![]() The letter makes it abundantly clear that CDZI is not furthering a railroad purpose, mentioning those words specifically numerous times. The letter cites not just one issue with the company’s plan, but rather numerous issues that it takes exception with: The letter notifies the company that it would not be allowed to use a loophole that the company was seeking to use in order to move its water pipeline project forward (“cannot be authorized”). The latest, and arguably the most threatening roadblock the company has faced is in a letter they received from the US Department of the Interior in early October. Recent Regulatory Correspondence Confirms Short Thesis Finally, we’re going to take a look at the company’s alarming liquidity crunch, insolvent balance sheet and perpetual cash burn. Since the water project has been opined on at length, we’re only going to look at recent developments from the California State Bureau of Land Management and how they seem to validate past reports. Today, we take the next step in identifying what we believe to be an extremely promising short case against CDZI. ![]() This detailed and lengthy take down of the company’s water project, published in April 2015 by The Pump Stopper, is a must read as a pre-requisite for those reading this article and looking to familiarize themselves with the criticism surrounding CDZI. For those unfamiliar with CDZI, this project represents just about all of the future prospects that investors are seemingly betting on when they are buying CDZI stock. ![]() It has been argued exhaustively that CDZI’s water project has been, and will continue to be, a complete failure. While this has been ongoing, CDZI has been looting its balance sheet and losing money quarter after quarter, for years. ![]() Don’t take our word for it – the company has even stated themselves, in their 10-Q, that their ability repay their debt and remain liquid depends on the success of this project. This project was the one potential success story the company had and was dealt a massive blow just days ago that we think will be extremely detrimental to the company. after pleading guilty to criminal charges relating to securities trading in Britain.” Or, as the LA Times put it yesterday, “Cadiz was the brainchild of an investment promoter named Keith Brackpool, who came to the U.S. The project’s recent resurgence, seemingly the only reason to potentially buy the stock, has been called, “the latest version of a proposal that’s been floating around for more than 15 years.” The fact is that the company is essentially a one trick pony and has been working on the same “water project,” as they call it, for years, with very little tangible progress being made on the necessary regulatory front, while enriching insiders and burning through millions of dollars. (NASDAQ: CDZI) is centered on two damning points: the company’s main business project (a water project focused on relocating water from an aquifer in the Mojave Desert) seems doomed for imminent failure and, in the meantime, CDZI has an insolvent balance sheet and has posted a loss the last 42 quarters straight. Without steady profits, we value CDZI at what it’s worth on paper and believe it’s is on its way to $0, be it from bankruptcy, eventual dilution or other means.As it stands, CDZI’s balance sheet is insolvent and the company’s equity is worth $0 dollars on paper with seemingly no future road toward profitability or cash generation.On top of its main business operation looking like an impossibility, CDZI faces a major liquidity crisis and has enormous debt coming due.This reconciles with, and further validates, past critical articles suggesting that the project is doomed for eventual failure and, as such, the company may be as well.A letter on October 5th from the California State Office of the Bureau of Land Management continues to paint a bleak picture for CDZI’s focus - its ongoing “water project”.
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