Note 2 - Summary of Significant Accounting Policies	12 Months Ended
Dec. 31, 2016
Notes to Financial Statements
Significant Accounting Policies [Text Block]	NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Consolidated Financial Statements of the Company have been prepared assuming that the Company will continue as a going concern, which assumed realization of assets and settlement of liabilities in the normal course of business. The Company incurred losses of $26.3 million, $24.0 million and $18.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. The Company had working capital of $11.0 million at December 31, 2016, including cash of $12.2 million, and used cash in operations of $9.5 million for the year ended December 31, 2016. Cash requirements during the year ended December 31, 2016, primarily reflect certain administrative and litigation costs related to the Company’s water project development efforts. Currently, the Company’s sole focus is the development of its land and water assets. In April 2016, the Company issued approximately $10.0 million in aggregate principal and accrued interest of its 7.00% Convertible Senior Notes due 2020 (“2020 Notes”), and in December 2016, the Company raised approximately $10.6 million with the sale of 1,150,000 shares at $9.75 per share by way of takedown from its shelf registration. The agreement with its lenders to allow the Company to pay all interest either in-kind or through the issuance of shares combined with the proceeds from the issuance of the 2020 Notes, and from the shelf takedown, provides the Company with sufficient funds to meet its expected working capital needs through April 2018. In addition, the Company is able to control certain of its costs and can reduce expenditures if needed to coincide with future capital raises. The Company may meet future working capital requirements beyond April 2018 through a variety of means, including equity or debt placements, through the sale or other disposition of assets or reductions in operating costs. Equity placements may be made using our existing shelf registration. Equity placements, if made, would be undertaken only to the extent necessary, so as to minimize the dilutive effect of any such placements upon the Company’s existing stockholders. Limitations on the Company’s liquidity and ability to raise capital may adversely affect it. Sufficient liquidity is critical to meet the Company’s resource development activities. Although the Company currently expects its sources of capital to be sufficient to meet its near-term liquidity needs, there can be no assurance that its liquidity requirements will continue to be satisfied. If the Company cannot raise needed funds, it might be forced to make substantial reductions in its operating expenses, which could adversely affect its ability to implement its current business plan and ultimately its viability as a company. Principles of Consolidation The consolidated financial statements include the accounts of Cadiz Inc. and all subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates in Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In preparing these financial statements, management has made estimates with regard to goodwill and other long-lived assets, stock compensation and deferred tax assets. Actual results could differ from those estimates. Revenue Recognition The Company recognizes agricultural revenue through its lease with Fenner Valley Farms LLC. Stock-Based Compensation General and administrative expenses include $1.3 million, $1.1 million and $1.1 million of stock-based compensation expenses in the years ended December 31, 2016, 2015 and 2014, respectively. The Company applies the Black-Scholes valuation model in determining the fair value of options granted to employees and consultants. For employees, the fair value is then charged to expense on the straight-line basis over the requisite service period. For consultants, the fair value is remeasured at each reporting period and recorded as a liability until the award is settled. ASC 718 also requires the Company to estimate forfeitures in calculating the expense related to stock-based compensation as opposed to only recognizing forfeitures and the corresponding reduction in expense as they occur. As of December 31, 2016, all options outstanding are fully vested; therefore, there is no potential impact of forfeitures. The Company is in a tax loss carryforward position and is not expected to realize a benefit from any additional compensation expense recognized under ASC 718. See Note 7, “Income Taxes". Net Loss Per Common Share Basic net loss per share is computed by dividing the net loss by the weighted-average common shares outstanding. Options, deferred stock units, warrants, and the zero coupon term loan convertible into or exercisable for certain shares of the Company’s common stock were not considered in the computation of net loss per share because their inclusion would have been antidilutive. Had these instruments been included, the fully diluted weighted average shares outstanding would have increased by approximately 11,070,000 shares, 8,453,000 shares and 8,237,000 shares for the years ended December 31, 2016, 2015 and 2014, respectively. Property, Plant, Equipment and Water Programs Property, plant, equipment and water programs are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, generally ten to forty - five years for land improvements and buildings, and five to fifteen years for machinery and equipment. Leasehold improvements are amortized over the shorter of the term of the relevant lease agreement or the estimated useful life of the asset. Water rights, storage and supply programs are stated at cost. Certain costs directly attributable to the development of such programs have been capitalized by the Company. These costs, which are expected to be recovered through future revenues, consist of direct labor, drilling costs, consulting fees for various engineering, hydrological, environmental and additional feasibility studies, and other professional and legal fees. While interest on borrowed funds is currently expensed, interest costs related to the construction of project facilities will be capitalized at the time construction of these facilities commences. Goodwill and Other Assets As a result of a merger in May 1988 between two companies which eventually became known as Cadiz Inc., goodwill in the amount of $7,006,000 was recorded. Approximately $3,193,000 of this amount was amortized prior to the adoption of ASC 350 on January 1, 2002. Since the adoption of ASC 350, there have been no goodwill impairments recorded. Deferred loan costs represent costs incurred to obtain debt financing. Such costs are amortized over the life of the related loan using the interest method. At December 31, 2016, the deferred loan fees relate to the corporate term loan, as described in Note 6, “Long-Term Debt”. Impairment of Goodwill and Long-Lived Assets The Company assesses long-lived assets, excluding goodwill, for recoverability whenever events or changes in circumstances indicate that their carrying value may not be recoverable through the estimated undiscounted future cash flows resulting from the use of the assets. If it is determined that the carrying value of long-lived assets may not be recoverable, the impairment is measured by using the projected discounted cash-flow method. The Company uses a two -step impairment test to identify potential goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any) for the Company. The first step, which is performed at least annually, considers whether there are qualitative factors present such that it is more likely than not a goodwill impairment exists. If based on qualitative factors it is more likely than not a goodwill impairment exists, the Company performs “Step 2” as described below. The step 2 calculation of the impairment test compares the implied fair value of the goodwill to the carrying value of goodwill. The implied fair value of goodwill represents the excess of the estimated fair value above the fair value of the Company's identified assets and liabilities. If the carrying value of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess (not to exceed the carrying value of goodwill). The determination of the fair value of its assets and liabilities is performed as of the measurement date using observable market data before and after the measurement date (if that subsequent information is relevant to the fair value on the measurement date). Income Taxes Income taxes are provided for using an asset and liability approach which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable enacted tax rates. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Fair Value of Financial Instruments Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carrying values approximating fair value include accounts payable and accrued liabilities due to their short-term nature. The carrying value of the Company's debt approximates fair value, based on interest rates available to the Company for debt with similar terms. See Note 6, “Long-Term Debt”, for discussion of fair value of debt. Supplemental Cash Flow Information The Company is required to pay 50% of all future quarterly interest payments in cash or stock on the corporate secured debt, rather than in accretion to principal, beginning with the quarterly interest payment due June 5, 2016. No other payments are due on the corporate secured debt or convertible notes prior to their maturities. During the year ended December 31, 2016, approximately $434 thousand in interest payments on the corporate secured debt was paid in stock. As result, 46,236 shares of common stock were issued to the lenders. In November 2016, the Company issued 357,500 shares of common stock to its lenders in connection to an amendment to the corporate secured debt. The Company recorded a debt discount in the amount of $3.4 million which is the fair value of the 357,500 shares issued. In April 2016, the Company recorded a beneficial conversion feature in the amount of $1.48 million in connection with the issuance of approximately $10.0 million in aggregate principal and accrued interest of its convertible notes. During the year ended December 31, 2016, approximately $9.9 million in convertible notes were converted by certain of the Company’s lenders. As a result, 1,406,723 shares of common stock were issued to the lenders. Cash payments for income taxes were $4,000 for each of the years ended December 31, 2016, 2015, and 2014. Recent Accounting Pronouncements Accounting Guidance Not Yet Adopted In May 2014, the FASB issued an accounting standards update on revenue recognition including enhanced disclosures. Under the new standard, revenue is recognized when (or as) a good or service is transferred to the customer and the customer obtains control of the good or service. On July 9, 2015, the FASB approved a one -year deferral, updating the effective date to January 1, 2018. The Company is currently evaluating this new guidance, and expects this new stand will not have a material impact on the consolidated financial statements. In February 2016, the FASB issued an accounting standards update related to lease accounting including enhanced disclosures. Under the new standard, a lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified assets for a period of time in exchange for consideration. Lessees will classify leases with a term of more than one year as either operating or finance leases and will need to recognize a right-of-use asset and a lease liability. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. This guidance is effective January 1, 2019, but early adoption is permitted. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time. In March 2016, the FASB issued an accounting standards update to simplify the accounting for share-based payments. Under this new guidance, the tax effects related to share based payments will be recorded through the income statement. Currently, tax benefits in excess of compensation cost ("windfalls") are recorded in equity, and tax deficiencies ("shortfalls") are recorded in equity to the extent of previous windfalls, and then to the income statement. This guidance is effective January 1, 2017, but early adoption is permitted. The new standard also revised reporting on the statement of cash flows. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time. In August 2016, the FASB issued an accounting standards update which eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, but early adoption is permitted. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time. In January 2017, the FASB issued an accounting standards update which eliminates Step 2 from the goodwill impairment test. Entities should perform their goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time. Accounting Guidance Adopted In August 2014, the FASB issued an accounting standards update requiring an entity’s management to evaluate whether there are conditions or events, considered in aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). The Company adopted this guidance on December 31, 2016. In April 2015, the FASB issued an accounting standards update that requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. Previously, accounting guidance required these costs to be presented as a deferred charge asset. The Company adopted this guidance in the first quarter of 2016. The Amount of debt issuance costs that have been reclassified from “Other long-term assets” as a deduction of “Long-term debt” for December 31, 2015 was $626 thousand.

NOTE

– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Consolidated Financial Statements of the Company have been prepared assuming that the Company will continue as a going concern, which assumed realization of assets and settlement of liabilities in the normal course of business.

The Company incurred losses of

$26.3

million,

$24.0

million and

$18.9

million for the years ended

December

31,

2016,

2015

and

2014,

respectively. The Company had working capital of

$11.0

million at

December

31,

2016,

including cash of

$12.2

million, and used cash in operations of

$9.5

million for the year ended

December

31,

2016.

Cash requirements during the year ended

December

31,

2016,

primarily reflect certain administrative and litigation costs related to the Company’s water project development efforts. Currently, the Company’s sole focus is the development of its land and water assets.

April

2016,

the Company issued approximately

$10.0

million in aggregate principal and accrued interest of its

7.00%

Convertible Senior Notes due

2020

(“2020

Notes”), and in

December

2016,

the Company raised approximately

$10.6

million with the sale of

1,150,000

shares at

$9.75

per share by way of takedown from its shelf registration.

The agreement with its lenders to allow the Company to pay all interest either in-kind or through the issuance of shares combined with the proceeds from the issuance of the

2020

Notes, and from the shelf takedown, provides the Company with sufficient funds to meet its expected working capital needs through

April

2018.

In addition, the Company is able to control certain of its costs and can reduce expenditures if needed to coincide with future capital raises.

The Company

may

meet future working capital requirements beyond

April

2018

through a variety of means, including equity or debt placements, through the sale or other disposition of assets or reductions in operating costs. Equity placements

may

be made using our existing shelf registration. Equity placements, if made, would be undertaken only to the extent necessary, so as to minimize the dilutive effect of any such placements upon the Company’s existing stockholders.

Limitations on the Company’s liquidity and ability to raise capital

may

adversely affect it. Sufficient liquidity is critical to meet the Company’s resource development activities. Although the Company currently expects its sources of capital to be sufficient to meet its near-term liquidity needs, there can be no assurance that its liquidity requirements will continue to be satisfied. If the Company cannot raise needed funds, it might be forced to make substantial reductions in its operating expenses, which could adversely affect its ability to implement its current business plan and ultimately its viability as a company.

Principles of Consolidation

The consolidated financial statements include the accounts of Cadiz Inc. and all subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In preparing these financial statements, management has made estimates with regard to goodwill and other long-lived assets, stock compensation and deferred tax assets. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes agricultural revenue through its lease with Fenner Valley Farms LLC.

Stock-Based Compensation

General and administrative expenses include

$1.3

million,

$1.1

million and

$1.1

million of stock-based compensation expenses in the years ended

December

31,

2016,

2015

and

2014,

respectively.

The Company applies the Black-Scholes valuation model in determining the fair value of options granted to employees and consultants. For employees, the fair value is then charged to expense on the straight-line basis over the requisite service period. For consultants, the fair value is remeasured at each reporting period and recorded as a liability until the award is settled.

ASC

718

also requires the Company to estimate forfeitures in calculating the expense related to stock-based compensation as opposed to only recognizing forfeitures and the corresponding reduction in expense as they occur. As of

December

31,

2016,

all options outstanding are fully vested; therefore, there is no potential impact of forfeitures. The Company is in a tax loss carryforward position and is not expected to realize a benefit from any additional compensation expense recognized under ASC

718.

See Note

“Income Taxes".

Net Loss Per Common Share

Basic net loss per share is computed by dividing the net loss by the weighted-average common shares outstanding. Options, deferred stock units, warrants, and the

zero

coupon term loan convertible into or exercisable for certain shares of the Company’s common stock were not considered in the computation of net loss per share because their inclusion would have been antidilutive. Had these instruments been included, the fully diluted weighted average shares outstanding would have increased by approximately

11,070,000

shares,

8,453,000

shares and

8,237,000

shares for the years ended

December

31,

2016,

2015

and

2014,

respectively.

Property, Plant, Equipment and Water Programs

Property, plant, equipment and water programs are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, generally

ten

forty

five

years for land improvements and buildings, and

five

fifteen

years for machinery and equipment. Leasehold improvements are amortized over the shorter of the term of the relevant lease agreement or the estimated useful life of the asset.

Water rights, storage and supply programs are stated at cost. Certain costs directly attributable to the development of such programs have been capitalized by the Company. These costs, which are expected to be recovered through future revenues, consist of direct labor, drilling costs, consulting fees for various engineering, hydrological, environmental and additional feasibility studies, and other professional and legal fees. While interest on borrowed funds is currently expensed, interest costs related to the construction of project facilities will be capitalized at the time construction of these facilities commences.

Goodwill and Other Assets

As a result of a merger in

May

1988

between

two

companies which eventually became known as Cadiz Inc., goodwill in the amount of

$7,006,000

was recorded. Approximately

$3,193,000

of this amount was amortized prior to the adoption of ASC

350

January

2002.

Since the adoption of ASC

350,

there have been no goodwill impairments recorded.

Deferred loan costs represent costs incurred to obtain debt financing. Such costs are amortized over the life of the related loan using the interest method. At

December

31,

2016,

the deferred loan fees relate to the corporate term loan, as described in Note

“Long-Term Debt”.

Impairment of Goodwill and Long-Lived Assets

The Company assesses long-lived assets, excluding goodwill, for recoverability whenever events or changes in circumstances indicate that their carrying value

may

not be recoverable through the estimated undiscounted future cash flows resulting from the use of the assets. If it is determined that the carrying value of long-lived assets

may

not be recoverable, the impairment is measured by using the projected discounted cash-flow method.

The Company uses a

two

-step impairment test to identify potential goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any) for the Company. The

first

step, which is performed at least annually, considers whether there are qualitative factors present such that it is more likely than not a goodwill impairment exists. If based on qualitative factors it is more likely than not a goodwill impairment exists, the Company performs “Step

2”

as described below.

The step

calculation of the impairment test compares the implied fair value of the goodwill to the carrying value of goodwill. The implied fair value of goodwill represents the excess of the estimated fair value above the fair value of the Company's identified assets and liabilities. If the carrying value of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess (not to exceed the carrying value of goodwill). The determination of the fair value of its assets and liabilities is performed as of the measurement date using observable market data before and after the measurement date (if that subsequent information is relevant to the fair value on the measurement date).

Income Taxes

Income taxes are provided for using an asset and liability approach which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable enacted tax rates. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Fair Value of Financial Instruments

Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carrying values approximating fair value include accounts payable and accrued liabilities due to their short-term nature. The carrying value of the Company's debt approximates fair value, based on interest rates available to the Company for debt with similar terms. See Note

“Long-Term Debt”, for discussion of fair value of debt.

Supplemental Cash Flow Information

The Company is required to pay

50%

of all future quarterly interest payments in cash or stock on the corporate secured debt, rather than in accretion to principal, beginning with the quarterly interest payment due

June

2016.

No other payments are due on the corporate secured debt or convertible notes prior to their maturities. During the year ended

December

31,

2016,

approximately

$434

thousand in interest payments on the corporate secured debt was paid in stock. As result,

46,236

shares of common stock were issued to the lenders.

November

2016,

the Company issued

357,500

shares of common stock to its lenders in connection to an amendment to the corporate secured debt. The Company recorded a debt discount in the amount of

$3.4

million which is the fair value of the

357,500

shares issued.

April

2016,

the Company recorded a beneficial conversion feature in the amount of

$1.48

million in connection with the issuance of approximately

$10.0

million in aggregate principal and accrued interest of its convertible notes.

During the year ended

December

31,

2016,

approximately

$9.9

million in convertible notes were converted by certain of the Company’s lenders. As a result,

1,406,723

shares of common stock were issued to the lenders.

Cash payments for income taxes were

$4,000

for each of the years ended

December

31,

2016,

2015,

and

2014.

Recent Accounting Pronouncements

Accounting Guidance Not Yet Adopted

May

2014,

the FASB issued an accounting standards update on revenue recognition including enhanced disclosures. Under the new standard, revenue is recognized when (or as) a good or service is transferred to the customer and the customer obtains control of the good or service. On

July

2015,

the FASB approved a

one

-year deferral, updating the effective date to

January

2018.

The Company is currently evaluating this new guidance, and expects this new stand will not have a material impact on the consolidated financial statements.

February

2016,

the FASB issued an accounting standards update related to lease accounting including enhanced disclosures. Under the new standard, a lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified assets for a period of time in exchange for consideration. Lessees will classify leases with a term of more than

one

year as either operating or finance leases and will need to recognize a right-of-use asset and a lease liability. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. This guidance is effective

January

2019,

but early adoption is permitted. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time.

March

2016,

the FASB issued an accounting standards update to simplify the accounting for share-based payments. Under this new guidance, the tax effects related to share based payments will be recorded through the income statement. Currently, tax benefits in excess of compensation cost ("windfalls") are recorded in equity, and tax deficiencies ("shortfalls") are recorded in equity to the extent of previous windfalls, and then to the income statement. This guidance is effective

January

2017,

but early adoption is permitted. The new standard also revised reporting on the statement of cash flows. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time.

August

2016,

the FASB issued an accounting standards update which eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on

eight

specific cash flow issues. This guidance is effective for fiscal years beginning after

December

15,

2017,

and interim periods within those fiscal years, but early adoption is permitted. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time.

January

2017,

the FASB issued an accounting standards update which eliminates Step

from the goodwill impairment test. Entities should perform their goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The amendments in this update are effective prospectively during interim and annual periods beginning after

December

15,

2019,

with early adoption permitted. The Company is currently evaluating this new guidance and cannot determine the impact of this standard at this time.

Accounting Guidance Adopted

August

2014,

the FASB issued an accounting standards update requiring an entity’s management to evaluate whether there are conditions or events, considered in aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within

one

year after the date that the financial statements are issued (or within

one

year after the date that the financial statements are available to be issued when applicable). The Company adopted this guidance on

December

31,

2016.

April

2015,

the FASB issued an accounting standards update that requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. Previously, accounting guidance required these costs to be presented as a deferred charge asset. The Company adopted this guidance in the

first

quarter of

2016.

The Amount of debt issuance costs that have been reclassified from “Other long-term assets” as a deduction of “Long-term debt” for

December

31,

2015

was

$626

thousand.