invest in our common stock.
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Lock-Up
Agreements
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Each
of our directors, and executive officers and certain of our major stockholders have agreed that for a period of 90 days from
the date of this prospectus supplement, they will be subject to a lock-up agreement prohibiting certain sales, transfers or
hedging transactions in our securities held by them, subject to certain exceptions. See “Underwriting – Lock-Up
Agreements.”
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NASDAQ
Global Market symbol
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CDZI
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(1)
The number of shares of common stock to be outstanding immediately after this offering as shown above is based on 19,753,506 shares
outstanding as of November 29, 2016. The number of outstanding shares excludes, as of November 29, 2016:
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1,182,500 shares of common stock
reserved for issuance under the Company’s 2009 Equity Incentive Plan and 2014 Equity Incentive Plan (the “Equity
Incentive Plans”), including:
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507,500
shares of common stock issuable upon the exercise of outstanding stock options, issued
pursuant to the 2009 Equity Incentive Plan, with a weighted-average exercise price of
$11.66;
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179,865
Restricted Stock Units and Outside Director Compensation Plan shares issuable pursuant
to the 2014 Equity Incentive Plan; and
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200,000
Restricted Stock Units issuable in connection with obtaining construction financing for
the Water Project;
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357,500 shares of common stock to
be issued in connection with the Fifth Amendment;
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357,500 shares of common stock issuable
upon exercise of outstanding warrants having an exercise price of $0.01 per share;
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13,229,886 shares of common stock
issuable upon conversion of outstanding convertible promissory notes at an average conversion price equal to $7.40; and
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up to 800,000 shares of common stock
reserved for future issuance, at the Company’s election provided certain conditions are satisfied, for the payment of
interest due under our Amended and Restated Credit Agreement, as amended.
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RISK
FACTORS
Our
business is subject to significant risks. Before you invest in our common stock, you should carefully consider, among other matters,
the risks and uncertainties described below, as well as the other information contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus, including our consolidated financial statements and accompanying notes and the information
under the heading “Risk Factors” in our most recent annual report on Form 10-K and quarterly reports on Form 10-Q.
See “Information Incorporated by Reference.” If any of the risks and uncertainties described in this prospectus supplement
or the accompanying prospectus or the documents incorporated by reference herein actually occur, our business, financial condition,
or results of operations could be adversely affected in a material way. This could cause the trading price of our common stock
to decline, perhaps significantly, and you may lose part or all of your investment. Please note that additional risks not presently
known to us or that we currently deem immaterial may also impair our business, financial condition and operations.
Risks
Related to the Offering
You
will experience immediate dilution in the book value per share of the common stock you purchase in this offering.
Because
the price per share of our common stock being offered is substantially higher than the book value per share of our common stock,
you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. If you
purchase shares of common stock in this offering, you will suffer immediate and substantial dilution of $12.88 per share in the
net tangible book value of the common stock, based on an offering price of $9.75 per share. See the section titled “Dilution”
below for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.
Our
management will have broad discretion over the use of the net proceeds from this offering.
We
currently anticipate using the net proceeds from this offering to fund our Water Project and for general corporate purposes, which
may include business development activities, capital expenditures, working capital and general and administrative expenses. We
have not reserved or allocated specific amounts for any of these purposes and we cannot specify with certainty how we will use
the net proceeds. Accordingly, our management will have considerable discretion in the application of the net proceeds and you
will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately.
The net proceeds may also be used for corporate purposes that do not increase our operating results or market value. Until the
net proceeds are used, they may be placed in investments that do not produce income or that lose value.
Future
sales of our common stock could lower our stock price and dilute existing stockholders.
We
may, in the future, sell additional shares of common stock in subsequent public or private offerings. In October 2016, we filed
a universal shelf registration statement with the SEC covering the possible offer and sale of an indeterminate amount of common
stock, preferred stock, debt securities, units, warrants and subscription rights for a maximum aggregate offering price of $40,000,000.
The securities may be offered from time to time, separately or together, directly by us, or through underwriters, dealers or agents
at amounts, prices, interest rates and other terms to be determined at the time of the offering.
In
addition, we have issued approximately $73 million in convertible promissory notes which accrue interest at a rate of 7% per year.
The principal and accrued interest underlying the notes are convertible into up to an aggregate of 13,229,886 shares of common
stock. Furthermore, we recently entered into a Fifth Amendment to our Credit Agreement pursuant to which we issued to our lenders
an aggregate 357,500 shares of our common stock and warrants to purchase an additional 357,500 shares of common stock. As part
of the Fifth Amendment, our lenders agreed that we could issue, so long as certain conditions were met, shares of our common stock
for the payment of interest due under the Amended and Restated Credit Agreement. If we decide to pay the interest with shares
of our common stock, we could issue as many as 800,000 shares of common stock.
We
cannot predict the size of future issuances of our common stock or the effect, if any, that future sales and issuances of shares
of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including
shares issued upon the exercise of stock options and warrants and conversion of convertible promissory notes), or the perception
that such sales could occur, may adversely affect prevailing market prices for our common stock. In addition, these sales may
be dilutive to existing stockholders.
In
connection with this offering, our executive officers, directors and certain major stockholders have entered into lock-up agreements
restricting the sale of their shares of common stock for 90 days following the date of this prospectus supplement, subject to
certain exceptions and extension in certain circumstances. However, the underwriter may at any time release all or a portion of
the common stock subject to these lock-up provisions. When determining whether or not to release shares subject to a lock-up agreement,
the underwriter will consider, among other factors, the holder’s reasons for requesting the release, the number of shares
for which the release is being requested and the possible impact of the release of the shares on the market price of our common
stock. If such lock-up restrictions are waived, the affected common stock may be available for sale into the market, which could
adversely affect the market price of our common stock.
Fluctuations
in the price of our common stock may affect the number of shares of our common stock we issue for the payment of interest, which
could adversely impact our stock price.
If
we elect to pay interest due under our Credit Agreement, as amended by the Fifth Amendment, with shares of our common stock, we
will issue to our lenders a number of shares of common stock rounded to the nearest whole number, equal to each lender’s
pro rata interest divided by the per share volume weighted average price of our common stock on our principal trading market (currently
The NASDAQ Global Market) for the ten trading days preceding the date of election. As of November 29, 2016, the number of shares
of our common stock outstanding was
19,753,506
. If we elect to pay the interest due with shares of our common stock, we
could issue up to an additional 800,000 shares of common stock, depending on the market price of our common stock. If the trading
price of our stock declines, we may be issuing a greater number of shares as interest payments than we would have otherwise issue
for each such interest payment, and the subsequent resales of these shares may further depress the trading price of our stock.
USE
OF PROCEEDS
We
estimate that the net proceeds from the sale of our common stock in this offering will be approximately $9,012,500, or approximately
$10,401,875 if the underwriter exercise in full the option to purchase additional shares of common stock, in each case, after
deducting underwriting discounts and commissions and our estimated expenses related to the offering. We intend to use the net
proceeds from the sale of our common stock to fund our Water Project and for general corporate purposes, which may include business
development activities, capital expenditures, working capital and general and administrative expenses. Pending such use, we may
temporarily invest the net proceeds in short-term investments.
The
amounts and timing of our actual expenditures will depend on numerous factors, including the factors described under “Risk
Factors” in this prospectus supplement, the accompanying prospectus and in the documents incorporated by reference herein,
as well as the amount of cash used in our operations. We may find it necessary or advisable to use the net proceeds for other
purposes, and our management will have significant flexibility in applying the net proceeds of this offering.
DETERMINATION
OF OFFERING PRICE
The
public offering price of the shares offered by this prospectus has been determined by negotiation between us and the underwriter.
Among the factors considered in determining the public offering price of the shares were:
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our
history and our prospects;
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the
industry in which we operate;
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our
past and present operating results; and
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the
general condition of the securities markets at the time of this offering.
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The
offering price stated on the cover page of this prospectus should not be considered an indication of the actual value of the shares.
That price is subject to change as a result of market conditions and other factors, and we cannot assure you that the shares can
be resold at or above the public offering price.
MARKET
PRICE OF OUR COMMON STOCK
Our
common stock is listed on The
Nasdaq
Global Market (“NASDAQ”) under
the symbol “CDZI”.
The
following table sets forth the quarterly range of high and low sale prices of our common stock since January 1, 2014 as reported
by
Nasdaq
. As of November 29, 2016, we had
19,753,506
shares of common stock
outstanding and approximately 91 stockholders of record.
2016
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High
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Low
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October 1, 2016 through November 29, 2016
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$
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10.50
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$
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10.30
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July 1, 2016 through September 30, 2016
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5.64
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7.97
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April 1, 2016 through June 30, 2016
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4.98
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6.94
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January 1, 2016 through March 31, 2016
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4.03
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5.82
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2015
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October 1, 2015 through December 31, 2015
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5.45
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5.15
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July 1, 2015 through September 30, 2015
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7.37
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7.24
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April 1, 2015 through June 30, 2015
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8.70
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8.53
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January 1, 2015 through March 31, 2015
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10.66
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10.21
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2014
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October 1, 2014 through December 31, 2014
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11.69
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11.09
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July 1, 2014 through September 30, 2014
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10.63
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9.87
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April 1, 2014 through June 30, 2014
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8.48
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8.29
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January 1, 2014 through March 31, 2014
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7.10
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|
|
6.91
|
|
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 senior secured term loan has covenants that prohibit the payment of dividends.
CAPITALIZATION
The
following table sets forth our capitalization as of September 30, 2016:
|
●
|
on a pro forma, as adjusted basis to give effect to
our receipt of net proceeds of approximately $9,012,500 from the sale of 1,000,000 shares of common stock we are offering at a
public offering price of $9.75 per share after deducting the underwriter’s fees and commission and estimated offering expenses
payable by us.
|
This
capitalization table does not include 13,229,886 shares of common stock issuable upon conversion of outstanding convertible notes
and should be read in conjunction with management’s discussion and analysis of results of operations and our consolidated
financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2015 and in
our Quarterly Report on Form 10-Q for the quarter ended September 30, 2016. The information below is in thousands, except share
data.
|
|
As of September 30, 2016
(unaudited)
|
|
|
|
Actual
|
|
|
Pro Forma
|
|
Cash and cash equivalents
|
|
$
|
3,893
|
|
|
$
|
13,155
|
|
Preferred stock, $0.01 par value; 100,000 shares authorized; none issued and outstanding
|
|
|
--
|
|
|
|
--
|
|
Common stock, $0.01 par value; 70,000,000 shares authorized; 19,014,953 issued and outstanding as of September 30, 2016
|
|
|
190
|
|
|
|
200
|
|
Additional paid-in-capital
|
|
|
332,729
|
|
|
|
341,981
|
|
Accumulated deficit
|
|
|
(403,147
|
)
|
|
|
(403,397
|
)
|
Total stockholders’ equity (deficit)
|
|
|
(70,228
|
)
|
|
|
(61,216
|
)
|
DILUTION
If
you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between
the combined public offering price per share and our pro forma net tangible book value per share after this offering. We calculate
net tangible book value per share by dividing our net tangible book value, which is tangible assets less total liabilities, by
the number of outstanding shares of our common stock.
Our
net tangible book value as of September 30, 2016 was approximately $(74.0 million), or $(3.89) per share. After giving effect
to the sale by us of 1,000,000 shares of common stock offered hereby at the public offering price of $9.75 per share and after
deducting the underwriting discounts and commission and estimated offering expenses payable by us, our pro forma as adjusted net
tangible book value as of September 30, 2016 would have been approximately $65.0 million, or $(3.13) per share. This represents
an immediate increase in as adjusted net tangible book value of $0.76 per share to existing stockholders and an immediate dilution
of $12.88 per share to new investors purchasing our common stock in this offering. The following table illustrates the per share
dilution to investors purchasing shares of common stock in this offering:
Public offering price of common stock
|
|
|
|
|
|
$
|
9.75
|
|
Net tangible book value per share as of September 30, 2016
|
|
$
|
(3.89
|
)
|
|
|
|
|
Increase per share in net tangible book value after this offering
|
|
$
|
0.76
|
|
|
|
|
|
As adjusted net tangible book value per share as of September 30, 2016, after giving effect to this offering
|
|
|
|
|
|
$
|
(3.13
|
)
|
Dilution per share to new investors
|
|
|
|
|
|
$
|
12.88
|
|
The
above table is based on 19,753,506 shares issued and outstanding as of November 29, 2016 and does not include:
|
●
|
1,182,500 shares of common stock reserved for issuance under the Equity Incentive Plans, including:
|
|
|
|
|
|
|
●
|
507,500
shares of common stock issuable upon the exercise of outstanding stock options, issued pursuant to the 2009
Equity Incentive Plan, with a weighted-average exercise price of $11.66;
|
|
|
|
|
|
|
●
|
179,865
Restricted Stock Units and Outside Director Compensation Plan issuable pursuant to the 2014 Equity Incentive
Plan; and
|
|
|
|
|
|
|
●
|
200,000
Restricted Stock Units issuable in connection with obtaining construction financing for the Water Project;
|
|
●
|
357,500
shares of common stock to be issued in connection with the Fifth Amendment;
|
|
|
|
|
●
|
357,500
shares of common stock issuable upon exercise of outstanding warrants having an exercise
price of $0.01 per share;
|
|
|
|
|
●
|
13,229,886
shares of common stock issuable upon conversion of outstanding convertible promissory
notes at an average conversion price equal to $7.40; or
|
|
|
|
|
●
|
up
to 800,000 shares of common stock reserved for future issuance, at the Company’s
election provided certain conditions are satisfied, for the payment of interest due under
our Amended and Restated Credit Agreement, as amended.
|
To
the extent that the outstanding options or warrants are exercised, or shares are issued for payment of interest due under our
Credit Agreement, you will experience further dilution. To the extent that the above issued options and warrants are exercised,
and all 800,000 shares of common stock reserved for possible payment of interest are issued, the pro forma net tangible book value
per share of our common stock after giving effect to this offering would be $(1.77) per share, and the dilution in net tangible
book value per share to purchasers in this offering would be $11.52 per share. In addition, we may choose to raise additional
capital due to market conditions or strategic considerations. To the extent that additional capital is raised through the sale
of securities, the issuance of those securities could result in further dilution to our stockholders.
UNDERWRITING
Under
the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus supplement, the
underwriter, B. Riley & Co., LLC, has agreed to purchase, and we have agreed to sell to the underwriter, 1,000,000 shares
of our common stock.
The
underwriter is offering the shares subject to its acceptance of the shares from us and subject to prior sale. The underwriting
agreement provides that the obligation of the underwriter to pay for and accept delivery of the shares offered by this prospectus
supplement are subject to the approval of certain legal matters by its counsel and to other conditions, including the absence
of any material adverse change in our business and the receipt of customary legal opinions, letters and certificates. The underwriter
is committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option
described below unless and until this option is exercised.
Option
to Purchase Additional Shares
If
the underwriter sells more than 1,000,000 shares, the underwriter will have an option to buy up to an additional 150,000 shares
from us. The underwriter may exercise that option at any time and from time to time during the 30-day period from the date of
this prospectus supplement.
Discounts
and Commissions
The
underwriter proposes to offer the common stock directly to the public at the public offering price indicated on the cover page
of this prospectus supplement. After this offering, the public offering price, concession and reallowance to dealers may be reduced
by the underwriter. No reduction will change the amount of proceeds to be received by us as indicated on the cover page of this
prospectus supplement. The shares of common stock are offered by the underwriter as stated in this prospectus supplement, subject
to receipt and acceptance and subject to the underwriter’s right to reject any order in whole or in part.
The
following table summarizes the public offering price, underwriting discounts and commissions and proceeds before payment of other
expenses by us assuming both no exercise and full exercise of the underwriter’s option to purchase additional shares:
|
|
|
|
|
Total
|
|
|
|
Per share
|
|
|
Without Purchase of
Additional
Shares
|
|
|
With Purchase
of Additional Shares
|
|
Public offering price
|
|
$
|
9.75
|
|
|
$
|
9,750,000
|
|
|
$
|
11,212,500
|
|
Underwriting discounts and commissions
|
|
$
|
0.4875
|
|
|
$
|
487,500
|
|
|
$
|
560,625
|
|
Proceeds to us before payment of other expenses
|
|
$
|
9.2625
|
|
|
$
|
9,262,500
|
|
|
$
|
10,651,875
|
|
We
have agreed to reimburse the underwriter for its expenses (including the fees and expenses of its counsel up to $40,000 in the
aggregate). We estimate that the total expenses payable by us in connection with this offering, other than the underwriting discounts
and commissions referred to in the table above, will be approximately $[250,000, which includes approximately $40,000 in expenses
incurred by the underwriter (including the fees and expenses of its counsel) and $210,000 in expenses incurred by us (including
the fees and expenses of our counsel, independent registered public accountants and other miscellaneous expenses).
The
underwriter and its affiliates may, in the future, perform various financial advisory and investment banking services for us,
for which they will receive customary fees and expenses.
Indemnification
We
have agreed to indemnify the underwriter against various liabilities, including certain liabilities under the Securities Act and
the Exchange Act, or to contribute to payments the underwriter may be required to make because of any of those liabilities.
Lock-Up
Agreements
We
and our directors, executive officers and certain major stockholders (collectively, the “Locked-Up Stockholders”)
have agreed with the underwriter, subject to certain exceptions, not to sell or transfer any common stock or securities convertible
into, exchangeable for, exercisable for, or repayable with common stock, during the period from the date of this prospectus supplement
until 90 days after the date of this prospectus supplement (the “Lock-Up Period”), except with the prior written consent
of B. Riley & Co., LLC. Specifically, we and these other persons have agreed, with certain limited exceptions, not to directly
or indirectly:
|
●
|
offer,
pledge, sell, assign or contract to sell any common stock or securities convertible into common stock or exercisable or exchangeable
for common stock;
|
|
●
|
engage
in any short selling of common stock or securities
convertible
into common stock or exercisable or exchangeable for common stock;
|
|
|
|
|
●
|
make
any demand for or exercise any right with respect to, the registration of any common stock or any security convertible into
or exercisable for common stock;
|
|
●
|
otherwise
dispose of or transfer any common stock; or
|
|
●
|
enter
into any swap, hedge or other agreement or arrangement that transfers, in whole or in part, the economic consequence of ownership
of any common stock or securities
convertible
into common stock or exercisable or exchangeable for common stock
whether any such swap
or transaction is to be settled by delivery of shares or other securities, in cash or otherwise.
|
Notwithstanding
the foregoing, the Locked-Up Stockholders may transfer common stock (i) as a
bona fide
gift or gifts, (ii) by will or intestate
succession; (iii) if the Locked-Up Stockholder is a corporation, partnership, limited liability company, trust or other business
entity and (1) transfers to another corporation, partnership, limited liability company, trust or other business entity that is
a direct or indirect affiliate or (2) distributes shares of common stock or any security convertible into or exercisable for common
stock to limited partners, limited liability company members or stockholders of the Locked-Up Stockholder; (iv) if the Locked-Up
Stockholder is a trust, transfers to the beneficiary of such trust;
provided
, in each case, that (x) such transfer does
not involve a disposition for value, (y) the transferee agrees in writing with the underwriter to be bound by the terms of the
lock-up agreement and (z) no filing by any party under Section 16(a) of the Exchange Act will be required or will be made voluntarily
in connection with such transfer (other than a filing of a Form 5 made after the expiration of the Lock-Up Period); (v) in connection
with transactions related to the exercise or settlement of any equity awards issued to the Locked-up Stockholder pursuant to the
Company’s equity incentive plans or the exercise of warrants issued by the Company; provided that such restrictions shall
apply to the securities issued to the Lock-up Stockholder upon such exercise; or (vi) to the Company in connection with the full
or partial payment of exercise or purchase prices and taxes or tax withholding obligations required to be paid or satisfied upon
the settlement, vesting or exercise of any equity award or warrant granted or issued by the Company; and (vii) in connection with
sales pursuant to a plan adopted pursuant to Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) and existing as of
the date of this prospectus;
provided
,
however
, that Timothy J. Shaheen, our Chief Financial Officer, and Keith
Brackpool, Chairman of our Board of Directors, may establish a sales plan that satisfies the requirements of Rule 10b5-1 in order
to effect sales of up to 32,000 shares of common stock and 50,000 shares of common stock, respectively, prior to the expiration
of the Lock-Up Period, for the sole purpose of covering tax payments that may be owed by Mr. Shaheen or Mr. Brackpool in connection
with certain equity awards granted to them by the Company.
Price
Stabilization, Short Positions and Penalty Bids
Until
this offering is completed, rules of the SEC may limit the ability of the underwriter and certain selling group members to bid
for and purchase shares of our common stock. As an exception to these rules, the underwriter may engage in certain transactions
that stabilize the price of our common stock. These transactions may include short sales, stabilizing transactions, purchases
to cover positions created by short sales and passive market making. A short sale is covered if the short position is no greater
than the number of shares available for purchase by the underwriter under the option to purchase additional shares. The underwriter
can close out a covered short sale by exercising the option to purchase additional shares or purchasing shares in the open market.
In determining the source of shares to close out a covered short sale, the underwriter will consider, among other things, the
open market price of shares compared to the price available under the option to purchase additional shares. The underwriter may
also sell shares in excess of the option to purchase additional shares, creating a naked short position. The underwriter must
close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created
if the underwriter is concerned that there may be downward pressure on the price of the common stock in the open market after
pricing that could adversely affect investors who purchase in the offering. As an additional means of facilitating the offering,
the underwriter may bid for, and purchase, shares of common stock in the open market to stabilize the price of the common stock.
The underwriter may also reclaim selling concessions allowed to an underwriter or a dealer for distributing the shares of common
stock in the offering, if the syndicate repurchases previously distributed shares of common stock to cover syndicate short positions
or to stabilize the price of the shares of common stock. These activities may raise or maintain the market of the shares of common
stock above independent market levels or prevent or retard a decline in the market price of the shares of common stock.
In
connection with this transaction, the underwriter may engage in passive market making transactions in the common stock on The
NASDAQ Global Market, prior to the pricing and completion of this offering. Passive market making is permitted by SEC Regulation
M and consists of displaying bids on The NASDAQ Global Market no higher than the bid prices of independent market makers and making
purchases at prices no higher than these independent bids and effected in response to order flow. Net purchases by a passive market
maker on each day are limited to a specified percentage of the passive market maker’s average daily trading volume in the
common stock during a specified period and must be discontinued when such limit is reached. Passive market making may cause the
price of the common stock to be higher than the price that otherwise would exist in the open market in the absence of such transactions.
These
activities by the underwriter may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the
price of our common stock may be higher than the price that otherwise might exist in the open market. The underwriter is not required
to engage in these activities. If these activities are commenced, they may be discontinued by the underwriter without notice at
any time. These transactions may be effected on The NASDAQ Global Market or otherwise.
Electronic
Distribution
A
prospectus supplement in electronic format may be made available on websites or through other online services maintained by the
underwriter of the offering, or by its affiliates. Other than the prospectus supplement in electronic format, the information
on the underwriter’s website and any information contained in any other website maintained by the underwriter is not part
of this prospectus supplement or the registration statement of which this prospectus supplement forms a part, has not been approved
and/or endorsed by us or the underwriter in the capacity as an underwriter and should not be relied upon by investors.
Listing
Our
common stock is listed on The NASDAQ Global Market under the symbol “CDZI.”
Selling
Restrictions
No
action has been taken in any jurisdiction (except in the United States) that would permit a public offering of our common stock,
or the possession, circulation or distribution of this prospectus supplement, the accompanying prospectus or any other material
relating to us or our common stock in any jurisdiction where action for that purpose is required. Accordingly, our common stock
may not be offered or sold, directly or indirectly, and none of this prospectus supplement, the accompanying prospectus or any
other offering material or advertisements in connection with our common stock may be distributed or published, in or from any
country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction.
LEGAL
MATTERS
The
validity of the securities offered hereby will be passed upon for us by Mitchell Silberberg & Knupp LLP, Los Angeles, California.
EXPERTS
The
financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which
is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this prospectus supplement
by reference to our Annual Report on Form 10-K for the year ended December 31, 2015 have been so incorporated in reliance on the
report (which contains an explanatory paragraph relating to the Company’s ability to continue as a going concern as described
in Note 2 to the financial statements) of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given
on the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the Commission a registration statement on Form S-3 under the Securities Act of 1933, as amended, to register
with the Commission the securities being offered in this prospectus supplement and the accompanying prospectus. This prospectus
supplement and the accompanying prospectus, which constitute a part of the registration statement, do not contain all of the information
set forth in the registration statement or the exhibits and schedules filed with the registration statement. For further information
about us, and the securities being offered, reference is made to the registration statement and the exhibits and schedules filed
with the registration statement. Any statements contained or incorporated by reference in this prospectus supplement regarding
the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily
complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document
filed as an exhibit to the registration statement. We file annual, quarterly and current reports, proxy and registration statements
and other information with the Commission. You may read and copy any reports, statements, or other information that we file, including
the registration statement of which this prospectus supplement and the accompanying prospectus form a part, and the exhibits and
schedules filed with the registration statement, without charge at the public reference room maintained by the Commission, located
at 100 F Street, NE, Room 1024, Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained
from the Commission on the payment of the fees prescribed by the Commission. Please call the Commission at 1-800-SEC-0330 for
further information about the public reference room. Our filings with the Commission, including the registration statement, are
available to you on the Commission’s website at http://www.sec.gov. In addition, documents that we file with the Commission
are available on our website at www.cadizinc.com. Unless specifically incorporated by reference into this prospectus supplement
or the accompanying prospectus, information contained on our website is not, and should not be interpreted to be, part of this
prospectus supplement or the accompanying prospectus.
We
are “incorporating by reference” into this prospectus supplement and the accompanying prospectus specified documents
we file with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, which are filed after the effective
date of the registration statement and prior to the termination of the offering of securities offered pursuant to this prospectus
supplement and the accompanying prospectus. We are not, however, incorporating, in each case, any documents or information that
we “furnish” to, and not file with, the Commission in accordance with its rules and regulations. The information we
incorporate by reference into this prospectus supplement is an important part of the prospectus of which this prospectus supplement
is a part .
We
incorporate by reference into this prospectus supplement the information contained in the following documents, which is considered
to be a part of this prospectus supplement:
|
●
|
our
Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 14, 2016;
|
|
●
|
our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016, June 30, 2016 and
September 30, 2016, filed on May 9, 2016, August 8, 2016 and November 9, 2016, respectively;
|
|
●
|
our
Current Reports on Form 8-K filed on February 12, 2016, March 10, 2016, April 29, 2016,
May 11, 2016, May 26, 2016, June 14, 2016, June 23, 2016 and December 1, 2016;
|
|
●
|
our definitive Proxy Statement on Schedule 14A filed
on April 26, 2016, but only to the extent that such information was incorporated by reference into our Annual Report on Form 10-K
for the year ended December 31, 2015;
|
|
●
|
the
description of our common stock as set forth in our registration statement filed on Form
8-A under the Exchange Act on May 8, 1984, as amended by reports on:
|
|
o
|
Form
8-K filed with the SEC on May 26, 1988;
|
|
o
|
Form
8-K filed with the SEC on June 2, 1992;
|
|
o
|
Form
8-K filed with the SEC on May 18, 1999; and
|
|
o
|
Annual
Report on Form 10-K for the year ended December 31, 2003, filed on November 2, 2004
|
Any
statement contained in a document incorporated or deemed to be incorporated by reference into this prospectus supplement will
be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus
supplement or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus supplement
modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded,
to constitute a part of this prospectus supplement.
Our
filings with the Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K, and definitive proxy statement, and any amendments to those filings, are available free of charge on our website (www.cadizinc.com)
as soon as reasonably practicable after they are filed with, or furnished to, the Commission. Our website and the information
contained on that site, or connected to that site, are not incorporated into and are not a part of this prospectus supplement.
You may also obtain a copy of these filings at no cost by writing or telephoning us at the following address:
Cadiz
Inc.
550
S. Hope Street
Suite
2850
Los
Angeles, California 90071
Attention:
Investor Relations
Telephone:
(213) 271-1600
We
will provide without charge upon written or oral request to each person, including any beneficial owner, to whom a prospectus
is delivered, a copy of any and all of the documents which are incorporated by reference in this prospectus but not delivered
with this prospectus (other than exhibits unless such exhibits are specifically incorporated by reference in such documents).
You may request a copy of these documents by writing or telephoning us at the above address.
No
person has been authorized to give any information or to make any representation not contained in this prospectus supplement,
and, if given or made, such information and representation should not be relied upon as having been authorized by us. Neither
this prospectus supplement nor the accompanying prospectus constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby in any jurisdiction or to any person to whom it is unlawful to make such offer or solicitation.
Neither the delivery of this prospectus supplement or the accompanying prospectus nor any sale made hereunder will under any circumstances
create an implication that there has been no change in the facts set forth in this prospectus supplement or the accompanying prospectus
or in our business, financial condition or affairs since the date hereof.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement we filed with the Securities and Exchange Commission, or the "Commission",
using the "shelf" registration process. Under the shelf registration process, using this prospectus, together
with a prospectus supplement, we may sell from time to time any combination of the securities described in this prospectus in
one or more offerings. This prospectus provides you with a general description of the securities that may be offered.
Each time we sell securities pursuant to this prospectus, we will provide a prospectus supplement that will contain specific information
about the terms of the securities being offered. A prospectus supplement may include a discussion of any risk factors or
other special considerations applicable to those securities or to us. The prospectus supplement may also add to, update
or change information contained in this prospectus and, accordingly, to the extent inconsistent, the information in this prospectus
will be superseded by the information in the prospectus supplement. You should read this prospectus, any applicable prospectus
supplement and the additional information incorporated by reference in this prospectus described below under "Available Information"
and "Information Incorporated by Reference" before making an investment in our securities.
This
prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made
to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents.
Copies of the documents referred to herein have been filed, or will be filed or incorporated by reference as exhibits to the registration
statement of which this prospectus is a part, and you may obtain copies of those documents as described below under "Available
Information."
Neither
the delivery of this prospectus nor any sale made under it implies that there has been no change in our affairs or that the information
in this prospectus is correct as of any date after the date of this prospectus. You should not assume that the information
in this prospectus, including any information incorporated in this prospectus by reference, the accompanying prospectus supplement
or any free writing prospectus prepared by us, is accurate as of any date other than the date on the front of those documents.
Our business, financial condition, results of operations and prospects may have changed since that date.
We
have not authorized anyone to provide any information other than that contained or incorporated by reference in this prospectus,
a prospectus supplement or in any free writing prospectus prepared by or on behalf of us or to which we have referred you.
We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give
you. We are not making an offer to sell securities in any jurisdiction where the offer or sale of such securities is not
permitted.
Unless
the context otherwise requires, the terms "we," "us," "our," "Cadiz," and "the Company"
refer to Cadiz Inc., a Delaware corporation.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
All
statements in this prospectus and the documents incorporated by reference that are not historical facts should be considered "Forward
Looking Statements" within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform
Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results,
performance or achievements of the Company to be materially different from any future results, performance or achievements expressed
or implied by the forward-looking statements. Although we believe that our plans, intentions and expectations reflected
in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions, or
expectations will be achieved.
Certain
risks, uncertainties, and other factors are incorporated herein by reference to our most recent Annual Report on Form 10-K
and our subsequent Quarterly Reports on Form 10-Q, along with the other information contained in this prospectus, as updated
by our subsequent filings under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Except as
otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, changed circumstances, or any other reason, after the date
of this prospectus.
AVAILABLE
INFORMATION
We
are subject to the informational requirements of the Exchange Act, and file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission" or the "SEC"). We have also filed a registration
statement on Form S-3 with the Commission. This prospectus, which forms part of the registration statement, does not have
all of the information contained in the registration statement. You may read, free of charge, and copy, at the prescribed
rates, any reports, proxy statements and other information, including the registration statement, at the Commission's Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information concerning the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. The Commission also maintains a website that contains reports,
proxy statements and other information, including the registration statement. The website address is: http://www.sec.gov.
INFORMATION
INCORPORATED BY REFERENCE
The
Commission allows us to "incorporate by reference" into this prospectus the information we file with them. The
information we incorporate by reference into this prospectus is an important part of this prospectus. Any statement in a
document we have filed with the Commission prior to the date of this prospectus and which is incorporated by reference into this
prospectus will be considered to be modified or superseded to the extent a statement contained in the prospectus or any other
subsequently filed document that is incorporated by reference into this prospectus modifies or supersedes that statement.
The modified or superseded statement will not be considered to be a part of this prospectus, except as modified or superseded.
We
incorporate by reference into this prospectus the information contained in the following documents, which is considered to be
a part of this prospectus:
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our
Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 14, 2016;
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our
Current Reports on Form 8-K filed on February 12, 2016, March 10, 2016, April 29, 2016, May 11, 2016, May 26, 2016, June
14, 2016 and June 23, 2016;
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our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016 and June 30, 2016, filed on May 9, 2016
and August 8, 2016, respectively;
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the
description of our common stock as set forth in our registration statement filed on Form 8-A under the Exchange Act on
May 8, 1984, as amended by reports on:
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Form 8-K
filed with the SEC on May 26, 1988;
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Form 8-K
filed with the SEC on June 2, 1992;
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Form 8-K
filed with the SEC on May 18, 1999; and
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Annual
Report on Form 10-K for the year ended December 31, 2003, filed on November 2, 2004
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We
also incorporate by reference all additional documents that we file with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act that are filed after the date of the initial registration statement and prior to the effectiveness
of the registration statement or that are filed after the effective date of the registration statement of which this prospectus
is a part and prior to the termination of the offering of securities offered pursuant to this prospectus. We are not, however,
incorporating in each case, any documents or information that we are deemed to "furnish" and not file in accordance
with the Commission rules.
You
may obtain a copy of these filings, without charge, by writing or calling us at:
Cadiz
Inc.
550 South Hope Street
Suite 2850
Los Angeles, California 90071
Attention: Investor Relations
(213) 271-1600
No
dealer, salesperson, or other person has been authorized to give any information or to make any representation not contained in
this prospectus, and, if given or made, such information and representation should not be relied upon as having been authorized
by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered
by this prospectus in any jurisdiction or to any person to whom it is unlawful to make such offer or solicitation. Neither
the delivery of this prospectus nor any sale made hereunder shall under any circumstances create an implication that there has
been no change in the facts set forth in this prospectus or in our affairs since the date hereof.
THE
COMPANY
About
Cadiz
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
all of this land is underlain with high-quality, naturally recharging groundwater resources, and is situated in proximity to the
Colorado River and the Colorado River Aqueduct ("CRA"), a major source of imported water for Southern California. Our
properties are suitable for various uses, including large-scale agricultural development, groundwater storage and water supply
projects. Our main objective is to realize the highest and best use of our 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 water supply 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 to evaporation
from the aquifer system beneath our 34,000-acre property in the Cadiz and Fenner valleys of eastern San Bernardino County (the
"Cadiz/Fenner Property"), and deliver it to water providers throughout Southern California (see "Water Resource
Development"). We believe that the ultimate implementation of this Water Project will provide a significant source
of future cash flow.
The
primary factor driving the value of such projects is ongoing pressure on water supplies throughout California, which has led Southern
California water providers to actively seek new, reliable supply solutions to plan for both short and long-term water needs. Available
supply is constrained by environmental and regulatory restrictions on each of the State's three main water sources: the
State Water Project, which provides water supplies from Northern California to the central and southern parts of the state, the
CRA and the Los Angeles Aqueduct. Southern California's water providers rely 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 several years.
Availability
of supplies in California also differs greatly from year to year due to natural hydrological variability. Over the
last several years, California has struggled through a historic drought featuring record-low winter precipitation and reservoir
storage levels. In 2015, for the first time in the state's history, California Governor Jerry Brown mandated rationing of 25%
statewide in an effort to curtail urban demand. An "El Nino" weather pattern developed at the end of 2015
and brought wet conditions to California, yet snowpack and precipitation remain average for the year, especially in Southern California.
According to the US Drought Monitor, as of February 2016, more than 99% of California remains abnormally dry. The
Water Project is one of the few nearly "shovel-ready" supply options in Southern California that could help alleviate
the region's water supply challenges. (See "Water Resource Development" below.) In addition to our water resource development
activities, we also continue to explore additional uses of our land and water resource assets, including new agricultural opportunities,
the development of a land conservation bank on our properties outside the Water Project area and other long-term legacy uses of
our properties, such as habitat conservation and cultural uses.
In
addition to an urgent need in California for new, reliable water supplies, demand for agricultural land with water rights is also
at an all-time high. Therefore, in addition to our Water Project proposal, we are pursuing ways in which the groundwater
currently being lost to evaporation from the aquifer system at the Cadiz/Fenner property can be immediately put to beneficial
use through sales, leasing, or agricultural joint ventures that are complementary to the Water Project.
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 is generally considered to be enough water to meet the annual water needs of one average California household.
We
have farmed portions of the Cadiz/Fenner Property since the late 1980s relying on groundwater from the aquifer system for irrigation
and we believe the site is well suited for various permanent and seasonal crops. In 1993, we secured permits to develop agriculture
on up to 9,600 acres of the property and withdraw groundwater from the underlying aquifer system for irrigation. We
initially developed 1,900 acres of agriculture at the Property, including a well-field and manifold system and since have maintained
various levels of agriculture at the Property as we focused on developing the Water Project. In February 2016 we completed
arrangements to lease 2,100 acres of the Cadiz/Fenner Property for agricultural development as a result of significant interest
from third parties in expanding agricultural activity at the Cadiz/Fenner Property.
As
part of the agricultural expansion to be conducted under the lease arrangements, the groundwater production capacity of the property's
existing well-field is expected to be increased, which will provide additional infrastructure that is complementary to the Water
Project. Through work completed in 2015, including the drilling of three additional exploratory wells, we have now
identified suitable locations for the drilling of high-production wells powered by natural gas that could produce all of the water
allowable under our existing permit for implementation of the Water Project or alternatively to supply irrigation water for all
of the agricultural land. While any additional well-field development for agricultural use would be financed by our
agricultural partners as provided under our agricultural arrangements, the Company retained a call feature that allows 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's facilities.
Our
2016 working capital requirements relate largely to the final development activities associated with the Water Project and those
activities consistent with the Water Project related to further development of our land and agricultural assets. While
we continue to believe that the ultimate implementation of the Water Project will provide the primary source of our future cash
flow, we also believe there is significant additional value in our underlying agricultural assets.
We
also continue to explore additional uses of our land and water resource assets, including the marketing of our approved desert
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 as habitat conservation and cultural development.
Corporate
Information
We
are a Delaware corporation with our principal executive offices located at 550 South Hope Street, Suite 2850, Los Angeles, California
90071. Our telephone number is (213) 271-1600. We maintain a corporate website at www.cadizinc.com. The information
contained in, or that can be accessed through, our website is not a part of this prospectus.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. Certain risks relating to us and our business are described
under the headings "Business" and "Risk Factors" in our Annual Report on Form 10-K for the year ended
December 31, 2015, filed with the Commission on March 14, 2016, which is incorporated by reference into this prospectus
and which you should carefully review and consider, along with the other information contained in this prospectus or incorporated
by reference herein, as updated by our subsequent filings under the Exchange Act, before making an investment in any of our securities.
Additional risks, as well as updates or changes to the risks described in the documents incorporated by reference herein, may
be included in any applicable prospectus supplement. Our business, financial condition or results of operations could be
materially adversely affected by any of these risks. The market or trading price of our securities could decline due to
any of these risks, and you may lose all or part of your investment. In addition, please read the section of this prospectus
captioned "Special Note Regarding Forward-Looking Statements", in which we describe additional uncertainties associated
with our business and the forward-looking statements included or incorporated by reference in this prospectus. Please note
that additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations.
Investment
in any securities offered pursuant to this prospectus involves risks and uncertainties. If one or more of the events discussed
in the risk factors were to occur, our business, financial condition, results of operations or liquidity, as well as the value
of an investment in our securities, could be materially adversely affected.
You
should carefully consider the risk factors as well as the other information contained and incorporated by reference in this prospectus
before deciding to invest.
USE
OF PROCEEDS
Unless
otherwise provided in the applicable prospectus supplement, the net proceeds from the sale of the securities offered by this prospectus
and each prospectus supplement, the "offered securities", will be used for general corporate purposes, which may include
working capital needs, the refinancing or repayment of existing indebtedness, capital expenditures, expansion of the business
and acquisitions. If any of the net proceeds from the offered securities will be used for acquisitions, we will identify
the acquisition in the applicable prospectus supplement. The net proceeds may be invested temporarily in short-term securities
or to repay short-term debt until they are used for their stated purpose.
RATIOS
OF EARNINGS TO FIXED CHARGES AND COMBINED
FIXED CHARGES AND PREFERRED DIVIDENDS
The
ratios of earnings to fixed charges and earnings to combined fixed charges and preferred stock dividend requirements are set forth
below for the periods indicated.
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Year Ended December 31,
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Six
months ended
June
30, 2016
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2015
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2014
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2013
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2012
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2011
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Ratio of Earnings to Fixed Charges
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(a)
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(a)
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(a)
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(a)
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(a)
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(a)
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(a)
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Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividend Requirements
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(a)
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(a)
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(a)
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(a)
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(a)
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(a)
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(a)
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(a)
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Both
(1) fixed charges and (2) combined fixed charges and preferred stock dividend requirements exceeded our earnings
(loss) for the six months ended June 30, 2016 by $14.4 million and for the years ended December 31, 2015, 2014, 2013, 2012
and 2011 by $24.0 million, $18.9 million, $22.7 million, $19.9 million, and $16.8 million, respectively.
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For
the purpose of calculating both the ratios of earnings to fixed charges and earnings to combined fixed charges and preferred stock
dividend requirements, earnings represent net income from continuing operations before the cumulative effect of change in accounting
principles, less undistributed equity earnings, plus applicable income taxes plus fixed charges. Fixed charges, excluding
interest on deposits, include interest expense (other than on deposits) and the proportion deemed representative of the interest
factor of rent expense, net of income from subleases. Fixed charges, including interest on deposits, include all interest
expense and the proportion deemed representative of the interest factor of rent expense, net of income from subleases.
DESCRIPTION
OF DEBT SECURITIES
This
prospectus describes certain general terms and provisions of the debt securities. The debt securities may constitute either
senior or subordinated debt securities, and in either case will be unsecured, and may also include convertible debt securities.
We will issue any debt securities that will be senior debt under an Indenture between us and U.S. Bank National Association, as
trustee (the "Senior Indenture"). We will issue any debt securities that will be subordinated debt under an Indenture
between us and U.S. Bank National Association, as trustee (the "Subordinated Indenture"). We may also issue debt
securities under the Indentures between Cadiz Inc., as Issuer, and U.S. Bank National Association, as Trustee, dated as of March
5, 2013 and December 10, 2015 (the "Existing Indentures"). This prospectus refers to the Senior Indenture and
the Subordinated Indenture individually as the "Indenture" and collectively as the "Indentures." The form
of Senior Indenture and the form of Subordinated Indenture are included as exhibits to the registration statement of which this
prospectus forms a part while the Existing Indentures are incorporated by reference as exhibits to the registration statement.
The term "trustee" refers to the trustee under each Indenture, as appropriate.
The
Indentures are subject to and governed by the Trust Indenture Act of 1939, as amended. The Indentures are substantially
identical, except for the provisions relating to subordination, which are included only in the Subordinated Indenture. The
following summary of the material provisions of the Indentures and the debt securities is not complete and is subject to, and
is qualified in its entirety by reference to, all of the provisions of the Indentures, each of which has been filed as an exhibit
to the registration statement of which this prospectus is a part. We urge you to read the Indenture that is applicable to
you because it, and not the summary below, defines your rights as a holder of debt securities. You can obtain copies of
the Indentures by following the directions described under the heading "Available Information."
General
The
senior debt securities will rank equally with all of our other unsecured and unsubordinated debt. The subordinated debt
securities will be subordinated in right of payment to our "Senior Indebtedness", as defined below in the section titled
"Subordination". As of June 30, 2016, all of our $118,891,459 aggregate principal amount of existing debt would
have ranked senior to the subordinated debt securities and $76,223,279 aggregate principal amount of our debt would have ranked
equally with the senior debt securities. The Indentures do not limit the amount of debt, either secured or unsecured, which
may be issued by us under the Indentures or otherwise. We may limit the maximum total principal amount for the debt securities
of any series. However, any limit under the Indentures may be increased by resolution of our Board of Directors. We
will establish the terms of each series of debt securities under the Indentures in a supplemental Indenture, board resolution
or company order. The debt securities under the Indentures may be issued in one or more series with the same or various
maturities and may be sold at par, a premium or an original issue discount. Debt securities sold at an original issue discount
may bear no interest or interest at a rate which is below market rates.
The
Indentures do not prohibit us or our subsidiaries from incurring debt or agreeing to limitations on our subsidiaries' ability
to pay dividends or make other distributions to us, although the terms of specific debt securities may include such limitations.
The agreements governing our indebtedness, including the Existing Indentures, contain limitations on our ability to incur debt
or liens, conduct asset sales and pay dividends.
Unless
we inform you otherwise in a prospectus supplement, we may issue additional debt securities of a particular series under the Indentures
without the consent of the holders of the debt securities of such series outstanding at the time of issuance. Any such additional
debt securities, together with all other outstanding debt securities of that series, will constitute a single series of securities
under the applicable Indenture.
Unless
we inform you otherwise in a prospectus supplement, each series of our senior debt securities will rank equally in right of payment
with all of our other unsubordinated debt. The subordinated debt securities will rank junior in right of payment and be
subordinate to all of our unsubordinated debt.
We
may issue debt securities from time to time in one or more series under the Indentures or under the Existing Indentures.
We will describe the particular terms of each series of debt securities we offer in a supplement to this prospectus or other offering
material. The prospectus supplement and other offering material relating to a series of debt securities will describe the
terms of such debt securities being offered, including (to the extent such terms are applicable to such debt securities):
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title of the debt securities;
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designation,
aggregate principal amount, denomination and currency or currency unit;
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date
of maturity;
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the
price or prices at which we sell the debt securities and the percentage of the principal amount at which the debt securities
will be issued;
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whether
the debt securities are senior debt securities or subordinated debt securities and applicable subordination provisions, if
any;
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any
limit on the total principal amount of the debt securities and the ability to issue additional debt securities of the same
series;
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currency
or currency units for which such debt securities may be purchased and in which principal of, premium, if any, and any interest
will or may be payable;
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interest
rate or rates (or the manner of calculation thereof), if any;
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the
times at which any such interest will be payable;
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the
date or dates from which interest will accrue on the debt securities, or the method used for determining those dates;
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the
place or places where the principal and interest, if any, will be payable;
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any
redemption, sinking fund, satisfaction and discharge, or defeasance provisions;
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whether
such debt securities will be issuable in registered form or bearer form or both and, if issuable in bearer form, restrictions
applicable to the exchange of one form for another and to the offer, sale and delivery of certificates in bearer form;
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whether
and under what circumstances we may from time to time, without the consent of holders of debt securities, issue additional
debt securities, having the same ranking and the same interest rate, maturity and other terms as the debt securities being
offered, except for the issue price and issue date and, in some cases, the first interest payment date, whereby such additional
securities will, together with the then outstanding debt securities, constitute a single class of debt securities under the
Indentures, and will vote together on matters under the Senior Indenture;
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if
material, federal income tax consequences;
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whether
and under what circumstances we will issue the debt securities in whole or in part as Global Securities as described below
under "Global Securities";
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applicable
conversion or exchange privileges;
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any
defaults and events of defaults applicable to the debt securities to be issued;
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securities
exchange(s) on which the securities will be listed, if any;
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whether
any underwriter(s) will act as market maker(s) for the securities;
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extent
to which a secondary market for the securities is expected to develop;
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provisions
relating to covenant defeasance and legal defeasance;
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provisions
relating to satisfaction and discharge of the Indenture;
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any
covenants or restrictions on us or our subsidiaries; and
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any
other specific terms of the offered debt securities, including any terms in lieu of those described in this prospectus and
any terms which may be required by or advisable under United States laws or regulations such as those made a part of the applicable
Indenture by the Trust Indenture Act of 1939.
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Material
United States federal income tax consequences and special considerations, if any, applicable to any such securities will be described
in the applicable prospectus supplement.
Debt
securities may be presented for exchange, and registered debt securities may be presented for transfer, in the manner, at the
places and subject to the restrictions set forth in the debt securities and as summarized in the applicable prospectus supplement.
Such services will be provided without charge, other than any tax or other governmental charge payable in connection with such
exchange or transfer, but subject to the limitations provided in the applicable Indenture. Debt securities in bearer form
and the coupons, if any, appertaining to such debt securities will be transferable by delivery.
Subordination
The
indebtedness represented by the subordinated debt securities will be subordinated in right of payment to existing and future "Senior
Indebtedness," as described in the Subordinated Indenture and any accompanying prospectus supplement. The term "Senior
Indebtedness" means:
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all
indebtedness for money borrowed incurred by us, unless the terms of the instrument or instruments by which such indebtedness
is incurred or created expressly provide that such indebtedness is subordinate to the subordinated debt securities or that
such indebtedness is not superior in right of payment to the subordinated debt securities,
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any
other indebtedness, obligation or liability incurred by us (including any guaranty, endorsement or other contingent obligation
of ours in respect of, or to purchase, or otherwise acquire, any obligation of another), direct or indirect, absolute or contingent,
or matured or unmatured, which is specifically designated by us as Senior Indebtedness in the instruments evidencing such
indebtedness, obligation or liability at the time of its issuance or incurrence, or
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any
deferral, renewal or extension of any of the foregoing.
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“Senior
Indebtedness" does not include:
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our
debt to any of our subsidiaries;
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any
series of subordinated debt securities issued under the Subordinated Indenture, unless otherwise specified by the terms of
any such series;
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any
of our other debt which by the terms of the instrument creating or evidencing it is specifically designated as being subordinated
to or pari passu with the subordinated debt securities; and
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any
trade payables.
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The
Subordinated Indenture does not limit our ability to incur additional indebtedness, including indebtedness that ranks senior in
priority of payment to the subordinated debt securities. A prospectus supplement relating to each series of subordinated
debt securities will describe any subordination provisions applicable to such series in addition to or different from those described
above.
By
reason of such subordination, in the event of dissolution, insolvency, bankruptcy or other similar proceedings, upon any distribution
of assets, (i) the holders of subordinated debt securities will be required to pay over their share of such distribution
in respect of the subordinated debt securities to the holders of Senior Indebtedness until such Senior Indebtedness is paid in
full and (ii) creditors of ours who are not holders of Senior Indebtedness may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than holders of subordinated debt securities.
Conversion
and Exchange
The
terms, if any, on which debt securities of any series will be convertible into or exchangeable for our common stock, our preferred
stock, another series of our debt securities, other securities, property or cash, or a combination of any of the foregoing, will
be summarized in the prospectus supplement relating to such series of debt securities. Such terms may include provisions
for conversion or exchange, either on a mandatory basis, at the option of the holder, or at our option, in which the number of
shares or amount of our common stock, our preferred stock, another series of our debt securities, other securities, property or
cash to be received by the holders of the debt securities would be calculated according to the factors and at such time as summarized
in the related prospectus supplement.
Global
Securities
The
debt securities of a series may be issued in whole or in part in the form of one or more global securities that will be deposited
with, or on behalf of, a depositary identified in the prospectus supplement. Global securities will be issued in registered
form and in either temporary or definitive form. Unless and until it is exchanged in whole or in part for the individual
debt securities, a global security may not be transferred except as a whole by the depositary for such global security to a nominee
of such depositary or by a nominee of such depositary to such depositary or another nominee of such depositary or by such depositary
or any such nominee to a successor of such depositary or a nominee of such successor. The specific terms of the depositary
arrangement with respect to any debt securities of a series and the rights of and limitations upon owners of beneficial interests
in a global security will be described in the applicable prospectus supplement.
Restrictive
Covenants
We
will describe any restrictive covenants, including restrictions on any subsidiary, for any series of debt securities in a prospectus
supplement.
Defeasance
At
our option, either (a) we will be Discharged (as defined below) from any and all obligations in respect of any series of
debt securities under the Indenture or (b) we will cease to be under any obligation to comply with the restriction on our
ability to merge, consolidate or sell assets set forth in the applicable Indenture, the requirement that we maintain our existence
or certain other restrictions, in either case if we deposit irrevocably with the trustee, in trust, specifically for the benefit
of the holders of such series, money or U.S. Government Obligations (as defined below) which through the payment of interest thereon
and principal thereof in accordance with their terms will provide money in an amount sufficient (in the written opinion of a nationally
recognized firm of independent public accountants in the case of U.S. Government Obligations or a combination of money and U.S.
Government Obligations) to pay all the principal of (including any sinking fund payments or analogous obligations), and interest
on, the debt securities of such series on the dates such payments are due in accordance with the terms of such series of debt
securities. To exercise such option, we are required to deliver to the trustee an opinion of tax counsel to the effect that
holders of the debt securities of such series will not recognize income, gain or loss for federal income tax purposes as a result
of such deposit and discharge and will be subject to federal income tax in the same amount and in the same manner and at the same
times as would have been the case if such deposit and discharge had not occurred.
The
term "Discharged" is defined to mean that we are deemed to have paid and discharged the entire indebtedness represented
by, and obligations under, the debt securities of such series and to have satisfied all the obligations under the Indenture relating
to the debt securities of such series, except for
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the
rights of holders of the debt securities of such series to receive, from the trust fund described above, payment of the principal
of and the interest on the debt securities of such series when such payments are due;
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our
obligations with respect to the debt securities of such series with respect to temporary debt securities, registration, transfer,
exchange, replacement of mutilated, destroyed, lost and stolen certificates, maintenance of a paying office and holding money
in trust; and
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the
rights, powers, trusts, duties and immunities of the trustee under the applicable Indenture.
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The
term "U.S. Government Obligations" is defined to mean securities that are (i) direct obligations of the United
States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of America, which, in either case under clauses (i)
or (ii) are not callable or redeemable at the option of the issuer thereof, and also includes a depositary receipt issued by a
bank or trust company, as custodian with respect to any such U.S. Government Obligation held by such custodian for the account
of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect
of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligations evidenced
by such depository receipt.
Satisfaction
and Discharge
In
addition, an Indenture will cease to be of further effect with respect to the debt securities of a series issued under that Indenture,
subject to certain exceptions generally relating to compensation and indemnity of the trustee, when either:
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all
outstanding debt securities of that series have been delivered to the trustee for cancellation and we have paid all sums payable
by us under the Indenture with respect to such series, or
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all
outstanding debt securities of that series not delivered to the trustee for cancellation either: (i) have become
due and payable, (ii) will become due and payable at their stated maturity within one year, or (iii) are to be called
for redemption within one year; and we have deposited irrevocably with the trustee, in trust, specifically for the benefit
of the holders of such series, money or U.S. Government Obligations which through the payment of interest thereon and principal
thereof in accordance with their terms will provide money in an amount sufficient (in the written opinion of a nationally
recognized firm of independent public accountants in the case of U.S. Government Obligations or a combination of money and
U.S. Government Obligations) to pay all the principal of (including any sinking fund payments or analogous obligations), and
interest on, the debt securities of such series on the dates such payments are due in accordance with the terms of such series
of debt securities.
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Modification
of the Indentures
Modifications
and amendments of each Indenture may be made by us and the trustee without the consent of the holders of the debt securities or
with the consent of the holders of not less than a majority in principal amount of all outstanding debt securities affected by
such modification or amendment; provided however, that no such modification or amendment may, without the consent of the holder
of each outstanding debt security affected thereby:
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change
the stated maturity of the principal of, or any installment of principal of or interest on, any debt security;
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reduce
the principal amount of or interest on, or any premium payable upon redemption of, any debt security;
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change
certain other terms related to waiver of past defaults or covenants (such as covenants and provisions of the Indenture that
may not be amended without the consent of the holder of each outstanding debt security of the series affected); or
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reduce
the percentage of the principal amount of the outstanding debt security of any series, the consent of whose holders is required
to modify or amend the applicable Indenture or waive compliance with, or consent to certain defaults under, the provisions
of such Indenture.
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Our
Board of Directors does not have the power to waive any of the covenants of each Indenture, including those relating to consolidation,
merger or sale of assets.
Events
of Default, Notice and Waiver
The
following will be "Events of Default" with respect to any particular series of the debt securities under the Indentures:
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default
in any payment of interest on such series when due, continued for 30 days;
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default
in any payment of principal and premium, if any, of, or sinking fund installment on, such series when due;
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default
in the performance, or breach, of any covenant or warranty of ours applicable to such series continued for 60 days after written
notice to us by the trustee or the holders of at least 25% in principal amount of such series;
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certain
events of bankruptcy, insolvency or reorganization; and
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any
other event of default we may provide for that series.
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No
Event of Default with respect to a particular series of debt securities necessarily constitutes an Event of Default with respect
to any other series of debt securities.
The
trustee will, within 90 days after the occurrence of any default with respect to any series of the debt securities, give to the
holders thereof notice of such default known to the trustee, unless such default has been cured or waived (the term default for
this purpose means any event which is, or after notice or lapse of time, or both, would become, an Event of Default); provided
that, except in the case of a default in the payment of principal of (or premium, if any) or interest on any of such series of
debt securities or in the payment of any sinking fund installments, the trustee will be protected in withholding such notice if
and so long as it in good faith determines that the withholding of such notice is in the interest of the holders of the debt securities
of that series.
We
will be required to furnish to the trustee each year a statement as to the fulfillment by us of our obligations under the applicable
Indenture.
The
holders of a majority in principal amount of the outstanding debt securities of any series may, in respect of such series, waive
certain defaults and may direct the time, method and place of conducting any proceeding for any remedy available to the trustee
or exercising any trust or power conferred on the trustee, provided that such direction shall not be in conflict with any rule
of law or with the applicable Indenture. The trustee has the right to decline to follow any such direction if the trustee
in good faith determines that the proceeding so directed would be unjustly prejudicial to the holders of debt securities of such
series not joining in any such direction or would involve the trustee in personal liability. Each Indenture provides that
in case an Event of Default occurs and is continuing with respect to any series of the debt securities, the trustee will be required
to exercise any of its rights and powers under such Indenture with the degree of care and skill such as a prudent man would exercise
in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of
its rights or powers under the applicable Indenture at the direction of any of the holders of such debt securities unless such
holders have offered to the trustee reasonable security or indemnity against the costs, expenses and liabilities which might be
incurred by the trustee in complying with such direction.
If
an Event of Default occurs and is continuing with respect to the debt securities of any series, the trustee or the holders of
at least 25% in principal amount of such series may declare such series due and payable.
Each
Indenture provides that no holder of debt securities of any series may institute any action against us under such Indenture (except
actions for payment of overdue principal or interest or premium, if any) unless the holders of at least 25% in principal amount
of such series have requested the trustee to institute such action and have offered the trustee reasonable indemnity, and the
trustee has not instituted such action within 60 days of such request.
Consolidating,
Merger or Sale of Assets
We
may not consolidate with or merge into any other corporation or sell our assets substantially as an entirety, unless:
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the
corporation formed by such consolidation or into which we are merged or the corporation which acquires our assets is organized
in the United States and expressly assumes the due and punctual payment of the principal of (and premium, if any) and interest
on all the debt securities, if any, issued under the applicable Indenture and the performance of every covenant of such Indenture
to be performed by us; and
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immediately
after giving effect to such transaction, no Event of Default, and no event which after notice or lapse of time or both would
become an Event of Default, has happened and is continuing.
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Upon
any such consolidation, merger or sale, the successor corporation formed by such consolidation, or into which we are merged or
to which such sale is made, will succeed to, and be substituted for, us under such Indenture.
Other
than the covenants described above, or as set forth in any accompanying prospectus supplement, the Indentures and the debt securities
do not contain any covenants or other provisions designed to afford holders of the debt securities protection in the event of
a takeover, recapitalization or a highly leveraged transaction involving us.
Governing
Law
New
York Law will govern the Indentures and the debt securities, without regard to its conflicts of law principles.
DESCRIPTION
OF CAPITAL STOCK
The
following statements relating to our capital stock do not purport to be complete, and are subject to, and are qualified in their
entirety by reference to, the provisions of the Certificate of Incorporation, as amended (the "Certificate") and By-Laws,
as amended (the "By-Laws") which are incorporated by reference as exhibits to the registration statement of which this
prospectus is a part.
General
The
Certificate authorizes a total of 70,100,000 shares of capital stock, of which 70,000,000 may be shares of common stock and 100,000
may be shares of preferred stock.
As
of June 30, 2016, 18,677,053 shares of common stock were issued and outstanding and options and warrants to purchase 507,500 shares
of common stock issued to directors, employees, consultants and lenders remain outstanding. As of June 30, 2016, the number
of stockholders of record of our common stock was 93.
Common
Stock
Subject
to the rights of the holders of any shares of preferred stock that may at the time be outstanding, record holders of common stock
are entitled to such dividends as the Board of Directors may declare. Holders of common stock are entitled to one vote for
each share held in their name on all matters submitted to a vote of shareowners and do not have preemptive rights or cumulative
voting rights. Holders of common stock are not subject to further calls or assessments as a result of their holding shares
of common stock.
If
Cadiz is liquidated, the holders of shares of common stock are entitled to share ratably in the distribution remaining after payment
of debts and expenses and of the amounts to be paid on liquidation to the holders of shares of preferred stock.
The
transfer agent for our common stock is Continental Stock Transfer & Trust Company, New York, New York.
Certain
Other Provisions of the Certificate
Delaware
law permits a corporation to eliminate the personal liability of its directors to the corporation or to any of its shareowners
for monetary damages for a breach of fiduciary duty as a director, except (i) for breach of the director's duty of loyalty,
(ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for
certain unlawful dividends and stock repurchases or (iv) for any transaction from which the director derived an improper
personal benefit. The Certificate provides for such limitation of liability.
The
Certificate does not permit stockholder action by written consent in lieu of a meeting of stockholders. In addition, special
meetings of stockholders may be called only by the Board of Directors, the Chief Executive Officer or the President.
Limitations
on Directors' Liability
Our
Certificate of Incorporation eliminates the personal liability of a director to us and our shareowners for monetary damages for
certain breaches of his or her fiduciary duty as a director to the fullest extent permitted under the General Corporation Law
of the State of Delaware.
This
provision offers persons who serve on our Board of Directors protection against awards of monetary damages resulting from certain
breaches of their fiduciary duty, including grossly negligent business decisions made in connection with takeover proposals for
us, and limits our ability or the ability of one of our shareowners to prosecute an action against a director for a breach of
fiduciary duty.
Indemnification
of Directors and Officers
Our
By-Laws and Certificate provide that we will indemnify any of our directors, officers or employees to the fullest extent permitted
by the General Corporation Law of the State of Delaware against all expenses, liability and loss incurred in connection with any
action, suit or proceeding in which any such person may be involved by reason of the fact that he or she is or was our director,
officer or employee. We carry insurance policies in standard form indemnifying our directors and officers against liabilities
arising from certain acts performed by them in their capacities as our directors and officers. These policies also indemnify
us for any sums we may be required or permitted to pay by law to our directors and officers as indemnification for expenses they
may have incurred.
Exchange
Listing
Our
common stock is listed on the Nasdaq Global Market under the symbol "CDZI".
Anit-Takeover
Effects of Delaware Law
Cadiz
is subject to the "business combination" provisions of Section 203 of Delaware law. In general, such provisions
prohibit a publicly held Delaware corporation from engaging in various "business combination" transactions with any
interested stockholder for a period of three years after the date of the transaction in which the person became an interested
stockholder, unless
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prior
to the date the interested stockholder obtained such status, the Board of Directors of the corporation approved either the
business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
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upon
consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or
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on
or subsequent to such date, the business combination is approved by the Board of Directors of the corporation and authorized
at an annual or special meeting of shareowners by the affirmative vote of at least 66 2/3% of the outstanding voting stock
which is not owned by the interested stockholder.
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A
"business combination" is defined to include mergers, asset sales and other transactions resulting in financial benefit
to an interested stockholder. In general, an "interested stockholder" is a person who, together with affiliates
and associates, owns (or within three years, did own) 15% or more of a corporation's voting stock. The statute could prohibit
or delay mergers or other takeover or change in control attempts with respect to Cadiz and, accordingly, may discourage attempts
to acquire Cadiz even though such a transaction may offer Cadiz's shareowners the opportunity to sell their stock at a price above
the prevailing market price.
DESCRIPTION
OF OFFERED PREFERRED STOCK
This
prospectus describes certain general terms and provisions of our preferred stock. When we offer to sell a particular series
of preferred stock, we will describe the specific terms of the securities in a supplement to this prospectus. The prospectus
supplement will also indicate whether the general terms and provisions described in this prospectus apply to the particular series
of preferred stock. The preferred stock will be issued under a certificate of designations relating to each series of preferred
stock and is also subject to our Certificate of Incorporation. The certificate of designations will be filed with the SEC in connection
with an offering of preferred stock.
Under
the Certificate of Incorporation, our Board of Directors has the authority to
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create
one or more series of preferred stock,
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issue
shares of preferred stock in any series up to the maximum number of shares of preferred stock authorized, and
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determine
the preferences, rights, privileges and restrictions of any series.
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Our
Board may issue authorized shares of preferred stock, as well as authorized but unissued shares of common stock, without further
shareholder action, unless shareholder action is required by applicable law or by the rules of a stock exchange or quotation system
on which any series of our stock may be listed or quoted.
The
prospectus supplement will describe the terms of any preferred stock being offered, including:
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the
number of shares and designation or title of the shares;
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any
liquidation preference per share;
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any
date of maturity;
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any
redemption, repayment or sinking fund provisions;
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any
dividend rate or rates and the dates of payment (or the method for determining the dividend rates or dates of payment);
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any
voting rights;
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if
other than the currency of the United States, the currency or currencies including composite currencies in which the preferred
stock is denominated and/or in which payments will or may be payable;
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the
method by which amounts in respect of the preferred stock may be calculated and any commodities, currencies or indices, or
value, rate or price, relevant to such calculation;
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whether
the preferred stock is convertible or exchangeable and, if so, the securities or rights into which the preferred stock is
convertible or exchangeable, and the terms and conditions of conversion or exchange;
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the
place or places where dividends and other payments on the preferred stock will be payable; and
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any
additional voting, dividend, liquidation, redemption and other rights, preferences, privileges, limitations and restrictions.
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All
shares of preferred stock offered will be fully paid and non-assessable. Any shares of preferred stock that are issued will
have priority over the common stock with respect to dividend or liquidation rights or both.
Our
Board of Directors could create and issue a series of preferred stock with rights, privileges or restrictions which effectively
discriminates against an existing or prospective holder of preferred stock as a result of the holder beneficially owning or commencing
a tender offer for a substantial amount of common stock. One of the effects of authorized but unissued and unreserved shares
of capital stock may be to make it more difficult or discourage an attempt by a potential acquirer to obtain control of our company
by means of a merger, tender offer, proxy contest or otherwise. This protects the continuity of our management. The
issuance of these shares of capital stock may defer or prevent a change in control of our company without any further shareholder
action.
The
transfer agent for each series of preferred stock will be described in the prospectus supplement.
DESCRIPTION
OF WARRANTS
We
may issue warrants for the purchase of common stock, preferred stock or debt securities. We may issue warrants independently
or together with any offered securities. The warrants may be attached to or separate from those offered securities.
We may issue the warrants under warrant agreements to be entered into between us and a bank or trust company to be named in the
applicable prospectus supplement, as warrant agent, all as described in the applicable prospectus supplement. The warrant
agent will act solely as our agent in connection with the warrants and will not assume any obligation or relationship of agency
or trust for or with any holders or beneficial owners of warrants. If we offer warrants, we will file the warrant agreement
relating to the offered warrants as an exhibit to, or incorporate it by reference in, the registration statement of which this
prospectus is a part.
The
prospectus supplement relating to any warrants that we may offer will contain the specific terms of the warrants. These
terms may include the following:
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the
title of the warrants;
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the
price or prices at which the warrants will be issued;
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the
designation, amount and terms of the securities for which the warrants are exercisable;
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the
designation and terms of the other securities, if any, with which the warrants are to be issued and the number of warrants
issued with each other security;
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the
aggregate number of warrants;
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any
provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price
of the warrants;
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the
price or prices at which the securities purchasable upon exercise of the warrants may be purchased;
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if
applicable, the date on and after which the warrants and the securities purchasable upon exercise of the warrants will be
separately transferable;
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a
discussion of any material U.S. federal income tax considerations applicable to the exercise of the warrants;
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the
date on which the right to exercise the warrants will commence, and the date on which the right will expire;
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the
maximum or minimum number of warrants that may be exercised at any time;
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information
with respect to book-entry procedures, if any; and
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any
other terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants.
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Exercise
of Warrants
Each
warrant will entitle the holder of warrants to purchase for cash the amount of common stock, preferred stock or debt securities,
at the exercise price stated or determinable in the prospectus supplement for the warrants. Warrants may be exercised at
any time up to the close of business on the expiration date shown in the applicable prospectus supplement, unless otherwise specified
in such prospectus supplement. After the close of business on the expiration date, if applicable, unexercised warrants will
become void. Warrants may be exercised as described in the applicable prospectus supplement. When the warrant holder
makes the payment and properly completes and signs the warrant certificate at the corporate trust office of the warrant agent
or any other office indicated in the prospectus supplement, we will, as soon as possible, forward the common stock, preferred
stock or debt securities that the warrant holder has purchased. If the warrant holder exercises the warrant for less than
all of the warrants represented by the warrant certificate, we will issue a new warrant certificate for the remaining warrants.
DESCRIPTION
OF SUBSCRIPTION RIGHTS
We
may issue subscription rights to purchase shares of our common stock or preferred stock. These subscription rights may be
issued independently or together with any other security offered hereby and may or may not be transferable by the stockholder
receiving the subscription rights in such offering. In connection with any offering of subscription rights, we may enter
into a standby arrangement with one or more underwriters or other purchasers pursuant to which the underwriters or other purchasers
may be required to purchase any securities remaining unsubscribed for after such offering.
The
applicable prospectus supplement will describe the specific terms of any offering of subscription rights for which this prospectus
is being delivered, including the following:
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the
price, if any, for the subscription rights;
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the
exercise price payable for each share of common stock or preferred stock upon the exercise of the subscription rights;
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the
number of subscription rights issued to each stockholder;
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the
number and terms of the shares of common stock or preferred stock which may be purchased per each subscription right;
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the
extent to which the subscription rights are transferable;
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any
other terms of the subscription rights, including the terms, procedures and limitations relating to the exchange and exercise
of the subscription rights;
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the
date on which the right to exercise the subscription rights shall commence, and the date on which the subscription rights
shall expire;
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the
extent to which the subscription rights may include an over-subscription privilege with respect to unsubscribed securities;
and
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if
applicable, the material terms of any standby underwriting or purchase arrangement entered into by us in connection with the
offering of subscription rights.
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The
description in the applicable prospectus supplement of any subscription rights we offer will not necessarily be complete and will
be qualified in its entirety by reference to the applicable subscription rights certificate, which will be filed with the SEC
if we offer subscription rights.
DESCRIPTION
OF UNITS
As
specified in the applicable prospectus supplement, we may issue units consisting of one or more subscription rights, warrants,
debt securities, shares of preferred stock, shares of common stock or any combination of such securities issued by us or by third
parties. The applicable prospectus supplement will describe:
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the
terms of the units and of the subscription rights, warrants, debt securities, preferred stock and common stock comprising
the units, including whether and under what circumstances the securities comprising the units may be traded separately;
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a
description of the terms of any unit agreement governing the units; and
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a
description of the provisions for the payment, settlement, transfer or exchange or the units.
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PLAN
OF DISTRIBUTION
We
may sell the securities offered by this prospectus from time to time in one or more transactions;
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directly
to purchasers;
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through
agents;
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to
or through underwriters or dealers; or
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through
a combination of these methods.
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A
distribution of the securities offered by this prospectus may also be effected through the issuance of derivative securities,
including without limitation, warrants and subscriptions.
In
addition, the manner in which we may sell some or all of the securities covered by this prospectus includes, without limitation,
through:
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a
block trade in which a broker-dealer will attempt to sell as agent, but may position or resell a portion of the block, as
principal, in order to facilitate the transaction;
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purchases
by a broker-dealer, as principal, and resale by the broker-dealer for its account; or
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ordinary
brokerage transactions and transactions in which a broker solicits purchasers.
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In
addition, we may enter into derivative or hedging transactions with third parties, or sell securities not covered by this prospectus
to third parties in privately negotiated transactions. In connection with such a transaction, the third parties may sell
securities covered by and pursuant to this prospectus and an applicable prospectus supplement or other offering materials, as
the case may be. If so, the third party may use securities borrowed from us or others to settle such sales and may use securities
received from us to close out any related short positions. We may also loan or pledge securities covered by this prospectus
and an applicable prospectus supplement to third parties, who may sell the loaned securities or, in an event of default in the
case of a pledge, sell the pledged securities pursuant to this prospectus and the applicable prospectus supplement or other offering
materials, as the case may be.
A
prospectus supplement with respect to each series of securities will state the terms of the offering of the securities, including:
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the
terms of the offering;
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the
name or names of any underwriters or agents and the amounts of securities underwritten or purchased by each of them, if any;
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the
public offering price or purchase price of the securities and the net proceeds to be received by us from the sale;
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any
delayed delivery arrangements;
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any
initial public offering price;
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any
underwriting discounts or agency fees and other items constituting underwriters' or agents' compensation;
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any
discounts or concessions allowed or reallowed or paid to dealers; and
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any
securities exchange on which the securities may be listed.
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The
offer and sale of the securities described in this prospectus by us, the underwriters or the third parties described above may
be effected from time to time in one or more transactions, including privately negotiated transactions, either:
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at
a fixed price or prices, which may be changed;
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in
an "at the market" offering within the meaning of Rule 415(a)(4) of the Securities Act;
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at
prices related to the prevailing market prices; or
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at
negotiated prices.
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General
Underwriters,
dealers, agents and remarketing firms that participate in the distribution of the offered securities may be "underwriters"
as defined in the Securities Act of 1933. Any discounts or commissions they receive from us and any profits they receive
on the resale of the offered securities may be treated as underwriting discounts and commissions under the Securities Act.
We will identify any underwriters, agents or dealers and describe their commissions, fees or discounts in the applicable prospectus
supplement, as the case may be.
Underwriters
and Agents
If
underwriters are used in a sale, they will acquire the offered securities for their own account. The underwriters may resell
the offered securities in one or more transactions, including negotiated transactions. These sales will be made at a fixed
public offering price or at varying prices determined at the time of the sale. We may offer the securities to the public
through an underwriting syndicate or through a single underwriter. The underwriters in any particular offering will be named
in the applicable prospectus supplement or other offering materials, as the case may be.
Unless
the applicable prospectus supplement states otherwise, the obligations of the underwriters to purchase the offered securities
will be subject to certain conditions contained in an underwriting agreement that we will enter into with the underwriters at
the time of the sale to them. The underwriters will be obligated to purchase all of the securities of the series offered
if any of the securities are purchased, unless the applicable prospectus supplement says otherwise. Any initial public offering
price and any discounts or concessions allowed, reallowed or paid to dealers may be changed from time to time.
We
may designate agents to sell the offered securities. Unless the applicable prospectus supplement states otherwise, the agents
will agree to use their best efforts to solicit purchases for the period of their appointment. We may also sell the offered
securities to one or more remarketing firms, acting as principals for their own accounts or as agents for us. These firms
will remarket the offered securities upon purchasing them in accordance with a redemption or repayment pursuant to the terms of
the offered securities. A prospectus supplement or other offering materials, as the case may be, will identify any remarketing
firm and will describe the terms of its agreement, if any, with us and its compensation.
In
connection with offerings made through underwriters or agents, we may enter into agreements with such underwriters or agents pursuant
to which we receive our outstanding securities in consideration for the securities being offered to the public for cash.
In connection with these arrangements, the underwriters or agents may also sell securities covered by this prospectus to hedge
their positions in these outstanding securities, including in short sale transactions. If so, the underwriters or agents
may use the securities received from us under these arrangements to close out any related open borrowings of securities.
Dealers
We
may sell the offered securities to dealers as principals. The dealer may then resell such securities to the public either
at varying prices to be determined by the dealer or at a fixed offering price agreed to with us at the time of resale.
Direct
Sales
We
may choose to sell the offered securities directly. In this case, no underwriters or agents would be involved.
Institutional
Purchasers
We
may authorize agents, dealers or underwriters to solicit certain institutional investors to purchase offered securities on a delayed
delivery basis pursuant to delayed delivery contracts providing for payment and delivery on a specified future date. The
applicable prospectus supplement or other offering materials, as the case may be, will provide the details of any such arrangement,
including the offering price and commissions payable on the solicitations.
We
will enter into such delayed contracts only with institutional purchasers that we approve. These institutions may include
commercial and savings banks, insurance companies, pension funds, investment companies and educational and charitable institutions.
Indemnification;
Other Relationships
We
may have agreements with agents, underwriters, dealers and remarketing firms to indemnify them against certain civil liabilities,
including liabilities under the Securities Act. Agents, underwriters, dealers and remarketing firms, and their affiliates,
may engage in transactions with, or perform services for, us in the ordinary course of business. This includes commercial
banking and investment banking transactions.
Market-Making,
Stabilization and Other Transactions
There
is currently no market for any of the offered securities, other than our common stock which is traded on the Nasdaq Global Market.
If the offered securities are traded after their initial issuance, they may trade at a discount from their initial offering price,
depending upon prevailing interest rates, the market for similar securities and other factors. While it is possible that
an underwriter could inform us that it intends to make a market in the offered securities, any such underwriter would not be obligated
to do so, and any such market-making could be discontinued at any time without notice. Therefore, no assurance can be given
as to whether an active trading market will develop for the offered securities. We have no current plans for listing of
the debt securities, preferred stock, warrants or subscription rights on any securities exchange or quotation system. Any
such listing with respect to any particular debt securities, preferred stock, warrants or subscription rights will be described
in the applicable prospectus supplement or other offering materials, as the case may be.
Any
underwriter may engage in stabilizing transactions, syndicate covering transactions and penalty bids in accordance with Rule 104
under the Securities Exchange Act of 1934. Stabilizing transactions involve bids to purchase the underlying security in
the open market for the purpose of pegging, fixing or maintaining the price of the securities. Syndicate covering transactions
involve purchases of the securities in the open market after the distribution has been completed in order to cover syndicate short
positions.
Penalty
bids permit the underwriters to reclaim a selling concession from a syndicate member when the securities originally sold by the
syndicate member are purchased in a syndicate covering transaction to cover syndicate short positions. Stabilizing transactions,
syndicate covering transactions and penalty bids may cause the price of the securities to be higher than it would be in the absence
of these transactions. The underwriters may, if they commence these transactions, discontinue them at any time.
LEGAL
MATTERS
Unless
otherwise specified in the applicable prospectus supplement, the validity of the securities offered by this prospectus will be
passed upon for us by Mitchell Silberberg & Knupp LLP, Los Angeles, California. If legal matters in connection with
offerings made by this prospectus are passed on by counsel for the underwriters, dealers or agents, if any, that counsel will
be named in the applicable prospectus supplement.
EXPERTS
The
financial statements and management's assessment of the effectiveness of internal control over financial reporting (which is included
in Management's Report on Internal Control over Financial Reporting) incorporated in this Prospectus by reference to the Annual
Report on Form 10-K for the year ended December 31, 2015 have been so incorporated in reliance on the report (which
contains an explanatory paragraph relating to the Company's ability to continue as a going concern as described in Note 2 to the
financial statements) of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority
of said firm as experts in auditing and accounting.
1,000,000
shares of Common Stock
PROSPECTUS
SUPPLEMENT
Sole
Book-Runner
B.
Riley & Co.
The
date of this prospectus supplement is December 1, 2016
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