UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D. C. 20549

                            FORM 10-K

                FOR ANNUAL AND TRANSITION REPORTS
             PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
(Mark One)

[X]  Annual Report Pursuant to Section 13 or 15(d) of the
      Securities Exchange Act of 1934 for the fiscal year
                    ended December 31, 2004

                               OR

[ ] Transition Report Pursuant to Section 13 or 15(d) of the
      Securities Exchange Act of 1934 for the transition
                    period from .. to ...

                 COMMISSION FILE NUMBER 0-12114

                           CADIZ INC.
       (EXACT NAME OF REGISTRANT SPECIFIED IN ITS CHARTER)

           DELAWARE                          77-0313235
(State or other jurisdiction of           (I.R.S. Employer
incorporation or organization)          Identification No.)

777 S. FIGUEROA STREET, SUITE 4250
       LOS ANGELES, CA                         90017
(Address of principal executive offices)     (Zip Code)

                         (213) 271-1600
      (Registrant's telephone number, including area code)
                   ---------------------------

   Securities Registered Pursuant to Section 12(b) of the Act:
  Title of Each Class     Name of Each Exchange on Which Registered
  --------------------    -----------------------------------------
        None                               None

   Securities Registered Pursuant to Section 12(g) of the Act:
             COMMON STOCK, PAR VALUE $0.01 PER SHARE
                        (Title of Class)

Indicate by check mark whether the registrant:  (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                          YES      NO  X
                              ---     ---

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (220.405 of this chapter)
is not contained herein, and will not be contained to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-
K or any amendment of this Form 10-K.

Indicate by check mark whether the Registrant is an accelerated
filer (as defined in Exchange Act Rule 12b-2).

                        YES      NO  X
                            ---     ---

As of Feb 28, 2005, the Registrant had 10,326,339 shares of
common stock outstanding. The aggregate market value of the
common stock held by nonaffiliates as of June 30, 2004 was
approximately $41,050,122 based on 4,773,270 shares of common
stock outstanding held by nonaffiliates and the closing price on
that date. Shares of common stock held by each executive officer
and director and by each entity that owns more than 5% of the
outstanding common stock have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other
purposes.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant is not incorporating by reference any other
documents within this Annual Report on Form 10-K except those
footnoted in Part IV under the heading "Item 15. Exhibits,
Financial Statement Schedules, and Reports on Form 8-K".




                        TABLE OF CONTENTS

PART I
------

Item 1.  Business . . . . . . . . . . . . . . . . . . . . . . . 1

Item 2.  Properties . . . . . . . . . . . . . . . . . . . . . . 8

Item 3.  Legal Proceedings  . . . . . . . . . . . . . . . . . .10

Item 4.  Submission of Matters to a Vote of Security Holders . 10


PART II
-------

Item 5.  Market for Registrant's Common Equity and Related
         Stockholder Matters  . . . . . . . . . . . . . . . .. 11

Item 6.  Selected Financial Data  . . . . . . . . . . . . . . .12

Item 7.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations  . . . . . . . . .13

Item 7A. Quantitative and Qualitative Disclosures about Market
         Risk . . . . . . . . . . . . . . . . . . . . . . . . .26

Item 8.  Financial Statements and Supplementary Data . . . . . 26

Item 9.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure  . . . . . . . . .27

Item 9A.  Controls and Procedures  . . . . . . . . . . . . . . 27

Item 9B.  Other Information . . . . . . . . . . . . . . . . . .27


PART III
--------

Item 10.  Directors and Executive Officers of the Registrant . 28

Item 11.  Executive Compensation  . . . . . . . . . . . . . . .31

Item 12.  Security Ownership of Certain Beneficial Owners and
          Management and Related Stockholder Matters  . . . . .36

Item 13.  Certain Relationships and Related Transactions . . . 40

Item 14.  Principal Accountant Fees and Services . . . . . . . 40


PART IV
-------

Item 15.  Exhibits, Financial Statements and Reports of Form
          8-K . . . . . . . . . . . . . . . . . . . . . . . . .42

                            Page i

                             PART I

ITEM 1.   BUSINESS

     This Form 10-K presents forward-looking statements with
regard to financial projections, proposed transactions such as
those concerning the further development of our land and water
assets, information or expectations about our business
strategies, results of operations, products or markets, or
otherwise makes statements about future events.  Such forward-
looking statements can be identified by the use of words such as
"intends", "anticipates", "believes", "estimates", "projects",
"forecasts", "expects", "plans" and "proposes".  Although we
believe that the expectations reflected in these forward-looking
statements are based on reasonable assumptions, there are a
number of risks and uncertainties that could cause actual results
to differ materially from these forward-looking statements.
These include, among others, the cautionary statements under the
caption "Certain Trends and Uncertainties", as well as other
cautionary language contained in this Form 10-K.  These
cautionary statements identify important factors that could cause
actual results to differ materially from those described in the
forward-looking statements.  When considering forward-looking
statements in this Form 10-K, you should keep in mind the
cautionary statements described above.

OVERVIEW

     Our primary asset consists of three separate properties,
each of which consists of largely contiguous land in eastern San
Bernardino County, California.  This land position totals
approximately 45,000 acres.  Virtually all of this land is
underlain by high-quality groundwater resources with demonstrated
potential for various applications, including water storage and
supply programs and agricultural, municipal, recreational, and
industrial development.  Two of the three properties are located
in proximity to the Colorado River Aqueduct, the major source of
imported water for southern California.  The third property is
located near the Colorado River.

     The value of these assets derives from a combination of
population increases and limited water supplies throughout
southern California.  In addition, most of the major population
centers in southern California are not located where significant
precipitation occurs, requiring the importation of water from
other parts of the state.  We therefore believe that a
competitive advantage exists for those companies that possess or
can provide high quality, reliable, and affordable water to major
population centers.

     To this end, in 1997 we commenced discussions with the
Metropolitan Water District of Southern California
("Metropolitan") in order to develop a long-term agreement for a
joint venture groundwater storage and supply program on our land
in the Cadiz and Fenner valleys of eastern San Bernardino County
(the "Cadiz Program").  Under the Cadiz Program, surplus water
from the Colorado River would be stored in the aquifer system
underlying our land during wet years.  When needed, the stored
water, together with indigenous groundwater, would be returned to
the Colorado River Aqueduct for distribution to Metropolitan's
member agencies throughout six southern California counties.

     During the next several years, we engaged in extensive
negotiations with Metropolitan concerning the Cadiz Program and
actively pursued and received substantially all of the various
permits required to construct and operate the project.  However,
in October 2002, Metropolitan's Board voted to not proceed with
the Cadiz Program.

     Notwithstanding Metropolitan's actions in 2002, we expect to
be able to use our land assets and related water resources to
participate in a broad variety of water storage and supply,

                            Page 1

exchange, and conservation programs with public agencies and
other parties.  Southern California's need for water storage and
supply programs has not abated.  We believe there are many
different scenarios to maximize the value of this water resource,
all of which are under current evaluation.  See "Water Resource
Development", below.

     We expect that these alternative scenarios will have
different capital requirements and implementation periods than
those previously established for the Cadiz Program.  Therefore,
following Metropolitan's actions in 2002, we have entered into a
series of agreements with our senior secured lender, ING Capital
LLC ("ING") pursuant to which we reduced our debt to ING to $25
million and extended the maturity date of the ING debt until
March 31, 2010, conditioned upon a further principal reduction of
$10 million on or before March 31, 2008.  In addition, we have
raised approximately $35 million in equity through private
placements completed in 2003 and 2004.

     Further, in February 2005, our wholly owned subsidiary Sun
World International, Inc. ("Sun World") completed the sale of
substantially all of its assets. See "General Development of
Business", below.  Sun World had entered bankruptcy proceedings
in January 30, 2003, following which the financial statements of
Sun World are no longer consolidated with ours.

     With the implementation of these steps, we have been able to
retain ownership of all of our assets relating to our water
programs and to obtain working capital needed to continue our
efforts to develop our water programs, albeit with the
divestiture of our interests in Sun World's assets.  Because many
of our pre-existing common stockholders have participated in the
2003 and 2004 private placements, our base of common stockholders
remains largely the same as before these placements.

     We remain committed to our water programs and we continue to
explore all opportunities for development of these assets.  We
cannot predict with certainty which of these various
opportunities will ultimately be utilized.


(A)  GENERAL DEVELOPMENT OF BUSINESS
     -------------------------------

     We are a Delaware corporation formed in 1992 to act as the
surviving corporation in a Delaware reincorporation merger
between us and our predecessor, Pacific Agricultural Holdings,
Inc., a California corporation formed in 1983.

     As part of our historical business strategy, we have
conducted our land acquisition, water development activities,
agricultural operations and search for international water and
agricultural opportunities for the purpose of enhancing the long-
term appreciation of our properties and future prospects.  See
"Narrative Description of Business" below.

     The focus of our water development activities has been the
Cadiz Program.  The actions of Metropolitan in late 2002 have, at
a minimum, delayed implementation of the Cadiz Program.  In 2004,
our business development activities consisted largely of
continued adjustments to our capital structure by way of
amendments to our lending agreements and equity issuances.  See
"Overview", above.  Our primary goal in this process has been to
maintain ownership of our San Bernardino County properties and to
create a capital structure that would allow us to continue our
development of the Cadiz Program.  We believe that we have
succeeded in achieving this goal.  Subsequent to Metropolitan's
actions in 2002, we have paid down our debt facility with ING to
$25 million, and have obtained a maturity date extension and
interest rate reduction with respect to such debt.  We have
obtained an additional equity infusion of approximately $35
million through the issuance of common stock.  Substantially all
of the assets of Sun World have

                            Page 2

been sold.  These transactions are described in more detail in
Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operation."

     We acquired all of the outstanding capital stock of Sun
World in 1996.  Since that time, until late 2002, we provided to
Sun World various management and administrative services and
facilities, and supplemented Sun World's annual working capital
requirements.  In late 2002, it became apparent that we would not
be able to continue to provide such ongoing financial support to
Sun World.  In order to obtain the new financing needed to
provide working capital for its 2003-2004 growing seasons, on
January 30, 2003 (the "Petition Date") Sun World and three of its
wholly owned subsidiaries filed voluntary petitions under Chapter
11 of the Bankruptcy Code.  As of the Petition Date, the
financial statements of Sun World are no longer consolidated with
those of ours, but instead we account for our investment in Sun
World on the cost basis of accounting. See Consolidated Financial
Statements - Note 2 - Summary of Significant Accounting Policies
- Principals of Consolidation.

     In December 2003 we entered into a global settlement
agreement with Sun World and with the holders of a majority, and
subsequently all, of Sun World's First Mortgage Notes (the
"Bondholders"). This global settlement agreement provided for the
grant by Sun World to us of an unsecured claim against Sun World
of $13.5 million in full and final settlement of all claims and
causes of action between us. This unsecured claim was then
transferred to a trust controlled by the Bondholders. The
Bondholders, in turn, waived any right of recovery from us on
account of our previously issued guarantee of Sun World's
obligations under the First Mortgage Notes.

     In order to maximize Sun World's ability to make payments to
the holders of the Series B First Mortgage Notes ("First Mortgage
Notes") and other creditors, Sun World, with Bankruptcy Court
approval, pursued the sale of substantially all of its assets by
way of auction.  As a result of this auction, which was conducted
in January 2005, Sun World sold substantially all of its assets
in exchange for cash and credit consideration of $127.8 million,
plus payment and assumption of certain liabilities totaling an
estimated $14 million, including the trade claims, which
approximates net book value as of December 31, 2004 of the assets
sold.  Sun World plans to file an amended Plan to distribute the
remaining consideration left in Sun World (estimated at
approximately $50 million after interim distributions/credits to
the holders of First Mortgage Notes of approximately $78 million
upon closing as authorized by the Court) and the distribution
will be sufficient to enable Sun World to repay all holders of
the First Mortgage Notes.


(B)  FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
     ---------------------------------------------

     During the year ended December 31, 2004 we continued to
develop the water resource segment of our business.  The
operations of our agricultural resources segment were
discontinued with the deconsolidation of Sun World upon Sun
World's January 30, 2003 bankruptcy filing.  See Consolidated
Financial Statements.  See also Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations".


(C)  NARRATIVE DESCRIPTION OF BUSINESS
     ---------------------------------

     Our business strategy is the development of our holdings for
their highest and best uses.  At present, our development
activities are focused on water resource development at our San
Bernardino County properties.

                            Page 3

WATER RESOURCE DEVELOPMENT

     Our portfolio of water resources, located in proximity to
either the Colorado River or the Colorado River Aqueduct, the
principal source of imported water for Southern California,
provides us with the opportunity to participate in a variety of
water storage and supply programs, exchanges and conservation
programs with public agencies and other partners.

(a)  CADIZ GROUNDWATER STORAGE AND DRY-YEAR SUPPLY PROGRAM.
     -----------------------------------------------------

     We own approximately 35,000 acres of land and related high-
quality groundwater resources in the Cadiz and Fenner valleys of
eastern San Bernardino County.  The aquifer system underlying
this property is naturally recharged by precipitation (both rain
and snow) within a watershed of approximately 1,300 square miles.
See Item 2, "Properties - The Cadiz/Fenner Property".

     In 1997 we commended discussions with Metropolitan in order
to develop principles and terms for a long-term agreement for a
joint venture groundwater storage and supply program on this land
(the "Cadiz Program").  The Cadiz Program would provide
Metropolitan with a valuable increase in water supply during
periods of drought or other emergencies, as well as greater
reliability and flexibility in operation of its Colorado River
Aqueduct. During wet years, surplus water from the Colorado River
would be stored in the aquifer system that underlies the Cadiz
property.  When needed, the stored water and indigenous
groundwater would be returned to the Colorado River Aqueduct for
distribution to Metropolitan's member agencies throughout six
southern California counties.  Metropolitan provides supplemental
water to approximately 17 million people.

     In addition, temporary withdrawals of indigenous groundwater
would also be available from the Cadiz Program during
emergencies, in full compliance with the GROUNDWATER MONITORING &
MANAGEMENT PLAN approved by the U.S. Department of the Interior
in its RECORD OF DECISION.  With this provision of the MANAGEMENT
PLAN the effective long-term storage capacity of the Cadiz
Program may exceed two million acre-feet.

     Following extensive negotiations with us, in April 2001
Metropolitan's Board of Directors approved definitive economic
terms and responsibilities, which were to serve as the basis for
a final agreement to be executed between us, subject to the then-
ongoing environmental review process. Pursuant to these
definitive terms, during storage operations, Metropolitan would
pay a $50 fee per acre-foot for put of Colorado River water into
storage, and a $40 fee per acre-foot for return of Colorado River
water from storage, or a total of $90 per acre-foot to cycle
water into and out of the Cadiz Program facilities.  On the
transfer of indigenous water, Metropolitan would pay a base rate
of $230 per acre-foot, which would be adjusted according to a
fair market value adjustment procedure. Metropolitan would commit
to minimum levels of utilization of the Cadiz Program for both
storage of Colorado River Aqueduct water (900,000 acre-feet) and
transfer of indigenous groundwater (up to 1,500,000 acre-feet).
In addition, the definitive terms provided for the grant to us of
the option to sell a portion of the indigenous groundwater
(30,000 acre-feet per year for 25 years or a total of 750,000
acre-feet) to outside third parties within Metropolitan's service
area at fair market value.

   Cadiz Program facilities would include, among other things:

       *  Spreading basins, which are shallow ponds that
          percolate water from the ground surface to the
          water table;

                            Page 4

       *  High yield extraction wells designed to extract
          stored Colorado River water and indigenous
          groundwater from beneath the Cadiz Program area;

       *  A 35-mile conveyance pipeline to connect the
          spreading basins and wellfield to the Colorado River
          Aqueduct near the Iron Mountain pumping plant; and

       *  A pumping plant to pump water through the conveyance
          pipeline  from the Colorado River Aqueduct near the Iron
          Mountain pumping plant to the Cadiz Program spreading
          basins.

     The expected cost of these facilities was estimated at
approximately $150 million, which was to be jointly shared.

     The definitive terms for the Cadiz Program also call for the
establishment of a comprehensive GROUNDWATER MONITORING AND
MANAGEMENT PLAN to ensure long-term protection of the aquifer
system and related environmental resources in and surrounding the
area in which the Cadiz Program is located.

     In October 2001, the environmental report was issued by
Metropolitan and the U.S. Bureau of Land Management, in
collaboration with the U.S. Geological Survey and the National
Park Service.  On August 29, 2002, the U.S. Department of
Interior approved the Final Environmental Impact Statement for
the Cadiz Program and issued its Record of Decision, the final
step in the federal environmental review process for the Cadiz
Program.  The Record of Decision amended the California Desert
Conservation Area Plan for an exception to the utility corridor
element and offered to Metropolitan a right-of-way grant
necessary for the construction and operation of the Cadiz
Program.

     On October 8, 2002, Metropolitan's Board considered
acceptance of the terms and conditions of the right-of-way grant
pursuant to the published Record of Decision.  The Board voted
not to adopt Metropolitan staff's recommendation to approve the
terms and conditions of the right-of-way grant issued by the
Department of the Interior for the Cadiz Program by a vote of
47.11% in favor and 47.36% against the recommendation.  Instead,
the Board voted for an alternative motion to reject the terms and
conditions of the right-of-way grant and to not proceed with the
Cadiz Program by a vote of 50.25% in favor and 44.22% against.

     Subsequent to Metropolitan's actions, negotiations toward a
final agreement for the Cadiz Program on the basis of the
previously approved definitive terms have ceased.

     With Metropolitan's actions, we have not been able to
complete the environmental review phase of the Cadiz Program.  It
is our position that Metropolitan's actions of October 2002
breached various contractual and fiduciary obligations of
Metropolitan to us, and interfered with the economic advantage we
would have obtained from the Cadiz Program.  Therefore, in April
2003 we filed a claim against Metropolitan seeking compensatory
and punitive damages.  See Item 3 - "Legal Proceedings".

     Irrespective of Metropolitan's actions, the need for new
water storage and supply programs in the southwestern United
States has not diminished.  Over the five years preceding the
2004 - 2005 winter season, the Colorado River watershed has
experienced a prolonged drought that continues to present major
challenges to the economies of California, Nevada, and Arizona.
As population continues to grow at record rates, these states are
faced with the very real possibility that current and future
supplies of water will not be able to meet demand.

                            Page 5

     We believe there are a variety of scenarios under which the
value of the Cadiz Program may be realized.  Exploratory
discussions have been initiated with representatives of
governmental organizations, water agencies, and private water
users with regard to their expressed interest in implementation
of the Cadiz Program. Several such discussions have been held
with water agencies that are independently seeking reliability of
supply.  Other discussions have focused on the possibility of
exchanging water stored at the Cadiz Program with water
contractors in other regions in California. In addition, the
drought within the Colorado River watershed has served as an
impetus to cooperative discussions between states, with the goal
that interstate exchanges and transfers may also become feasible
in the future.

     Because of our long-term relationship with Metropolitan, we
also intend to pursue discussions with the agency in an effort to
determine whether there are terms acceptable to both parties
under which the Cadiz Program could be implemented. With the
recent finalization of the Quantification Settlement Agreement
(QSA), an agreement involving the Secretary of the Interior, the
State of California, Metropolitan and three other southern
California water agencies quantifying the amount of water
California's Colorado River users could expect on an annual
basis, Metropolitan's Colorado River supplies are now specified
and limited only by the variable volume of flow on the river.  To
meet the growing needs of its service area, Metropolitan must
take advantage of all opportunities to store available Colorado
River water during periods of surplus. With virtually all
environmental permits and approvals in place for the Cadiz
Program, except for those dependent upon Metropolitan's
certification of the Environmental Impact Report (EIR), we
believe a partnership with Metropolitan could be renewed in a
timely manner if terms acceptable to both parties were to be
negotiated.

     In the absence of a negotiated resolution, we would continue
to seek an administrative resolution of our claim against
Metropolitan.  In April 2003 we filed an administrative notice of
claim with Metropolitan asserting the breach by Metropolitan of
various obligations specified in the PRINCIPLES OF AGREEMENT.  We
believe that by failing to complete the environmental review
process, as specified in the PRINCIPLES OF AGREEMENT,
Metropolitan violated this contract, breached its fiduciary
duties to us and interfered with our prospective economic
advantages.  In discussions following presentation of this claim,
we and Metropolitan agreed to evaluate alternative approaches to
implementation of the Cadiz Program.  Metropolitan has not to
date responded to the claim and we have until October 2005 to
file a lawsuit against the agency.

(b)  OTHER EASTERN MOJAVE PROPERTIES
     -------------------------------

     Our second largest landholding is approximately 9,000 acres
in the Piute Valley of eastern San Bernardino County.  This
landholding is located approximately 15 miles from the resort
community of Laughlin, Nevada, and about 12 miles from the
Colorado River town of Needles, California.  Extensive
hydrological studies, including the drilling and testing of a
full-scale production well, have demonstrated that this
landholding is underlain by high-quality groundwater. The aquifer
system underlying this property is naturally recharged by
precipitation (both rain and snow) within a watershed of
approximately 975 square miles.  Discussions with potential
partners have commenced with the objective of developing our
Piute Valley assets.

     Additionally, we own additional acreage located near Danby
Dry Lake, approximately 30 miles southeast of our landholdings in
Cadiz and Fenner valleys.   Our Danby Lake property is located
approximately 10 miles north of the Colorado River Aqueduct.
Initial hydrological studies indicate that it has excellent
potential for a groundwater storage and supply project.

                            Page 6

AGRICULTURAL OPERATIONS

     We are no longer engaged in agricultural operations.
Historically, we have leased our Cadiz Valley farming property to
Sun World and other third parties. In the fourth quarter of 2004,
the lease with Sun World expired. We continue to lease to a third
party approximately 1,000 acres of juice grape vineyards and
citrus orchards at our Cadiz Valley property. The lease is
renewable on a year to year basis with annual revenues of
approximately $50,000.

     On January 30, 2003, Sun World filed voluntary petitions
under Chapter 11 of the Bankruptcy Code. In February 2005, with
Bankruptcy Court approval, Sun World sold substantially all of
its assets. See "General Development of Business", above.
Following the filing date and until the sale of its assets, Sun
World operated its business and managed its affairs as debtor and
debtor in possession.  As of the filing date the financial
statements of Sun World are no longer consolidated with those of
ours, but instead, we account for our investment in Sun World on
the cost basis of accounting.  As a result of changing to the
cost basis of accounting on January 31, 2003, we had a net
investment in Sun World of approximately $195 thousand consisting
of loans and other amounts due from Sun World of $13,500,000 less
losses in excess of investment in Sun World of $13,305,000.  We
wrote off the net investment in Sun World of $195 thousand at the
Chapter 11 filing date because we do not anticipate being able to
recover our investment.

SEASONALITY

     Our water resource development activities are not seasonal
in nature.

     With our divestiture of Sun World our operations will no
longer be subject to the general seasonal trends that are
characteristic of the agricultural industry.

COMPETITION

     We face competition for the acquisition, development and
sale of our properties from a number of competitors.  We may also
face competition in the development of water resources associated
with our properties.  Since California has scarce water resources
and an increasing demand for available water, we believe that
location, price and reliability of delivery are the principal
competitive factors affecting transfers of water in California.

EMPLOYEES

     As of December 31, 2004, we employed 5 full-time employees
(i.e. those individuals working more than 1,000 hours per year).
We believe that our employee relations are good.

REGULATION

     Our operations are subject to varying degrees of federal,
state and local laws and regulations.  As we proceed with the
development of our properties, including the Cadiz Program, we
will be required to satisfy various regulatory authorities that
we are in compliance with the laws, regulations and policies
enforced by such authorities.  Groundwater development, and the
export of surplus groundwater for sale to single entities such as
public water agencies, is not subject to regulation by existing
statutes other than general environmental statutes applicable to
all development projects.  Additionally, we must obtain a variety
of approvals and permits from state and federal governments with
respect to issues that may include

                            Page 7

environmental issues, issues related to special status species,
issues related to the public trust, and others.  Because of the
discretionary nature of these approvals and concerns which may be
raised by various governmental officials, public interest groups
and other interested parties during both the development and
approval process, our ability to develop properties and realize
income from our projects, including the Cadiz Program, could be
delayed, reduced or eliminated.


ITEM 2.   PROPERTIES

The following is a description of our significant properties.

THE CADIZ/FENNER PROPERTY

     In 1984, we conducted investigations of the feasibility of
agricultural development of land located in the Cadiz and Fenner
valleys of eastern San Bernardino County, California.  These
investigations confirmed the availability of high-quality water
in commercial quantities appropriate for agricultural
development.  Since 1985, we have acquired approximately 35,000
acres of largely contiguous land in this area, which is located
approximately 30 miles north of the Colorado River Aqueduct.

     Additional numerous independent geotechnical and engineering
studies conducted since 1985 have confirmed that the Cadiz/Fenner
property overlies a natural groundwater aquifer system that is
ideally suited for the underground water storage and dry year
transfers as contemplated in the Cadiz Program.  See Item 1,
"Business - Narrative Description of Business - Water Resource
Development".

     In November 1993, the San Bernardino County Board of
Supervisors unanimously approved a General Plan Amendment
establishing an agricultural land use designation for 9,600 acres
in the Cadiz Valley for which approximately 1,600 acres have been
developed for agriculture.  This action also approved permits to
construct infrastructure and facilities to house as many as 1,150
seasonal workers and 170 permanent residents (employees and their
families) and allows for the withdrawal of more than 1,000,000
acre-feet of groundwater from the aquifer system underlying our
property.

OTHER EASTERN MOJAVE PROPERTIES

     We also own approximately 10,900 additional acres in the
eastern Mojave Desert, including the Piute and Danby Lake
properties.

     Our second largest property consists of approximately 9,000
acres in the Piute Valley of eastern San Bernardino County.  This
landholding is located approximately 15 miles from the resort
community of Laughlin, Nevada, and about 12 miles from the
Colorado River town of Needles, California.  Extensive
hydrological studies, including the drilling and testing of a
full-scale production well, have demonstrated that this
landholding is underlain by high-quality groundwater.  The
aquifer system underlying this property is naturally recharged by
precipitation (both rain and snow) within a watershed of
approximately 975 square miles.  Discussions with potential
partners have commenced with the objective of developing our
Piute Valley assets.

     Additionally, we own or control additional acreage located
near Danby Dry Lake, approximately 30 miles southeast of our
landholdings in the Cadiz and Fenner valleys.  Our Danby Lake
property is located approximately 10 miles north of the Colorado
River Aqueduct.

                            Page 8

Initial hydrological studies indicate that it has excellent
potential for a groundwater storage and supply project.

FARM PROPERTY

     Approximately 1,600 acres of our Cadiz Valley property has
been developed for agricultural use.  We are currently leasing to
a third party approximately 1,000 acres of this property,
consisting of juice grape vineyards, and until the fourth quarter
of 2004 were leasing approximately 300 acres of this property,
consisting of citrus orchards, to Sun World.  The lease provides
for the lessee to be responsible for all costs associated with
growing crops on the leased property. The lease with the third
party is renewable on a year to year basis with annual revenues
of approximately $50,000.

EXECUTIVE OFFICES

     We currently lease our executive offices in Los Angeles,
California, which consist of approximately 4,770 square feet,
pursuant to a sublease that expires on June 14, 2006. Current
base rent under the lease is approximately $8,350 per month.

CADIZ REAL ESTATE

     In December 2003, we transferred substantially all of our
assets (with the exception of our office sublease, certain office
furniture and equipment and any Sun World related assets) to
Cadiz Real Estate LLC, a Delaware limited liability company
("Cadiz Real Estate").  We hold 100% of the equity interests of
Cadiz Real Estate, and therefore we continue to hold 100%
beneficial ownership of the properties that we transferred to
Cadiz Real Estate.  Cadiz Real Estate was created at the behest
of our senior secured lender, ING.  The Board of Managers of
Cadiz Real Estate consists of two managers appointed by us and
one independent manager named by ING.

     Cadiz Real Estate is a co-obligor under our credit
facilities with ING, for which assets of Cadiz Real Estate have
been pledged as security.

     Because the transfer of our properties to Cadiz Real Estate
has no effect on our ultimate beneficial ownership of these
properties, we refer throughout this Report to properties owned
of record either by Cadiz Real Estate or by us as "our"
properties.

DEBT SECURED BY PROPERTIES

     Our outstanding debt at December 31, 2004 of $25 million
represents loans secured by our properties (including properties
held of record by Cadiz Real Estate).  Information regarding
interest rates and principal maturities is provided in Note 7 to
the consolidated financial statements.

                            Page 9

ITEM 3.   LEGAL PROCEEDINGS

CLAIM AGAINST METROPOLITAN

     On April 7, 2003 we filed an administrative claim against
The Metropolitan Water District of California ("Metropolitan"),
asserting the breach by Metropolitan of various obligations
specified in our Principles of Agreement with Metropolitan.  We
believe that by failing to complete the environmental review
process for the Cadiz Program, as specified in the Principles of
Agreement, Metropolitan violated this contract, breached its
fiduciary duties to us and interfered with our prospective
economic advantages.  See Item 1, "Business - Narrative
Description of Business - Water Resource Development".  The
filing was made with the Executive Secretary of Metropolitan.  We
are seeking recovery of compensatory and punitive damages.

     In discussions following presentation of this claim, we have
continued to evaluate alternative approaches to implementation of
the Cadiz Program.  Metropolitan has not to date responded to the
claim and we have until October 2005 to file a lawsuit against
the agency.

SUN WORLD BANKRUPTCY FILING

     On January 30, 2003, (the "Petition Date") Sun World and
three of its wholly owned subsidiaries (Sun Desert, Inc.,
Coachella Growers and Sun World/Rayo) filed voluntary petitions
under Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court, Central District of California, Riverside
Division (Case Nos: RS 03-11370 DN, RS 03-11369 DN, RS 03-11371
DN, RS 03-11374 DN).  See Item 1, "Business - General Development
of Business".

OTHER PROCEEDINGS

     There are no other material pending legal proceedings to
which we are a party or of which any of our property is the
subject.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of our stockholders
during the fourth quarter of 2004.

                            Page 10

					PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS

     Our common stock is currently traded over the counter on the
OTC Bulletin Board under the symbol "CDZI". Prior to March 27,
2003, the Company's common stock was listed on the Nasdaq
National Market (Nasdaq). On March 27, 2003, the Company's common
stock was delisted from Nasdaq, and thereafter traded on the OTC
Bulletin Board until May 23, 2003, at which time our common stock
was removed from the Bulletin Board and began trading on the OTC
U.S. Market, often referred to as the "Pink Sheets". On November
11, 2004 our stock resumed trading on the OTC Bulletin Board. The
following table reflects actual sales transactions for the dates
that the Company was trading on Nasdaq, and high and low bid
information for dates subsequent. The OTC Bulletin Board and Pink
Sheet market quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily
represent actual transactions. The high and low ranges of the
common stock for the dates indicated have been provided by
Bloomberg LP. Please note that all stock prices listed throughout
this annual report on Form 10K have been adjusted for the one for
25 reverse stock split that took place in December 2003.

                                      HIGH          LOW
     QUARTER ENDED                SALES PRICE   SALES PRICE
     -------------                -----------   -----------
     2003:
       March 31                   $     20.25   $     2.625
       June 30                    $      4.75   $     2.425
       September 30               $      4.00   $     1.425
       December 31                $      5.90   $     3.375

     2004:
       March 31                   $      7.60   $      4.80
       June 30                    $      8.75   $      7.10
       September 30               $     15.50   $      8.50
       December 31                $     17.00   $     11.70

     On February 28, 2005, the high, low and last sales prices
for the shares, as reported by Bloomberg, were $15.00, $14.50,
and $15.00, respectively.

     We also have an authorized class of 100,000 shares of
preferred stock. There is one series of preferred stock (Series
F) authorized for issuance. All 100,000 authorized shares of
Series F Preferred Stock were issued in December 2003. Effective
November 30, 2004, 99,000 shares of Series F Preferred Stock were
converted to 1,711,665 shares of our common stock leaving 1,000
shares of Series F Preferred Stock issued and outstanding.

     On May 10, 1999 we adopted a Stockholders' Rights Plan. In
connection with the Rights Plan, and as further described in the
Rights Plan, we declared a dividend of one preferred share
purchase right for each outstanding share of our common stock
outstanding at the close of business on June 1, 1999, and filed a
Certificate of Designations designating for issuance 40,259
shares of Series A Junior Participating Preferred Stock. No
shares of Series A Participating Preferred Stock were ever
issued. The Rights Plan was amended and terminated by our Board
of Directors on March 25, 2004. On March 26, 2004, Cadiz filed a
certificate of elimination which eliminated this series of
preferred stock.

                            Page 11

     As of February 28, 2005, the number of stockholders of
record of our common stock was 245 and the estimated number of
beneficial owners was approximately 2,268.

     To date, we have not paid a cash dividend on our common
stock and we do not anticipate paying any cash dividends in the
foreseeable future. Our ability to pay such dividends is subject
to covenants pursuant to agreements with our primary lender that
prohibits the payment of dividends.

     All equity securities sold by us during the quarter ended
December 31, 2004 that were not registered under the Securities
Act were previously reported in our Current Report on Form 8-K
dated November 30, 2004.  All other securities sold by us during
the three years ended December 31, 2004 which were not registered
under the Securities Act have previously been reported in our
Annual and Quarterly Reports on Forms 10K and 10-Q.


ITEM 6.   SELECTED FINANCIAL DATA

    The following selected financial data insofar as it relates
to the years ended December 31, 2004, 2003, 2002, 2001 and 2000
has been derived from our audited financial statements. The
information that follows should be read in conjunction with the
audited consolidated financial statements and notes thereto for
each of the three years in the period ended December 31, 2004
included in Part IV of this Form 10-K. See also Item 7,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations".

($ in thousands, except for per share data)

                                       YEAR ENDED DECEMBER 31,
                             --------------------------------------------
                             2004      2003      2002      2001      2000
                             ----      ----      ----      ----      ----
Statement of Operations Data:

  Total  revenues          $     47  $  3,162  $114,250  $ 92,402  $107,745
  Net loss                  (16,037)  (11,536)  (22,225)  (25,722)  (22,458)
     Less: Preferred stock
      dividends                   -       918     1,125       591         -
     Imputed dividend on
      preferred stock             -     1,600       984       441         -
                           --------  --------  --------  --------  --------
 Net loss applicable to
  common stock             $(16,037) $(14,054) $(24,334) $(26,754) $(22,458)
                           ========  ========  ========  ========  ========

Per share:

  Net loss (basic and
   diluted)                $  (2.32) $  (6.39) $ (16.76) $ (18.66) $ (15.89)
                           ========  ========  ========  ========  ========

Weighted-average common
   shares outstanding         6,911     2,200     1,452     1,434     1,414
                           ========  ========  ========  ========  ========


                                              DECEMBER 31,
                              --------------------------------------------
                              2004      2003      2002      2001      2000
                              ----      ----      ----      ----      ----
Balance Sheet Data:

  Total assets             $  51,071 $  49,526 $ 191,883 $ 198,275 $ 203,617
  Long-term debt           $  25,000 $  30,253 $ 115,447 $ 141,429 $ 145,610
  Redeemable preferred
   stock                   $       - $       - $  10,942 $   9,958 $   3,950

  Preferred stock, common
   stock and additional
   paid-in capital         $ 209,718 $ 185,040 $ 156,166 $ 152,765 $ 143,063
  Accumulated deficit      $(184,860)$(168,823)$(157,287)$(135,062)$(109,340)
  Stockholders' equity     $  24,858 $  16,217 $  (1,121)$  17,703 $  33,723

                            Page 12

ITEM  7.    MANAGEMENT'S  DISCUSSION AND  ANALYSIS  OF  FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

     In connection with the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, the following
discussion contains trend analysis and other forward-looking
statements.  Forward-looking statements can be identified by the
use of words such as "intends", "anticipates", "believes",
"estimates", "projects", "forecasts", "expects", "plans" and
"proposes".  Although we believe that the expectations reflected
in these forward-looking statements are based on reasonable
assumptions, there are a number of risks and uncertainties that
could cause actual results to differ materially from these
forward-looking statements.  These 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.  See additional
discussion under the heading "Certain Trends and Uncertainties"
below.

OVERVIEW

      As discussed in further detail below, as of January 30,
2003 the financial statements of our Sun World subsidiary are no
longer being consolidated with ours.  Presently, our operations
(and, accordingly, our working capital requirements) relate
primarily to our water development activities and, more
specifically, to the Cadiz Groundwater Storage and Dry-Year
Supply Program.  Our results of operations for periods subsequent
to January 2003 have been, and in future fiscal periods will be,
largely reflective of the operations of our water development
activities.

      In 1997 we commenced discussions with the Metropolitan
Water District of Southern California ("Metropolitan") in order
to develop a long-term agreement for a joint venture groundwater
storage and supply program on our land in the Cadiz and Fenner
valleys of eastern San Bernardino County (the "Cadiz Program").
Under the Cadiz Program, surplus water from the Colorado River
would be stored in the aquifer system underlying our land during
wet years.  When needed, the stored water, together with
indigenous groundwater, would be returned to the Colorado River
Aqueduct for distribution to Metropolitan's member agencies
throughout six southern California counties.

     During the next several years, we engaged in extensive
negotiations with Metropolitan concerning the Cadiz Program and
actively pursued and received substantially all of the various
permits required to construct and operate the project.  However,
in October 2002, Metropolitan's Board voted to not proceed with
the Cadiz Program.

     Notwithstanding Metropolitan's actions in 2002, we expect to
be able to use our land assets and related water resources to
participate in a broad variety of water storage and supply,
exchange, and conservation programs with public agencies and
other parties.  Southern California's need for water storage and
supply programs has not abated.  We believe there are many
different scenarios to maximize the value of this water resource,
all of which are under current evaluation.  See "Item 1.  Water
Resource Development", above.

     We expect that these alternative scenarios will have
different capital requirements and implementation periods than
those previously established for the Cadiz Program.  Therefore,
following Metropolitan's actions in 2002, we have entered into a
series of agreements with our senior secured lender, ING Capital
LLC ("ING") pursuant to which we reduced our debt to ING to $25
million and extended the maturity date of the ING debt until
March 31, 2010, conditioned upon a further principal reduction of
$10 million on or before March 31, 2008.  In addition, we

                            Page 13

have raised approximately $35 million in equity through private
placements completed in 2003 and 2004.  Most recently, on
November 30, 2004, we completed a private placement of 400,000
Units at the price of $60.00 per Unit.  Each Unit consisted of
five (5) shares of the Company's common stock and one (1) common
stock purchase warrant.  Each Warrant will entitle the holder to
purchase, commencing 180 days from the date of issuance, one (1)
share of common stock at an exercise price of $15.00 per share.
Each Warrant will have a term of three (3) years, but will be
callable by us commencing twelve months following completion of
the placement if the closing market price of our common stock
exceeds $18.75 for 10 consecutive trading days.

     We used approximately half of the proceeds of the placement
to reduce our senior debt to ING.  The balance of the proceeds
are being used by the Company for working capital.

     Further, in February 2005, Sun World completed the sale of
substantially all of its assets  in exchange for cash and credit
consideration of $127.8 million, plus payment and assumption of
certain liabilities totaling an estimated $14 million, including
the trade claims, which approximates net book value as of
December 31, 2004 of the assets sold. Sun World plans to file an
amended Plan to distribute the remaining consideration left in
Sun World (estimated at approximately $50 million after interim
distributions/credits to the holders of First Mortgage Notes of
approximately $78 million upon closing as authorized by the
Court). See "Item 1.  General Development of Business", above.
Sun World had entered bankruptcy proceedings in January 30, 2003,
following which the financial statements of Sun World are no
longer consolidated with ours.

     With the implementation of these steps, we have been able to
retain ownership of all of our assets relating to our water
programs and to obtain working capital needed to continue our
efforts to develop our water programs, albeit with the
divestiture of our interests in Sun World's assets.  Because many
of our pre-existing common stockholders have participated in the
2003 and 2004 private placements, our base of common stockholders
remains largely the same as before these placements.

RESULTS OF OPERATIONS

     On January 30, 2003, Sun World filed a voluntary petition
for Chapter 11 bankruptcy protection.  As of that date due to the
Company's loss of control over the operations of Sun World, the
financial statements of Sun World are no longer consolidated with
ours, but instead, we are accounting for our investment in Sun
World on the cost basis of accounting.  As a result of changing
to the cost basis of accounting on January 31, 2003, we had a net
investment in Sun World of approximately $195 thousand consisting
of loans and other amounts due from Sun World of $13,500,000 less
losses in excess of investment in Sun World of $13,305,000. As a
result, the Company wrote off its net investment in Sun World of
$195 thousand at the Chapter 11 filing date because it does not
anticipate being able to recover its investment.

     Our consolidated financial statements for the year ended
December 31, 2003 include the results of operations for Sun World
only for the period January 1, 2003 through January 30, 2003.
The results of operations of Sun World subsequent to January 30,
2003 are not included in these consolidated financial statements.
As a result of the foregoing, direct comparisons of our
consolidated results of operations for year ended December 31,
2004 with results for the year ended December 31, 2003 do not, in
our view, prove meaningful.

     For this reason, we believe that material trends and
developments with respect to our results of operations from
period to period are more readily identifiable by comparing the

                            Page 14

unconsolidated results of Cadiz Inc. for the year ended December
31, 2003, which do not include the January 2003 operations of Sun
World, rather than our consolidated results of operations, which
include the January 2003 operations of Sun World.

     Tables which disclose the results of Cadiz Inc. separate
from its consolidated subsidiary Sun World for the year ended
December 31, 2003, and from which the numbers used in the
following discussion are derived, can be found in Note 7 to the
Consolidated Financial Statements.

(A)  YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED
     DECEMBER 31, 2003
     ---------------------------------------------------

     We have not received significant revenues from our water
resource activity to date.  As a result, we continue to incur a
net loss from operations.  We had revenues of $47 thousand for
the year ended December 31, 2004 and $3.2 million for the year
ended December 31, 2003, including $3.0 million from Sun World
for the month ended January 30, 2003.  Our net loss totaled $16.0
million for the year ended December 31, 2004 compared to $11.5
million for the year ended December 31, 2003 which included a
$2.5 million loss from Sun World for the period ended January 30,
2003. The increase for the 2004 period resulted from the write
off of permanent and developing crops in the amount of $3.4
million, a $2.8 million increase in interest cost resulting from
amortization of deferred borrowing costs, and write offs of
unamortized deferred borrowing costs of $1.4 million. General and
administrative costs declined by $2.2 million in 2004.

     Our primary expenses are our ongoing overhead costs (i.e.
general and administrative expense) and our interest expense. In
addition, during the upcoming years ending December 31, 2005 and
2006 we expect that we will incur an additional significant non-
cash expense in connection with the issuance of shares and
options under our Management Equity Incentive Plan, which
provides for the issuance of up to 1,472,051 shares of our common
stock. See Item 12 "Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters -
Management Equity Incentive Plan," below. The issuance of these
shares, or options to purchase these shares, will result in a
charge to our earnings based on the value of our common stock at
the time of issue and the valuation of options at the time of
their award and will be recorded over the vesting period in
proportion to the quantities vested. The value of our common
stock at the time of issue and the valuation of options at the
time of their award will be added to additional paid-in capital
with the result that there will not be a net reduction to
shareholders' equity as a result of the issuances.

     REVENUES  Revenue totaled $47 thousand during the year ended
December 31, 2004 compared to $3.2 million the preceding year.
The $3.2 million in 2003 includes $0.3 million attributable to
Cadiz with the remainder attributable to Sun World for the period
ending January 30, 2003. The Cadiz decrease from $0.3 million to
$47 thousand is primarily due to discontinuation of the
management fee and other fees payable to Cadiz by Sun World as of
January 30, 2003 due to Sun World's Chapter 11 filing. The
revenue during the year ended December 31, 2004 was derived
primarily from the lease of farming property to a third party. No
revenue was derived from the lease to Sun World during the year
ended December 31, 2004 as such revenue was contingent on
profitability of the harvest, which profitability was not
achieved, under the terms of the lease.

     GENERAL AND ADMINISTRATIVE EXPENSES.  General and
administrative expenses during the year ended December 31, 2004
totaled $3.1 million compared to $5.2 million for the year ended
December 31, 2003.  Excluding Sun World, Cadiz general

                            Page 15

and administrative expenses during the year ended December 31, 2003
were $4.7 million. The decrease in Cadiz' general and administrative
expenses in 2004 is primarily due to reductions in salaries which
included a contract termination payment to the Company's CEO (see
Item 11) of $0.8 million in 2003 and increased professional fees in
2003 related to transactions with our secured lender, our equity
raising activities, and the Sun World bankruptcy.

     WRITE OFF OF INVESTMENT IN SUBSIDIARY  On January 30, 2003,
Sun World and certain of its subsidiaries filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code. As
of that date, due to the Company's loss of control over the
operations of Sun World, the financial statements of Sun World
are no longer consolidated with those of Cadiz, but instead Cadiz
accounts for its investment in Sun World on the cost basis of
accounting. As a result of changing to the cost basis of
accounting and because the Company does not believe it will be
able to recover its investment, the Company wrote off its
investment in Sun World of $195,000 in 2003. There was no similar
expense in 2004.

     REORGANIZATION COSTS  Reorganization costs totaled $0.7
million during 2003.  These costs were incurred by Sun World
during January 2003 related to the Chapter 11 bankruptcy filing.
No such costs occurred during 2004.

     WRITE OFF OF PERMANENT CROPS AND DEVELOPING CROPS  In the
last quarter of the year ended December 31, 2004, the long-
standing lease for a portion of our Cadiz Valley farming property
to Sun World expired and the crops have not been leased to
another party.  The remaining property, which is leased to an
independent third party, on a year to year basis, does not
generate a significant amount of revenue. Based on the
uncertainty as to possible recovery of the carrying value of the
permanent crops and developing crops on this property, during the
last quarter of 2004 we wrote off our investment in permanent and
developing crops at this property in the amount of $3.4 million,
net of depreciation.  See Note 2 to our Consolidated Financial
Statements.  No such write offs occurred during 2003.

     DEPRECIATION AND AMORTIZATION  Depreciation and amortization
for Cadiz totaled $0.5 million for the year ended December 31,
2004 compared to $0.7 million for the 2003 year. The reduction in
depreciation and amortization is due to certain assets becoming
fully depreciated during 2004 and $0.2 million attributable to
Sun World included in the period ended January 30, 2003 which did
not exist in 2004.

     INTEREST EXPENSE, NET.  Net interest expense totaled $9.1
million during the year ended December 31, 2004, compared to $4.9
million during 2003, of which $3.6 million was attributable to
Cadiz excluding Sun World. The following table summarizes the
components of Cadiz net interest expense and that of Sun World
for the two periods (in thousands):

                                                YEAR ENDED
                                               DECEMBER 31,
                                               ------------
                                              2004      2003
                                              ----      ----

   Cadiz
     Interest on outstanding debt          $  3,970  $  3,053
     Amortization of financing costs          3,767       641
     Write off of unamortized
      financing costs                         1,369         -
     Interest income                            (42)      (58)
   Sun World interest expense                     -     1,269
                                           --------  --------

                                           $  9,064   $ 4,905
                                           ========  ========

                            Page 16

     Financing costs, which include legal fees, warrant costs and
preferred stock, are amortized over the life of the ING debt
agreement. In December 2003 we entered into an agreement with ING
which extended the maturity date of our loan, which had a prior
maturity date of January 31, 2003. As a result there was little
amortization during 2003 as the deferred financing costs were
fully amortized at the January 2003 maturity date. Following
several months of discussion with ING, our loan was amended in
December 2003 and the financing costs associated with the debt
amendment of $5.3 million (consisting of fees of $0.3 million and
preferred stock valued at $5.0 million) were being amortized
through the maturity date of March 31, 2005. On November 30, 2004
we entered into another amendment of the loan agreement, under
which the term of  the loan was extended, the interest rate was
reduced, and a portion of the principal balance was repaid
necessitating the write off of the remaining $1.4 million in
unamortized financing costs associated with the loan under the
terms applicable as of December 2003.

(B)  YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED
     DECEMBER 31, 2002
     ---------------------------------------------------

     The Company had revenues of $3.2 million for the year ended
December 31, 2003 and $114.3 million for the year ended December
31, 2002. Cadiz, excluding Sun World, had revenues of $0.3
million for the year ended December 31, 2003 and $2.1 million for
the year ended December 31, 2002.  The Company had a net loss of
$11.5 million for the year ended December 31, 2003 compared to
$22.2 million for the year ended December 31, 2002. Cadiz' net
loss, excluding the loss from Sun World, totaled $9.2 million for
the year ended December 31, 2003 compared to $12.7 million for
the year ended December 31, 2002, with the decrease for the 2003
period resulting from decreases in general and administrative and
interest expense offset by a reduction in revenue and no cost
incurred for the removal of underperforming crops in 2003.

     REVENUES  Our revenue totaled $3.2 million during the year
ended December 31, 2003 compared to $114.2 million the preceding
year. Cadiz' standalone revenue, excluding the revenue of Sun
World, totaled $0.3 million during the year ended December 31,
2003 compared to $2.1 million the preceding year. The decrease is
primarily due to discontinuation of the management fee payable by
Sun World as of January 30, 2003 due to Sun World's Chapter 11
filing.

     GENERAL AND ADMINISTRATIVE EXPENSES.  General and
administrative expenses during the year ended December 31, 2003
totaled $5.2 million compared to $17.0 million for the year ended
December 31, 2002. Cadiz' general and administrative expenses,
excluding that of Sun World, during the year ended December 31,
2003 totaled $4.7 million compared to $7.5 million for the year
ended December 31, 2002.  The decrease in general and
administrative expenses is primarily due to reductions in
salaries and other costs associated with a reduction in staffing,
elimination of foreign water programs, and reduced facility and
insurance costs, partly offset by increased professional fees
related to transactions with our secured lender, our equity
raising activities, and the Sun World bankruptcy.

     WRITE OFF OF INVESTMENT IN SUBSIDIARY  On January 30, 2003,
Sun World and certain of its subsidiaries filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code. As
of that date, due to the Company's loss of control over the
operations of Sun World, the financial statements of Sun World
are no longer consolidated with those of Cadiz, but instead Cadiz
accounts for its investment in Sun World on the cost basis of
accounting. As a result of changing to the cost basis of
accounting and because the Company does not believe it will be
able to recover its investment, in 2003 the Company wrote off its
investment in Sun World of $195,000.

                            Page 17

     REORGANIZATION COSTS  Reorganization costs totaled $0.7
million during 2003.  These costs were incurred by Sun World
during January 2003 related to the Chapter 11 bankruptcy filing.
No such costs occurred during 2002.

     REMOVAL OF UNDERPERFORMING CROPS  Removal of underperforming
crops totaled $4.5 million for the year ended December 31, 2002.
During 2002, Cadiz removed 200 acres of underperforming table
grapes and citrus at the Cadiz Ranch resulting in a charge of
$1.0 million in connection with the removal of these crops. The
remaining $3.5 million related to Sun World.  No such removals
occurred during 2003.

     DEPRECIATION AND AMORTIZATION  Depreciation and amortization
totaled $0.7 million for the year ended December 31, 2003
compared to $7.5 million for the 2002 year. Depreciation and
amortization for Cadiz, excluding that of Sun World, totaled $0.6
million for the year ended December 31, 2003 compared to $1.0
million for the 2002 year. The reduction in depreciation and
amortization is primarily due to the removal of underperforming
crops in 2002 and certain assets becoming fully depreciated
during the past year.

     INTEREST EXPENSE, NET.  Net interest expense totaled $4.9
million during the year ended December 31, 2003, which included
Sun World expense for the period to January 30, 2003, compared to
$21.2 million during the same period in 2002, which included Sun
World expense for the full year. Net interest expense for Cadiz,
excluding that of Sun World, totaled $3.6 million during the year
ended December 31, 2003, compared to $5.1 million during the same
period in 2002.  The following table summarizes the components of
Cadiz' net interest expense and that of Sun World for the two
periods (in thousands):

                                               YEAR ENDED
                                               DECEMBER 31,
                                               ------------
                                              2003      2002
                                              ----      ----
      Cadiz
        Interest on outstanding debt       $  3,053  $  3,101
        Amortization of financing costs         641     2,712
        Interest income                         (58)     (705)
      Sun World interest expense              1,269    16,064
                                           --------  --------

                                           $  4,905  $ 21,172
                                           ========  ========

     Financing costs, which include legal fees and warrant costs,
are amortized over the life of the debt agreement. In December
2003 we entered into an agreement with ING which extended the
maturity date of our loan which had a prior maturity date of
January 31, 2003.  The financing costs associated with the December
2003 debt amendment of $5.3 million (consisting of fees of $0.3
million and preferred stock valued at $5.0 million) were being
amortized through the maturity date of March 31, 2005 starting in
December 2003.  The deferred financing costs of the loan that
matured in January 2003 were fully amortized as at the January
2003 maturity date.  As a result there was little amortization
during 2003. The lower interest income was the result of no
interest accruing on the intercompany loans to Sun World
following the Chapter 11 petition.

                            Page 18


LIQUIDITY AND CAPITAL RESOURCES

(A)  CURRENT FINANCING ARRANGEMENTS
     ------------------------------

     CADIZ OBLIGATIONS.  As we have not received significant
revenues from our water resource activity to date, we have been
required to obtain financing to bridge the gap between the time
water resource development expenses are incurred and the time
that revenue will commence. Historically, we have addressed these
needs primarily through secured debt financing arrangements with
our lenders, private equity placements and the exercise of
outstanding stock options.

     Subsequent to the vote of Metropolitan's Board in October
2002 to not proceed with the Cadiz Program and Sun World's
January 2003 bankruptcy filing, we have worked with our primary
secured lender, ING Capital LLC, to structure our debt in a way
which would allow us to continue our development of the Cadiz
Program.  We believe that we have accomplished this goal with a
series of agreements with ING, in the most recent of which
concluded in November 2004.

     In November 2004 we entered into our most recent series of
agreements with ING which provided for:

  *  the repayment in full of our senior term loan facility with
     ING and the reduction to $25 million of the outstanding principal
     balance under our existing revolving credit facility; and

  *  amendments to the terms and conditions of our revolving
     credit facility with ING in order to:

          (i)  extend the maturity date of the debt until March
               31, 2010, conditioned upon a further principal
               reduction of $10 million on or before March 31,
               2008, and

          (ii) reduce the interest rate through March 31, 2008 on
               the new outstanding balance to 4% cash plus 4% PIK
               (increasing to 4% cash plus 6% PIK for interest
               periods commencing on and after April 1, 2008).

     Also in November 2004 ING agreed to convert 99,000 shares of
the Company's Series F Preferred Stock (representing 99% of the
outstanding shares of Series F Preferred Stock) into 1,711,665
shares of the Company's common stock.  We had issued 100,000
shares of Series F preferred stock to ING as part of our
agreements in December 2003.

     Concurrently with this conversion, the terms and conditions
of the remaining outstanding Series F Preferred Stock were
amended to fix the conversion ratio at its original conversion
ratio of 17.28955 shares of common stock for each share of Series
F Preferred Stock converted.  In addition to its conversation
rights, as the holder of this preferred stock ING holds:

     -  The right to appoint two members of our Board of Directors
        as long as both (a) the outstanding principal balance of ING's
        loan is at least $15 million, and (b) the Series F Preferred
        Stock holdings of ING (including both the common stock into which
        outstanding Series F Preferred Stock is then convertible and any
        common stock received by ING upon previous

                            Page 19

        conversions of Series F Preferred Stock which remains held by,
        and has not been disposed of, by ING) represent at least 5%
        of our common stock;
     -  The right to approve the authorization or issuance of any
        other class or shares of our preferred stock;
     -  Anti-dilution protection;
     -  Pre-emptive rights;
     -  Registration rights; and
     -  Dividend, liquidation and voting rights shared on an as-
        converted basis with common stock.

     Pursuant to our loan arrangements with ING, ING also has the
right to appoint an independent manager to the Board of Managers
of Cadiz Real Estate LLC, a Delaware limited liability company
("Cadiz Real Estate"), in which we hold 100% of the economic
interests.  In December 2003 we transferred substantially all of
our assets (with the exception of our office sublease, certain
office furniture and any Sun World related assets) to Cadiz Real
Estate.  Cadiz Real Estate is a co-obligor with us on our credit
facilities with ING, and the properties now held of record by
Cadiz Real Estate secure our obligations under these facilities.
We have entered into a management agreement with Cadiz Real
Estate pursuant to which we manage the assets now held by Cadiz
Real Estate, subject to the requirements of the Operating
Agreement of Cadiz Real Estate.  The Operating Agreement of Cadiz
Real Estate provides for a Board of Managers consisting of two
managers appointed by us and one independent manager named by
ING.  As long as our obligations to ING are outstanding, Cadiz
Real Estate may not institute bankruptcy proceedings without the
unanimous consent of this Board of Managers (including the
independent manager).

     The debt covenants associated with our ING credit facility
were negotiated by the parties with a view towards our operating
and financial condition as it existed at the time our current
revised agreements were entered into.  Given current
circumstances, we do not consider it likely that we will be in
material breach of such covenants.

     As we continue to actively pursue our business strategy,
additional financing specifically in connection with our water
programs will be required.  See "Outlook", below.  As the parties
have anticipated this need, the covenants in the credit facility
which would otherwise prohibit our incurrence of additional debt
(or our use of our assets as security for such debt) contain an
exception for debt and liens incurred in order to finance the
acquisition, construction or improvement of any assets (up to a
maximum of $135 million at any one time outstanding).  The
covenants in the credit facility do not prohibit our use of
equity financing, but do provide that 35% of the proceeds of such
issuance be applied as a prepayment against such facility.  We do
not expect these covenants to materially limit our ability to
undertake debt or equity financing in order to finance our water
development activities.

     At December 31, 2004, we have no outstanding credit
facilities or preferred stock other than that held by ING as
described above.

SUN WORLD OBLIGATIONS
---------------------

   Sun World has outstanding $115 million of First Mortgage
Notes. The First Mortgage Notes were originally to mature on
April 15, 2004. The First Mortgage Notes went into default as a
consequence of the Sun World bankruptcy filing. In February 2005,
Sun World completed the sale of substantially all of its assets
for cash and credit consideration of $127.8 million, plus

                            Page 20

payment and assumption of certain liabilities totaling an estimated
$14 million, including the trade claims, which approximates net book
value of the acquired assets as of December 31, 2004.  Sun World
plans to file an amended Plan to distribute the remaining
consideration left in Sun World (estimated at approximately $50
million after interim distributions/credits to the holders of
First Mortgage Notes of approximately $78 million upon closing as
authorized by the Court) and the distribution will be sufficient
to enable Sun World to repay all holders of the First Mortgage
Notes.

     We have obtained waivers and/or releases with respect to our
previously issued guarantees of the First Mortgage Notes from all
the holders of outstanding First Mortgage Notes.  Further, as
part of a December 2003 global settlement, we have settled all of
our claims and obligations with Sun World.  Although we continue
to be the record owner of Sun World's stock, with the recently
completed sale by Sun World of all of its assets, Sun World does
not conduct any business operations.  We therefore have no
further obligations or working capital needs with respect to Sun
World.

     CASH USED FOR OPERATING ACTIVITIES.  Cash used for operating
activities totaled $7.6 million for the year ended December 31,
2004, as compared to cash used for operating activities of $6.6
million for the year ended December 31, 2003. The above amounts
are not comparable because of the deconsolidation of Sun World in
January 2003.

      Cash used by Cadiz (exclusive of Sun World) for operating
activities for the year ended December 31, 2004 totaled $7.6
million compared to $4.9 million for the previous year. The
increase in cash used for operating activities was due to an
increase in net loss by $4.5 million in the year ended December
31, 2004 as compared to the same period in 2003. This was offset
by an increase in non-cash expenses, the major items being write-
off of permanent crops of $3.4 million in the year ended December
31, 2004 compared to $2.5 million loss from subsidiary in January
of the preceding year.

      CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES.  Cash
provided by investing activities totaled $2.1 million for the
year ended December 31, 2004, as compared to $3.5 million used
for investing activities during the same period in 2003.

      Cash provided by investing activities for the year ended
December 31, 2004 was almost entirely due to the reduction of
restricted cash that had been placed in a restricted bank account
to pay for interest on the $35 million term loan facility with
ING. The use of a restricted bank account for this purpose had
been a requirement under our pre-November 2004 arrangements with
ING. The 2003 expenditures of $2.0 million (exclusive of Sun
World) were primarily the placing of the $2.1 million in the
restricted bank account.

      CASH PROVIDED BY FINANCING ACTIVITIES.  Cash provided by
financing activities totaled $11.1 million for the year ended
December 31, 2004 consisting primarily of $21.3 million in net
proceeds from the issuance of capital stock by Cadiz, offset by
$10.0 million in repayment of term loan borrowings. For the same
period in 2003, cash provided by financing activities totaled
$10.2 million consisting primarily of $10.3 million from the
issuance of capital stock by Cadiz.

(B)  OUTLOOK
     -------

     SHORT TERM OUTLOOK.  The proceeds of our 2003 and 2004
private placements have provided us with sufficient cash to meet
our expected working capital needs for current operations until
the Company will need to raise additional capital in order to
fund the $10 million

                            Page 21

repayment of its borrowing from ING required to be made by March
2008 in order to obtain a further two year extension of the maturity
date of the ING loan.  See "Long Term Outlook", below. Approximately
$12.7 million of the proceeds of our November 2004 private placement
were used to reduce the principal balance, which included approximately
$2.7 million in interest payable in kind ("PIK"), owed to ING  under
our ING credit facilities to $25 million.  40 Units in the 2004
private placement were issued to ING for $2.4 million of prepaid
interest under the Company's $25 million borrowing from the lender.
The remainder of the proceeds from the placements will be used to
meet our ongoing working capital needs.

    LONG TERM OUTLOOK.  In the longer term, the current maturity
date of our loan with ING is March 2008, although we may obtain a
further extension of this loan by making a $10 million repayment.
Otherwise, our working capital needs will be determined based
upon the specific measures we pursue in the development of our
water resources.   We will evaluate the amount of cash needed,
and the manner in which such cash will be raised, on an ongoing
basis. We may meet any such future cash requirements through a
variety of means to be determined at the appropriate time. Such
means may include equity or debt placements, or the sale or other
disposition of assets.  Equity placements would be undertaken
only to the extent necessary so as to minimize the dilutive
effect of any such placements upon our existing stockholders.

(C)  CERTAIN TRENDS AND UNCERTAINTIES
     --------------------------------

      In connection with the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we are filing
cautionary statements identifying important risk factors that
could cause our actual results to differ materially from those
projected in our forward-looking statements made by or on our
behalf.

      We wish to caution readers that these factors, among
others, could cause our actual results to differ materially from
those expressed in any projected, estimated or forward-looking
statements relating to us.  The following factors should be
considered in conjunction with any discussion of operations or
results by us or our representatives, including any forward-
looking discussion, as well as comments contained in press
releases, presentations to securities analysts or investors, or
other communications to us.

     In making these statements, we are not undertaking to
address or update each factor in future filings or communications
regarding our business or results, and are not undertaking to
address how any of these factors may have caused changes to
discussions or information contained in previous filings or
communications.  In addition, certain of these matters may have
affected our past results and may affect future results.

     OUR REVENUES ARE DEPENDENT UPON THE SUCCESS OF OUR WATER
DEVELOPMENT PROJECTS.  We may never generate revenues or become
profitable unless we are able to successfully implement our water
development programs.  At present, we do not know the terms, if
any, upon which we may be able to proceed with the Cadiz Program,
or of any alternative means which we may be able to use in order
to implement our water development programs.  Regardless of the
form of our water development programs, the circumstances under
which transfers or storage of water can be made and the
profitability of any transfers or storage are subject to
significant uncertainties, including hydrologic risks of variable
water supplies, risks presented by allocations of water under
existing and prospective priorities, and risks of adverse changes
to or interpretations of U.S. federal, state and local laws,
regulations and policies.  Additional risks attendant to such
programs include our ability to obtain all necessary regulatory
approvals and permits, possible litigation by environmental or
other groups, unforeseen technical difficulties, and general
market conditions for water supplies.

                            Page 22

     OUR FAILURE TO MAKE TIMELY PAYMENTS OF PRINCIPAL AND
INTEREST ON OUR INDEBTEDNESS MAY RESULT IN A FORECLOSURE ON OUR
ASSETS.  As of December 31, 2004, we had indebtedness outstanding
to our senior secured lender of approximately $25 million.  Our
assets have been put up as collateral to secure the payment of
this debt.  If we cannot generate sufficient cash flow to make
timely payments of principal and interest on this indebtedness,
or if we otherwise fail to comply with the terms of agreements
governing our indebtedness, we may default on our obligations.
If we default on our obligations, our lenders may sell off the
assets that we have put up as collateral.  This, in turn, may
result in a cessation or sale of our operations.

     THE ISSUANCE OF SHARES UNDER OUR MANAGEMENT EQUITY INCENTIVE
PLAN WILL IMPACT EARNINGS. Under applicable accounting rules, the
issuance of shares and options under our Management Incentive
Equity Plan will result in a charge to earnings based on the
value of our common stock at the time of issue and the valuation
of options at the time of their award and will be recorded over
the vesting period in proportion to the quantities vested. Our
Management Equity Incentive Plan provides for the issuance of up
to 1,472,051 shares of common stock. We expect that during the
year ended December 31, 2005 we will issue stock or options to
purchase stock representing most or all of the shares authorized
for issuance under this Management Equity Incentive Plan. Based
on the trading price at February 28, 2004 such issuances will
result in significant charges to our earnings for the years
ending December 31, 2005 and 2006. If all shares are issued under
this plan in the year ending December 31, 2005, the cost of
approximately 83% of shares will be an expense during 2005.

     OUR STOCK IS NOT TRADED ON A NATIONAL SECURITIES EXCHANGE.
Effective March 27, 2003, our common stock was delisted from
trading on the Nasdaq National Market. While we have reapplied
for a Nasdaq listing, certain requirements for such a listing,
such as minimum trading price, are not within our control, and
therefore we cannot be certain when or if Nasdaq will approve our
listing application.

     FURTHER EQUITY FINANCINGS WOULD RESULT IN THE DILUTION
OF OWNERSHIP INTERESTS OF CURRENT STOCKHOLDERS.  We may require
additional capital to finance our operations until such time as
our water development operations produce revenues. We cannot
assure you that our current lenders, or any other lenders, will
give us additional credit should we seek it.

     THE REGISTRATION FOR RESALE OF COMMON STOCK PURSUANT TO
EXISTING REGISTRATION RIGHTS AGREEMENTS WILL INCREASE THE NUMBER
OF OUTSTANDING SHARES OF OUR COMMON STOCK ELIGIBLE FOR RESALE.
The sale, or availability for sale, of these shares could cause
decreases in the market price of our common stock, particularly
in the event that a large number of shares were sold in the
public market over a short period of time.  Similarly, the
perception that additional shares of our common stock could be
sold in the public market in the future, could cause a reduction
in the trading price of our stock.

     WE ARE RESTRICTED BY CONTRACT FROM PAYING DIVIDENDS AND
WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.  Any
return on investment on our common stock will depend primarily
upon the appreciation in the price of our common stock.  To date,
we have never paid a cash dividend on our common stock.  The loan
documents governing our credit facilities with ING prohibit the
payment of dividends while such facilities are outstanding.  As
we have a history of operating losses, we have been unable to
date to pay dividends.  Even if we post a profit in future years,
we currently intend to retain all future earnings for the operation
of our business.  As a result, we do not anticipate that we will
declare any dividends in the foreseeable future.

                            Page 23

(D)  CRITICAL ACCOUNTING POLICIES
     ----------------------------

     As discussed in Note 2 to the Consolidated Financial
Statements of Cadiz, the preparation of financial statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that affect amounts reported in the accompanying
consolidated financial statements and related footnotes. In
preparing these financial statements, management has made its
best estimates and judgments of certain amounts included in the
financial statements based on all relevant information available
at the time and giving due to consideration to materiality. We do
not believe there is a great likelihood that materially different
amounts would be reported related to the accounting policies
described below. However, application of these policies involves
the exercise of judgment and use of assumptions as to future
uncertainties and, as a result, actual results could differ from
these estimates. Management has concluded that the following
critical accounting policies described below affect the most
significant judgments and estimates used in the preparation of
the consolidated financial statements.

     (1) PRINCIPLES OF CONSOLIDATION The  Consolidated
Financial Statements have been prepared by Cadiz Inc., sometimes
referred to as "Cadiz" or "the Company". On January 30, 2003, Sun
World  filed voluntary petitions under Chapter 11 of  the
Bankruptcy Code. Since the filing date, Sun World has operated
its business and managed its affairs as debtor and debtor in
possession. As of that date due to the Company's loss of control
over the operations of Sun World, the financial statements of Sun
World are no longer consolidated with those of Cadiz, but
instead, Cadiz is accounting for its investment in Sun World on
the cost basis of accounting. As a result, the Company wrote off
its net investment in Sun World of $195 thousand at the Chapter
11 filing date because it did not anticipate being able to
recover its investment. The foregoing Consolidated Financial
Statements include the accounts of the Company and, until January
30, 2003, those of its then wholly-owned subsidiary, Sun World
International, Inc. and its subsidiaries collectively referred to
as "Sun World", and contain all adjustments, consisting only of
normal  recurring adjustments, which the Company  considers
necessary for a fair presentation. Certain reclassifications
have been made to the prior period to conform to the current
period presentation.

     (2)  Intangible and Other Long-Lived Assets.  Property,
plant and equipment, intangible and certain other long-lived
assets are amortized over their useful lives. Useful lives are
based on management's estimates of the period that the assets
will generate revenue. Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. At
Sun World, management regularly reviews crop portfolios in an
attempt to identify crops that are underperforming generally at
the conclusion of each growing season. As a result of these
reviews, management determines which crops will be removed
immediately or at the conclusion of the next growing season. As
such, appropriate writedowns and accruals for estimated removal
costs are made and where appropriate, remaining useful lives are
shortened to correspond to the estimated period that the assets
are expected to generate future revenues.  As a result of the
actions taken by Metropolitan in the fourth quarter of 2002 as
described in Note 1, the Company, with the assistance of a
valuation firm, evaluated the carrying value of its water program
and determined that the asset was not impaired and that the costs
expect to be recovered through sale or operation of the project.

     During the fourth quarter of the year ended December 31,
2004, the long-standing lease to Sun World for a portion of the
permanent and developing crops at the Cadiz Valley property
terminated and the crops have not been leased to any other party.
The lease to an independent

                            Page 24

third party for the remainder of the crops is on a year to year
basis and does not generate a significant amount of revenue. Based
on the uncertainty as to possible recovery of the carrying value
of the permanent crops and developing crops the Company recorded
a charge of $3.4 million to write off the capitalized costs related
to these crops which is shown under the heading "Write-off of
permanent and developing crops" on the Consolidated Statement of
Operations.

     (3) GOODWILL. 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 until the adoption of
Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 142, ("SFAS No. 142")
"Goodwill and Other Intangible Assets" on January 1, 2002.
Goodwill is tested for impairment annually in the first quarter,
or if events occur which require an impairment analysis be
performed.  As a result of the actions taken by Metropolitan in
the fourth quarter of 2002 as described in Note 1, the Company,
with the assistance of a valuation firm, performed an impairment
test of its goodwill and determined that its goodwill was not
impaired.  In addition, in the first quarter of 2004 and 2003,
the Company, performed its annual impairment test of goodwill and
determined its goodwill was not impaired.

     (4)  DEFERRED TAX ASSETS AND VALUATION ALLOWANCES.  To date,
we have had a history of net operating losses as we have not
generated significant revenue from our water development programs
and Sun World had experienced losses from its agricultural
operations. As such, we have generated significant deferred tax
assets, including large net operating loss carry forwards for
federal and state income taxes for which we have a full valuation
allowance. Management is currently working on initiatives at
Cadiz that are designed to generate future taxable income,
although there can be no guarantee that this will occur. As
taxable income is generated, some portion or all of the valuation
allowance will be reversed and an increase in net income would
consequently be reported in future years.

(E)  NEW ACCOUNTING PRONOUNCEMENTS
     -----------------------------

     In December 2004, the Financial Accounting Standards Board
issued SFAS no. 123(R) (revised 2004), "Share-Based Payment"
which amends SFAS Statement 123 and will be effective for public
companies for interim periods or annual periods beginning after
June 15, 2005. The new standard will require us to recognize
compensation costs in our financial statements in an amount equal
to the fair value of share-based payments granted to employees
and directors. We are currently evaluating how we will adopt the
standard and evaluating the effect that the adoption of SFAS
123(R) will have on our financial position and results of
operations.

(F)  OFF BALANCE SHEET ARRANGEMENTS
     ------------------------------

     Cadiz does not have any off balance sheet arrangements at
this time other than the guarantee of Sun World's first mortgage
notes. See "Liquidity and Capital Resources - Sun World
Obligations" above.

                            Page 25

(G)  CERTAIN KNOWN CONTRACTUAL OBLIGATIONS
     -------------------------------------

                               PAYMENTS DUE BY PERIOD
CONTRACTUAL             LESS THAN
OBLIGATIONS    TOTAL      1 YEAR   1-3 YEARS   4-5 YEARS   AFTER 5 YEARS
-----------    -----    ---------  ---------   ---------   -------------
Long term debt
 obligations  $ 25,000  $      -   $      -    $ 10,000      $ 15,000

Operating
 leases            150       124         26           -             -
              --------  --------   --------    --------      --------
              $ 25,150  $    124   $     26    $ 10,000      $ 15,000
              ========  ========   ========    ========      ========

     Cadiz long-term debt included in the table above reflects
the most recent arrangements with ING which were concluded in
November 2004 as described above in Item 7, Managements
Discussion and Analysis of Financial Condition and Results of
Operation; Liquidity and Capital Resources; Cadiz Obligations.


ITEM  7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
            RISK

     We are exposed to market risk from changes in interest rates
on long-term debt obligations that impact the fair value of these
obligations. Our policy is to manage interest rates
fair values by year of scheduled maturities to evaluate the
expected cash flows and sensitivity to interest rate changes (in
thousands of dollars). Circumstances could arise which may cause
interest rates and the timing and amount of actual cash flows to
differ materially from the schedule below:

                                       LONG-TERM DEBT
                    -------------------------------------------------------
                    FIXED RATE     AVERAGE     VARIABLE RATE     AVERAGE
EXPECTED MATURITY   MATURITIES  INTEREST RATE    MATURITIES   INTEREST RATE
-----------------   ----------  -------------  -------------  -------------
      2008           $ 10,000        8.0%        $      -       $      -
                                                 ========       ========
      2010           $ 15,000        8.8%        $      -       $      -
                     ========        ====        ========       ========

     Cadiz long-term debt included in the table above reflects
the debt restructuring which occurred in December 2004 as
described above in Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations; Liquidity and
Capital Resources; Cadiz Obligations.

     Cadiz has guaranteed the First Mortgage Notes issued by Sun
World as described above in Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations;
Liquidity and Capital Resources; Sun World Obligations.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The information required by this item is submitted in
response to Part IV below. See the Index to Consolidated
Financial Statements.

                            Page 26

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL
          DISCLOSURE

       Not applicable.


ITEM 9A.  CONTROLS AND PROCEDURES

     We carried out an evaluation, under the supervision and with
the participation of our management, including our Chairman,
Chief Executive Officer and Chief Financial Officer (Principal
Executive and Financial Officer), of the effectiveness of the
design and operation of our disclosure controls and procedures as
of December 31, 2004. As of the date of that evaluation, our
Chairman, Chief Executive Officer and Chief Financial Officer
concluded that these disclosure controls and procedures are
effective in timely alerting him to material information relating
to Cadiz (including our consolidated subsidiaries) required to be
included in our periodic Securities and Exchange Commission
filings. There was no significant change in our internal control
over financial reporting that occurred during the most recent
fiscal quarter that materially affected, or is reasonably likely
to affect, our internal control over financial reporting, and no
corrective actions with regard to significant deficiencies or
weaknesses.


ITEM 9B.  OTHER INFORMATION

     COMPENSATORY PLANS OR ARRANGEMENTS

     On December 7, 2004 our Board adopted resolutions
supplementing our Management Equity Incentive Plan, which was
authorized in December 2003.  These resolutions provided for the
general vesting and other conditions of issuance for the 754,678
shares characterized as the "Subsequent Allocation Shares" under
the Plan.  See Item 12. "Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters -
Management Equity Incentive Plan".

     Also on December 7, 2004, our Compensation Committee
adopted, and our Board ratified, the Cadiz Inc. 2004 Management
Bonus Plan which authorized the issuance of 10,000 shares of our
common stock to our Chairman and Chief Executive Officer, Keith
Brackpool, as a performance bonus.  Such shares have not yet been
issued. See Item 12. "Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters -
Management Equity Incentive Plan".

                            Page 27

                           PART III


ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Name                Age       Position with Cadiz
     ----                ---       -------------------

 Keith Brackpool          47       Chairman of the Board,
                                   President, Chief Executive and
                                   Financial Officer

 Murray H. Hutchison      66       Director

 Timothy J. Shaheen       45       Director

 Geoffrey Arens           40       Director

 Gregory Ritchie          41       Director

 Richard E. Stoddard      54       Chairman of the Board of
                                   Managers and CEO of Cadiz Real
                                   Estate LLC

     Keith Brackpool is a founder of Cadiz, has served as a
member of Cadiz' Board of Directors since September 1986, and has
served as President and Chief Executive Officer of Cadiz since
December 1991. Mr. Brackpool assumed the role of Chairman of the
Board of Cadiz on May 14, 2001, and the role of Chief Financial
Officer on May 19, 2003. Mr. Brackpool has also been a principal
of 1334 Partners L.P., a partnership that owns commercial real
estate from 1989 to present.

     Murray H. Hutchison was appointed a director of Cadiz in
June 1997. He is also a member of the Board of Managers (an LLC's
functional equivalent of a Board of Directors) of Cadiz'
subsidiary, Cadiz Real Estate LLC. In his capacity as a manager
of the LLC he performs essentially the same duties on behalf of
the LLC as he would as an outside director for a corporation.
Since his retirement in 1996 from International Technology
Corporation, a publicly traded diversified environmental
management company, Mr. Hutchison has been self-employed with his
business activities involving primarily the management of an
investment portfolio. From 1976 to 1994, Mr. Hutchison served as
Chief Executive Officer and Chairman of International Technology.
Mr. Hutchison currently serves as a director of Jack in the Box,
Inc., a publicly traded fast food restaurant chain. Additionally,
Mr. Hutchison serves as Chairman of the Huntington Hotel
Corporation, a privately owned hotel and office building, and as
a director of several other non-publicly traded U.S. companies.

     Timothy J. Shaheen was appointed a director of Cadiz in
March 1999. Since September 1996 Mr. Shaheen has served as the
President, Chief Executive Officer and a director of Sun World.
Concurrently with the February 2005 sale by Sun World of
substantially all of its assets, Mr. Shaheen agreed to remain
with Sun World for a 60 day transition period in order to
facilitate the transfer of Sun World's operations to the buyer of
these assets.  At the conclusion of this transition period Mr.
Shaheen's relationship with Sun World shall end.. Prior to
joining Sun World, Mr. Shaheen served as a senior executive with
Albert Fisher North America, a publicly traded domestic and
international produce company from 1989 to 1996. While with
Albert Fisher, Mr. Shaheen also served as director of its
Canadian produce operations and as a director of Fresh Western
Marketing, one of the largest growers and shippers of fresh
vegetables in the Salinas Valley of California. Prior to his
employment with Albert Fisher, Mr.

                            Page 28

Shaheen has seven years of experience with the accounting firm of
Ernst & Young LLP. Mr. Shaheen is a certified public accountant.
As described more fully in "Item 1 Description of Business - General
Development of Business" above, Sun World and its domestic
subsidiaries filed for bankruptcy on January 30, 2003.

     Geoffrey Arens was appointed a director of Cadiz on January
30, 2004 as a nominee of ING pursuant to the rights of ING as
holder of Cadiz' Series F preferred stock. Mr. Arens has been
with ING since 1995 and is the co-Head of ING's Strategic Trading
Platform Americas group and as such is responsible for that
group's global proprietary investing business. He is also CEO of
ING Capital Advisors, LLC, a registered investment advisor
specializing in the management of leveraged loan assets for large
institutional clients. In addition to his Board duties at Cadiz,
Mr. Arens also serves on the Board of Directors of ING Capital
Management, Ltd., and California Coastal Communities, Inc.

     Gregory Ritchie was appointed a director of Cadiz on March
25, 2004 as a nominee of ING pursuant to the rights of ING as
holder of Cadiz' Series F preferred stock. Mr. Ritchie has been
with ING since 1995 and is a Managing Director and the co-head of
ING's Strategic Trading Platform and as such is responsible for
the group's global proprietary investing business. He is also
head of the Strategic Trading Platform's Equities team.

     Richard E. Stoddard serves as Chairman and CEO of the Board
of Managers of Cadiz Real Estate LLC, the subsidiary of Cadiz,
directing the development of the Cadiz Groundwater Storage
Program and the other Cadiz real estate assets.  In addition,
since 1988, Mr. Stoddard has served as the Chairman and CEO of
Kaiser Ventures LLC, an unrelated public entity involved real
estate development and waste management projects in southern
California.  Kaiser Ventures LLC was previously involved in water
development projects in Southern California.

     The certificate of designation for our Series F preferred
stock provides that the holder(s) of the Series F preferred stock
(currently ING) have the right to elect two members of the Board
of Directors.

     Directors of Cadiz hold office until the next annual meeting
of stockholders or until their successors are elected and
qualified. There are no family relationships between any
directors or current officers of Cadiz. Officers serve at the
discretion of the Board of Directors.

     The Board of Directors has determined that Mr. Hutchison, a
member of the Company's Audit Committee, is an "audit committee
financial expert" as that term is defined in Item 401(h) of
Regulation S-K under the Securities Act. The other members of the
Audit Committee are Messrs. Arens and Ritchie. The Board has
determined that Messrs. Hutchison, Arens and Ritchie are
independent in accordance with the criteria and guidelines
established by Nasdaq.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Exchange Act requires our directors and
executive officers, and persons who beneficially own more than
10% of a registered class of our equity securities ("reporting
persons"), to file with the SEC initial reports of ownership and
reports of changes in ownership of common stock and other equity
securities of Cadiz. Reporting persons are required by the SEC
regulations to furnish Cadiz with copies of all Section 16(a)
forms they file.  To Cadiz' knowledge, based solely on a review
of the copies of reports and amendments thereto on Forms 3, 4 and
5 furnished to us by reporting persons and forms that we filed on
behalf of certain directors and officers, during, and with
respect to, Cadiz' fiscal year ended

                            Page 29

December 31, 2004, and on a review of written representations from
reporting persons to Cadiz that no other reports were required to
be filed for such fiscal year, the Form 3 filed on February 11, 2004
by ING Groep NV which reported transactions by which it became a 10%
owner on December 15, 2003 was inadvertently filed late and the Form
4 filed on January 7, 2005 for Mr. Shaheen which reported his sale on
December 27, 2004 of 3,986 shares was inadvertently filed late,
and all other Section 16(a) filing requirements applicable to
Cadiz' directors, executive officers and greater than 10%
beneficial owners during such period were satisfied in a timely
manner.

CODE OF ETHICS

     Cadiz has adopted a code of ethics that applies to all of
its employees, including its principal executive and financial
officer. A copy of the code of ethics may be found on Cadiz'
website at www.cadizinc.com.  Other information on this website
is not incorporated as part of this filing.

                            Page 30

ITEM 11.  EXECUTIVE COMPENSATION

     The tables and discussion below set forth information about
the compensation awarded to, earned by, or paid to Cadiz' chief
executive and financial officer during the years ended December
31, 2004, 2003 and 2002 and to the chief executive of Cadiz'
subsidiary, Cadiz Real Estate LLC, during the year ended December
31, 2004.

SUMMARY COMPENSATION TABLE

NAME AND               FISCAL   ANNUAL COMPENSATION(2)   OTHER LONG-TERM
PRINCIPAL POSITION     YEAR(1)    SALARY    BONUS       COMPENSATION AWARDS
 Keith Brackpool      12/31/04  $ 250,000  $240,000(3)       $      -0-
 President and Chief  12/31/03    288,461   200,000(4)         850,000(5)
  Executive and       12/31/02    500,000   233,124                 -0-
  Financial Officer
 Richard E. Stoddard  12/31/04    250,000(6)     -0-                -0-
 Chief Executive Officer
  Cadiz Real Estate LLC
 ______________________________________

   (1)The information presented in this table is for the years
      ended December 31, 2004, 2003 and 2002. The executive
      officers for whom compensation has been disclosed for the
      year ended December 31, 2004, are the only executive
      officers of Cadiz or its subsidiaries as of December 31,
      2004. Mr. Stoddard was appointed chief executive officer of
      Cadiz Real Estate LLC effective October 29, 2004. No other
      executive officer received total salary or bonus exceeding
      $100,000 during the year ended December 31, 2004.

   (2)No column for "Other Annual Compensation" has been included
      to show compensation not properly categorized as salary or
      bonus, which consisted entirely during each fiscal year of
      perquisites and other personal benefits, because the
      aggregate amounts did not exceed the lesser of either
      $50,000 or 10% of the total of annual salary and bonus
      reported for Mr. Brackpool for each fiscal year and for Mr.
      Stoddard for 2004. See "Employment Arrangements" below.

   (3)This bonus was paid to Mr. Brackpool $120,000 in cash during
      the year and $120,000 to be paid through the issue of 10,000
      shares of common stock in 2005 under the 2004 Management
      Bonus Plan. Such shares have not yet been issued.

   (4)This bonus was paid to Mr. Brackpool in February 2004 for
      services completed in the preceding calendar year.  Mr.
      Brackpool was provided the opportunity to receive the bonus
      in cash or shares of common stock valued at $2.50 per share
      and elected to receive his compensation in stock.

   (5)Mr. Brackpool received an aggregate $850,000 due to the
      termination of his previous employment agreement without
      cause and foregone salary.

   (6)Mr. Stoddard receives $20,833 monthly in accordance with a
      consulting agreement dated August 1, 2002 and revised and
      extended on January 1, 2004

COMPENSATION OF DIRECTORS

     In the fiscal year 2004, Murray H. Hutchison received cash
compensation for his services as a director of Cadiz in the
amount of $25,000.

     Messrs. Brackpool, Shaheen, Arens and Ritchie do not receive
any compensation from Cadiz for serving as directors of Cadiz.
Mr. Hutchison will receive $25,000 per year in accordance
with his agreement with Cadiz for services as director.

EMPLOYMENT ARRANGEMENTS

     Mr. Brackpool is compensated under an Agreement Regarding
Employment pursuant to which Mr. Brackpool receives base
compensation of $250,000 per year, plus certain fringe benefits
including the use of a leased automobile and life and disability
insurance benefits funded by us. While this Agreement requires
Mr. Brackpool to perform his services in a satisfactory manner,
it does not require that his services be provided on a full-time
basis.  Although the initial term of the Agreement Regarding
Employment ended September 30, 2003,

                            Page 31

Mr. Brackpool continues to provide services to us upon the terms
and conditions set forth in this Agreement.

     Mr. Stoddard is compensated in accordance with a Consulting
Agreement dated August 1, 2002, and extended on January 1, 2004,
pursuant to which he receives $20,833.00 per month and which
continues on a month to month basis until terminated by either
party. Under this agreement Mr. Stoddard serves as the Chairman
and CEO of the Board of Managers of Cadiz Real Estate LLC, the
subsidiary of Cadiz. The agreement also provides that Mr.
Stoddard will participate in the Management Equity Incentive Plan
and as a member of the key management team in any further equity
grants considered by the compensation committee of the Board of
Directors of Cadiz.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

      The Board of Directors has formed a Compensation Committee
 which is responsible for reviewing and establishing the
 compensation payable to Cadiz' executive officers, including
 the President and Chief Executive Officer. For executive
 officers other than the President and Chief Executive Officer,
 the Committee establishes compensation levels based, in part,
 upon the recommendations of the President and Chief Executive
 Officer.

     The Compensation Committee has furnished the following
 report on executive compensation:(1)

     Cadiz' executive compensation programs are designed to
     enhance operating performance and to maximize the long-
     term value of Cadiz' assets and stockholder value, by
     aligning the financial interest of the executive
     officers with those of the stockholders. Such a
     compensation program helps to achieve Cadiz' business
     and financial objectives and provide incentives needed
     to attract and retain well-qualified executives in a
     highly competitive marketplace. To this end, Cadiz has
     developed a compensation program with three primary
     components: base salary, performance-based cash awards
     and long-term incentives through stock awards.

     BASE SALARY.  In light of the nature of Cadiz' resource
     development activities, the Cadiz compensation program
     is weighted more heavily towards long-term incentives
     than is typical of other companies with similarly sized
     asset portfolios.  Accordingly, the base salary
     component of the compensation program is lower than
     that typically provided by similarly sized companies.
     No specific or set formula has been used to tie base
     salary levels to precise measurable factors; rather,
     current base salaries have been established by
     agreement between Cadiz and its key executives.

     Where applicable, the Compensation Committee may also
     consider the past performance of the officer, both in
     adjusting base salary levels and in determining
     additional incentive compensation, such as the cash
     awards and long term incentives discussed below.

     As Chairman and Chief Executive Officer of Cadiz, Mr.
     Brackpool is charged with the overall responsibility
     for the performance of Cadiz.  Mr. Brackpool is
     compensated pursuant to a written agreement effective
     as of February 1, 2003.  This agreement was entered
     into following a breach by Cadiz of Mr. Brackpool's

                            Page 32

     prior employment agreement and the effective
     termination of such prior employment agreement.  At the
     time, Cadiz and Mr. Brackpool agreed that, because of
     Mr. Brackpool's experience and background, particularly
     at a critical juncture of Cadiz' operations, Cadiz had
     and continues to have a need for Mr. Brackpool's
     services.  In light of then existing circumstances
     (i.e. Metropolitan's actions in 2002, the January 2003
     bankruptcy filing of Cadiz' Sun World subsidiary and
     the consequent uncertainty concerning Cadiz' ability to
     continue with the development of its water programs),
     the employment agreement entered into with Mr.
     Brackpool effective as of February 1, 2003 reduced his
     base salary to 50% of its previous amount but also
     allowed Mr. Brackpool to provide services to Cadiz on a
     non-exclusive basis.

     PERFORMANCE-BASED CASH AWARDS.  The Compensation
     Committee believes that incentives should be offered to
     executives which are related to improvements in
     performance that yield increased value for
     stockholders.  Although the Compensation Committee
     relies primarily upon the grant of incentive stock
     options or other stock awards to reward executive
     performance (see "Long-Term Incentives" below), under
     certain circumstances, the Compensation Committee will
     utilize performance-based cash awards from time to time
     to provide additional incentives.

     Prior to 2003, the Compensation Committee had
     established bonus compensation for Mr. Brackpool
     pursuant to criteria established in his employment
     agreement.  Mr. Brackpool's current written agreement
     does not provide specific criteria for the granting of
     bonuses.  Following Sun World's bankruptcy Cadiz has
     been able, under Mr. Brackpool's leadership, to
     successfully retain ownership of all of the assets
     relating to Cadiz' water programs and to obtain working
     capital needed to continue efforts to develop these
     water programs.  In light of these accomplishments, the
     Compensation Committee granted Mr. Brackpool a
     performance-based bonus in 2004 in the form of $120,000
     in cash and 10,000 shares of Cadiz common stock (valued
     at $12.00 per share) to be issued during 2005.

     LONG-TERM INCENTIVES.  The primary form of incentive
     compensation offered by Cadiz to executives consists of
     long-term incentives in the form of stock options or
     other stock awards. This form of compensation is
     intended to help retain executives and motivate them to
     improve Cadiz' long-term performance and hence long-
     term stock market performance. Stock options and other
     stock awards are granted at the prevailing market value
     and will only have added value if Cadiz' stock price
     increases.

     The Compensation Committee views the grant of stock
     awards as both a reward for past performance and an
     incentive for future performance. Stock options or
     other stock awards granted by Cadiz may vest
     immediately upon grant, with the passage of time, at
     the discretion of the Board, and/or upon the
     achievement of certain specific performance goals.
     Where performance is not readily measurable, the
     vesting of performance based options or other stock
     awards may be dependent upon the satisfaction of
     subjective performance criteria.  As noted above, a
     portion of Mr. Brackpool performance based bonus for
     2004 is in the form of common stock.

     Due to the difficult circumstances which Cadiz and its
     subsidiaries have faced subsequent to Metropolitan's
     actions in 2002 with respect to the Cadiz water
     program, all stock options granted under the three then
     existing stock option

                            Page 33

     plans have become virtually worthless and a majority of
     them have subsequently expired without exercise.
     Therefore, the Compensation Committee, Board of Directors,
     management and our senior secured lender agreed in December
     2003 upon the implementation of a Management Equity Incentive
     Plan with a total of 1,472,051 shares authorized which would
     provide incentive to senior management in a going-
     forward manner.  Under this Plan, as supplemented by
     further board action in December 2004, an initial
     allocation of 717,373 shares will vest 2/3 immediately
     on the date of the grant and the remaining 1/3 will
     vest on December 11, 2005.  A subsequent allocation of
     the remaining shares will be in the form of 377,339
     shares of common stock to be granted and 377,339 shares
     in the form of options to purchase common stock at the
     price of $12.00 per share.  Vesting of the subsequent
     allocation will be 1/3 upon grant, 1/3 on December 7,
     2005 and 1/3 on December 7, 2006.  All awards will be
     subject to continued employment or immediate vesting
     upon termination without cause.  The Board has formed
     an allocation committee made up of Messrs. Brackpool,
     Hutchison, and Stoddard to direct the allocation of
     these shares.  While no shares or options have been
     allocated, granted, or issued under this Plan to date,
     the allocation committee has identified the members of
     management who are eligible to participate in the Plan,
     and the actual allocation and issuance of the shares
     and options authorized under the Plan may occur at any
     time.

     DEDUCTIBILITY OF CERTAIN EXECUTIVE COMPENSATION
     EXPENSES UNDER FEDERAL TAX LAWS

     The Compensation Committee has considered the impact of
     provisions of the Internal Revenue Code of 1986,
     specifically Code Section 162(m). Section 162(m) limits
     to $1 million Cadiz' deduction for compensation paid to
     each executive officer of Cadiz, which does not qualify
     as "performance based".

     While Cadiz expects that this provision will not limit
     its tax deductions for executive compensation in the
     near term, the Cadiz 1996 Stock Option Plan ?enables
     Cadiz to comply, to the extent deemed advisable, with
     the requirements of Section 162(m) for performance
     based compensation to insure that Cadiz will be able to
     avail itself of all deductions otherwise available with
     respect to awards made under the 1996 Stock Option
     Plan. However, any shares of stock issued to executives
     under the Cadiz 2000 Stock Award Plan and Management
     Equity Incentive Plan will not qualify as performance-
     based compensation and, therefore, will be counted in
     determining whether the $1 million limit has been
     reached.

     CONCLUSION

     Through the programs described above, a very significant
     portion of Cadiz' executive compensation is contemplated to
     be linked directly to corporate performance. The
     Compensation Committee intends to implement this policy of
     linking executive compensation to corporate performance in
     order to continue to align the interest of executives with
     those of Cadiz' stockholders.

                              THE COMPENSATION COMMITTEE

                              Murray H. Hutchison, Chairman

                            Page 34

---------------------------------------------
(1) This report shall not be deemed incorporated by reference by
any general statement incorporating by reference this annual
report on Form 10-K into any filing under the Securities Act of
1933, except to the extent that Cadiz specifically incorporates
this report by reference, and shall not otherwise be deemed filed
under such acts.



STOCK PRICE PERFORMANCE

     The stock price performance graph below compares the
cumulative total return of Cadiz common stock against the
cumulative total return of the Standard & Poor's Small Cap 600
Nasdaq U.S. index and the Russell 2000r index for the past five
fiscal years. The graph indicates a measurement point of December
31, 1999 and assumes a $100 investment on such date in Cadiz
common stock, the Standard & Poor's Small Cap 600 and the Russell
2000r indices. With respect to the payment of dividends, Cadiz
has not paid any dividends on its common stock, but the Standard
& Poor's Small Cap 600 and the Russell 2000r indices assume that
all dividends were reinvested. The stock price performance graph
shall not be deemed incorporated by reference by any general
statement incorporating by reference this annual report on Form
10-K into any filing under the Securities Act of 1933, as
amended, except to the extent that Cadiz specifically
incorporates this graph by reference, and shall not otherwise be
deemed filed under such acts.


      COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURNS*

      Among Cadiz Inc., The Russell 2000 Index and
             the S&P Smallcap 600 Index

		12/99    12/00    12/01    12/02    12/03    12/04

Cadiz Inc.  100.00    94.08    84.42     5.79     2.33     6.52
Russell
 2000		100.00    96.98    99.39    79.03   116.38   137.71

S&P Smallcap
 600		100.00   111.80   119.11   101.69   141.13   173.09

* $100 invested on 12/31/99 in stock or index-including reinvestment
of dividends.  Fiscal year ending December31.

Copyright (c) 2002, Standar & Poor's, a division of The McGraw-Hill
Companies, Inc.  All rights reserved.  www.researchdatagroup.com/S&P.htm

                            Page 35

ITEM  12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT AND RELATED STOCKHOLDER MATTERS

STOCK OPTION AND AWARD PLANS NOT APPROVED BY STOCKHOLDERS

     The purpose of Cadiz' stock option and award plans is to
provide incentives to attract, retain and motivate eligible
persons whose present and potential contributions are important
to the success of Cadiz and its subsidiaries and affiliates, by
offering them an opportunity to participate in Cadiz future
performance through awards of options, restricted stock grants
and other similar stock awards.  The following is a description
of the stock option plans and awards not approved by
stockholders.

  MANAGEMENT EQUITY INCENTIVE PLAN

     In December 2003 our board of directors authorized the
adoption of a Management Equity Incentive Plan (the "Incentive
Plan"). Under the Incentive Plan, as supplemented by further
board action in December 2004, a total of 1,472,051 shares of our
common stock may be granted to our key personnel. Of the
1,472,051 shares, 1,094,712 may be granted with 717,373 shares
vesting 2/3 immediately on the date of the grant and 1/3 on
December 11, 2005, and 377,339 shares vesting 1/3 upon grant, 1/3
on December 7, 2005 and 1/3 on December 7, 2006. The remaining
377,339 shares of common stock may be granted in the form of
options to purchase common stock at the price of $12.00 per
share. Vesting of the 377,339 options will be 1/3 upon grant, 1/3
on December 7, 2005 and 1/3 on December 7, 2006. All awards will
be subject to continued employment or immediate vesting upon
termination without cause. The Board formed allocation committees
made up of Messrs. Brackpool, Hutchison, and Stoddard, to direct
the allocation of these shares.

     As of December 31, 2004, no shares had been issued,
allocated, or granted under the Incentive Plan. However, the
allocation committee has identified the members of management who
are eligible to participate in the Plan, and the actual
allocation and issuance of the shares and options authorized
under the Plan may occur at any time.

  2004 MANAGEMENT BONUS PLAN

     In December 2004, our Compensation Committee, with board
approval, adopted the Cadiz Inc. 2004 Management Bonus Plan (the
"Bonus Plan") pursuant to which a total of 10,000 shares of our
common stock, valued at $12 per share, were authorized for
issuance to Mr. Brackpool as a performance bonus along with a
cash bonus of $120,000. See Item 11 "Executive Compensation". As
of December 31, 2004, these shares had not yet been issued under
the Bonus Plan but the liability and compensation expense have
been recorded in the 2004 financial statements.

  1998 STOCK OPTION PLAN

          In 1998, the Board approved a Non-Qualified Stock
Option Plan (the "1998 Plan") to provide grants of stock options
to certain employees, consultants, independent contractors and
advisors of Cadiz or its subsidiaries and affiliates, but
excluding any directors or officers including those who would be
required to file reports of beneficial ownership pursuant to the
Exchange Act.

                            Page 36

      The 1998 Plan is administered by a committee of the Board
or the Board acting as the committee. It permits the governing
committee to establish, as to any participant, the number of
options, exercise price, exercise term (subject to a maximum of
ten years), and other terms and conditions, however, the Board's
general intent with the plan is to grant options at an exercise
price equal to the fair market value of Cadiz common stock at the
time of grant, which options vest ratably over a five-year period
subject to vesting acceleration for a change in control of the
Company or the Board's determination of satisfaction of certain
specified performance criteria.

     The Board may amend or terminate the Plan at any time;
provided, however, that the Board may not, with respect to any
particular option grant, without the consent of the holder of
that outstanding option, amend or terminate such option or
materially adversely affect the rights of the holder under such
option. According to its terms, the 1998 Plan will terminate 10
years from its effective date.

     31,700 shares are reserved and authorized for issuance
under the 1998 Plan, which amount may be decreased by the
cumulative cap of 160,000 for issuance under the 1998 Plan, the
Cadiz Inc. 1996 Stock Option Plan (the "1996 Plan") and the Cadiz
Inc. 2000 Stock Award Plan (the "2000 Plan"). The 1996 Plan and
the 2000 Plan were approved by our stockholders in 1996 and 2000
respectively. Shares subject to a grant or award under the 1998
Plan which are not issued or delivered by reason of the failure
to vest or the expiration, termination, cancellation or
forfeiture are again available for future grants and awards. As
of December 31, 2004, 15,560 shares remained available for grant
under the 1998 Plan (subject to the cumulative cap for issuance
under all three stock option and award plans).

     The following table provides information as of December 31,
2004 with respect to shares of our common stock that may be
issued under our existing compensation plans:
EQUITY COMPENSATION PLAN INFORMATION

                 Number of       Weighted-       Number of
               securities to     average        securities
                 be issued       exercise        remaining
               upon exercise     price of      available for
                    of         outstanding    future issuance
                outstanding      options,      under equity
                 options,      warrants and  compensation plans
               warrants and      rights          (excluding
                 rights                          securities
                                               reflected in
  Plan                                           column (a))
Category            (a)            (b)             (c)
----------------------------------------------------------------
Equity             2,990         $ 228.32         34,467
compensation
plans approved
by stockholders(1)

Equity            11,700(2)      $ 234.38      1,497,611(3)
compensation
plans not
approved by
stockholders

Total             14,690         $ 233.14      1,532,078(4)


(1) Represents the Cadiz Inc. 1996 Stock Option Plan, and Cadiz
    Inc. 2000 Stock Award Plan
(2) Represents the Cadiz Inc. 1998 Stock Option Plan
(3) Represents 15,560 shares for the 1998 Stock Option Plan,
    1,472,051 shares for the Management Equity Incentive Plan, and
    10,000 shares for the 2004 Management Bonus Plan
(4) There is a cumulative cap on the 1996 Stock Option Plan, the
    1998 Stock Option Plan, and the 2000 Stock Award Plan of
    160,000 shares

                            Page 37

BENEFICIAL OWNERSHIP

   The following table sets forth, as of February 28, 2005, the
ownership of common stock of Cadiz by each stockholder who is
known by Cadiz to own beneficially more than five percent of the
outstanding common stock, by each director, by each executive
officer listed in the summary compensation table above, and by
all directors and executive officers as a group excluding, in
each case, rights under options or warrants not exercisable
within 60 days. All persons named have sole voting power and
investment power over their shares except as otherwise noted.

CLASS OF COMMON STOCK

                                  AMOUNT AND NATURE        PERCENT
  NAME AND ADDRESS             OF BENEFICIAL OWNERSHIP     OF CLASS
  ----------------             -----------------------     --------
ING Groep N.V.                       1,911,665 (1)          19.0%
ING Capital LLC
Amstelveenseweg 500
1081 KL Amsterdam

Bedford Oak Partners, L.P.             828,500(4)            8.2%
Bedford Oak Capital, L.P.
Bedford Oak Offshore
100 South Bedford Road
Mt. Kisco, NY 10549

SACC Partners LP                       684,699(2)            6.7%
Riley Investment Management LLC
B. Riley & Co. Inc.
B. Riley & Co.
  Retirement Trust
11100 Santa Monica Blvd.,
Suite 800
Los Angeles, CA  90025

Morgan Stanley & Co.                  639,603 (5)            6.7%
International Limited
1585 Broadway
New York, NY 10036

FMR Corp.                              675,306(8)            6.5%
82 Devonshire Street
Boston MA 02109

RAB Special Situations LP              606,900(9)            6.4%
c/o RAB Capital
No. 1 Adam Street
London W2CN 6LE
United Kingdom

Lloyd Miller MILGRAT I                 560,000(3)            5.5%
Lloyd I. Miller Fund C
Lloyd Miller A4 Trust
Lloyd Miller MILFAM II
4550 Gordon Drive
Naples, Florida 34102-7914

Keith Brackpool                        127,223(6)            1.2%
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

Timothy J. Shaheen                       6,185                 *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

Richard E. Stoddard                     17,500                 *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

Murray Hutchison                         6,490(7)              *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

Geoffrey Arens                               0                 *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

                            Page 38

Gregory Ritchie                          1,000                 *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017

All directors and officers             165,322(6)(7)         1.6%
as a group
(five individuals)
-----------------------------------------------------------------
 *  Represents   less   than  one  percent  of   the   10,324,339
    outstanding  shares of common stock of Cadiz as of  February
    28, 2005.

                  CLASS OF SERIES F PREFERRED STOCK
                                 AMOUNT AND NATURE OF      PERCENT
NAME AND ADDRESS                 BENEFICIAL OWNERSHIP     OF CLASS
----------------                 --------------------     --------
ING Groep N.V.                          1000(1)             100%
ING Capital LLC
Amstelveenseweg 500
1081 KL Amsterdam

 (1)  Based upon a Schedule 13D filed on February 15, 2005 with
      the SEC by ING Groep N.V. on behalf of its wholly-owned
      subsidiary ING Capital LLC, and based on Cadiz corporate records,
      the ING entities beneficially own 1,000 shares of Cadiz Series F
      Preferred Stock and have sole voting and dispositive power as to
      all of the shares. The preferred stock held by ING is initially
      convertible into 17,289 shares of Cadiz common stock. In addition
      to the preferred stock, ING holds 1,911,665 shares of Cadiz
      common stock, and ING has sole voting and dispositive power as to
      the common stock. In addition to the common and preferred stock,
      ING holds 40,0000 warrants, each exercisable into one share of
      Cadiz common stock,  and ING has sole voting and dispositive
      power as to the warrants. The principal office of ING Capital LLC
      is located at 1325 Avenue of the Americas, New York, NY  10019.

 (2)  Based upon a Schedule 13G filed on May 12, 2004 with the SEC
      by SACC Partners LP and its affiliated entities, Cadiz
      corporate records of stock issuances and correspondence with
      Mr. Riley, the listed affiliated entities beneficially own
      an aggregate of 634,699 shares of Cadiz common stock, and
      have sole voting and dispositive power of the stock.

 (3)  Based upon a Schedule 13G filed on February 4, 2005 with
      the SEC by Lloyd I. Miller, III, Cadiz corporate records of
      stock issuances and correspondence with Mr. Miller, the
      listed affiliated entities beneficially own an aggregate of
      560,000 shares of Cadiz common stock and 10,000 warrants
      exercisable to acquire an additional 60,000 shares of common
      stock.  Mr. Miller has sole voting power of 460,000 of the
      shares, and sole dispositive power of 460,000 of the shares.
      The remaining shares beneficially owned by Mr. Miller are
      subject to shared voting and dispositive power.

 (4)  Based upon a Schedule 13G filed on February 15, 2005 with
      the SEC, Cadiz corporate records of stock issuances and
      correspondence with Bedford Oak, the listed related funds
      beneficially own an aggregate of 828,500 shares of Cadiz
      common stock.

 (5)  Based upon a Schedule 13G filed on February 18, 2004 with
      the SEC by Morgan Stanley & Co. International Limited and
      its affiliated entities, Cadiz corporate records of stock
      issuances and correspondence with Morgan Stanley, Morgan
      Stanley has shared voting rights and shared dispositive
      power over an aggregate of 639,603 shares of Cadiz common
      stock.


 (6)  Includes 2,000 shares owned by a foundation of which Mr.
      Brackpool is a trustee, but in which Mr. Brackpool has no
      economic interest and 2,000 shares owned by his separated
      spouse. Mr. Brackpool disclaims any beneficial ownership of
      the 4,000 shares owned by the foundation and his spouse.

 (7)  Includes 1,490 shares underlying presently exercisable
      options.

 (8)  Based upon a Schedule 13G filed on October 14, 2004 with
      the SEC by FMR Corp. and its affiliated entities, Cadiz
      corporate records of stock issuances and correspondence with
      FMR Corp., the listed affiliated entities beneficially own
      an aggregate of 675,306 shares of Cadiz common stock, and
      have sole voting and dispositive power of the stock.

 (9)  Based upon a Schedule 13G filed on February 14, 2005 with
      the SEC by RAB Special Situations LP. and its affiliated
      entities, Cadiz corporate records of stock issuances and
      correspondence with RAB., the listed affiliated entities
      beneficially own an aggregate of 606,400 shares of Cadiz
      common stock  and 60,000

                            Page 39

      warrants exercisable to acquire an additional 60,000 shares
      of common stock and have shared voting and dispositive power
      of the stock.



ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

TRANSACTIONS WITH ING

     On November 30, 2004, the Company entered into an agreement
with ING, whereby, among other things, the Company's senior term
loan facility with ING was repaid in full and the outstanding
principal balance under the Company's existing revolving credit
facility was reduced to $25 million, and ING agreed to convert
99,000 shares of the Company's Series F Preferred Stock
(representing 99% of the outstanding shares of Series F Preferred
Stock) into 1,711,665 shares of the Company's common stock.  See
Item 7, "Management's Discussion and Analysis of Financial
Condition and of Operations - Liquidity and Capital Resources -
Current Financing Arrangements", above.

NOVEMBER 2004 PRIVATE PLACEMENT

     On November 30, 2004, the Company completed a private
placement (the "Placement") of 400,000 Units at the price of
$60.00 per Unit.  See Item 7, "Management's Discussion and
Analysis of Financial Condition and of Operations - Overview".
40 Units in the Placement were issued to ING for $2.4 million of
prepaid interest under the Company's $25 million borrowing from
the lender.  The other holders of more than 5% of the Company's
common stock participating in the Placement were SACC Partners LP
and affiliated entities, as to 10,000 Units; FMR Corp. and affiliated
entities, as to 72,500 Units; Lloyd I. Miller III and affiliated
entities, as to 10,000 Units; Bedford Oak Partners and affiliated
entities, as to 17,000 Units; and Morgan Stanley & Co.
International Limited and affiliated entities, as to 60,000
Units.


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

     For the fiscal years ended December 31, 2004 and 2003,
professional services were performed by PricewaterhouseCoopers
LLC (PwC). Cadiz' audit committee annually approves the
engagement of outside auditors for audit services in advance. The
audit committee has also established complementary procedures to
require pre-approval of all audit-related, tax and permitted non-
audit services provided by PwC, and to consider whether the
outside auditors' provision of non-audit services to Cadiz is
compatible with maintaining the independence of the outside
auditors. The audit committee may delegate pre-approval authority
to one or more of its members. Any such fees pre-approved in this
manner shall be reported to the audit committee at its next
scheduled meeting. All services described below were pre-approved
by the audit committee.

     All fees for services rendered by PwC aggregated $313,000
and $296,050 for the fiscal years ended December 31, 2004 and
2003, respectively, and were composed of the following:

     Audit Fees.  The aggregate fees billed for the audit of the
annual financial statements for the fiscal years ended December
31, 2004 and 2003, for reviews of the financial statements
included in the Company's Quarterly Reports on Form 10Q, and for
assistance with and review of documents filed with the SEC were
$313,000 for 2004 and $296,050 for 2003.

                            Page 40

     Audit Related Fees.  No audit-related fees were billed by
PwC to Cadiz for the fiscal years ended December 31, 2004 and
2003.

     Tax Fees.  Fees billed for tax services for the fiscal years
ended December 31, 2004 and 2003 were $0 and $0, respectively.

     All  Other Fees.  No other fees were billed by PwC to  Cadiz
for  services other than as discussed above for the fiscal  years
ended December 31, 2004 and 2003.

                            Page 41

                           PART IV

Item 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORT
	    ON FORM 8-K

     (a)  1.   Financial Statements.  See Index to Consolidated
               Financial Statements.

          2.   Financial Statement Schedules.  See
               Index to Consolidated Financial Statements.

          3.   Exhibits.

     The following exhibits are filed or incorporated by
reference as part of this Form 10-K.

             3.1   Cadiz Certificate of Incorporation, as
                   amended(1)

             3.2   Amendment to Cadiz Certificate of
                   Incorporation dated November 8, 1996(2)

             3.3   Amendment to Cadiz Certificate of
                   Incorporation dated September 1, 1998(3)

             3.4   Amendment to Cadiz Certificate of
                   Incorporation dated December 15, 2003(11)

             3.5   Certificate of Elimination of Series D
                   Preferred Stock, Series E-1 Preferred Stock and
                   Series E-2 Preferred Stock of Cadiz Inc. dated
                   December 15, 2003(11)

             3.6   Certificate of Elimination of Series A Junior
                   Participating Preferred Stock of Cadiz Inc., dated
                   March 25, 2004(11)

             3.7   Certificate of Designations of Series F
                   Preferred Stock of Cadiz Inc. dated December 15,
                   2003

             3.8   Amended and Restated Certificate of
                   Designations of Series F Preferred Stock of Cadiz
                   Inc.(12)

             3.9   Cadiz Bylaws, as amended (4)

             4.1   Indenture, dated as of April 16, 1997 among
                   Sun World as issuer, Sun World and certain
                   subsidiaries of Sun World as guarantors, and IBJ
                   Whitehall Bank & Trust Company as trustee, for the
                   benefit of holders of 11 percent First Mortgage Notes
                   due 2004 (including as Exhibit A to the Indenture,
                   the form of the Global Note and the form of each
                   Guarantee)(5)

             4.2   Amendment to Indenture dated as of October 9,
                   1997(6)

             4.3   Amendment to Indenture dated as of January 23,
                   1998(7)

             4.4   Preferred Stock Exchange Agreement, dated
                   October 20, 2003, by and among Cadiz Inc., OZ
                   Master Fund, Ltd. and OZF Credit Opportunities
                   Master Fund, Ltd. (11)

                            Page 42

             10.1  Cadiz Inc. 1996 Stock Option Plan(4)

             10.2  Amendment to the Cadiz Inc. 1996 Stock Option
                   Plan(8)

             10.3  Amended and Restated Cadiz Inc. 1998 Non-
                   Qualified Stock Option Plan(8)

             10.4  Cadiz Inc. 2000 Stock Award Plan(9)

             10.5  Agreement Regarding Employment Between Cadiz
                   Inc. and Keith Brackpool dated July 5, 2003(10)

             10.6  Agreement Regarding Satisfaction of Note
                   Obligations Between Cadiz Inc. and Keith Brackpool
                   dated July 5, 2003(10)

             10.7  Sixth Amended and Restated Credit Agreement,
                   dated as of December 15, 2003, among Cadiz Inc.,
                   Cadiz Real Estate LLC, and ING Capital LLC, as
                   Administrative Agent, and the lenders party
                   thereto(11)

             10.8  Sixth Global Amendment Agreement, dated as of
                   December 15, 2003, between Cadiz Inc., Cadiz Real
                   Estate LLC, and ING Capital LLC(11)

             10.9  First Amendment to 2003 Restated Credit Agreement
                   and Consent to Offering, dated as of November 30,
                   2004, among Cadiz Inc., Cadiz Real Estate LLC, and
                   ING Capital LLC, as Administrative Agent, and the
                   lenders party thereto.

             10.10 ING Capital LLC Amended and Restated Tranche A Note
                   in principal amount of $25 million(11)

             10.11 ING Capital LLC Amended and Restated Tranche B Note
                   in principal amount of $10 million(11)

             10.12 ING Capital LLC Second Amended and Restated Tranche
                   A Note, dated as of November 30, 2004, in principal
                   amount of $15 million.

             10.13 ING  Capital LLC Second Amended and Restated Tranche
                   B  Note, dated as of November 30, 2004, in principal
                   amount of $10 million.

             10.14 Limited Liability Company Agreement of Cadiz Real
                   Estate LLC dated December 11, 2003(11)

             10.15 Amendment No. 1, dated October 29, 2004, to  Limited
                   Liability  Company  Agreement of Cadiz  Real  Estate
                   LLC.

             10.16 The Cadiz Groundwater Storage and Dry-
                   Year Supply Program Definitive Economic Terms and
                   Responsibilities between Metropolitan Water
                   District of Southern California and Cadiz dated
                   March 6, 2001(8)

             10.17 Sun World-Bondholder-Cadiz Term Sheet and
                   Agreement in Principle, dated as of October 13,
                   2003, by and among Cadiz, Sun World International,
                   Inc. and its debtor affiliates, and Black Diamond
                   Capital Management, L.L.C. and CFSC Wayland
                   Advisers, Inc. and their respective

                            Page 43

                   affiliates(11)

             10.18 Sun World Noteholder Trust Agreement,
                   dated December 15, 2003, by and among Cadiz Inc.,
                   Logan & Company, as Trustee, Black Diamond Capital
                   Management, L.L.C. on behalf of its affiliates, and
                   CFSC Wayland Advisers, Inc. (11)

             10.19 Assignment of Claims, dated December 15,
                   2003, by Cadiz Inc. and the Sun World Noteholder
                   Trust (11)

             10.20 Pledge Agreement, dated as of December
                   12, 2003, by and between Cadiz Inc., as Pledgor,
                   and Sun World Noteholder Trust, as Secured Party
                   (11)

             10.21 Agreement re Closing of "Sun World-
                   Bondholder-Cadiz Term Sheet and Agreement in
                   Principle", dated as of November 24, 2003, by and
                   between Cadiz Inc. and Black Diamond Capital
                   Management, L.L.C. and CFSC Wayland Advisers, Inc.
                   and their respective affiliates(11)

             10.22 Mutual General Release, dated December
                   15, 2003 by and between Cadiz Inc., and Sun World
                   International, Inc., Sun Desert Inc., Coachella
                   Growers and Sun World/Rayo(11)

             10.23 Resolution of the Directors of Cadiz
                   Inc., authorizing the Management Equity Incentive
                   Plan. (11)

             10.24 Supplemental Resolutions of the Compensation
                   Committee of the Board of Directors of Cadiz Inc.,
                   regarding the Management Equity Incentive Plan.

             10.25 2004 Management Bonus Plan.

             10.26 Consulting Agreement dated August 1, 2002 by and
                   between Richard Stoddard and Cadiz Inc., and
                   Extension of Consulting Agreement dated January 1,
                   2004 by and between Richard Stoddard and Cadiz Inc.

              21.1 Subsidiaries of the Registrant

              31.1 Certification of Keith Brackpool, Chairman,
                   Chief Executive Officer and Chief Financial Officer
                   of Cadiz Inc. pursuant to Section 302 of the
                   Sarbanes-Oxley Act of 2002

              32.1 Certification of Keith Brackpool, Chairman, Chief
                   Executive Officer and Chief Financial Officer of Cadiz Inc.
                   pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                   Section 906 of the Sarbanes-Oxley Act of 2002

---------------------------------------------------------

          (1)  Previously filed as an Exhibit to our Registration
               Statement of Form S-1 (Registration No. 33-75642)
               declared effective May 16, 1994 filed on February
               23, 1994
          (2)  Previously filed as an Exhibit to our Report on
               Form 10-Q for the quarter ended September 30, 1996
               filed on November 14, 1996

                            Page 44

          (3)  Previously filed as an Exhibit to our Quarterly
               Report on Form 10-Q for the quarter ended
               September 30, 1998 filed on November 13, 1998
          (4)  Previously filed as an Exhibit to our Quarterly
               Report on Form 10-Q for the quarter ended June 30,
               1999 filed on August 13, 1999
          (5)  Previously filed as an Exhibit to Amendment No. 1
               to our Form S-1 Registration Statement No. 333-
               19109 filed on April 29, 1997
          (6)  Previously filed as an Exhibit to Amendment No. 2
               to Sun World's Form S-4 Registration Statement No.
               333-31103 filed on October 14, 1997
          (7)  Previously filed as an Exhibit to our Annual
               Report on Form 10-K for the fiscal year ended
               December 31, 1997 filed on March 26, 1998
          (8)  Previously filed as an exhibit to our Annual
               Report on Form 10-K for the fiscal year ended
               December 31, 2001 filed on March 28, 2002
          (9)  Previously filed as Appendix A to our Proxy
               Statement dated April 5, 2000, filed on March 29,
               2000
          (10) Previously filed as an Exhibit to our Report
               on Form 10-Q for the quarter ended September 30,
               2003 filed on November 2, 2004
          (11) Previously filed as an Exhibit to our Annual
               Report on Form 10-K for the year ended December
               31, 2003 filed on November 2, 2004.
          (12) Previously filed as an Exhibit to our Current
               Report on Form 8-K dated November 30, 2004 filed
               on December 2, 2004.

     (B)  REPORTS ON FORM 8-K

     We filed a report on Form 8-K dated November 30, 2004
reporting numerous transactions involving the reduction and
extension of our senior secured debt, the issuance of our common
stock in a private placement, the conversion of preferred stock
into common stock, and an amendment to the terms of our remaining
outstanding preferred stock.

                            Page 45

                           SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereto duly authorized.

                              CADIZ INC.

                              By:/s/ Keith Brackpool
                                 ------------------------------
                                 Keith Brackpool,
                                 Chairman and Chief Executive
                                 and Financial Officer

                              Date: March 30, 2005
                                    -------------------------

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons in the
capacities and on the dates indicated.

     NAME AND POSITION                       DATE



/s/ Keith Brackpool                          March 30, 2005
--------------------------------             -----------------
Keith Brackpool, Chairman and Chief Executive
and Financial Officer
(Principal Executive, Financial and Accounting Officer)


/s/ Murray H. Hutchison                      March 30, 2005
--------------------------------             -----------------
Murray H. Hutchison, Director


/s/ Timothy J. Shaheen                       March 30, 2005
--------------------------------             -----------------
Timothy J. Shaheen, Director


/s/ Geoffrey Arens                           March 30, 2005
--------------------------------             -----------------
Geoffrey Arens, Director


/s/ Gregory Ritchie                          March 30, 2005
--------------------------------             -----------------
Gregory Ritchie, Director


                            Page 46


                          CADIZ INC.

                 INDEX TO FINANCIAL STATMENTS

CADIZ INC. CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------
                                                              Page

Report of Independent Registered Public Accounting Firm . . . . 48

Consolidated Statement of Operations for the three years ended
December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . 49

Consolidated Balance Sheet as of December 31, 2004 and 2003 . . 50

Consolidated Statement of Cash Flows for the three years ended
December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . 51

Consolidated Statement of Stockholders' Equity for the three
years ended December 31, 2004  . . . . . . . . . . . . . . . . .53

Notes to the Consolidated Financial Statements . . . . . . . . .55


CADIZ INC. FINANCIAL STATEMENT SCHEDULES
----------------------------------------

Schedule I - Condensed Financial Information of Registrant as of
             December 31, 2003 and for the two years ended
             December 31, 2003 . . . . . . . . . . . . . . . . .81

Schedule II - Valuation and Qualifying Accounts for the three
              years ended December 31, 2004 . . . . . . . . . . 85


SUN WORLD INTERNATIONAL, INC. FINANCIAL STATEMENTS
--------------------------------------------------

Report of Independent Registered Public Accounting Firm . . . . 86

Consolidated Statement of Operations
for the three years ended December 31, 2004 . . . . . . . . . . 87

Consolidated Balance Sheet as of December 31, 2004 and 2003 . . 88

Consolidated Statement of Cash Flows for the three years ended
December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . 89

Consolidated Statement of Stockholder's Equity
for the three years ended December 31, 2004 . . . . . . . . . . 90

Notes to the Consolidated Financial Statements . . . . . . . . .91

(Schedules other than those listed above have been omitted since
they are either not required, inapplicable, or the required
information is included on the financial statements or notes
thereto.)

                            Page 47


     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of Cadiz Inc.

     In our opinion, the consolidated financial statements listed
in the accompanying index present fairly, in all material
respects, the financial position of Cadiz Inc. and its
subsidiaries at December 31, 2004 and 2003, and the results of
their operations and their cash flows for each of the three years
in the period ended December 31, 2004 in conformity with
accounting principles generally accepted in the United States of
America.  In addition, in our opinion, the financial statement
schedules listed in the accompanying index present fairly, in all
material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
These financial statements and financial statement schedules are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits of these statements in accordance with
the standards of the Public Company Accounting Oversight Board
(United States).  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

     As discussed in Note 2 to the accompanying financial
statements, the Company incurred losses of approximately $16.0
million and $11.5 million in 2004 and 2003, respectively, and
used cash for operating activities of $7.6 million and $6.6
million in 2004 and 2003, respectively.  The Company's objectives
in regard to this matter are discussed in Note 2.  The
accompanying consolidated financial statements have been prepared
using accounting principles applicable to a going concern, which
assumes realization of assets and settlement of liabilities in
the normal course of business.  The matters described above
raise substantial doubt about the Company's ability to continue
as a going concern.  The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.

/s/  PricewaterhouseCoopers LLP
-------------------------------
PricewaterhouseCoopers LLP


Los Angeles, California
March 11, 2005

                            Page 48


                            CADIZ INC.

                CONSOLIDATED STATEMENT OF OPERATIONS

---------------------------------------------------------------------
                                        THREE YEAR ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA)     2004      2003       2002
---------------------------------------------------------------------

Total revenues                          $     47  $  3,162  $114,250
                                        --------  --------  --------
Costs and expenses:
 Cost of sales                                 -     2,965    86,356
 General and administrative                3,050     5,235    16,953
 Write off of investment in subsidiary         -       195         -
 Reorganization costs                          -       655         -
 Removal of underperforming crops              -         -     4,514
 Write-off of permanent and
   developing crops                        3,443         -         -
 Depreciation and amortization               527       743     7,480
                                        --------  --------  --------

 Total costs and expenses                  7,020     9,793   115,303
                                        --------  --------  --------

Operating loss                            (6,973)   (6,631)   (1,053)

Interest expense, net                      9,064     4,905    21,172
                                        --------  --------  --------

Net loss before income taxes             (16,037)  (11,536)  (22,225)

Income tax expense                             -         -         -
                                        --------  --------  --------

Net loss                                 (16,037)  (11,536)  (22,225)

Less:  Preferred stock dividends               -       918     1,125
       Imputed dividend on
         preferred stock                       -     1,600       984
                                        --------  --------  --------

Net loss applicable to common stock     $(16,037) $(14,054) $(24,334)
                                        ========  ========  ========
Basic and diluted net loss per share    $  (2.32) $  (6.39) $ (16.76)
                                        ========  ========  ========
Weighted-average shares outstanding        6,911     2,200     1,452
                                        ========  ========  ========

See accompanying notes to the consolidated financial statements.

                            Page 49


                          CADIZ INC.

                  CONSOLIDATED BALANCE SHEET

-----------------------------------------------------------------
                                                  DECEMBER 31,
($ IN THOUSANDS)                                2004       2003
-----------------------------------------------------------------

ASSETS

Current assets:
Cash and cash equivalents                      $  9,031  $  3,422
Prepaid interest expense                          1,106         -
Prepaid expenses and other                          116       248
                                               --------  --------
  Total current assets                           10,253     3,670

Property, plant, equipment and water
 programs, net                                   35,552    39,514
Goodwill                                          3,813     3,813
Restricted cash                                       -     2,142
Other assets                                      1,453       387
                                               --------  --------

                                               $ 51,071  $ 49,526
                                               ========  ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable                              $    470  $    857
 Accrued liabilities                                743     1,545
                                               --------  --------

  Total current liabilities                       1,213     2,402

Long-term debt                                   25,000    30,253
Other liabilities                                     -       654

Contingencies (Note 13)

Stockholders' equity:
 Series F convertible preferred stock -
 $.01 par value:
  100,000 shares authorized, shares issued
  and outstanding - 1,000 at December 31,
  2004 and 100,000 at December 31, 2003               -         1
 Common stock - $0.01 par value; 70,000,000
  shares authorized; shares issued and
  outstanding 10,324,339 at December 31,
  2004 and 6,471,384 at December 31, 2003           103        65

Additional paid-in capital                      209,615   184,974
Accumulated deficit                            (184,860) (168,823)
                                               --------  --------
  Total stockholders' equity                     24,858    16,217
                                               --------  --------

                                               $ 51,071  $ 49,526
                                               ========  ========

See accompanying notes to the consolidated financial statements.

                            Page 50


                            CADIZ INC.

                CONSOLIDATED STATEMENT OF CASH FLOWS

----------------------------------------------------------------------
                                            YEAR ENDED DECEMBER 31,
($ IN THOUSANDS)                           2004      2003       2002
----------------------------------------------------------------------
Cash flows from operating activities:
 Net loss                                $(16,037) $(11,536) $(22,225)
 Adjustments to reconcile net loss to
  net cash used for operating activities:
   Depreciation and amortization            4,294     1,602    13,241
   Write off of unamortized deferred debt
    discount and loan fees                  1,369         -         -
   Write off of investment in subsidiary        -       195
   Stock issued for services                    -       550         -
   Compensation paid through settlement
    of note receivable from officer             -       841         -
   Interest paid in common stock                -        12         -
   Loss on disposal of assets                   -        43       346
   Write-off of permanent and
    developing crops                        3,443         -         -
   Removal of underperforming crops             -         -     4,514
   Shares of KADCO stock earned
    for services                                -         -    (1,250)
   Compensation charge for deferred
    stock units                                 -       152       579
   Accrued interest on note receivable
    from officer                                -         -       (22)
   Changes in operating assets and
    liabilities:
     Decrease (increase) in
      accounts receivable                       -     1,488      (405)
     Increase in inventories                    -    (3,043)   (1,116)
     Decrease (increase) in prepaid
      expenses and other                      132      (112)     (378)
     (Decrease) increase in accounts
      payable                                (386)    1,393    (4,365)
     (Decrease) increase in accrued
      liabilities                            (454)    1,831       633
     Increase in other liabilities              -         -       315
                                         --------  --------  --------

   Net cash used for operating
     activities                            (7,639)   (6,584)  (10,133)
                                         --------  --------  --------

Cash flows from investing activities:
 Deconsolidation of subsidiary                  -    (1,019)        -
 Additions to property, plant and
  equipment                                    (8)     (140)     (638)
 Additions to water programs                    -         -      (643)
 Additions to developing crops                  -      (231)   (2,176)
 Proceeds from disposal of property,
  plant and equipment                           -         -     2,463
 Loan to officer                                -       181    (1,000)
 Decrease (increase) in restricted cash     2,142    (2,142)        -
 Increase in other assets                     (10)     (104)      (95)
                                         --------  --------  --------

    Net cash provided by (used for)
     investing activities                   2,124    (3,455)   (2,089)
                                         --------  --------  --------

Cash flows from financing activities:
 Net proceeds from issuance of stock       21,274    10,304       764
 Proceeds from issuance of
  long-term debt                                -       135         -
 Financing costs                             (150)     (400)        -
 Proceeds from convertible note payable         -       200         -
 Net proceeds from short-term borrowings        -         -    14,400
 Principal payments on long-term debt     (10,000)       (7)     (761)
 Bank overdraft                                 -         -      (410)
                                         --------  --------  --------
    Net cash provided by financing
     activities                            11,124    10,232    13,993
                                         --------  --------  --------
Net increase in cash and cash
 equivalents                                5,609       193     1,771

Cash and cash equivalents, beginning
 of period                                  3,422     3,229     1,458
                                         --------  --------  --------

                            Page 51

Cash and cash equivalents, end of period $  9,031  $  3,422  $  3,229
                                         ========  ========  ========


Non-cash financing and investing activities

Settlement of note receivable from
 officer                                 $      1  $    841  $      -
Common stock issued upon conversion
 of preferred stock                             -    14,020         -
Issuance of preferred stock with loan
 extension                                      -     5,000         -
Issuance of common stock upon conversion
 of note payable                                -       212         -
Issuance of common stock to prepay
 interest on term loan obligations          2,400         -         -
Issuance of common stock for services
 accrued in 2003                              350         -         -
Exchange of deferred stock units for
 common stock                                 654     1,054        43
Payment of preferred stock dividends
 with common stock                              -         -       908

See accompanying notes to the consolitated financial statements

                            Page 52


                                     CADIZ INC.

                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

--------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2001
($ IN THOUSANDS)
--------------------------------------------------------------------------------
              PREFERRED STOCK   COMMON STOCK ADDITIONAL               TOTAL
              ---------------   ------------  PAID-IN  ACCUMULATED STOCKHOLDERS'
              SHARES   AMOUNT  SHARES  AMOUNT CAPITAL     DEFICIT     EQUITY
              ------   ------  ------  ------ -------     -------     ------

Balance as
 of December
 31, 2001          -   $   - 1,442,833  $ 14  $152,751   $(135,062)   $ 17,703

Exercise of
 stock
 options           -       -     5,741     1       763           -         764
Issuances of
 common stock
 to lender         -       -     1,000     -       208           -         208
Beneficial
 conversion
 feature for
 convertible
 notes payable     -       -         -     -       884           -         884
Exchange of
 deferred
 stock units
 for common
 stock             -       -     3,482     -        43           -          43
Issuance of
 warrants to
 lenders           -       -         -     -     2,703           -       2,703
Payment of
 preferred stock
 dividends with
 common stock      -       -     5,603     -       908           -         908
Preferred stock
 dividend          -       -         -     -    (1,125)          -      (1,125)
Imputed dividend
 from warrants
 and deferred
 beneficial
 conversion
 feature           -       -         -     -      (984)          -        (984)
Net loss           -       -         -     -         -     (22,225)    (22,225)
Balance as
 of December
 31, 2002          -       - 1,458,659    15   156,151    (157,287)     (1,121)
               -----   ----- ---------  ----  --------   ---------    --------

Exchange of
 deferred stock
 units for
 common stock      -       -    26,027     -     1,054           -       1,054
Issuance of
 common stock
 for cash          -       - 4,112,000    41    10,239           -      10,280
Issuance of
 stock to
 lenders           -       -   168,000     2       430           -         432
Issuance of
 common stock
 for services      -       -   128,000     1       279           -         280
Exercise of
 warrants          -       -    94,000     1        23           -          24
Conversion of
 Series D and
 E convertible
 preferred
 stock             -       -   400,000     4    14,016           -      14,020
Conversion of
 convertible
 note payable      -       -    84,699     1       211           -         212
Beneficial
 conversion
 feature of
 note payable      -       -         -     -        90           -          90
Preferred stock
 dividend          -       -         -     -      (918)          -        (918)
Imputed dividend
 from warrants
 and deferred
 beneficial
 conversion
 feature           -       -         -     -    (1,600)          -      (1,600)


                            Page 53


                                   CADIZ INC.

                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2001
($ IN THOUSANDS), CONTINUED
--------------------------------------------------------------------------------

              PREFERRED STOCK   COMMON STOCK ADDITIONAL               TOTAL
              ---------------   ------------  PAID-IN  ACCUMULATED STOCKHOLDERS'
              SHARES   AMOUNT  SHARES  AMOUNT CAPITAL     DEFICIT     EQUITY
              ------   ------  ------  ------ -------     -------     ------
Issuance of
 Series F
 convertible
 preferred
 stock       100,000       1         -     -     4,999           -       5,000
Net loss           -       -         -     -         -     (11,536)    (11,536)
             -------   ----- ---------  ----  --------   ---------    --------
Balance as
 of December
 31, 2003    100,000       1 6,471,385    65  $184,974    (168,823)     16,217

Exchange of
 deferred
 stock units
 for common
 stock             -       -     1,289     -       654           -         654
Issuance of
 common stock
 for cash          -       - 2,000,000    20    23,654           -      23,674
Issuance of
 common stock
 for services      -       -   140,000     1       349           -         350
Conversion of
 Series F
 convertible
 preferred
 stock       (99,000)     (1)1,711,665    17       (16)          -           -
Net loss           -       -         -     -         -     (16,037)    (16,037)
               -----   ----- ---------  ----  --------   ---------    --------

Balance as
 of December
 31, 2004      1,000   $   - 10,324,339 $103  $209,615   $(184,860)   $ 24,858
               =====   ===== ========== ====  ========   =========    ========

See accompanying notes to the consolidated financial statements

                            Page 54


                          CADIZ INC.

        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS
--------------------------------

     The Company had agricultural operations through its wholly-
owned subsidiary, Sun World International, Inc. and its
subsidiaries, collectively referred to as "Sun World," and is
developing the water resource segment of its business. With Sun
World's filing of voluntary petitions for relief under Chapter 11
of the Bankruptcy code as further described below, the primary
business of the Company is to acquire and develop water
resources.  The Company has created a complementary portfolio of
assets encompassing undeveloped land with high-quality
groundwater resources and/or storage potential, located
throughout central and southern California with valuable water
rights, and other contractual water rights.  Management believes
that, with both the increasing scarcity of water supplies in
California and an increasing population, the Company's access to
water could provide it with a competitive advantage as a supplier
of water.

     The Company's primary asset consists of three blocks of
largely contiguous land in eastern San Bernardino County,
California.  This land position totals approximately 45,000
acres.  Virtually all of this land is underlain by high-quality
groundwater resources with demonstrated potential for various
applications, including water storage and supply programs, and
agricultural, municipal, recreational and industrial development.
Two of the three blocks of land are located in proximity to the
Colorado River Aqueduct, the major source of imported water for
southern California.  The third block of land is located near the
Colorado River.

     The value of these assets derives from a combination of
population increases and limited water supplies throughout
southern California.  In addition, most of the major population
centers in southern California are not located where significant
precipitation occurs requiring the importation of water from
other parts of the state. The Company therefore believes that a
competitive advantage exists for those companies that possess or
can provide high quality, reliable and affordable water to major
population centers.

     To this end, in 1997, the Company commenced discussions with
the Metropolitan Water District of Southern California
("Metropolitan") in order to develop a long-term agreement for a
joint venture groundwater storage and supply program on and under
its desert properties, sometimes referred to as the "Cadiz
Program". Under the Cadiz Program, surplus water from the
Colorado River would be stored in the aquifer system underlying
its land during wet years. When needed, the stored water,
together with indigenous groundwater, would be returned to the
Colorado River Aqueduct for distribution to Metropolitan's member
agencies throughout six southern California counties.

     During the next several years, the Company engaged in
extensive negotiations with Metropolitan concerning the Cadiz
Program and actively pursued and received substantially all of
the various permits required to construct and operate the
project.  However, in October 2002, Metropolitan's Board voted to
not proceed with the Cadiz Program.

     Notwithstanding Metropolitan's actions in 2002, the Company
expects to be able to use its land assets and related water
resources to participate in a broad variety of water storage and
supply, exchange, and conservation programs with public agencies
and other parties.  Southern California's need for water storage
and supply programs has not abated. The Company believes

                            Page 55

there are many different scenarios to maximize the value of this
water resource, all of which are under current evaluation.

      The Company believes there are a variety of scenarios under
which the value of the Cadiz Program may be realized.
Exploratory discussions have been initiated with representatives
of governmental organizations, water agencies, and private water
users with regard to their expressed interest in implementation
of the Cadiz Program. Several such discussions have been held
with water agencies that are independently seeking reliability of
supply.  Other discussions have focused on the possibility of
exchanging water stored at the Cadiz Program with water
contractors in other regions in California. In addition, the
current drought within the Colorado River watershed has served as
an impetus to cooperative discussions between states, with the
goal that interstate exchanges and transfers may also become
feasible in the future.

     Because of the Company's long-term relationship with
Metropolitan, the Company also intends to pursue discussions with
the agency in an effort to determine whether there are terms
acceptable to both parties under which the Cadiz Program could be
implemented. With the recent finalization of the Quantification
Settlement Agreement (QSA), an agreement between the Secretary of
the Interior, the State of California, Metropolitan and three
other southern California water agencies quantifying the amount
of water California's Colorado River users could expect on an
annual basis, Metropolitan's Colorado River supplies are now
specified and limited only by the variable volume of flow on the
river.  To meet the growing needs of its service area,
Metropolitan must take advantage of all opportunities to store
available Colorado River water during periods of surplus. With
virtually all environmental permits and approvals in place for
the Cadiz Program, except for those dependent upon Metropolitan's
certification of the Environmental Impact Report (EIR), the
Company believes a partnership with Metropolitan could be renewed
in a timely manner if terms acceptable to both parties were to be
negotiated.

     Sun World is a large vertically integrated agricultural
company that owns approximately 17,000 acres of land, primarily
located in two major growing areas of California: the San Joaquin
Valley and the Coachella Valley.  Fresh produce, including table
grapes, stonefruit, citrus, peppers and watermelons, is marketed
and shipped to food wholesalers and retailers throughout the
United States and to more than 30 foreign countries.  Sun World
owns and operates two cold storage and packing facilities located
in California.

    On January 30, 2003, Sun World and certain of its
subsidiaries (Sun Desert Inc., Coachella Growers, and Sun
World/Rayo) filed voluntary petitions for relief under Chapter 11
of the Bankruptcy Code. The filing was made in the United States
Bankruptcy Court, Central District of California, Riverside
Division.  Sun World sought bankruptcy protection in order to
access a seasonal financing package of up to $40 million to
provide working capital through the 2003-2004 growing seasons.

     As a debtor-in-possession, Sun World is authorized to
continue to operate as an ongoing business, but may not engage in
transactions outside the ordinary course of business without the
approval of the Bankruptcy Court.  Under the Bankruptcy Code,
actions to collect pre-petition indebtedness, as well as most
other pending litigation, are stayed and other contractual
obligations against Sun World may not be enforced.  In addition,
under the Bankruptcy Code, Sun World may assume or reject
executory contracts, including lease obligations.  Parties
affected by these rejections may file claims with the Court in
accordance with the reorganization

                            Page 56

process.  Absent an order of the Court, substantially all pre-petition
liabilities are subject to settlement under a plan of reorganization
to be voted upon by creditors and equity holders and approved by
the Bankruptcy Court.

    The four Sun World entities are the joint proponents of the
Debtors' Joint Plan of Reorganization Dated November 24, 2003
(the "Plan").  The Plan provided for the restructuring of Sun
World's balance sheet by providing for Sun World to issue equity
interests in the reorganized company to the holders of its First
Mortgage Notes in full satisfaction of their mortgage note
claims; for the payment in full of convenience claims and trade
claims; and for Sun World to issue equity interests in the
reorganized company to entities holding certain other unsecured
claims in full satisfaction of those claims.  The holders of Sun
World's secured First Mortgage Notes were unable to reach
agreement on various Plan issues, and the Plan as presented was
not confirmable. Thereafter, following an extensive marketing
process, Sun World entered into, subject to Court approval, an
asset purchase agreement ("APA") in December 2004 with BDCM
Opportunity Fund, L.P. ("BDCM""), " a major holder of the First
Mortgage Notes, under which BDCM would acquire substantially all
of Sun World's assets subject to overbids at a Court authorized
auction. Following the auction on January 13, 2005, BDCM was
declared the winning bidder and the Court approved on January 14,
2005, an amended APA under which BDCM agreed to acquire
substantially all of Sun World's assets in exchange for cash and
credit consideration of $127,750,000, plus assumption of certain
liabilities totaling an estimated $14 million, including the
trade claims which approximate net book value as of December 31,
2004 of the assets sold. Thereafter, BDCM assigned its rights
under the APA to Sun World International LLC ("SWLLC"), a
subsidiary of BDCM. The agreement with SWLLC closed on February
28, 2005. The Company expects that following closing of the
transaction, that Sun World will file an amended Plan to
distribute the remaining consideration left in Sun World
(estimated at approximately $50 million after interim
distributions/credits to the holders of First Mortgage Notes of
approximately $78 million upon closing as authorized by the
Court).

     At January 30, 2003, due to the Company's loss of control
over the operations of Sun World, the financial statements are no
longer consolidated with those of Cadiz.  Instead, Cadiz accounts
for its investment in Sun World on the cost basis of accounting.
As a result, the Company wrote off its net investment in Sun
World of $195 thousand at the Chapter 11 filing date because it
did not anticipate being able to recover its investment.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

BASIS OF PRESENTATION

      The financial statements of the Company have been
prepared using accounting principles applicable to a going
concern, which assumes realization of assets and settlement
of liabilities in the normal course of business. The Company
incurred losses of $16.0 million and $11.5 million in 2004
and 2003, respectively, had working capital of $9.0 million
at December 31, 2004, and used cash in operations of $7.6
million and $6.6 million in 2004 and 2003, respectively.  On
that date, Sun World was deconsolidated and the Company
discontinued its agricultural operations.  Currently, the
Company's sole focus is the development of its water
resources program.

                            Page 57

     As discussed in Note 1, on October 8, 2002,
Metropolitan's Board voted not to approve the terms and
conditions of the right-of-way grant and not to proceed with
the Cadiz Program.  On April 7, 2003, the Company filed an
administrative claim against Metropolitan, asserting the
breach of various obligations specified in the Company's
Principles of Agreement with Metropolitan.  The Company
believes that by failing to complete the environmental
review process for the Cadiz Program, as specified in the
Principles of Agreement, Metropolitan violated this
contract.  In discussions following presentation of this
claim, the Company and Metropolitan agreed to continue to
evaluate alternative approaches to implementation of the
Cadiz Program.  Metropolitan has not to date responded to
the claim and the Company has until October 2005 to file a
lawsuit against the agency.

     The Company remains committed to its water programs and
it continues to explore all opportunities for development of
these assets.  As further discussed in Note 1, exploratory
discussions have been initiated with representatives of
governmental organizations, water agencies, and private
water users with regard to their expressed interest in
implementation of the Cadiz Program.  However, at the
present time, the Company does not have a commitment from
any of these parties for the implementation of the Cadiz
program.

     During the quarter ended December 31, 2004, the Company
raised $21.3 million in cash through a private sale of
common stock. Based on current forecasts, the Company
believes it has sufficient resources to fund operations
beyond December 2005.  The Company's current resources do
not provide the capital necessary to fund the water
development project should the Company be required to do so.
There is no assurance that additional financing (public or
private) will be available on acceptable terms or at all. If
the Company issues additional equity securities to raise
funds, the ownership percentage of the Company's existing
stockholders would be reduced. New investors may demand
rights, preferences or privileges senior to those of
existing holders of common stock. If the Company cannot
raise needed funds, it might be forced to make further
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.
These financial statements do not include any adjustments
that might result from these uncertainties.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts
of the Company and those of Sun World until January 30, 2003, at
which date Sun World and certain of its subsidiaries (Sun Desert
Inc., Coachella Growers, and Sun World/Rayo) filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code. As
of that date, due to the Company's loss of control over the
operations of Sun World, the financial statements of Sun World
are no longer consolidated with those of Cadiz, but instead,
Cadiz accounts for its investment in Sun World on the cost basis
of accounting.  As a result of changing to the cost basis of
accounting on January 31, 2003, the Company had a net investment
in Sun World of $195 thousand consisting of loans and other
amounts due from Sun World of $13,500,000 less losses in excess
of investment in Sun World of $13,305,000. The Company wrote off
its net investment in Sun World during the quarter ended March
31, 2003 because it will not be able to recover its investment.

                            Page 58

     In December 2003, the Company transferred substantially all
of its assets (with the exception of our office sublease, certain
office furniture and equipment and any Sun World related assets)
to Cadiz Real Estate LLC, a Delaware limited liability company
("Cadiz Real Estate").  The Company holds 100% of the equity
interests of Cadiz Real Estate, and therefore continues to hold
100% beneficial ownership of the properties that it transferred
to Cadiz Real Estate.  Because the transfer of the Company's
properties to Cadiz Real Estate has no effect on its ultimate
beneficial ownership of these properties, the properties owned of
record either by Cadiz Real Estate or by the Company are treated
as belonging to the Company.

ONE-FOR-25 REVERSE STOCK SPLIT

      In December 2003, the Company effected a one-for-25 reverse
stock  split.   All  share  and  per  share  information  in  the
accompanying   financial  statements  have   been   retroactively
restated to reflect the effect of this stock split.

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 revenue recognition and the
valuation of inventory, goodwill and other long-lived assets, and
deferred tax assets.  Actual results could differ from those
estimates.

REVENUE RECOGNITION

     Prior to the deconsolidation of Sun World, the Company
recognized crop sale revenue upon shipment and transfer of title
to customers. Packing revenues and marketing commissions from
third party growers were recognized when the related services
were provided. Proprietary product development revenues were
recognized based upon product sales by licensees. Project
development and management fees were recorded when earned under
the terms of the related agreement.

     Sun World revenues attributable to one national retailer
totaled $0.1 million (2.2%) for the month ended January 31, 2003,
and $9.6 million (8.4%) for the year ended December 31, 2002.
Revenues attributable to another national retailer totaled $0.5
million (16.6%) for the month ended January 31, 2003. Sun World
export sales accounted for approximately 6.1%, and 12.1% of the
Company's revenues for the month ended January 31, 2003, and for
year ended December 31, 2002, respectively.  Services and license
revenues were less than 10% of total revenues for each of the
years in the two-year period ended December 31, 2003.

RESEARCH AND DEVELOPMENT

     Prior to the deconsolidation of Sun World, the Company
incurred costs to research and develop new varieties of
proprietary products.  Research and development costs were
expensed as incurred.  Such costs incurred by Sun World were
approximately  $183,000 for the month ended January 31, 2003, and
$2,424,000 for the year ended December 31, 2002.

                            Page 59

NET LOSS PER COMMON SHARE

     Basic Earnings Per Share (EPS) is computed by dividing the
net loss, after deduction for preferred dividends either accrued
or imputed, if any, by the weighted-average common shares
outstanding.  Options, deferred stock units, warrants, and
participating and redeemable preferred stock convertible into or
exercisable for certain shares of the Company's common stock,
were not considered in the computation of diluted EPS because
their inclusion would have been antidilutive.  Had these
instruments been included, the fully diluted weighted average
shares outstanding would have increased by approximately 68,000
shares, 125,000 shares, and 333,000 shares for the years ended
December 31, 2004, 2003 and 2002, respectively.

STOCK-BASED COMPENSATION

     As permitted under Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation" as amended by SFAS 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure", the Company has elected
to follow Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" in accounting for its stock
options and other stock-based employee awards.  Pro forma
information regarding net loss and loss per share, as calculated
under the provisions of SFAS 123, are disclosed in the table
below.  The Company accounts for equity securities issued to non-
employees in accordance with the provision of SFAS 123 and
Emerging Issues Task Force 96-18.

     Had compensation cost for these plans been determined using
fair value the Company's net loss and net loss per common share
would have increased to the following pro forma amounts (dollars
in thousands except per share amounts):

                                        YEAR ENDED DECEMBER 31,
                                        -----------------------
                                       2004      2003       2001
                                        ----      ----      ----
 Net loss applicable to common stock:
           As reported                $(16,037) $(14,054) $(24,334)
           Expense under SFAS 123            -      (150)     (648)
                                      --------  --------  --------
           Pro forma                  $(16,037) $(14,204) $(24,982)
                                      ========  ========  ========

 Net loss per common share:
           As reported                $  (2.32) $  (6.39) $ (16.76)
           Expense under SFAS 123            -     (0.07)    (0.45)
                                      --------  --------  --------
           Pro forma                  $  (2.32) $  (6.46) $ (17.21)
                                      ========  ========  ========

CASH AND CASH EQUIVALENTS

     The Company considers all short-term deposits with an
original maturity of three months or less to be cash equivalents.
The Company invests its excess cash in deposits with major
international banks and short-term commercial paper and,
therefore, bears minimal risk.  Such
investments are stated at cost, which approximates fair value,
and are considered cash equivalents for purposes of reporting
cash flows.

                            Page 60

PREPAID INTEREST EXPENSE

     As part of the private sale of common shares on November 30,
2004, the Company issued to its lender $2.4 million of units as
prepaid interest under the Company's $25 million borrowing from
ING. The current portion of this interest is included in Prepaid
Interest Expense and the non-current portion is included in Other
Assets in the Consolidated Balance Sheet.

RESTRICTED CASH

     At the time the Company entered into revised secured term
lending arrangements with ING in December 2003, the Company
deposited into the lender's cash collateral account the sum of
$2,142,000.  The deposit represented collateral for future
interest payments on the Company's credit facility accruing at
the rate of 4% per annum from October 1, 2003 until March 31,
2005. This amount is shown on the balance sheet at December 31,
2003 as Restricted Cash. The balance was applied to principal and
interest payments on the ING borrowing during 2004.

PROPERTY, PLANT, EQUIPMENT AND WATER PROGRAMS

     Property, plant, equipment and water programs are stated at
cost.

     The Company capitalized direct and certain indirect costs of
planting and developing orchards and vineyards during the
development period, which varied by crop and generally ranged
from three to seven years.  Depreciation commenced in the year
commercial production is achieved.

     Permanent land development costs, such as acquisition costs,
clearing, initial leveling and other costs required to bring the
land into a suitable condition for general agricultural use, are
capitalized and not depreciated since these costs have an
indefinite useful life.

     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, three to twenty-
five years for machinery and equipment, and five to thirty years
for permanent crops.

     Water rights and water storage and supply programs are
stated at cost.  All costs directly attributable to the
development of such programs are being 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 feasibility studies, and other professional and
legal fees.

IMPAIRMENT OF LONG-LIVED ASSETS

     The Company evaluates its long-lived assets, including
intangibles, for potential impairment when circumstances indicate
that the carrying amount of the asset may not be recoverable.
This evaluation is based upon estimated future cash flows. In the
event that the undiscounted cash flows are less than the net book
value of the assets, the carrying value of the assets will be
written down to their estimated fair value.  As a result of the
actions taken by Metropolitan in the fourth quarter of 2002 as
described in Note 1, the

                            Page 61

Company, with the assistance of a valuation firm, evaluated the
carrying value of its water program and determined that the asset
was not impaired and that the costs were estimated to be recovered
through implementation of the Cadiz Program either with other
government organizations, water agencies and private water users,
or through implementation of the Cadiz Program on terms acceptable
to both Cadiz and Metropolitan. In 2004 and 2003 the Company
reviewed the valuation of the its water program and concluded that
the carrying amount of the program was not impaired. The Company's
estimate could be impacted by changes in plans related to the
Cadiz program.

     During the year ended December 31, 2002, Cadiz and Sun World
incurred costs to remove certain underperforming crops, primarily
stonefruit, citrus, and wine grapes. The Company recorded a
charge of $4.5 million in connection with the removal costs and
write off of capitalized costs related to these crops which is
shown under the heading "Removal of underperforming crops" on the
Consolidated Statement of Operations.

     Permanent crops and developing crops shown as Cadiz assets
have previously been leased to Sun World and an unaffiliated
third party as Cadiz does not conduct agricultural operations.
During the fourth quarter of the year ended December 31, 2004,
the long-standing lease to Sun World for a portion of these crops
terminated and the crops have not been leased to any other party.
The lease to an independent third party for the remainder of the
crops is on a year to year basis and does not generate a
significant amount of revenue. Based on the uncertainty as to
possible recovery of the carrying value of the permanent crops
and developing crops the Company recorded a charge of $3.4
million to write off the capitalized costs related to these crops
which is shown under the heading "Write-off of permanent and
developing crops" on the Consolidated Statement of Operations.

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 until the adoption of Statement of
Financial Accounting Standards No. 142, ("SFAS No. 142")
"Goodwill and Other Intangible Assets" on January 1, 2002.
Goodwill is tested for impairment annually in the first quarter,
or if events occur which require an impairment analysis be
performed.  As a result of the actions taken by Metropolitan in
the fourth quarter of 2002 as described in Note 1, the Company,
with the assistance of a valuation firm, performed an impairment
test of its goodwill and determined that its goodwill was not
impaired.  In addition, in the first quarters of 2004 and 2003,
the Company, performed its annual impairment test of goodwill and
determined its goodwill was not impaired.

     Capitalized loan fees represent costs incurred to obtain
debt financing.  Such costs are amortized over the life of the
related loan.  At December 31, 2004 and 2003, the capitalized
loan fees relate to costs incurred in connection with the ING
loan described in Note 7.

     Trademark development costs represent legal costs incurred
to obtain and defend patents and trademarks related to the
Company's proprietary products throughout the world.
Such costs are capitalized and amortized over their estimated
useful life, which range from 10 to 20 years.

                            Page 62

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.

SUPPLEMENTAL CASH FLOW INFORMATION

     Cash paid for interest during the years ended December 31,
2004, 2003 and 2002 was $3,970,000, $3,913,000, and $15,262,000,
respectively.  Cash paid for income taxes during the years ended
December 31, 2004, 2003 and 2002 was $0, $0 and $71,000,
respectively.

NEW ACCOUNTING PRONOUNCEMENTS

     In December 2004, the Financial Accounting Standards Board
issued SFAS no. 123(R) (revised 2004), "Share-Based Payment"
which amends SFAS Statement 123 and will be effective for public
companies for interim periods or annual periods beginning after
June 15, 2005. The new standard will require the Company to
recognize compensation costs in its financial statements in an
amount equal to the fair value of share-based payments granted to
employees and directors. The Company is currently evaluating how
it will adopt the standard and evaluating the effect that the
adoption of SFAS 123(R) will have on its financial position and
results of operations.


NOTE 3 - NOTE RECEIVABLE FROM OFFICER
-------------------------------------

     On July 5, 2002, the chief executive officer ("CEO") of the
Company issued a promissory note to the Company for a loan of up
to $1,000,000 to be made by the Company to the CEO.  Under the
terms of the promissory note, the principal and unpaid interest,
at 6% per annum, was due and payable on July 5, 2003.  The note
was collateralized by a pledge of shares of common stock,
restricted stock and deferred stock units so that the aggregate
fair market value of the pledged collateral was equal to or
greater than 133% of the outstanding principal and accrued
interest due on the note.

     On July 5, 2003, the Company and CEO entered into an
"Agreement Regarding Satisfaction of Note Obligation" (the
"Agreement").  Under the terms of the Agreement, the Company
determined that it was obligated to pay the CEO effective
February 1, 2003, $800,000 as a termination payment under a
previously existing employment agreement.  This overall
settlement with Mr. Brackpool was made effective July 5, 2003, by
way of a corresponding reduction in Mr. Brackpool's obligations
to Cadiz under the loan.  This reduction, along with cash
payments by Mr. Brackpool in the amount of $181,013 and an
application of $50,000 of accrued but unpaid compensation owed by
Cadiz to Mr. Brackpool under his post February 1,
2003 employment arrangements with Cadiz, resulted in the
settlement in full by Mr. Brackpool of his obligations under
this loan.

                            Page 63

     The Agreement of Employment dated July 5, 2003, has an
initial term of February 1, 2003, through September 30, 2003;
provides for a fixed amount of monthly compensation; and allows
for a new employment agreement to be negotiated, if mutually
agreeable, upon expiration of the term of the agreement.
Although the initial term of the agreement has expired, the CEO
continues to provide services to the Company under the terms of
the agreement.


NOTE 4 - PROPERTY, PLANT, EQUIPMENT AND WATER PROGRAMS
------------------------------------------------------

     Property, plant, equipment and water programs consist of the
following (dollars in thousands):
                                                  DECEMBER 31,
                                                 2004       2003
                                                 ----       ----

          Land and land improvements           $ 22,010   $ 22,010
          Permanent crops                             -      6,494
          Developing crops                            -        192
          Water programs                         14,274     14,274
          Buildings                               1,408      1,408
          Machinery and equipment                 3,599      3,590
                                               --------   --------

                                                 41,291     47,968
          Less accumulated depreciation          (5,739)    (8,454)
                                               --------   --------

                                               $ 35,552   $ 39,514
                                               ========   ========

     Depreciation expense during the years ended December 31,
2004, 2003 and 2002 was $527,000, $683,000 and $7,178,000
respectively.

     Permanent crops and developing crops shown as Cadiz assets
were leased to Sun World and to an unaffiliated third party as
Cadiz does not conduct agricultural operations. In the fourth
quarter of the year ended December 31, 2004, the lease of the
Cadiz Valley farming property to Sun World terminated.  Based on
the uncertainty as to possible recovery of the carrying value of
the permanent crops and developing crops on this property, during
the last quarter of 2004 the Company wrote off $3.4 million, net
of depreciation, of permanent and developing crops at this
property.


NOTE 5 - OTHER ASSETS
---------------------

     Other assets consist of the following (dollars in
thousands):

                                                   DECEMBER 31,
                                                 2004       2003
                                                 ----       ----

          Deferred loan costs, net             $    148   $     387
          Prepaid interest                        1,294           -
          Property tax refund receivable             11           -
                                               --------    --------
                                               $    159    $    387
                                               --------    --------

                            Page 64


     Amortization expense of deferred loan costs was $3,767,000,
$641,000, and $5,761,000 in 2004, 2003, and 2002, respectively,
and is included in interest expense in the statement of
operations.  Amortization expense included in the consolidated
financial statements for Sun World's capitalized trademark
development was $0, $60,000, and $302,000 in 2004, 2003, and
2002, respectively.


NOTE 6 - ACCRUED LIABILITIES
----------------------------

     Accrued liabilities consist of the following (dollars in
thousands):

                                                  DECEMBER 31,
                                                 2004       2003
                                                 ----       ----

          Interest                             $    172  $  1,073
          Payroll, bonus, and benefits              142       248
          Consulting fee                            326       150
          Other                                     103        74
                                               --------  --------

                                               $  743    $  1,545
                                               ========  ========

NOTE 7 - LONG-TERM DEBT
-----------------------

     At December 31, 2004 and 2003, the carrying amount of the
Company's outstanding debt is summarized as follows (dollars in
thousands):

                                                  DECEMBER 31,
                                                 2004       2003
                                                 ----       ----


   Senior term bank loan, interest payable
      semi-annually, interest per annum at
      4% in cash plus 4% paid in kind until
      March 31, 2008 and 4% in cash plus 6%
      paid in kind until March 31, 2010        $ 25,000  $ 35,000

   Debt discount                                      -    (4,747)
                                               --------  --------

                                                 25,000    30,253

  Less current portion                                -         -
                                               --------  --------
                                               $ 25,000  $ 30,253
                                               ========  ========

     Pursuant to the Company's loan agreement, annual maturity of
long-term debt outstanding (in thousands) on December 31, 2004 is
as follows: 2008 - $10,000, 2010 - $15,000.

CADIZ OBLIGATIONS

     The senior term bank loan, which previously consisted of a
revolving credit facility and a term loan, had an outstanding balance
of $25 million and $35 million at December 31, 2004 and 2003. The
senior term bank loan was due on January 31, 2003 and, through
various extensions,

                            Page 65

is now due on March 31, 2010 assuming a principal repayment of $10
million on or before March 31, 2008.

     In February 2002, the Company completed an amendment to the
senior term bank facility that extended the maturity date of the
obligation to January 31, 2003.  The interest rate could either
be LIBOR plus 300 basis points if paid in cash or LIBOR plus 700
basis points if paid in common stock.  In March 2002, the
revolving credit facility was increased from $15 million to $25
million, with $10 million of the $25 million revolver convertible
into 1,250,000 of the Company's common stock any time prior to
January 2003 at the election of the lender.  In connection with
obtaining the extension of the term loan and revolver and the
increase in the revolver, the Company repriced certain warrants
previously issued and issued certain additional warrants to
purchase shares of the Company's common stock. The estimated fair
value of the warrants issued and repriced was calculated using
the Black Scholes option pricing model and was recorded as a debt
discount and was being amortized over the remaining term of the
loan.

     The Company failed to pay off the senior term bank loan on
its maturity date of January 31, 2003 and on February 13, 2003,
the lender delivered to the Company a Notice of Default and
Demand for Payment.

     On December 15, 2003, the Company entered into an amendment
of its senior term loan and revolving credit facility to extend
the maturity date through March 31, 2005 and was entitled to
obtain further extensions through September 30, 2006, by
maintaining sufficient balances, among other conditions, in a
cash collateral account with the lender.  The maximum aggregate
amount to be outstanding under the amended credit facility was
$35 million plus accrued interest.  The amendment of the credit
facility did not constitute a troubled debt restructuring and was
accounted for as a debt modification under EITF 96-19. In
connection with this amendment, the Company;

  *  paid the lender $2,425,034 representing; (i) accrued
     interest through September 30, 2003 of $1,412,457 at the
     non default interest rate; (ii) accrued interest through
     September 30, 2003 of $612,577 at the default rate of
     interest; and (iii) $400,000 in fees;

  *  issued to the lender 100,000 shares of series F Preferred
     stock initially convertible into 1,728,955 shares of
     common stock; and

  *  deposited $2,142,280 in the cash collateral account with
     the lender representing prepaid interest through March 31,
     2005.

     The estimated value of the Series F preferred stock of $5
million was recorded as a debt discount and was being amortized
over the initial term of the note through March 31, 2005.

     Interest under the amended credit facilities was payable
semiannually at the Company's option in either cash at 8% per
annum, or in cash and paid in kind ("PIK"), at 4% per annum for
the cash portion and 8% per annum for the PIK portion.  The PIK
portion was to be added to the outstanding principal balance.

                            Page 66

     On November 30, 2004 the Company entered into another
amendment of its senior term loan agreement with ING. The
amendment of the credit facility did not constitute a troubled
debt restructuring and was accounted for as a debt modification
under EITF 96-19. Pursuant to this amendment, the Company;

  *  repaid in full the senior term loan portion of the
     facility with ING of $10 million and reduced to $25
     million the outstanding principal balance under the existing
     revolving portion of the loan;

  *  amended the terms and conditions of the loan facility
     with ING in order to:

       (i)extend the maturity date of the debt until March  31,
          2010, conditioned upon a further principal reduction of
          $10 million on or before March 31, 2008, and

      (ii)reduce the interest rate through March 31, 2008 on  the
          new  outstanding balance to 4% cash plus 4% PIK
          (increasing to 4% cash plus 6% PIK for interest periods
          commencing on and after April 1, 2008).

  *  wrote off of the remaining $1.4 million in unamortized
     financing costs associated with the loan under the terms
     applicable as of the previous, December 2003, amendment.

     The terms of the amended loan facilities also require
certain mandatory prepayments from the cash proceeds of future
equity issuances by the Company and prohibit the payment of
dividends.

     The senior term loan is secured by substantially all of the
assets of the Company.

SUN WORLD OBLIGATIONS

     In December 2000, Sun World entered into a two-year $5
million senior unsecured term loan. In connection with obtaining
the loan, the Company issued 2,000 shares of the Cadiz' common
stock as well as certain warrants to purchase shares of the Cadiz
common stock were issued. The fair value of the stock and the
warrants were recorded as a debt discount and were fully
amortized over the life of the loan through December 31, 2002.
At December 31, 2002, Sun World did not repay the loan and thus,
Sun World was in default.  With the default, pursuant to the
terms of the agreement, the interest rate was increased by 2%.
In connection with Sun World's Chapter 11 filing, all principal
and interest on this obligation have been suspended.

     In April 1997, Sun World issued $115 million of Series A
First Mortgage Notes through a private placement.  The notes have
subsequently been exchanged for Series B First Mortgage Notes,
which are registered under the Securities Act of 1933 and are
publicly traded.  The First Mortgage Notes are secured by a first
lien (subject to certain permitted liens) on substantially all of
the assets of Sun World and its subsidiaries other than growing
crops, crop inventories and accounts receivable and proceeds
thereof, which secure the Revolving Credit Facility.  With the
entering into the DIP Facility as described in Note 9, the note
holders now have a second position on substantially all of the
Company's assets for so long as the DIP Facility is outstanding.
The First Mortgage Notes mature April 15, 2004, but are
redeemable at the option of Sun World, in whole or in part, at
any time prior to the maturity date.  The First Mortgage

                            Page 67

Notes include covenants that do not allow for the payment of dividends
by the Company other than out of cumulative net income.  As a
result of Sun World's Chapter 11 filing discussed in Note 2,
principal payment on the First Mortgage Notes was suspended until
a final plan of reorganization is approved.

     The First Mortgage Notes are also secured by the guarantees
of Coachella Growers, Inc., Sun Desert, Inc., Sun World/Rayo, and
Sun World International de Mexico S.A. de C.V. (collectively, the
"Sun World Subsidiary Guarantors") and by Cadiz.  Cadiz also
pledged all of the stock of Sun World as collateral for its
guarantee. The guarantees by the Sun World Subsidiary Guarantors
are full, unconditional, and joint and several.  Sun World and
the Sun World Subsidiary Guarantors comprise all of the direct
and indirect subsidiaries of the Company other than
inconsequential subsidiaries.  Additionally, management believes
that the direct and indirect non-guarantor subsidiaries of Cadiz
and Sun World Subsidiary Guarantors are inconsequential, both
individually and in the aggregate, to the financial statements of
the Company for all periods presented.

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

     Condensed consolidating financial information for the years
ended December 31, 2003 and 2002 for the Company are presented
below (in thousands). The condensed consolidating financial
information for 2003 include the accounts of the Company and
those of Sun World until January 30, 2003, at which time Sun
World was no longer consolidated. No consolidating balance sheet
information for 2003 and no consolidating financial information
for 2004 are presented as the consolidated financial statements
include only the results of Cadiz due to the deconsolidation of
Sun World on January 30, 2003.


CONSOLIDATING STATEMENT
OF OPERATIONS INFORMATION
YEAR ENDED DECEMBER 31, 2003
                          CADIZ   SUN WORLD   ELIMINATIONS   CONSOLIDATED
                          -----   ---------   ------------   ------------
Revenues                 $    303  $  3,005     $   (146)       $  3,162
                         --------  --------     --------        --------

Costs and expenses:
  Cost of sales               333     2,653          (21)          2,965
  General and
   administrative           4,653       707         (125)          5,235
  Write off of investment
   in subsidiary              195         -            -             195
  Reorganization Costs          -       655            -             655
  Depreciation and
   amortization               553       190            -             743
                         --------  --------     --------        --------

  Total costs and expenses  5,734     4,205         (146)          9,793
                         --------  --------     --------        --------

Operating loss             (5,431)   (1,200)           -          (6,631)

Loss from subsidiary       (2,469)        -        2,469               -
Interest expense, net       3,636     1,269            -           4,905
                         --------  --------     --------        --------

Loss before income taxes  (11,536)   (2,469)       2,469         (11,536)

Income tax expense              -         -            -               -
                         --------  --------     --------        --------

Net loss                  (11,536)   (2,469)       2,469         (11,536)

Less: Preferred stock
       dividends             (918)        -            -            (918)
      Imputed dividend
       on preferred
       stock               (1,600)        -            -          (1,600)
                         --------  --------     --------        --------

Net loss applicable to
 common stock            $(14,054) $ (2,469)    $  2,469        $(14,054)
                         ========  ========     ========        ========

                            Page 68

CONSOLIDATING STATEMENT OF
CASH FLOW INFORMATION
YEAR ENDED DECEMBER 31, 2003
                          CADIZ   SUN WORLD   ELIMINATIONS   CONSOLIDATED
                          -----   ---------   ------------   ------------

Net cash used for
 operating activities    $ (4,881) $ (1,703)    $      -        $ (6,584)
                         --------  --------     --------        --------

Cash flows from investing
 activities:
 Disposal of subsidiary         -    (1,019)           -          (1,019)
 Additions to property,
  plant and equipment           -      (140)           -            (140)
 Additions to developing
  crops                       (34)     (197)           -            (231)
 Payment of loan to
  officer                     181         -            -             181
 Increase in restricted
  cash                     (2,142)        -            -          (2,142)
 (Increase) decrease in
  other assets                  5      (109)           -            (104)
                         --------  --------     --------        --------

Net cash used for
 investing activities      (1,990)   (1,465)           -          (3,455)
                         --------  --------     --------        --------

Cash flows from
 financing activities:
 Proceeds from issuance
  of long-term  debt            -       135            -             135
 Net proceeds from
  issuance of stock        10,304         -            -          10,304
 Financing costs             (400)        -            -            (400)
 Proceeds from
  convertible note
  payable                     200         -            -             200
 Principal payments
  on long-term  debt            -        (7)           -              (7)
                         --------  --------     --------        --------

Net cash provided by
 financing activities      10,104       128            -          10,232
                         --------  --------     --------        --------

Net increase (decrease)
 in cash and cash
 equivalents                3,233    (3,040)           -             193

Cash and cash
 equivalents, beginning
 of period                    189     3,040            -           3,229
                         --------  --------     --------        --------

Cash and cash
 equivalents, end
 of period               $  3,422  $      -     $      -        $  3,422
                         ========  ========     ========        ========

                            Page 69

CONSOLIDATING STATEMENT
OF OPERATIONS INFORMATION
YEAR ENDED DECEMBER 31, 2002
                          CADIZ   SUN WORLD   ELIMINATIONS   CONSOLIDATED
                          -----   ---------   ------------   ------------

Revenues                 $  2,067  $114,234     $ (2,051)       $114,250
                         --------  --------     --------        --------

Costs and expenses:
  Cost of sales               103    86,880         (627)         86,356
  General and
   administrative           7,500    10,953       (1,500)         16,953
  Removal of
   underperforming crops    1,017     3,497            -           4,514
  Depreciation and
   amortization             1,022     6,458            -           7,480
                         --------  --------     --------        --------

  Total costs and
   expenses                 9,642   107,788       (2,127)        115,303
                         --------  --------     --------        --------

Operating profit (loss)    (7,575)    6,446           76          (1,053)

Loss from subsidiary       (9,540)        -        9,540               -
Interest expense, net       5,108    16,299         (235)         21,172
                         --------  --------     --------        --------

Loss before income taxes  (22,223)   (9,853)       9,851         (22,225)

Income tax expense              2        (2)           -               -
                         --------  --------     --------        --------

 Net loss                 (22,225)   (9,851)       9,851         (22,225)

Less:  Preferred stock
        dividends          (1,125)        -            -          (1,125)
       Imputed dividend
        on preferred
        stock                (984)        -            -            (984)
                         --------  --------     --------        --------

Net loss applicable to
 common stock            $(24,334) $ (9,851)    $  9,851        $(24,334)
                         ========  ========     ========        ========

                            Page 70


CONSOLIDATING STATEMENT OF
CASH FLOW INFORMATION
YEAR ENDED DECEMBER 31, 2002
                          CADIZ   SUN WORLD   ELIMINATIONS   CONSOLIDATED
                          -----   ---------   ------------   ------------

Net cash provided by
 (used for) operating
 activities              $ (7,910) $ (4,205)    $  1,982        $(10,133)
                         --------  --------     --------        --------

Cash flows from
 investing activities:
 Additions to property,
  plant and equipment        (138)     (500)           -            (638)
 Additions to water
  programs                   (643)        -            -            (643)
 Additions to developing
  crops                       (24)   (2,152)           -          (2,176)
 Proceeds from disposal
  of property, plant and
  equipment                     3     2,460            -           2,463
 Loan to officer           (1,000)        -            -          (1,000)
 (Increase) decrease in
  other assets                124      (219)           -             (95)
                         --------  --------     --------        --------

Net cash used for
 investing activities      (1,678)     (411)           -          (2,089)
                         --------  --------     --------        --------

Cash flows from
 financing activities:
 Net proceeds from
  issuance of stock           764         -            -             764
 Net proceeds from
  short-term borrowings    10,000     4,400            -          14,400
 Borrowings from
  intercompany revolver      (977)    2,959       (1,982)              -
 Principal payments on
  long-term debt                -      (761)           -            (761)
 Bank overdraft              (410)        -            -            (410)
                         --------  --------     --------        --------

Net cash (used for)
 provided by financing
 activities                 9,377     6,598       (1,982)         13,993
                         --------  --------     --------        --------

Net (decrease) increase
 in cash and cash
 equivalents                 (211)    1,982            -           1,771

Cash and cash
 equivalents, beginning
 of period                    400     1,058            -           1,458
                         --------  --------     --------        --------

Cash and cash
 equivalents, end of
 period                  $    189  $  3,040     $      -        $  3,229
                         ========  ========     ========        ========

                            Page 71


NOTE 8 - INCOME TAXES
----------------------

     Deferred taxes are recorded based upon differences between
the financial statement and tax bases of assets and liabilities
and available carryforwards.  Temporary differences and
carryforwards which gave rise to a significant portion of
deferred tax assets and liabilities as of December 31, 2004 and
2003 are as follows (in thousands):

                                                   DECEMBER 31,
                                                  2004      2003
                                                  ----      ----
          Deferred tax assets:
            Net operating losses                $ 36,238  $ 36,663
            Fixed asset basis difference           8,049     6,759
            Contributions carryover                   35        35
            Other                                     61       303
                                                --------  --------
               Total deferred tax assets          44,383    43,760

            Valuation allowance for deferred
              tax assets                         (44,383)  (43,760)
                                                --------  --------

               Net deferred tax asset           $      -  $      -
                                                ========  ========

     The valuation allowance increased by $623,000 in 2004 due to
an increase in the deferred tax assets decreased by $21,258,000
in 2003 primarily due to the deconsolidation of Sun World and
increased in 2002 by $5,613,000 due to an increase in deferred
tax assets.

     As of December 31, 2004, the Company had net operating loss
(NOL) carryforwards of approximately $105 million for federal
income tax purposes.  Such carryforwards expire in varying
amounts through the year 2024.  At December 31, 2004, the Company
has state NOL carryforwards of $4.5 million.  These NOL
carryforwards expire in varying amounts through the year 2013.

     Because it is more likely than not that the Company will not
realize its net deferred tax assets, it has recorded a full
valuation allowance against these assets.  Accordingly, no
deferred tax asset has been recorded in the accompanying balance
sheet.

     Section 382 of the Internal Revenue Code imposes an annual
limitation on the utilization of net operating loss carryforwards
based on a statutory rate of return (usually the "applicable
federal funds rate", as defined in the Internal Revenue Code) and
the value of the corporation at the time of a "change of
ownership" as defined by Section 382.  Due to past equity
issuances and equity issuances in 2004, and due to the Chapter 11
filing by Sun World, the Company's ability to utilize net
operating loss carryforwards may be limited.

                            Page 72

     A reconciliation of the income tax benefit to the statutory
federal income tax rate is as follows (dollars in thousands):

                                        YEAR ENDED DECEMBER 31,
                                      ---------------------------
                                       2004      2003       2002
                                       ----      ----       ----

     Expected federal income tax
      benefit at 34%                 $ (5,453) $ (3,922) $ (7,557)
     Loss with no tax benefit
      provided                          1,993     3,900     7,440
     Federal AMT refund                     -         -       (73)
     State income tax                       2         2         5
     Amortization/write off of
      debt discount                     1,614         -         -
     Losses utilized against
      unconsolidated subsidiary
      taxable income                    1,837         -         -
     Foreign withholding taxes              -         -        68
     Other non-deductible expenses          7        20       117
                                     --------  --------  --------
       Income tax expense (benefit)  $      -  $      -  $      -
                                     ========  ========  ========


NOTE 9 - EMPLOYEE BENEFIT PLANS
-------------------------------

     The Company has a 401(k) Plan for its salaried employees.
Employees must work 1,000 hours and have completed one year of
service to be eligible to participate in this plan.  The Company
matches 75% of the first four percent deferred by an employee up
to $1,600 per year.  The Company contributed $3,000, $12,000 and
$322,000 to the plans for fiscal years 2004, 2003 and 2002,
respectively. Contributions include those made under Sun World
plans for its employees for January 2003 and for the year ended
December 31, 2002.


NOTE 10 - PREFERRED AND COMMON STOCK
------------------------------------

SERIES F CONVERTIBLE PREFERRED STOCK

     The Company has an authorized class of 100,000 shares of
$0.01 par value Series F Convertible preferred stock ("Series F
Preferred Stock").  On December 15, 2003, the Company issued
100,000 shares of Series F Convertible Preferred Stock in
conjunction with the extension of the Company's senior term
loan's maturity date.  The 100,000 preferred shares were
initially convertible into 1,728,955 shares of Common Stock of
the Company.  The holders of the Preferred Stock are entitled to
receive dividends as if the shares had been converted to Common
Stock if dividends are paid on the Company's common stock.  The
Series F Preferred Stock may not be redeemed by the Company.  The
estimated value of the Series F Preferred Stock was recorded as a
debt discount and was being amortized over the initial term of
the senior term loans through March 31, 2005. However, when the
senior term loans were amended on November 30, 2004, the
remaining debt discount of $1.4 million was written off. On
November 30, 2004, 99,000 shares of the Series F Preferred Stock
were converted into 1,711,665 shares of Common Stock of the
Company leaving 1,000 shares of the Series F Preferred Stock
outstanding.

                            Page 73

SERIES D CONVERTIBLE PREFERRED STOCK

     On December 29, 2000, the Company issued 5,000 shares of
Series D Convertible Preferred Stock ("Series D Preferred Stock")
for $5,000,000.  The holders of the Preferred Stock were entitled
to receive dividends, payable semi-annually, at a rate of 7% if
paid in cash or 9% if paid in the Company's common stock.  The
Series D Preferred Stock was initially convertible into 25,000
shares of the Company's common stock any time prior to July 2004
at the election of the holder.  The Company also had the right to
convert the Series D Preferred Stock, but only when the closing
price of the Company's common stock had exceeded $300 per share
for 30 consecutive trading days.  Holders were entitled to a
liquidation preference equal to the initial purchase of $1,000
per share plus any accrued and unpaid dividends.  The Series D
Preferred Stock would be redeemable in July 2004 if still
outstanding.  In 2003, all outstanding shares of Series D
preferred stock were exchanged for common stock as further
described below.

     The Company issued certain warrants to purchase shares of
the Company's common stock in connection with the issuance of the
Series D Preferred Stock.  The fair market value of the Company's
common stock at the time of issuance was above the accounting
conversion price resulting in an imputed dividend (beneficial
conversion feature).  The estimated fair value of the warrants
issued (calculated using the Black Scholes option pricing model)
and the imputed dividend totaled $1,050,000 which was recorded as
a discount to the Series D Preferred Stock.  The discount is
being amortized through the redemption date of the stock and
treated as a reduction to earnings for earnings per share
calculations.  Upon exchange of the Series D Preferred Stock for
common stock in October 2003, the unamortized beneficial
conversion feature was charged against paid in capital.

SERIES E-1 AND E-2 CONVERTIBLE PREFERRED STOCK

     During the fourth quarter of 2001, the Company issued 3,750
shares of Series E-1 Convertible Preferred Stock and 3,750 shares
of Series E-2 Convertible Preferred Stock (the "Series E
Preferred Stock") for an aggregate of $7,500,000.  The holders of
the Series E Preferred Stock are entitled to receive dividends,
payable semi-annually, at a rate of 7% if paid in cash or 9% if
paid in the Company's common stock.  The Series E Preferred Stock
was convertible into 40,000 shares of the Company's common stock
any time prior to July 2004 at the election of the holder.  The
Company also had the right to convert the Series E Preferred
Stock, but only when the closing price of the Company's common
stock had exceeded $262 per share for 30 consecutive trading
days.  Holders were entitled to a liquidation preference equal to
the initial purchase of $1,000 per share plus any accrued and
unpaid dividends.  The Series E Preferred Stock would be
redeemable in July 2004 if still outstanding.  In 2003, all
outstanding shares of Series E preferred stock were exchanged for
common stock as further described below.

     The Company issued 1,600 shares of the Company's common
stock and certain warrants to purchase shares of the Company's
common stock in connection with the issuance of the Series E
Preferred Stock.  The fair market value of the Company's common
stock at the time of issuance was above the accounting conversion
price resulting in an imputed dividend (beneficial conversion
feature).  The estimated fair value of the warrants issued
(calculated using the Black Scholes option pricing model) and the
imputed dividend totaled $1,614,000 which was recorded as a
discount to the Series E-1 and Series E-2 Preferred Stock.  The

                            Page 74

discount is being amortized through the redemption date of the
stock and treated as a reduction to earnings for earnings per
share calculations. Upon exchange of the Series E Preferred Stock
for common stock in October 2003, the unamortized beneficial
conversion feature was charged against paid in capital.

     On October 15, 2002, the Company and preferred stockholders
agreed to amend the Certificates of Designations of Series D,
Series E-1 and Series E-2 Preferred Stock to (i) reduce the
conversion price from $200 per share for the Series D Preferred
Stock and from $187.50 per share for Series E Preferred Stock to
$131.25 per share for both Series D and Series E Preferred Stock;
and (ii) extend the redemption date to July 16, 2006.  With the
assistance of a valuation firm, the Company determined that the
additional value associated with the reduction in the conversion
price was offset by the extension of the redemption date and that
there was no loss or gain attributable to the amendment to the
Certificates of Designations.

     On October 20, 2003, the Company and the preferred
stockholders entered into an agreement to (i) exchange all
outstanding shares of Series D Preferred Stock, plus accrued and
unpaid dividends, for an aggregate of 320,000 shares of common
stock; and (ii) exchange all outstanding shares of series E
Preferred Stock, plus accrued and unpaid dividends, for an
aggregate of 80,000 shares of common stock.  In connection with
this conversion, the Company recorded a charge of $42,000 against
paid in capital as an inducement to convert.  At this time the
Company also recorded the unamortized beneficial conversion
feature of the Series D and Series E Preferred Stock as a charge
against paid in capital.

COMMON STOCK AND WARRANTS

     On November 30, 2004, the Company completed a private
placement of 400,000 Units at the price of $60.00 per Unit.  Each
Unit consisted of five (5) shares of the Company's common stock
and one (1) common stock purchase warrant.  Each Warrant will
entitle the holder to purchase, commencing 180 days from the date
of issuance, one (1) share of common stock at an exercise price
of $15.00 per share.  Each Warrant has a term of three (3) years,
but will be callable at $15.00 per share by the Company
commencing twelve months following completion of the placement if
the closing market price of the Company's common stock exceeds
$18.75 for 10 consecutive trading days.


NOTE 11 - STOCK-BASED COMPENSATION PLANS AND WARRANTS
-----------------------------------------------------

STOCK OPTIONS AND WARRANTS

     The Company issued options pursuant to its 1996 Stock Option
Plan (the "1996 Plan") and the 1998 Non-Qualified Stock Option
Plan (the "1998 Plan").  The Company also grants stock awards
pursuant to its 2000 Stock Award Plan (the "2000 Plan"),
Management Equity Incentive Plan, and 2004 Management Bonus Plan,
described below.  Collectively, the 1996 Plan, the 1998 Plan,
and the 2000 Plan provide for the granting of up to 160,000 shares.
At December 31, 2004, the Company has approximately 50,027 shares
remaining that can be granted under the 1996 Plan, the 1998 Plan,
and the 2000 Plan. All options under the 1996 Plan, the 1998 Plan
and the 2000 Plan are granted at a price approximating fair market
value at the date of grant, have vesting periods ranging from
issuance date to five years, have maximum

                            Page 75

terms ranging from five to seven years and are issued to directors,
officers, consultants and employees of the Company. The Management
Equity Incentive Plan provides for the granting of 1,094,712 shares
of common stock and 377,339 options for the purchase of one share
of common stock at a price of $12 per share.  The 2004 Management
Bonus Plan provides for the granting of 10,000 shares of common
stock valued at $12.00 per share.

     Compensation cost for stock options is measured as the
excess, if any, of the quoted market price of the Company's stock
at the date of the grant over the amount an employee must pay to
acquire the stock.

     The Company has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123, ("SFAS
123"), "Accounting for Stock-Based Compensation."  Accordingly,
no compensation cost has been recognized for the stock-based
compensation other than for non-employees.

     The fair value of each option granted during 2002 was
estimated on the date of grant using the Black Scholes option
pricing model based on the weighted-average assumptions of: risk-
free interest rate of 4.08%; expected volatility of 57.2%;
expected life of three years; and an expected dividend yield of
zero. No options were granted in 2003 and 2004.

     The following table summarizes stock option activity for the
periods noted.  All options listed below were issued to officers,
directors, employees and consultants.

                                                        WEIGHTED-
                                                         AVERAGE
                                         AMOUNT      EXERCISE PRICE
                                         ------      --------------
Outstanding at December 31, 2001         74,030        $ 201.25
     Granted                              3,700        $ 183.75
     Expired or canceled                (10,280)       $ 189.25
     Exercised                           (5,740)       $ 132.75
                                       --------
  Outstanding at December 31, 2002       61,710        $ 197.45
     Granted                                  -               -
     Expired or canceled                 (7,760)       $ 207.45
     Exercised                                -               -
                                       --------

  Outstanding at December 31, 2003       53,950        $ 207.43
     Granted                                  -               -
     Expired or canceled                (39,270)       $ 198.54
     Exercised                                -               -
                                       --------
  Outstanding at December 31, 2004       14,680(a)     $ 231.22
                                       ========

  Options exercisable at
   December 31, 2002                     54,690        $ 196.50
                                       ========
  Options exercisable at
   December 31, 2003                     53,150        $ 206.98
                                       ========
  Options exercisable at
   December 31, 2004                     14,520        $ 231.29
                                       ========
Weighted-average years of remaining
 contractual life of options
 outstanding at December 31, 2004          0.48
                                       ========

                            Page 76

     (a)  Exercise prices vary from $165.63 to $293.75 and expiration
          dates vary from February 2005 to February 2007 as displayed in
          the following table:

------------------------------------------------------------------------------
                                                               EXERCISABLE
                                                               -----------
                                WEIGHTED
                                AVERAGE     WEIGHTED                  WEIGHTED
                               REMAINING    AVERAGE                   AVERAGE
   RANGE OF        NUMBER     CONTRACTUAL   EXERCISE       NUMBER     EXERCISE
EXERCISE PRICES  OUTSTANDING      LIFE       PRICE      OUTSTANDING    PRICE
---------------  -----------  -----------   --------    -----------   --------

$165.63-$234.38     13,280        0.44      $ 228.32       13,120     $ 228.36

$243.75-$293.75      1,400        0.87      $ 258.75        1,400     $ 258.75
                    ------                                 ------
                    14,680                                 14,520
                    ======                                 ======

     The weighted-average fair value of options granted during
2002 was $83.22.

     The Company accounts for equity securities issued to non-
employees in accordance with the provisions of SFAS 123 and
Emerging Issues Task Force 96-18.  During the years ended
December 31, 2002 and 2001, the Company issued 64,000, and 8,600
warrants with weighted-average exercise prices of $50.75, and
$189.75, respectively.  No warrants expired or were canceled
during any of the three periods discussed.  During 2002, in
connection with the loan amendments for the Cadiz obligations
described in Note 10, the Company repriced certain warrants
previously issued resulting in a reduction in the weighted-
average exercise price.  At December 31, 2002, there were 113,600
warrants outstanding with a weighted-average exercise price of
$58.50 per share, which expire through 2006.

     In connection with the Company's default in February 2003 on
its senior term loan and $25 million revolving credit facility,
as described in Note 10; (i) warrants held by the lender to
purchase 40,000 shares of the Company's common stock vested at an
exercise price of $0.25 per share; and (ii) the exercise price on
warrants held by the lender to purchase 57,000 shares of the
Company's common stock was automatically reset to $0.25 per
share.

     In December 2003, warrants to purchase 94,000 shares of
common stock were exercised for $23,500 in total cash proceeds.
At December 31, 2004, warrants to purchase 8,600 shares of common
stock of the Company at a weighted average exercise price of
$190.00 per share remained outstanding.

2000 STOCK AWARD PLAN

     The Cadiz Inc. 2000 Stock Award Plan ("Stock Award Plan")
was approved by the Company's shareholders in May 2000.  Under
the Stock Award Plan, the Company may issue various forms of
stock awards including restricted stock and deferred stock units
to attract, retain and motivate key employees or other eligible
persons.  As of December 31, 2004, the Company had no outstanding
deferred stock units granted under the Stock Award Plan. Each of
the units entitled the holder to receive one share of the
Company's common stock for each deferred stock unit three years
from the date of grant.  During the year ended December 31, 2004,
1,289 stock units were exchanged for shares of the Company's
common stock and the remaining deferred stock units were
cancelled in exchange for a payment to the holders of

                            Page 77

approximately $9,000.  The Company charged $0, $152,000, and
$579,000 to expense during the years ended December 31, 2004,
2003 and 2002, respectively, in connection with the Stock Award
Plan.

MANAGEMENT EQUITY INCENTIVE PLAN

     In December 2003, concurrently with the completion of the
Company's then current financing arrangements with ING, the
Company's board of directors authorized the adoption of a
Management Equity Incentive Plan (the "Incentive Plan"). Under
the Incentive Plan, a total of 1,472,051 shares of common stock
may be granted to key personnel. The Board has formed allocation
committees to direct the initial allocation of 717,373 of these
shares and a subsequent allocation of the remaining shares in the
form of 377,339 shares of common stock and 377,339 shares in the
form of options to purchase common stock at the price of $12.00
per share. Any grant of shares will be subject to vesting
conditions. The 717,373 initial allocation shares will vest 2/3
immediately on the date of the grant and the remaining 1/3 will
vest on December 11, 2005.  The subsequent allocation of 377,339
shares of common stock and 377,339 shares in the form of options
to purchase common stock will vest 1/3 upon grant, 1/3 on
December 7, 2005 and 1/3 on December 7, 2006. All grants will be
subject to continued employment or immediate vesting upon
termination without cause.

     No shares have been granted, issued or allocated to specific
individuals under the Incentive Plan.

2004 MANAGEMENT BONUS PLAN

     In December 2004, the Company, with board approval, adopted
the Cadiz Inc. 2004 Mangement Bonus Plan (the "Bonus Plan") pursuant
to which a total of 10,000 shares of Cadiz common stock, valued at
$12 per share, were authorized for issuance to Mr. Brackpool as a
performance bonus.  See item 11 "Executive Compensation".  These
shares had not yet been issued under the Bonus Plan but the liability
and compensation expense have been recorded in the 2004 financial
statements.

STOCK PURCHASE WARRANTS

     On November 30, 2004 the Company completed a private
placement of 400,000 units, each Unit consisting of five (5)
shares of the Company's common stock and one (1) common stock
purchase warrant.  Each of the 400,000 warrants entitle the
holder to purchase, commencing 180 days from the date of
issuance, one (1) share of common stock at an exercise price of
$15.00 per share.  Each Warrant has a term of three (3) years,
but will be callable by the Company commencing twelve months
following completion of the placement if the closing market price
of the Company's common stock exceeds $18.75 for 10 consecutive
trading days.


NOTE 12 - SEGMENT INFORMATION
-----------------------------

        With Sun World's filing of voluntary petitions for relief
under Chapter 11 of the Bankruptcy code as further described in
Note 1, the primary business of the Company is to acquire and
develop water resources. Prior to the filing of voluntary
petitions the Company had two reportable segments; water
resources (Cadiz) and agriculture (Sun World).  The accounting

                            Page 78

policies of the segments are the same as those described in the
summary of significant accounting polices.  The Company's
operations are reported in the following business segments:

        Financial information by reportable business segment is
reported in the following tables:

                                           2004     2003     2002
                                           ----     ----      ----
                                               ($ in thousands)
External sales:
   Water Resources                       $     47  $    157  $     16
   Agricultural                                 -     3,005   114,234
                                         --------  --------  --------
Consolidated                             $     47  $  3,162  $114,250
                                         ========  ========  ========

Inter-segment sales:
   Water Resources                       $      -  $    146  $  2,051
   Agricultural                                 -      (146)   (2,051)
                                         --------  --------  --------
Consolidated                             $      -  $      -  $      -
                                         ========  ========  ========

Total sales:
   Water Resources                       $     47  $    303  $  2,067
   Agricultural                                 -     3,005   114,234
   Other                                        -      (146)   (2,051)
                                         --------  --------  --------
Consolidated                             $     47  $  3,162  $114,250
                                         ========  ========  ========

Profit (loss) before income taxes:
   Water Resources                       $ (3,530) $ (5,236) $ (7,575)
   Agricultural                                 -    (1,200)    6,446
   Other                                   (3,443)     (195)       76
   Interest expense                        (9,064)   (4,905)  (21,172)
                                         --------  --------  --------
Consolidated                             $(16,037) $(11,536) $(25,665)
                                         ========  ========  ========

Assets:
   Water Resources                       $ 51,071  $ 49,526  $ 45,591
   Agricultural                                 -         -   146,417
   Other                                        -         -      (125)
                                         --------  --------  --------
Consolidated                             $ 51,071  $ 49,526  $191,883
                                         ========  ========  ========

Capital expenditures:
   Water Resources                       $      8  $     34  $    805
   Agricultural                                 -       337     2,652
                                         --------  --------  --------
Consolidated                             $      8  $    371  $  3,457
                                         ========  ========  ========

                            Page 79

Depreciation and amortization:
   Water Resources                      $     527  $    553  $  1,022
   Agricultural                                 -       190     6,458
                                         --------  --------  --------
Consolidated                             $    527  $    743  $  7,480
                                         ========  ========  ========

Interest expense, net:
   Water Resources                       $  9,064  $  3,636  $  5,108
   Agricultural                                 -     1,269    16,299
   Other                                        -         -      (235)
                                         --------  --------  --------
Consolidated                             $  9,064  $  4,905  $ 21,172
                                         ========  ========  ========


NOTE 13 - CONTINGENCIES
-----------------------

     In the normal course of its agricultural operations, the
Company handles, stores, transports and dispenses products
identified as hazardous materials.  Regulatory agencies
periodically conduct inspections and, currently, there are no
pending claims with respect to hazardous materials.

     The Company is involved in other legal and administrative
proceedings and claims.  In the opinion of management, the
ultimate outcome of each proceeding or all such proceedings
combined will not have a material adverse impact on the Company's
financial statements.


NOTE 14 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
----------------------------------------------------
(In thousands except per share data)

                                       QUARTER ENDED
                     ------------------------------------------------
                     MARCH 31,  JUNE 30,  SEPTEMBER 30,  DECEMBER 31,
                       2004       2004        2004          2004
                       ----       ----        ----          ----
Revenues             $     11   $      9   $     12       $     15
Gross profit               11          9         12             15
Net loss applicable
 to common stock       (2,815)    (2,724)    (2,894)        (7,604)
Net loss per
 common share        $  (0.43)  $  (0.41)  $  (0.44)      $  (1.04)


                                       QUARTER ENDED
                     ------------------------------------------------
                     MARCH 31,  JUNE 30,  SEPTEMBER 30,  DECEMBER 31,
                       2003       2003        2003          2003
                       ----       ----        ----          ----
Revenues             $  3,046   $     97   $     19       $      -
Gross profit (loss)       367         47       (154)           (63)
Net loss applicable
 to common stock       (5,171)    (1,951)    (3,013)        (3,919)
Net loss per
 common share        $  (3.53)  $  (0.92)  $  (1.32)      $  (1.17)

                            Page 80



                              CADIZ INC.

     SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

----------------------------------------------------------------------
BALANCE SHEET ($ IN THOUSANDS)            DECEMBER 31, 2003
----------------------------------------------------------------------

ASSETS

Current assets:
 Cash and cash equivalents                     $  3,422
 Prepaid expenses and other                         248
                                               --------
  Total current assets                            3,670

Property, plant, equipment and water
 programs, net                                   39,514
Goodwill                                          3,813
Restricted cash                                   2,142
Other assets                                        387
                                               --------
                                               $ 49,526
                                               ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable                              $    857
 Accrued liabilities                              1,545
                                               --------

  Total current liabilities                       2,402

Long-term debt                                   30,253
Other liabilities                                   654

Contingencies

Stockholders' equity:
 Series F convertible preferred stock -
  $.01 par value:
  100,000 shares authorized, shares issued
   and outstanding - 100,000 at December
   31, 2003                                           1
 Common stock - $0.01 par value;
  70,000,000 shares authorized; shares
  issued and outstanding 6,471,384
  at December 31, 2003                               65

 Additional paid-in capital                     184,974
 Accumulated deficit                           (168,823)
                                               --------

 Total stockholders' equity                      16,217
                                               --------
                                               $ 49,526
                                               ========

                            Page 81


                         CADIZ INC.

   SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

----------------------------------------------------------------------
STATEMENT OF OPERATIONS               YEAR ENDED DECEMBER 31,
($ IN THOUSANDS)                          2003      2002
----------------------------------------------------------------------

Total revenues                          $    303  $  2,067
                                        --------  --------
Costs and expenses:
 Cost of sales                               333       103
 General and administrative                4,653     7,500
 Removal of underperforming crops              -     1,017
 Write off of investment in subsidiary       195         -
 Depreciation and amortization               553     1,022
                                        --------  --------

 Total costs and expenses                  5,734     9,642
                                        --------  --------

Operating loss                            (5,431)   (7,575)

Loss from subsidiary                      (2,469)   (9,540)

Interest expense, net                      3,636     5,108
                                        --------  --------

Net loss before income taxes             (11,536)  (22,223)

Income taxes                                   -         2
                                        --------  --------

Net loss                                 (11,536)  (22,225)

Less:  Preferred stock dividends             918     1,125
       Imputed dividend on
        preferred stock                    1,600       984
                                        --------  --------

Net loss applicable to common stock     $(14,054) $(24,334)
                                        ========  ========

                            Page 82

                         CADIZ INC.

 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

--------------------------------------------------------------
                                       YEAR ENDED DECEMBER 31,
                                       -----------------------
STATEMENT OF CASH FLOWS ($ IN THOUSANDS)  2003      2002
--------------------------------------------------------------

Cash flows from operating activities:
 Net loss                              $ (11,536) $(22,225)
 Adjustments to reconcile net loss to
  net cash used for operating
  activities:
  Depreciation and amortization            1,336     5,181
  Write off of investment in subsidiary      195         -
  Stock issued for services                  550         -
  Compensation paid through settlement
   of note receivable from officer           841         -
  Interest paid in common stock               12         -
  Loss from subsidiary                     2,470     9,540
  (Gain) loss on disposal of assets           43        (3)
  Removal of underperforming crops             -     1,017
  Compensation charge for deferred
   stock units                               126       272
  Accrued interest on note receivable
   from officer                                -       (22)
  Changes in operating assets and
   liabilities:
   Increase in due to subsidiary               -    (1,360)
   Decrease (increase) in prepaid
    expenses and other                        75      (112)
   Decrease in accounts payable             (155)     (189)
   Increase (decrease) in accrued
    liabilities                            1,117        (9)
   Increase in due to affiliate               45         -
                                        --------  --------

  Net cash used for operating activities  (4,881)   (7,910)
                                        --------  --------


Cash flows from investing activities:
 Additions to property, plant
  and equipment                                -      (138)
 Additions to developing crops                 -       (24)
 Additions to water programs                 (34)     (643)
 Proceeds from disposal of property,
  plant and equipment                          -         3
 Loan to officer                             181    (1,000)
 Increase in restricted cash              (2,142)        -
 Increase in other assets                      5       124
                                        --------  --------

  Net cash used for investing activities  (1,990)   (1,678)
                                        --------  --------


Cash flows from financing activities:
 Net proceeds from issuance of stock      10,304       764
 Financing costs                            (400)        -
 Proceeds from convertible note payable      200         -
 Net proceeds from short-term borrowings       -    10,000
 Intercompany revolver with subsidiary         -      (977)
 Bank overdraft                                -      (410)
                                        --------  --------

  Net cash provided by financing
   activities                             10,104     9,377
                                        --------  --------

                            Page 83


Net increase (decrease) in cash and
 cash equivalents                          3,233      (211)

Cash and cash equivalents,
 beginning of period                         189       400
                                        --------  --------

Cash and cash equivalents,
 end of period                          $  3,422  $    189
                                        ========  ========

                            Page 84


                                   CADIZ INC.

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

--------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 ($ IN THOUSANDS)

                    BALANCE AT     ADDITIONS CHARGED TO                 BALANCE
YEAR ENDED          BEGINNING     COSTS AND       OTHER                  AT END
DECEMBER 31, 2004   OF PERIOD     EXPENSES       ACCOUNTS  DEDUCTIONS  OF PERIOD
-----------------   ----------    ---------      --------  ----------  ---------

 Tax valuation
  allowance          $  43760     $      -       $    623   $      -    $ 44,383
                     ========     ========       ========   ========    ========

YEAR ENDED
DECEMBER 31, 2003
-----------------

 Allowance for
  doubtful accounts  $    547     $      -       $    547   $      -    $      -
                     ========     ========       ========   ========    ========
 Tax valuation
  allowance          $ 65,018            -       $(21,258)  $      -    $ 43,760
                     ========     ========       ========   ========    ========

YEAR ENDED
DECEMBER 31, 2002
-----------------

 Allowance for
  doubtful accounts  $    506     $    200       $      -   $    159    $    547
                     ========     ========       ========   ========    ========
 Tax valuation
  allowance          $ 59,405     $      -       $  5,613   $      -    $ 65,018
                     ========     ========       ========   ========    ========

                            Page 85


      REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholder of
Sun World International, Inc.


     In our opinion, the accompanying consolidated balance sheets
and the related consolidated statements of operations, cash flows
and stockholder's deficit present fairly, in all material
respects, the financial position of Sun World International,
Inc., a wholly-owned subsidiary of Cadiz Inc., and its
subsidiaries at December 31, 2004 and 2003,  and the results of
their operations and their cash flows for each of the three years
in the period ended December 31, 2004 in conformity with
accounting principles generally accepted in the United States of
America.  These financial statements are the responsibility of
the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.  We
conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board
(United States).  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

     As discussed in Note 1 to the accompanying financial
statements, Sun World International, Inc. had a stockholder's
deficit of $13.8 million and $21.1 million at December 31, 2004
and 2003, respectively.  In addition, Sun World International,
Inc. and certain of its subsidiaries filed voluntary petitions
for reorganization under Chapter 11 of the United States
Bankruptcy Code on January 30, 2003.  Management continues to
operate the Company as a debtor-in-possession until a Plan of
Reorganization is approved by its creditors and confirmed by the
Bankruptcy Court.  The Company's objectives in regard to this
matter are also discussed in Note 1.  The accompanying financial
statements have been prepared using accounting principles
applicable to a going concern, which assumes realization of
assets and settlement of liabilities in the normal course of
business.  The uncertainties inherent in the bankruptcy process
raise substantial doubt about the Company's ability to continue
as a going concern.  The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.


/s/  PricewaterhouseCoopers LLP
-------------------------------
PricewaterhouseCoopers LLP

Los Angeles, California
March 2, 2005

                            Page 86




                 SUN WORLD INTERNATIONAL, INC.
                    (DEBTOR-IN-POSSESSION)
           (A WHOLLY-OWNED SUBSIDIARY OF CADIZ INC.)

             CONSOLIDATED STATEMENT OF OPERATIONS

--------------------------------------------------------------------

                                       YEAR ENDED DECEMBER 31,
($ IN THOUSANDS)                       2004     2003       2002
--------------------------------------------------------------------

Revenues                             $118,555  $100,938  $114,583
                                     --------  --------  --------
Costs and expenses:
 Cost of sales                         92,713    86,989    86,880
 General and administrative             8,745     8,889     9,243
 Intellectual property defense
    and professional fees (Note 15)         -         -     1,710
 Removal of underperforming crops       1,307       926     3,497
 Depreciation and amortization          5,927     6,873     6,458
                                     --------  --------  --------

                                      108,692   103,677   107,788
                                     --------  --------  --------

Operating income (loss)                 9,863    (2,739)    6,795

(Gain) loss on sale of property        (1,329)     (387)      349
Interest expense, net (contractual
 interest for fiscal year 2004 and
 2003 was $15,281 and $17,041,
 respectively)                          1,193     2,932    16,299
                                     --------  --------  --------

Income (loss) before reorganization
 items and income taxes                 9,999    (5,284)   (9,853)

Reorganization items:
   Debt issuance costs                      -       912         -
 Professional fees                      2,949     3,770         -
                                     --------  --------  --------

Total reorganization items              2,949     4,682         -
                                     --------  --------  --------

Income (loss) before income taxes       7,050    (9,966)   (9,853)

Income tax (benefit) expense               89       102        (2)
                                     --------  --------  --------

Net income (loss)                    $  6,961  $(10,068) $ (9,851)
                                     ========  ========  ========

See accompanying notes to the consolidated financial statements.

                            Page 87


                   SUN WORLD INTERNATIONAL, INC.
                     (DEBTOR-IN-POSSESSION)
             (A WHOLLY-OWNED SUBSIDIARY OF CADIZ INC.)

                    CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------
                                                  DECEMBER 31,
($ IN THOUSANDS)                                 2004      2003
--------------------------------------------------------------------
ASSETS

Current assets:
 Cash and cash equivalents                     $  5,311  $  1,548
 Restricted cash                                  3,344         -
 Accounts receivable, net                         6,243     7,031
 Inventories                                     12,078    12,851
 Prepaid expenses and other                       1,745     1,817
                                               --------  --------

    Total current assets                         28,721    23,247

Property, plant, and equipment, net             104,647   107,812
Intangible assets                                 1,909     1,903
Other assets                                      6,424     6,568
                                               --------  --------

 Total assets                                  $141,701  $139,530
                                               ========  ========

LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
 Accounts payable                              $  4,944  $  5,689
 Accrued liabilities                              2,993     2,280
 Revolving credit facility                            -     4,423
 Long-term debt, current portion                    722       125
                                               --------  --------

     Total current liabilities                    8,659    12,517

Long-term debt                                        9       730

Deferred income taxes                             5,447     5,447

Other liabilities                                    17       365
                                               --------  --------

  Total liabilities not subject to compromise    14,132    19,059
                                               --------  --------

Liabilities subject to compromise under
 reorganization proceedings                     141,387   141,606
                                               --------  --------

Contingencies (Note 16)

Stockholder's deficit:
 Common stock, $0.01 par value, 300,000
  shares authorized;
  42,000 shares issued and outstanding                -         -
 Additional paid-in capital                      39,479    39,123
 Accumulated deficit                            (53,297)  (60,258)
                                               --------  --------

  Total stockholder's deficit                   (13,818)  (21,135)
                                               --------  --------

 Total liabilities and stockholder's deficit   $141,701  $139,530
                                               ========  ========

See accompanying notes to the consolidated financial statements..

                            Page 88


                   SUN WORLD INTERNATIONAL, INC.
                     (DEBTOR-IN-POSSESSION)
             (A WHOLLY-OWNED SUBSIDIARY OF CADIZ INC.)

               CONSOLIDATED STATEMENT OF CASH FLOWS

----------------------------------------------------------------------
                                        YEAR ENDED DECEMBER 31,
                                        -----------------------
($ IN THOUSANDS)                       2004      2003      2002
----------------------------------------------------------------------

Cash flows from operating activities:
Net income (loss)                    $  6,961  $(10,068) $ (9,851)
Adjustments to reconcile net income
 (loss) to net cash provided by
 (used for) operating activities:
  Depreciation and amortization         5,934     6,987     8,295
  Write off of debt issuance costs          -       912         -
  Valuation allowance                       -     1,500         -
  (Gain) loss on sale of property      (1,329)     (387)      349
  Removal of underperforming crops      1,307       926     3,497
  Shares of KADCO stock earned
   for services                             -      (938)   (1,250)
  Compensation charge for deferred
   stock units                             20       211       307
  Changes in operating assets and
   liabilities:
   Decrease (increase) in accounts
    receivable                            919      (299)     (406)
   Decrease (increase) in inventories     409       246    (1,039)
   Decrease (increase) in prepaid
    expenses and other                     72      (974)     (265)
   Decrease in accounts payable          (745)   (3,143)   (4,176)
   Increase in accrued liabilities        713       247       687
   Decrease in due to parent                -         -      (668)
   (Decrease) increase in other
    liabilities                           (11)     (159)      315
                                     --------  --------  --------
Net cash provided by (used for)
 operating activities before
 reorganization items                  14,250     1,347    (4,205)
(Decrease) increase in liabilities
 subject to compromise under
 reorganization proceedings              (219)      559         -
                                     --------  --------  --------

  Net cash provided by (used for)
   operating activities                14,031     1,906    (4,205)
                                     --------  --------  --------

Cash flows from investing activities:
Additions to property, plant,
 and equipment                         (2,169)   (2,831)     (500)
Additions to developing crops          (2,919)   (1,963)   (2,152)
Proceeds from disposal of property,
 plant and equipment                    3,009     2,754     2,460
Increase in restricted cash            (3,344)        -         -
Increase in other assets                 (298)     (539)     (219)
                                     --------  --------  --------

  Net cash used for investing
   activities                          (5,721)   (2,579)     (411)
                                     --------  --------  --------

Cash flows from financing activities:
 Proceeds from issuance of
  long-term debt                            -       136         -
 Principal payments on
  long-term debt                         (124)     (978)     (762)
 Net (payments) proceeds from
  short-term borrowings                (4,423)       23     4,400
 Intercompany revolver with parent          -         -     2,960
                                     --------  --------  --------

  Net cash (used for) provided by
   financing activities                (4,547)     (819)    6,598
                                     --------  --------  --------

Net increase (decrease) in cash and
 cash equivalents                       3,763    (1,492)    1,982

Cash and cash equivalents at
 beginning of period                    1,548     3,040     1,058
                                     --------  --------  --------

Cash and cash equivalents at
 end of period                       $  5,311  $  1,548  $  3,040
                                     ========  ========  ========

See accompanying notes to the consolidated financial statements.

                            Page 89



                   SUN WORLD INTERNATIONAL, INC.
                      (DEBTOR-IN-POSSESSION)
             (A WHOLLY-OWNED SUBSIDIARY OF CADIZ INC.)

        CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)

($ in thousands)
------------------------------------------------------------------------
                    COMMON STOCK   ADDITIONAL               TOTAL
                    ------------    PAID-IN   ACCUMULATED STOCKHOLDERS'
                   SHARES  AMOUNT   CAPITAL     DEFICIT  EQUITY(DEFICIT)
                   ------  ------   -------     -------  ---------------

Balance as of
 December 31, 2001  42,000 $    -  $ 38,273    $(40,339)   $ (2,066)

Revaluation of
 derivative for
 warrants issued
 by parent               -      -       235           -         235

Net loss                 -      -         -      (9,851)     (9,851)
                    ------ ------  --------    --------    --------

Balance as of
 December 31, 2002  42,000      -    38,508     (50,190)    (11,682)

Exchange of deferred
 stock units for
 parent's common
 stock                   -      -       615           -         615


Net loss                 -      -         -     (10,068)    (10,068)
                    ------ ------  --------    --------    --------

Balance as of
 December 31, 2003  42,000      -    39,123     (60,258)    (21,135)

Exchange of deferred
 stock units for
 parent's common
 stock                   -      -       356           -         356

Net income               -      -         -       6,961       6,961
                    ------ ------  --------    --------    --------

Balance as of
 December 31, 2004  42,000 $    -  $ 39,479    $(53,297)   $(13,818)
                    ====== ======  ========    ========    ========

See accompanying notes to the consolidated financial statements.

                            Page 90


               SUN WORLD INTERNATIONAL, INC.
                 (DEBTOR-IN-POSSESSION)
        (A WHOLLY-OWNED SUBSIDIARY OF CADIZ INC.)

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF OPERATIONS AND REORGANIZATION UNDER CHAPTER 11
-----------------------------------------------------------------

     Founded in 1975, Sun World International, Inc. ("SWII" or
"Sun World") and its subsidiaries (collectively, the "Company")
operate as the wholly-owned agricultural segment of Cadiz Inc.
("Cadiz").  The Company is an integrated agricultural operation
that owns approximately 17,000 acres of land, primarily located
in two major growing areas of California: the San Joaquin Valley
and the Coachella Valley.  Fresh produce, including table grapes,
stonefruit, citrus, peppers and watermelons is marketed, packed
and shipped to food wholesalers and retailers located throughout
the United States and to more than 30 foreign countries.  The
Company owns and operates two cold storage and packing facilities
located in California.

     On January 30, 2003 (the "Petition Date"), SWII and certain
of its subsidiaries (Sun Desert Inc., Coachella Growers, and Sun
World/Rayo) filed voluntary petitions for relief under Chapter 11
of the Bankruptcy Code. The filing was made in the United States
Bankruptcy Court, Central District of California, Riverside
Division ("Bankruptcy Court").  Included in the Consolidated
Financial Statements are subsidiaries operated outside the United
States, which have not commenced Chapter 11 cases or other
similar proceedings elsewhere, and are not debtors.  The assets
and liabilities of such non-filing subsidiaries are not
considered material to the Consolidated Financial Statements.
SWII sought bankruptcy protection in order to access a seasonal
financing package of up to $40 million to provide working capital
through the 2003-2004 growing seasons.

     As a debtor-in-possession, Sun World is authorized to
continue to operate as an ongoing business, but may not engage in
transactions outside the ordinary course of business without the
approval of the Bankruptcy Court.  Under the Bankruptcy Code,
actions to collect pre-petition indebtedness, as well as most
other pending litigation, are stayed and other contractual
obligations against Sun World may not be enforced.  In addition,
under the Bankruptcy Code, Sun World may assume or reject
executory contracts, including lease obligations.  Parties
affected by these rejections may file claims with the Court in
accordance with the reorganization process.  Absent an order of
the Court, substantially all pre-petition liabilities are subject
to settlement under a plan of reorganization to be voted upon by
creditors and equity holders and approved by the Bankruptcy
Court.

     The four Sun World entities referred to above are the joint
proponents of the Debtors' Joint Plan of Reorganization Dated
November 24, 2003 (the "Plan"). The Plan provided for the
restructuring of Sun World's balance sheet by providing for Sun
World to issue equity interests in the Reorganized Company to the
holders of its First Mortgage Notes in full satisfaction of their
mortgage note claims; for the payment in full of convenience
claims and trade claims; and for Sun World to issue equity
interests in the Reorganized Company to entities holding certain
other unsecured claims in full satisfaction of those claims.  The
holders of Sun World's secured First Mortgage Notes were unable
to reach agreement on various Plan issues, and the Plan as
presented was not confirmable. Thereafter, following an extensive
marketing process, Sun World entered into, subject to Court
approval, an asset purchase agreement ("APA") in December 2004
with BDCM Opportunity Fund, L.P. ("BDCM""), a major holder of the
First Mortgage Notes, under which BDCM would acquire
substantially all of the Company's assets

                            Page 91

subject to overbids at a Court authorized auction. Following the
auction on January 13, 2005, BDCM was declared the winning bidder
and the Court approved on January 14, 2005, an amended APA under
which BDCM agreed to acquire substantially all of the Company's
assets in exchange for cash and credit consideration of $127.8
million, plus payment and assumption of certain liabilities totaling
an estimated $14 million, including the trade claims, which
approximates net book value of the acquired assets as of December
31, 2004. Thereafter, BDCM assigned its rights under the APA to Sun
World International LLC ("SW LLC"), a subsidiary of BDCM.  The
agreement with SW LLC closed on February 25, 2005. The Company
plans to file an amended Plan to distribute the remaining
consideration left in the Company (estimated at approximately $50
million after interim distributions/credits to the holders of
First Mortgage Notes of approximately $78 million upon closing as
authorized by the Court).

     The financial statements of the Company have been prepared
using accounting principles applicable to a going concern, which
assumes realization of assets and settlement of liabilities in
the normal course of business and in accordance with Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code".  Accordingly, all pre-petition
liabilities subject to compromise have been segregated in the
Consolidated Balance Sheet and classified as "Liabilities subject
to compromise under reorganization proceedings", at the estimated
amount of allowable claims.  The financial statements of the
Company do not purport to reflect or to provide for all of the
consequences of an ongoing Chapter 11 reorganization.
Specifically, but not all-inclusive, the financial statements of
the Company do not present: (a) the realizable value of assets on
a liquidation basis or the availability of such assets to satisfy
liabilities, (b) the amount which will ultimately be paid to
settle liabilities and contingencies which may be allowed in the
Chapter 11 reorganization, or (c) the effect of changes which may
be made resulting from a Plan of Reorganization.  The
appropriateness of using the going-concern basis is dependent
upon, among other things, confirmation of a Plan of
Reorganization, future profitable operations, the ability to
comply with debtor-in-possession financing agreements and the
ability to generate sufficient cash from operations to meet
obligations.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of
SWII and its subsidiaries, all of which are wholly-owned.  All
significant inter-company transactions have been eliminated.

BANKRUPTCY ACCOUNTING

     Since the Chapter 11 bankruptcy filing, the Company has
applied the provisions of SOP 90-7, which does not significantly
change the application of accounting principles generally
accepted in the United States of America; however, it does
require that the financial statements for periods including and
subsequent to filing the Chapter 11 petition distinguish
transactions and events that are directly associated with the
reorganization from the ongoing operations of

                            Page 92

the business.  As disclosed in the Consolidated Statement of
Operations, reorganization items consist of the write off of
unamortized debt issuance costs as of the Petition Date in 2003 of
$912,000 and professional fees directly associated with the
reorganization of $2,949,000 and $3,770,000 in 2004 and 2003,
respectively. Payments of  professional fees incurred totaled
approximately $2,838,000 and $2,963,000 for the years ended
December 31, 2004 and 2003, respectively.

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 revenue recognition and valuation
of inventory, long-lived assets, and deferred tax assets.  Actual
results could differ from those estimates.

REVENUE RECOGNITION

     The Company recognizes crop sale revenue upon shipment and
transfer of title and risk of loss to customers.  Packing
revenues and marketing commissions from third party growers are
recognized when the related services are provided.  Proprietary
product development revenues are recognized based upon product
sales by licensees.  Project development and management fees are
recorded when earned under the terms of the related agreement.

     Revenues attributable to one national retailer totaled
approximately $17,900,000 in 2004, $11,100,000 in 2003 and
$9,600,000 in 2002.   Revenue for another national retailer
totaled $13,300,000 in 2004 and $11,600,000 in 2003.  Export
sales accounted for approximately 9.9%, 12.4% and 12.1%, of the
Company's revenues for the years ended December 31, 2004, 2003
and 2002, respectively.  Service revenues and license revenues
were less than 10% of total revenues for each of the years in the
three-year period ended December 31, 2004.

RESEARCH AND DEVELOPMENT

     The Company incurs costs to research, develop and license to
third parties new varieties of proprietary products.  Research
and development costs are expensed as incurred.  Such costs were
approximately $3,195,000 for the year ended December 31, 2004,
$2,791,000 for the year ended December 31, 2003 and $2,424,000
for the year ended December 31, 2002 and are included in general
and administrative expenses in the Consolidated Statement of
Operations.

CASH AND CASH EQUIVALENTS

     The Company considers all short-term deposits with an
original maturity of three months or less to be cash equivalents.
The Company invests its excess cash in deposits with

                            Page 93

major international banks and short-term commercial paper and,
therefore, bears minimal risk.  At times these deposits exceed
federally insured limits. Such investments are stated at cost,
which approximates fair value, and are considered cash
equivalents for purposes of reporting cash flows.

RESTRICTED CASH

     In conjunction with the APA signed with BDCM in December
2004, Sun World funded approximately $3.3 million of cash into an
escrow account to cover $0.5 million in capped expense
reimbursement for actual and reasonable outside legal, financial
and other fees and expenses related to the acquisition and
approximately $2.8 million for a liquidated damages payment to be
paid if BDCM terminates the APA on account of an uncured breach
by Sun World as defined in the APA.

INVENTORIES

     Growing crops, harvested crops, and materials and supplies
are stated at the lower of cost or market, on a first-in, first-
out (FIFO) basis.  Growing and harvested crops inventory includes
direct costs and an allocation of indirect costs.

PROPERTY, PLANT, AND EQUIPMENT

     Property, plant, and equipment are stated at cost.

     The Company capitalizes direct and certain indirect costs
of planting and developing orchards and vineyards during the
development period, which varies by crop and usually ranges from
three to seven years.  Depreciation commences in the year
commercial production is achieved.

     Permanent land development costs, such as acquisition costs,
clearing, initial leveling and other costs required to bring the
land into a suitable condition for general agricultural use, are
capitalized and not depreciated since these costs have an
indefinite useful life.

     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, three to twenty-
five years for machinery and equipment, and five to thirty years
for permanent crops.

IMPAIRMENT OF LONG-LIVED ASSETS

     The Company annually evaluates its long-lived assets,
including intangibles, for potential impairment.  When
circumstances indicate that the carrying amount of the asset may
not be recoverable, as demonstrated by estimated future cash
flows, an impairment loss would be recorded based on fair value.
No assets were considered impaired at December 31, 2004 and 2003
(see Note 1).

                            Page 94

     During the years ended December 31, 2004, 2003 and 2002, the
Company incurred costs to remove certain underperforming crops,
primarily stonefruit, citrus, and wine grapes. The Company
recorded charges of $1,307,000, $926,000 and $3,497,000 in 2004,
2003 and 2002, respectively, in connection with the removal of
these crops which is shown under the heading "Removal of
underperforming crops" on the Consolidated Statement of
Operations.

INTANGIBLE AND OTHER ASSETS

     Water rights are stated at cost.  All costs directly
attributable to the development of such rights are being
capitalized by the Company which, to date, have not been
significant.

     Capitalized loan fees represent costs incurred to obtain debt
financing.  Such costs are amortized over the life of the related
loan.

     Trademark development costs represent legal costs incurred to
obtain and defend patents and trademarks related to the Company's
proprietary products throughout the world.  Such costs are
capitalized and amortized over their estimated useful life, which
ranges from 10 to 20 years.

     In October 1999, the Company entered into a management
agreement with Kingdom Agricultural Development Company (KADCO)
to develop and manage up to 100,000 acres of agricultural land in
southern Egypt called the Tushka project.  KADCO is controlled by
His Royal Highness Prince Alwaleed Bin Talal Bin Abdulaziz
Alsaud.  As compensation for project development and management,
the Company earned a quarterly fee of $312,500 based upon meeting
developmental milestones to be paid through an equity interest in
KADCO.  The management agreement expired on September 30, 2003.
The Company will receive licensing revenues from KADCO in the
future based upon plantings of proprietary varieties at the
Tushka project.  KADCO is currently engaged in a private
placement to raise the required funds to develop the project.
The Company anticipates receiving shares in KADCO for payment of
its project development and management fee in connection with the
completion of the private placement.  The amount of shares to be
received will be the current per share price used for the private
placement divided into the total amount of management fee earned
which is shown under the heading, "Receivable from KADCO to be
paid in common shares" in Note 6.

INCOME TAXES

     The Company is included in the consolidated federal and
combined state tax returns of Cadiz. The Company's current tax
liability is determined as though the Company filed its own
returns.  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 considered
more likely than not that some portion or all of the deferred tax
assets will not be realized.

                            Page 95

SUPPLEMENTAL CASH FLOW INFORMATION

     Cash payments for interest for the years ended December
31, 2004, 2003 and 2002 were $1,257,000, $1,748,000 and
$14,484,000, respectively.


NOTE 3 - ACCOUNTS RECEIVABLE
-----------------------------

     Accounts receivable consist of the following (dollars in
thousands):

                                               DECEMBER 31,
                                             2004      2003
                                             ----      ----
        Trade receivables                  $  3,719  $  4,054
        Other                                 2,745     3,447
                                           --------  --------

                                              6,464     7,501

        Less allowance for doubtful
         accounts                              (221)     (470)
                                           --------  --------

                                           $  6,243  $  7,031
                                           ========  ========

     Substantially all trade receivables are from large domestic
national and regional supermarket chain stores and produce
brokers and are unsecured.  Other receivables primarily include
juice grape and raisin sales, proceeds due from third party
marketers, receivables for international licensing, and other
miscellaneous receivables.


NOTE 4 - INVENTORIES
--------------------

   Inventories consist of the following (dollars in thousands):

                                              DECEMBER 31,
                                             2004      2003
                                             ----      ----
        Growing crops                     $   9,892  $ 10,427
        Materials and supplies                1,992     2,235
        Harvested product                       194       189
                                           --------  --------

                                           $ 12,078  $ 12,851
                                           ========  ========

     Depreciation related to permanent crops and related farming
equipment included in growing crop inventory totaled $1,771,
$1,833  and $2,131 at December 31, 2004, 2003 and  2002,
respectively.

                            Page 96

NOTE 5 - PROPERTY, PLANT, AND EQUIPMENT
---------------------------------------

   Property, plant, and equipment consist of the following
(dollars in thousands):

                                               DECEMBER 31,
                                              2004      2003
                                              ----      ----
        Land                               $ 43,600  $ 44,325
        Permanent crops                      54,088    56,218
        Developing crops                     10,129     9,413
        Buildings                            22,734    21,780
        Machinery and equipment              16,496    16,531
                                           --------  --------
                                            147,047   148,267
       Less accumulated depreciation        (42,400)  (40,455)
                                           --------  --------
                                           $104,647  $107,812
                                           ========  ========

     Depreciation expense for 2004, 2003 and 2002 was $5,630,
$6,521 and $6,156, respectively.


NOTE 6 - INTANGIBLE AND OTHER ASSETS
------------------------------------

     Intangible and other assets consist of the following
(dollars in thousands):

                                               DECEMBER 31,
                                              2004      2003
                                              ----      ----

        Water rights                       $  2,555  $  2,559
        Deferred loan costs, net                  -         7
        Long-term receivables                   369       502
        Capitalized trademark
         development, net                     1,909     1,903
        Receivable from KADCO to be paid
         in common shares                     5,000     5,000
                                           --------  --------

                                              9,833     9,971
        Valuation allowance                  (1,500)   (1,500)
                                           --------  --------

                                           $  8,333  $  8,471
                                           ========  ========

     Amortization expense of deferred loan costs was $7, $113 and
$802 in 2004, 2003 and 2002, respectively, and is included in
interest expense in the Consolidated Statement of Operations.
Amortization expense for capitalized trademark development was
$297, $352 and $302 in 2004, 2003, and 2002, respectively.
Future amortization of capitalized trademark development is as
follows (in thousands):  $302 - 2005; $302 - 2006; $294 - 2007;
$229 - 2008; $782 - 2009 and thereafter.

                            Page 97

NOTE 7 - ACCRUED LIABILITIES
----------------------------

     Accrued liabilities consist of the following (dollars in
thousands):

                                             DECEMBER 31,
                                            2004      2003
                                            ----      ----

        Payroll and benefits               $  2,611  $  1,931
        Other                                   382       349
                                           --------  --------

                                           $  2,993  $  2,280
                                           ========  ========


NOTE 8 - REVOLVING CREDIT FACILITIES
------------------------------------

Pre-petition financing:

     In November 2002, Sun World was notified by its seasonal
revolving lender that it would not renew the Revolving Credit
Facility for the 2003 growing season. The seasonal revolver
expired on November 30, 2002.  The Company sought and obtained
extensions from its lender through January 31, 2003. During the
extension period, the Company sought to obtain seasonal financing
from several different lenders.  Each of these lenders wanted to
have a first position on all of the Company's assets in order to
lend outside of a Chapter 11 proceeding.  This required the
holders of the First Mortgage Notes to modify their agreement
with the Company.  As outlined in Note 1, the Company was unable
to procure the financing with the consent of all parties. On
January 30, 2003, Sun World and certain of its subsidiaries filed
a voluntary petition for Chapter 11.

     At December 31, 2002, $4.4 million was outstanding under the
Revolving Credit Facility that was subsequently paid off with
proceeds from the DIP financing on January 31, 2003.

Debtor-In-Possession (DIP) financing:

   On January 31, 2003, the Bankruptcy Court approved an interim
$15 million dollar DIP financing facility.  On March 3, 2003, the
Bankruptcy Court approved a final DIP financing facility
agreement with the same lender.  The DIP financing, as amended,
provides for varying commitment levels based upon the Company's
seasonal borrowing requirements with a peak commitment level of
$35 million during the June through August time frame.  The DIP
financing during 2004 bore interest at the greater of Prime plus
4 percent or 8 percent, and is secured by substantially all of the
Company's assets.  The DIP financing agreement was amended in
November 2004 to (a) extend the maturity date to November 30, 2005;
(b) reduce the interest rate to either Prime plus 0% to 1% or
LIBOR plus 2% to 3% at the Company's election based upon trailing
12 month EBITDA levels; and (c) eliminate all financial covenants.
Borrowing availability is determined based on the lesser of: (1)
eligible percentages of inventory and accounts receivable plus a
specified amount starting at $15 million in March 2003 and
reduced

                            Page 98

by $150,000 per month thereafter; (2) certain multiples
of trailing 12 months EBITDA as defined in the credit agreement;
or (3) eligible percentage of the current value of all real
property.  The Company is required to meet certain customary
covenants.  Approximately $0 and $4.4 million was outstanding
under the DIP financing facility at December 31, 2004 and 2003,
respectively.


NOTE 9 - LONG-TERM DEBT
-----------------------

   At December 31, 2004 and 2003, the carrying amount of the
Company's outstanding debt is summarized as follows based upon
the original contractual maturities (dollars in thousands):


                                              DECEMBER 31,
                                             2004      2003
                                             ----      ----
     Amounts classified under Long-term debt:

   Series B First Mortgage Notes, interest
    payable semi-annually, with principal
    due in April 2004, interest at 11.25%
    (default interest at 12.25%)           $115,000  $115,000

   Unsecured term loan, interest payable
    quarterly, due December 31, 2002,
    default interest at LIBOR plus 5%         5,000     5,000

   Note payable to insurance company,
    quarterly installments of $120
    (including interest), due January 1,
    2005, interest at 7.75%                     654       654

   Other                                         77       201
                                           --------  --------

                                            120,731   120,855

   Less: Current portion                       (722)     (125)

         Amounts subject to compromise
          under reorganization proceedings (120,000) (120,000)
                                           --------  --------
                                           $      9  $    730
                                           ========  ========

     Pursuant to the Company's various loan agreements, the
contractual maturities of long-term debt outstanding (in
thousands) at December 31, 2004 are as follows: 2005 - $120,731
and 2006 - $9.  Included in these amounts are significant pre-
petition obligations for which payments have been suspended as a
result of the Chapter 11.  Therefore, the commitments shown above
will not reflect actual cash outlays in the future period.

                            Page 99

     As a result of the Chapter 11, all required principal
payments on pre-petition debt were suspended other than for
obligations classified as "Other" above.  For the period
subsequent to the Petition Date, interest on the debt classified
under "Liabilities subject to compromise under reorganization
proceedings" was not paid or accrued in accordance with SOP 90-7.
Contractual interest on these debt instruments at the default
rate for the years ending December 31, 2004 and 2003,
respectively was $14.0 million and $13.2 million in excess of
recorded interest of $0 and $1.1 million, respectively included
in the Consolidated Statement of Operations for these debt
instruments.

     In April 1997, the Company issued $115 million of Series A
First Mortgage Notes through a private placement.  The notes have
subsequently been exchanged for Series B First Mortgage Notes,
which are registered under the Securities Act of 1933 and are
publicly traded.  Prior to the Chapter 11 bankruptcy filing, the
First Mortgage Notes were secured by a first lien (subject to
certain permitted liens) on substantially all of the assets of
the Company and its subsidiaries other than growing crops, crop
inventories and accounts receivable and proceeds thereof, which
secured the Revolving Credit Facility.  With the entering into
the DIP Facility as described in Note 8, the note holders now
have a second position on substantially all of the Company's
assets for so long as the DIP Facility is outstanding.

     The First Mortgage Notes are also secured by the guarantees of
Coachella Growers, Inc., Sun Desert, Inc., Sun World/Rayo, and
Sun World International de Mexico S.A. de C.V. (collectively, the
"Sun World Subsidiary Guarantors") and by Cadiz.  Cadiz also
pledged all of the stock of Sun World as collateral for its
guarantee.  See Note 13 for additional discussion of the Cadiz
guarantee.

     In December 2000, Sun World entered into a two-year $5
million senior unsecured term loan.  In connection with obtaining
the loan, 50,000 shares of Cadiz' common stock as well as certain
warrants to purchase shares of Cadiz' common stock were issued.
The fair value of the stock and the warrants were recorded as a
debt discount and were fully amortized over the life of the loan
through December 31, 2002.  At December 31, 2002, the Company did
not repay the loan and thus, the Company was in default.  With
the default, pursuant to the terms of the agreement, the interest
rate was increased by 2%. In connection with the Company's
Chapter 11 filing, all principal and interest payments on this
obligation have been suspended.

                            Page 100

NOTE 10 - LIABILITIES SUBJECT TO COMPROMISE UNDER
          REORGANIZATION PROCEEDINGS
-------------------------------------------------

     Under bankruptcy law, actions by creditors to collect
indebtedness Sun World owed prior to the Petition Date are stayed
and certain other pre-petition contractual obligations may not be
enforced against the Company.  The Company has received approval
from the Bankruptcy Court to pay certain pre-petition liabilities
including employee salaries and wages, benefits, other employee
obligations, and certain grower liabilities entitled to trust
protection under the Perishable Agricultural Commodities Act
(PACA).  Except for certain secured debt obligations, all pre-
petition liabilities have been classified as "Liabilities subject
to compromise under reorganization proceedings" in the
Consolidated Balance Sheet.  Adjustments to the claims may result
from negotiations, payments authorized by Bankruptcy Court order,
rejection of executory contracts including leases, or other
events.

     Pursuant to an order of the Bankruptcy Court, Sun World
mailed notices to all known creditors that the deadline for
filing proofs of claim with the Court was August 29, 2003.  An
estimated 340 claims were filed as of August 29, 2003.  Amounts
that Sun World has recorded are in many instances different from
amounts filed by our creditors.  Differences between amounts
scheduled by Sun World and claims by creditors are being
investigated and resolved in connection with our claims
resolution process.  Until the process is complete, the ultimate
number and amount of allowable claims cannot be ascertained.  The
ultimate resolution of these claims will be based upon the final
plan of reorganization. Pursuant to the APA (see Note 1), holders
of trade claims totaling an estimated $3.0 million entered into a
trade vendor agreement with SW LLC  and SW LLC assumed those
claims upon closing of the asset purchase.

     Liabilities subject to compromise under reorganization
proceedings are summarized as follows (dollars in thousands):

                                              DECEMBER 31,
                                             2004      2003
                                             ----      ----

        Accounts payable                   $  4,092  $  4,311
        Interest payable                      3,795     3,795
        Due to parent company (see note 13)  13,500    13,500
        Long-term debt (see note 9)         120,000   120,000
                                           --------  --------

            Total                          $141,387  $141,606
                                           ========  ========

                            Page 101

NOTE 11 - INCOME TAXES
----------------------

     Significant components of the Company's deferred income tax
assets and liabilities as of December 31, 2004 and 2003 are as
follows (dollars in thousands):

                                              DECEMBER 31,
                                             2004      2003
                                             ----      ----
   Deferred tax liabilities:
        Net fixed assets basis difference  $  9,615  $  9,111
        Other                                    48        48
                                           --------  --------

          Total deferred tax liabilities      9,663     9,159
                                           --------  --------

   Deferred tax assets:
        Net operating losses                 25,781    28,079
        State taxes                           1,853     1,853
        Reserves and accruals                   210       748
        Other                                   886       989
                                           --------  --------
          Total deferred tax assets          28,730    31,669

   Valuation allowance for deferred
    tax assets                              (24,514)  (27,957)
                                           --------  --------

          Net deferred tax liability       $  5,447  $  5,447
                                           ========  ========

     As of December 31, 2004, the Company has net operating loss
(NOL) carryforwards of approximately $71.1 million for federal
income tax purposes.  Such carryforwards expire in varying
amounts through the year 2023.  As of December 31, 2004, the
Company has state NOL carryforwards of approximately $44.6
million.  These NOL carryforwards expire in varying amounts
through the year 2014.

     A reconciliation of the income tax expense (benefit) to the
statutory federal income tax rate is as follows (dollars in
thousands):

                                       YEAR ENDED DECEMBER 31,
                                       2004     2003      2002
                                       ----     ----      ----

  Expected federal income tax
   expense (benefit) at 34%         $  2,397  $ (3,388) $ (3,350)
  Loss with no tax benefit provided        -     2,696     3,322
  Utilization of net
   operating losses                   (3,009)        -         -
  Federal AMT refund                      30         -       (73)
  State income tax                         7         2         3
  Foreign withholding taxes               52       100        68
  Restructuring costs                    588       661         -
  Other non-deductible expenses           24        31        28
                                    --------  --------  --------

       Income tax expense (benefit) $     89  $    102  $     (2)
                                    ========  ========  ========

                            Page 102

NOTE 12 - EMPLOYEE BENEFIT PLANS
--------------------------------

     The Company participates in the Cadiz Inc. 401(k) Plan for its
employees. Employees must work 1,000 hours annually and have
completed one year of service to be eligible to participate in
this plan.  The Company matches 100% of the first three percent
deferred by an employee and 50% of the next two percent deferred.
For those hourly employees covered under a collective bargaining
agreement, contributions are made to a multi-employer pension
plan in accordance with negotiated labor contracts and are
generally based on the number of hours worked.  Total Company
contributions to these plans (in thousands) totaled $426 in 2004,
$296 in 2003 and $266 in 2002.


NOTE 13 - RELATED PARTY TRANSACTIONS
------------------------------------

     In September 1996, the Company and Cadiz entered into a 10-
year services agreement which had three separate components:  (1)
the services agreement itself under which Cadiz provided
management and financial services to the Company in exchange for
an annual management fee of $1.5 million and reimbursement of
certain other expenses incurred on behalf of the Company; (2) an
agricultural lease of Cadiz-owned irrigated farmland in San
Bernardino County consisting primarily of citrus and grapes for
which the Company paid annual land rent of $250,000; and (3) a
tax sharing agreement which provided for Cadiz and Sun World to
file a consolidated tax return with Sun World paying to Cadiz an
amount equal to its current tax liability as though Sun World
filed its own returns.  Additionally, the Company had an
intercompany revolving credit agreement whereby the Company could
borrow from Cadiz as needed.  As of December 31, 2002, $12.2
million was owed to Cadiz under the intercompany revolving credit
agreement and $1.3 million was payable to Cadiz under the
services agreement.

     Effective July 1, 2003, the Company and Cadiz agreed to an
amended agricultural lease approved by the Bankruptcy Court
whereby the Company would lease approximately 370 acres of lemons
and table grapes for the 2004 harvest season with rent equal to
50% of the net farming profit from the sale of the crops.

     In November 2003, the Company, Cadiz and holders of the
majority of the First Mortgage Notes entered into a settlement
agreement with respect to the various claims between the parties
which was approved by the Bankruptcy Court.  The settlement
agreement provided for the following:  (1) Cadiz would be allowed
a general unsecured claim of $13.5 million in full and final
settlement of all of its claims against the Company; (2) the
Company and Cadiz consented to the termination of all contracts
and agreement to which Cadiz and the Company are parties
including the services agreement and tax sharing agreement
described above but excluding the agricultural lease; (3) Cadiz
waived any contention that it was entitled to a recovery on
account of its equity interest in Sun World.

     In addition, pursuant to the settlement agreement, Cadiz
agreed to assign its $13.5 million claim to a trust for the
benefit of those holders of First Mortgage Notes who elect to
receive their

                            Page 103

prorata share of this trust.  Further, Cadiz agreed to pledge its
equity ownership in the Company to the trust.  The $13.5 million
claim is classified under the caption "Liabilities subject to
compromise under reorganization proceedings" on the Consolidated
Balance Sheet at December 31, 2004 and 2003.

     The Company made payments to Cadiz of $0 million for 2004,
$0.3 million for 2003, and $1.9 million for 2002, pursuant to the
services agreement (including the agricultural lease) described
above.


NOTE 14 - NON-RECURRING COMPENSATION EXPENSE
--------------------------------------------

     In 2001, Cadiz issued 12,034 deferred stock units to certain
senior managers of Sun World.  These deferred stock units were
issued in exchange for the cancellation of 22,600 fully vested
options to purchase the Cadiz common stock held by senior
managers. In accordance with the terms of the Stock Option
Exchange Agreements, the number of the deferred stock units
issued was calculated based on the average closing price for the
10 business days following the filing of the Cadiz Annual Report
on Form 10-K for the year ended December 31, 2000 on March 29,
2001.  Each deferred stock unit is exchangeable for one share of
Cadiz common stock at the end of the deferral period elected by
the holder.  The Company recorded a one-time charge of $2,953,000
in 2001 and no cash was expended in connection with the issuance
of the deferred stock units.


NOTE 15 - INTELLECTUAL PROPERTY DEFENSE AND PROFESSIONAL FEES
-------------------------------------------------------------

     The Company is involved with various litigation proceedings
both domestically and internationally to protect its proprietary
fruit varieties from unauthorized use.  The Company is currently
involved in proceedings with domestic growers to enjoin their
unauthorized production of one of the Company's proprietary
grapevines, the Sugraone table grape.  During 2002, a California
state court issued a ruling adverse to Sun World in one of these
proceedings.  In March 2003, the appeals court upheld the
decision reached by the California state court. The Company wrote
off capitalized legal costs related to defending its intellectual
property rights to this variety as of December 31, 2002 resulting
in a charge of $1,097,000.

     As described in Note 1, the Company tried unsuccessfully to
restructure its debt and ultimately filed for Chapter 11 on
January 30, 2003.  In connection with these efforts, the Company
incurred $614,000 of professional fees.  As a result of the
unsuccessful debt restructuring, these costs have been written
off as of December 31, 2002.

                            Page 104

NOTE 16 - CONTINGENCIES
-----------------------

     In the normal course of its agricultural operations, the
Company handles, stores, transports and dispenses products
identified as hazardous materials.  Regulatory agencies
periodically conduct inspections and, currently, there are no
pending claims with respect to hazardous materials.

     The Company is involved in various other legal and
administrative proceedings and claims.  In the opinion of
management, the ultimate outcome of each proceeding or all such
proceedings combined will not have a material adverse impact on
the Company's financial statements.

                            Page 105