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Note 12 - Leases | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Lessee, Operating Leases [Text Block] | NOTE 12 – LEASES The Company has operating leases for corporate offices, vehicles and office equipment. The Company’s leases have remaining lease terms of 8 months to 20 months, some of which include options to extend or terminate the lease. However, the Company is not reasonably certain to exercise options to renew or terminate, and therefore renewal and termination options are not considered in the lease term or the right-of-use asset and lease liability balances. The Company’s current lease arrangements expire in 2021. The Company does not have any finance leases. The Company’s lease population does not include any residual value guarantees, and therefore none were considered in the calculation of the lease balances. The Company has leases with variable payments, most commonly in the form of common area maintenance charges which are based on actual costs incurred. These variable payments were excluded from the right-of-use asset and lease liability balances since they are not fixed or in-substance fixed payments. The Company elected to utilize the transition package of practical expedients permitted within the new standard, including the practical expedient not to reassess existing land easements, which among other things, allows the Company to carryforward the historical lease classification. The Company has lease agreements with lease and non-lease components and has elected the practical expedient to account for lease and non-lease components as a single lease component for real-estate class of leases only. For leases with terms greater than 12 months, the Company records the related asset and lease liability at the present value of lease payments over the lease term. Leases with an initial term of 12 months or less with purchase options or extension options that are not reasonably certain to be exercised are not recorded on the Consolidated Balance Sheets; the Company recognizes lease expense for these leases on a straight-line basis over the term of the lease. Lease balances . Amounts recognized in the accompanying consolidated balance sheet as of December 31, 2019 are as follows (in thousands):
Activity |  | Balance Sheet Location |  | Balance |
ROU assets |  | Other assets |  | $ | 59 |
Short-term lease liability |  | Other liabilities |  | $ | 44 |
Long-term lease liability |  | Other long-term liabilities |  | $ | 15 |
Lease cost. The Company’s operating lease cost for the year ended December 31, 2019 was $97 thousand. Lease commitments. The table below summarizes the Company’s scheduled future minimum lease payments under operating, recorded on the balance sheet as of December 31, 2019 ( in thousands):
2020 |  |  | 46 |
2021 |  |  | 15 |
Total lease payments |  |  | 61 |
Less: Imputed interest |  |  | (2 | )
Present value of lease payments |  |  | 59 |
Less: current maturities of lease obligations |  |  | (44 | )
Long-term lease obligations |  | $ | 15 |
Most of our lease agreements do not provide a readily determinable implicit rate nor is it available to us from our lessors. Instead, we estimate the Company’s incremental borrowing rate based on information available at either the implementation date of Topic 842 or at lease commencement for leases entered into thereafter in order to discount lease payments to present value. The table below presents additional information related to our leases as of December 31, 2019:
Weighted Average Remaining Lease Term |  |  |  |
Operating leases (in years) |  |  | 1 |
Weighted Average Discount Rate |  |  |  |
Operating leases |  |  | 6 | %
From a lessor standpoint, in February 2016, the Company entered into a lease agreement with Fenner Valley Farms LLC (“FVF”) (the “lessee”), a subsidiary of Water Asset Management LLC, a related party, pursuant to which FVF is leasing, for a 99 -year term, 2,100 acres owned by Cadiz in San Bernardino County, California, to be used to plant, grow and harvest agricultural crops (“FVF Lease Agreement”). As consideration for the lease, FVF paid the Company a one -time payment of $12.0 million upon closing. Under the FVF Lease Agreement, the Company has a repurchase option to terminate the lease at any time during the twenty ( 20 ) year period following the effective date of the lease (“Termination Option Period”) upon ( 1 ) repayment of the one -time $12 million lease payment plus a ten percent ( 10% ) compounded annual return (provided that the amount of such payment shall be not less than $14,400,000 ), ( 2 ) reimbursement of water-related infrastructure on the leased property plus 8% per annum as well as the actual costs of any farming-related infrastructure installed on the leased property and ( 3 ) reimbursement of certain pipeline-related development expenses, working in coordination with Cadiz, not to exceed $3,000,000 (such payments, the “ Termination Payments “). If ( x ) Cadiz does not exercise its termination right within such 20 -year period or (y) the Agent under Cadiz’s credit agreement declares an event of default under Cadiz’s Senior Secured Debt and accelerates the indebtedness due and owing thereunder by Cadiz (or such indebtedness automatically accelerates under the terms of Cadiz’s Senior Secured Debt), then the lessee may purchase the leased property for $1.00. The Company has recorded the one -time payment of $12 million, before legal fees, paid by FVF as a long-term lease liability. The Company’s consolidated statement of operations reflects a net charge equal to a 10% finance charge compounding annually over the 20 -year Termination Option Period. The net charge to the consolidated statement of operations reflects ( 1 ) rental income associated with the use of the land by FVF over the 20 -year termination option period and ( 2 ) interest expense at a market rate reflective of a 20 -year secured loan transaction. As a result of this transaction, the Company incurred approximately $490 thousand of legal fees which was recorded as a debt discount and is being amortized over the 20 -year Termination Option Period. The Company expects to receive rental income of $420 thousand annually over the next five years related to the FVF Lease Agreement. On July 31, 2019, the JV entered into a lease agreement (the “Lease Agreement”) with the Company whereby the JV will cultivate industrial hemp on up to 9,600 acres at the Company’s agricultural property in eastern San Bernardino County, California (“Cadiz Ranch”). Under the terms of the Agreement, the JV initially leased 1,280 acres at the Cadiz Ranch and holds options to lease up to 8,320 additional acres by 2022. The Agreement has an initial term of five years and the JV has the option to extend the term for three successive periods of five years each. In consideration for the lease arrangement, the JV will provide the Company an annual rental payment equal to $500 per acre of leased property, subject to periodic CPI adjustment. The lease commencement date is contingent on the Company performing certain activities to bring the property to the specifications required by the JV. We expect the lease commencement date to be in the first quarter of 2020.

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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