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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549


FORM 10-Q


(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 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, CALIFORNIA 90017
(Address of principal executive offices) (Zip Code)

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

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 X No
--- ---

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

Yes No X
--- ---

As of September 30, 2004, the Registrant had 6,612,674 shares of
common stock, par value $0.01 per share, outstanding.

CADIZ INC.

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 PAGE
- ---------------------------------------------------------------------

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

1. CADIZ INC. CONSOLIDATED FINANCIAL STATEMENTS

Statement of Operations for the three months ended June 30,
2004 and 2003. . . . . . . . . . . . . . . . . . . . . . . . .1

Statement of Operations for the six months ended June 30,
2004 and 2003. . . . . . . . . . . . . . . . . . . . . . . . .2

Balance Sheet as of June 30, 2004 and December 31, 2003. . . .3

Statement of Cash Flows for the six months ended June 30,
2004 and 2003. . . . . . . . . . . . . . . . . . . . . . . . .4

Statement of Stockholders' Equity for the six months ended
June 30, 2004. . . . . . . . . . . . . . . . . . . . . . . . .5

Notes to the Consolidated Financial Statements. . . . . . . . 6

SUN WORLD INTERNATIONAL, INC. CONSOLIDATED FINANCIAL STATEMENTS

Statement of Operations for the three months ended June 30,
2004 and 2003. . . . . . . . . . . . . . . . . . . . . . . . 15

Statement of Operations for the six months ended June 30,
2004 and 2003. . . . . . . . . . . . . . . . . . . . . . . . 16

Balance Sheet as of June 30, 2004 and December 31, 2003. . . 17

Statement of Cash Flows for the six months ended June 30,
2004 and 2003. . . . . . . . . . . . . . . . . . . . . . . . 18

Statement of Stockholder's Equity for the six months ended
June 30, 2004. . . . . . . . . . . . . . . . . . . . . . . . 19

Notes to the Consolidated Financial Statements. . . . . . . .20


2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . 24

3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . 32

4. CONTROLS AND PROCEDURES. . . . . . . . . . . . . . . . . . . 33

PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . .33




CADIZ INC.

CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

- -----------------------------------------------------------------------
FOR THE THREE MONTHS
ENDED JUNE 30,
($ IN THOUSANDS EXCEPT PER SHARE DATA) 2004 2003
- -----------------------------------------------------------------------

Revenues $ 9 $ 97
--------- ---------
Costs and expenses:
Cost of sales - 50
General and administrative 479 743
Depreciation and amortization 131 142
--------- ---------

Total costs and expenses 610 935
--------- ---------

Operating loss (601) (838)

Interest expense, net 2,123 585
--------- ---------

Net loss ( 2,724) (1,423)

Less: Preferred stock dividends - 282

Imputed dividend on preferred stock - 246
--------- ---------

Net loss applicable to common stock $ (2,724) $ (1,951)
========= =========


Basic and diluted net loss per common share $ (0.41) $ (0.92)
========= =========

Basic and diluted weighted average shares
outstanding 6,613 2,132
========= =========

See accompanying notes to the consolidated financial statements.

Page 1



CADIZ INC.

CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

- -----------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED JUNE 30,
($ IN THOUSANDS EXCEPT PER SHARE DATA) 2004 2003
- -----------------------------------------------------------------------

Revenues $ 20 $ 3,143
--------- ---------

Costs and expenses:
Cost of sales - 2,729
General and administrative 1,017 2,380
Write off of investment in subsidiary - 195
Reorganization costs - 655
Depreciation and amortization 262 479
--------- ---------

Total costs and expenses 1,279 6,438
--------- ---------

Operating loss (1,259) (3,295)

Interest expense, net 4,280 2,772
--------- ---------

Net loss (5,539) (6,067)

Less: Preferred stock dividends - 563
Imputed dividend on preferred stock - 492
--------- ---------

Net loss applicable to common stock $ (5,539) $ (7,122)
========= =========

Basic and diluted net loss per common share $ (0.84) $ (3.60)
========= =========

Basic and diluted weighted average shares
outstanding 6,580 1,981
========= =========

See accompanying notes to the consolidated financial statements.

Page 2



CADIZ INC.

CONSOLIDATED BALANCE SHEET (UNAUDITED)

- -----------------------------------------------------------------------
JUNE 30, DECEMBER 31,
($ IN THOUSANDS) 2004 2003
- -----------------------------------------------------------------------

ASSETS

Current assets:
Cash and cash equivalents $ 2,066 $ 3,422
Prepaid expenses and other 359 248
--------- ---------

Total current assets 2,425 3,670

Property, plant, equipment and water
programs, net 39,257 39,514
Goodwill 3,813 3,813
Restricted cash 1,436 2,142
Other assets 218 387
--------- ---------

$ 47,149 $ 49,526
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 624 $ 857
Accrued liabilities 1,268 1,545
Long-term debt, current portion 33,575 -
--------- ---------

Total current liabilities 35,467 2,402

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

Commitments and contingencies

Stockholders' equity:
Series F convertible preferred stock -
$.01 par value:
100,000 shares authorized; shares
issued and outstanding - 100,000 at
June 30, 2004 and December 31, 2003 1 1

Common stock - $.01 par value; 70,000,000
shares authorized; shares issued and
outstanding - 6,612,674 at June 30, 2004
and 6,471,385 at December 31, 2003 66 65
Additional paid-in capital 185,977 184,974
Accumulated deficit (174,362) (168,823)
--------- ---------

Total stockholders' equity 11,682 16,217
--------- ---------
$ 47,149 $ 49,526
========= =========

See accompanying notes to the consolidated financial statements.

Page 3



CADIZ INC.

CONSOLIDATED STATEMENT OF CASHFLOWS (UNAUDITED)

- -----------------------------------------------------------------------
FOR THE SIX MONTHS
ENDED JUNE 30,
($ IN THOUSANDS) 2004 2003
- -----------------------------------------------------------------------

Cash flows from operating activities:
Net loss $ (5,539) $ (6,067)
Adjustments to reconcile net loss to
net cash used for operating activities:
Depreciation and amortization 2,312 1,062
Write off of investment in subsidiary - 195
Loss on disposal of assets - 43
Interest expense added to loan principal 707 -
Stock issued for services - 72
Compensation charge for deferred stock
units - 106
Accrued interest on loan to officer - (29)
Changes in operating assets and
liabilities:
Decrease in accounts receivable - 1,488
Increase in inventories - (3,043)
Increase in prepaid expenses and other (111) (557)
Increase (decrease) in accounts payable (233) 1,567
Increase in accrued liabilities 789 1,718
--------- ---------
Net cash used for operating activities (2,075) (3,445)
--------- ---------

Cash flows from investing activities:
Disposal of subsidiary - (1,019)
Additions to property, plant and equipment (6) (140)
Additions to developing crops - (198)
Decrease in restricted cash 706 -
Payment of loan to officer - 38
(Increase) decrease in other assets 19 (103)
--------- ---------

Net cash provided by (used) for
investing activities 719 (1,422)
--------- ---------

Cash flows from financing activities:
Proceeds from issuance of long-term debt - 135
Net proceeds from issuance of stock - 1,680
Proceeds from convertible note payable - 200
Principal payments on long-term debt - (7)
--------- ---------

Net cash provided by financing
activities - 2,008
--------- ---------

Net decrease in cash and cash equivalents (1,356) (2,859)

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

Cash and cash equivalents, end of period $ 2,066 $ 370
========= =========

See accompanying notes to the consolidated financial statements.

Page 4



CADIZ INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS'EQUITY (UNAUDITED)

- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 2004
($ IN THOUSANDS)
- --------------------------------------------------------------------------------
PREFERRED STOCK COMMON STOCK ADDITIONAL TOTAL
--------------- ------------ PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT DEFICIT
------ ------ ------ ------ ------- ------- -------

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
services - - 140,000 1 349 - 350

Net loss - - - - - (5,539) (5,539)
------- ---- --------- ------ --------- --------- ---------

Balance as
of June
30, 2004 100,000 $ 1 6,612,674 $ 66 $ 185,977 $(174,362) $ 11,682
======= ==== ========= ====== ========= ========= =========

See accompanying notes to the consolidated financial statements.

Page 5



CADIZ INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
==============================================

NOTE 1 - BASIS OF PRESENTATION
- ------------------------------

GENERAL

The Consolidated Financial Statements have been prepared by
Cadiz Inc., sometimes referred to as "Cadiz" or "the Company",
without audit and should be read in conjunction with the
Consolidated Financial Statements and notes thereto included in
the Company's Form 10-K for the year ended December 31, 2003. On
January 30, 2003, Sun World International, Inc. and its
subsidiaries (collectively "Sun World") filed voluntary petitions
under Chapter 11 of the Bankruptcy Code. See "General Development
of Business", in the Company's Form 10-K for the year ended
December 31, 2003. 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. At January 31, 2003, Cadiz had a net
investment in Sun World of approximately $195 thousand consisting
of loans and other amounts due from Sun World of approximately
$13,500,000 less losses in excess of investments in Sun World of
$13,305,000. The Company wrote off the net investment in Sun World
of $195 thousand at the Chapter 11 filing date because it did not
anticipate being able to recover its investments. The foregoing
Consolidated Financial Statements include the accounts of the
Company and, until January 30, 2003, those of Sun World, and contain
all adjustments, consisting only of normal recurring adjustments,
which the Company considers necessary for a fair presentation.
The unaudited consolidated financial information furnished herein
has been prepared in accordance with generally accepted accounting
principles and reflects all adjustments, consisting only of normal
recurring adjustments, which in the opinion of management, are
necessary to fairly state the Company's financial position, the
results of its operations and its cash flows for the periods
presented.

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and the accompanying notes. Actual
results could differ from those estimates and such differences
may be material to the financial statements. This quarterly
report on Form 10-Q should be read in conjunction with the
Company's Form 10-K for the year ended December 31, 2003. The
results of operations for the three and six months ended June 30,
2004 are not necessarily indicative of results for the entire
fiscal year ending December 31, 2004.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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
$5.5 million for the six months ended June 30, 2004 and $11.5
million for the year ended December 31, 2003 and had a working
capital deficit of $33.0 million at June 30, 2004 and used cash
in operations of $2.1 million in the six months ended June 30,
2004 and $6.6 million for the year ended December 31, 2003. In
addition, Sun World filed for reorganization under Chapter 11 of
the

Page 6

Bankruptcy Code. 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 provisions of
financing agreements and the ability to generate sufficient cash
from operations to meet obligations.

During the quarter ended June 30, 2003, the Company raised $1.7
million cash and during the quarter ended December 31, 2003, $8.6
million cash through private sales of common stock. Based on
current forecasts, the Company believes it has sufficient
resources to fund normal operations until May 2005. 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 be consolidated with those of Cadiz, but instead,
Cadiz accounts for its investment in Sun World on the cost basis
of accounting.

GOODWILL

The Company has $3.8 million of goodwill which resulted from
a merger in May 1988 between two companies, which eventually
became known as Cadiz Inc. Goodwill is not amortized but is
tested for impairment annually in the first quarter, or earlier
if events occur which require an impairment analysis be
performed. The Company performed an impairment test of its
goodwill in the first quarter of 2004 and determined that its
goodwill was not impaired.

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

Page 7

may not be recoverable. As a result of the actions taken by
Metropolitan in the fourth quarter of 2002 as described in Note
1 in Cadiz' Annual Report on Form 10- K for the year ended
December 31, 2002, the Company, with the assistance of an
independent valuation firm, evaluated the carrying value of
its water program and determined that the asset was not impaired
and that the costs will be recovered through the ultimate sale or
operation of the project.

STOCK-BASED COMPENSATION

As permitted under Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation", 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 notes to the financial statements. 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):

THREE AND SIX MONTHS ENDED JUNE 30
2004 2003
THREE MONTHS SIX MONTHS THREE MONTHS SIX MONTHS
------------ ---------- ------------ ----------

Net loss applicable to
common stock:
As reported $ (2,724) $ (5,539) $ (1,951) $ (7,122)
Expense under
SFAS 123 (14) (14) (24) (74)
--------- --------- --------- ---------
Pro forma $ (2,738) $ (5,553) $ (1,975) $ (7,196)
========= ========= ========= =========

Net loss per common share:
As reported $ (0.41) $ (0.84) $ (0.92) $ (3.60)
Expense under
SFAS 123 (0.00) (0.00) (0.01) (0.03)
--------- --------- --------- ---------
Pro forma $ (0.41) $ (0.84) $ (0.93) $ (3.63)
========= ========= ========= =========

See Note 2 to the Consolidated Financial Statements included
in the Company's Form 10-K for a discussion of the Company's
accounting policies.

NEW ACCOUNTING PRONOUNCEMENTS

In March 2004, the consensus of Emerging Issues Task Force (EITF)
Issue No. 03-06, Participating Securities and the Two-Class Method
under FASB Statement 128, was published. EITF Issue No. 03-06
addresses the computations of earnings per share

Page 8

by companies that have issued securities other than common stock that
contractually entitle the holder to participate in dividends and earnings
of the company. Further guidance on the application and allocations of
the two-class method of calculating earnings per share is also included.
The provisions of EITF Issue No. 03-06 will be effective for reporting
periods beginning after March 31, 2004. The adoption of this guidance
is not expected to have significant impact on the Company's financial
results of operations and financial position.


NOTE 2 - PROPERTY, PLANT, EQUIPMENT AND WATER PROGRAMS
- ------------------------------------------------------

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


JUNE 30, DECEMBER 31,
2004 2003
---- ----
Land $ 22,010 $ 22,010
Permanent crops 6,494 6,494
Developing crops 192 192
Water programs 14,274 14,274
Buildings 1,408 1,408
Machinery and equipment 3,596 3,590
--------- ---------

47,974 47,968
Less accumulated depreciation (8,717) (8,454)
--------- ---------

$ 39,257 $ 39,514
========= =========


NOTE 3 - DEBT
- -------------

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 can obtain
further extensions through September 30, 2006, by maintaining
sufficient balances, among other conditions, in a cash collateral
account with the lender. At the closing of the secured term
lending, the Company deposited into the lender's cash collateral
account the sum of $2,142,000. The deposit, which is shown on the
balance sheet as Restricted Cash, 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.

Interest under the amended credit facilities is payable
semiannually on March 31 and September 30 of each year 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 will be added to
the outstanding principal balance.

On March 31, 2004, the Company elected the 4% cash and 8%
PIK option. Accordingly, 4% interest from October 1, 2003 in the
amount of $0.7 million was paid from the restricted cash

Page 9

account leaving a balance of $1.4 million. On the same date, the accrued
8% PIK portion in the amount of $1.4 million was added to the principal
balance of the loan.

At June 30, 2004, the $33.6 million principal balance of the
loan represents the original borrowing of $35.0 million increased
by the $1.4 million above less $2.8 million being the unamortized
portion of the debt discount resulting from the issuance of the
Series F preferred stock at the time of the loan extension.

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 the Company's
filing on Form 10-K for the year ended December 31, 2003, 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 Notes
include covenants that do not allow for the payment of dividends
by the Company other than out of cumulative net income.

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.

Page 10

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Condensed consolidating financial information for the six
months ended June 30, 2003 for the Company is as follows.
Consolidating balance sheet information at June 30, 2004 and
December 31, 2003, consolidating financial information for the
three months ended June 30, 2003 and 2004, and consolidating
financial information for the six months ended June 30, 2004 is
not presented as Sun World was deconsolidated effective January
30, 2003 (in thousands):

CONSOLIDATING STATEMENT OF
OPERATIONS INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 2003
($ IN THOUSANDS)
CADIZ SUN WORLD ELIMINATIONS CONSOLIDATED
----- --------- ------------ ------------

Revenues $ 284 $ 3,005 $ (146) $ 3,143
--------- --------- --------- ---------
Costs and expenses:
Cost of sales 97 2,653 (21) 2,729
General and
administrative 1,798 707 (125) 2,380
Write off of
investment in
subsidiary 195 - - 195
Reorganization
costs - 655 - 655
Depreciation and
amortization 289 190 - 479
--------- --------- --------- ---------

Total costs and
expenses 2,379 4,205 (146) 6,438
--------- --------- --------- ---------

Operating profit
(loss) (2,095) (1,200) - (3,295)

Income (loss) from
subsidiary (2,469) - 2,469 -


Interest expense, net 1,503 1,269 - 2,772
--------- --------- --------- ---------

Net income (loss) (6,067) (2,469) 2,469 (6,067)

Less: Preferred
stock
dividend 563 - - 563
Imputed
dividend
on
preferred
stock 492 - - 492
--------- --------- --------- ---------

Net income (loss)
applicable to
common stock $ (7,122) $ (2,469) $ 2,469 $ (7,122)
========= ========= ========= =========

Page 11


CONSOLIDATING STATEMENT OF
CASH FLOW INFORMATION
SIX MONTHS ENDED JUNE 30, 2003
CADIZ SUN WORLD ELIMINATIONS CONSOLIDATED
----- --------- ------------ ------------
Net cash used for
operations $ (1,742) $ (1,703) $ - $ (3,445)
--------- --------- --------- ---------

Cash flows from
investing activities:
Disposal of
subsidiary - (1,019) - (1,019)
Additions to
property, plant
and equipment - (140) - (140)
Additions to
developing crops (1) (197) - (198)
Payment of loan
to officer 38 - - 38
Decrease (increase)
in other assets 6 (109) - (103)
--------- --------- --------- ---------

Net cash provided by
(used for)
investing activities 43 (1,465) - (1,422)
--------- --------- --------- ---------

Cash flows from
financing activities:
Net proceeds from
issuance of stock 1,680 - - 1,680
Proceeds from
issuance of
long-term debt - 135 - 135
Proceeds from
convertible note
payable 200 - - 200
Principal payments
on long-term debt - (7) - (7)
--------- --------- --------- ---------

Net cash provided by
financing
activities 1,880 128 - 2,008
--------- --------- --------- ---------

Net increase
(decrease) in cash
and cash equivalents 181 (3,040) - (2,859)

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

Cash and cash
equivalents, end of
period $ 370 $ - $ - $ 370
========= ========= ========= =========

Page 12


NOTE 4 - 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,
convertible debt, and preferred stock that are convertible into
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 1,751,000 shares (including Series F
preferred stock convertible into 1,729,000 shares of common stock)
and 323,000 shares for the three months ended June 30, 2004
and 2003, respectively. For the six months ended June 30, 2004
and 2003, weighted average shares outstanding would have increased
by approximately 1,750,000 shares and 184,000 shares, respectively.


NOTE 5 - SEGMENT INFORMATION
- ----------------------------

Financial information by reportable business segment is
reported in the tables below. The changes in the agricultural
segment for the six months ended June 30, 2004 are due to the
deconsolidation of Sun World in January 2003.


THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2004 2003 2004 2003
---- ---- ---- ----
External sales
Water Resources $ 9 $ 97 $ 20 $ 138
Agricultural - - - 3,005
--------- --------- --------- ---------
Consolidated $ 9 $ 97 $ 20 $ 3,143
========= ========= ========= =========

Inter-segment sales
Water Resources $ - $ - $ - $ 146
Agricultural - - - (146)
--------- --------- --------- ---------
Consolidated $ - $ - $ - $ -
========= ========= ========= =========

Total sales
Water Resources $ 9 $ 97 $ 20 $ 284
Agricultural - - - 3,005
Other - - - (146)
--------- --------- --------- ---------
Consolidated $ 9 $ 97 $ 20 $ 3,143
========= ========= ========= =========

Income (loss)
before tax

Page 13

Water Resources $ (601) $ (838) $ (1,259) $ (1,900)
Agricultural - - (1,200)
Interest expense (2,123) (585) (4,280) (2,772)
Other - - - (195)
--------- --------- --------- ---------
Consolidated $ (2,724) $ (1,423) $ (5,539) $ (6,067)
========= ========= ========= =========

June 30, December 31,
2004 2003
Assets
Water Resources $ 47,149 $ 49,526
Agricultural - -
--------- ---------
Consolidated $ 47,149 $ 49,526
========= =========

Page 14



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

CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
- -----------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30,
($ IN THOUSANDS) 2004 2003
- -----------------------------------------------------------------------


Revenues $ 37,069 $ 23,723
--------- ---------

Costs and expenses:
Cost of sales 27,878 19,063
General and administrative 2,083 2,210
Removal of underperforming crops 608 86
Depreciation and amortization 1,911 1,945
--------- ---------

Total costs and expenses 32,480 23,304
--------- ---------

Operating profit 4,589 419

(Gain) loss on sale of property (1,013) 258

Interest expense, net (contractual interest
for 2004 and 2003, respectively, was
$4,013 and $4,134) 491 534
--------- ---------

Income (loss) before reorganization items
and income taxes 5,111 (373)

Reorganization items:
Professional fees 590 1,266

--------- ---------
Net income (loss) before income taxes 4,521 (1,639)

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

Net income (loss) $ 4,521 $ (1,639)
========= =========

See accompanying notes to the consolidated financial statements.

Page 15



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

CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
- -----------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30,
($ IN THOUSANDS) 2004 2003
- -----------------------------------------------------------------------

Revenues $ 49,346 $ 33,284
--------- ---------

Costs and expenses:
Cost of sales 39,133 28,134
General and administrative 4,486 4,356
Removal of underperforming crops 608 86
Depreciation and amortization 2,385 2,471
--------- ---------

Total costs and expenses 46,612 35,047
--------- ---------

Operating profit (loss) 2,734 (1,763)

(Gain) loss on sale of property (1,165) 258

Interest expense (contractual interest for
2004 and 2003, respectively, was
$7,928 and $8,163) 884 2,137
--------- ---------

Income (loss) before reorganization items
and income taxes 3,015 (4,158)

Reorganization items:
Debt issuance costs - 912
Professional fees 1,008 2,631
--------- ---------

Total reorganization items 1,008 3,543
--------- ---------

Income (loss) before income taxes 2,007 (7,701)

Income tax expense 62 20
--------- ---------

Net income (loss) $ 1,945 $ (7,721)
========= =========

See accompanying notes to the consolidated financial statements.

Page 16



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

CONSOLIDATED BALANCE SHEET (UNAUDITED)
- -----------------------------------------------------------------------
JUNE 30, DECEMBER 31,
($ IN THOUSANDS) 2004 2003
- -----------------------------------------------------------------------

ASSETS

Current assets:
Cash and cash equivalents $ 852 $ 1,548
Accounts receivable, net 31,320 7,031
Inventories 25,070 12,851
Prepaid expenses and other 1,866 1,817
--------- ---------

Total current assets 59,108 23,247

Property, plant, equipment and water
programs, net 106,449 107,812

Intangible assets 1,906 1,903

Other assets 6,561 6,568
--------- ---------

Total assets $ 174,024 $ 139,530
========= =========

LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
Accounts payable $ 17,076 $ 5,689
Accrued liabilities 3,640 2,280
Revolving credit facility 24,388 4,423
Long-term debt, current portion 103 125
--------- ---------

Total current liabilities 45,207 12,517

Long-term debt 691 730

Deferred income taxes 5,447 5,447

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

Total liabilities not subject to
compromise 51,362 19,059

Liabilities subject to compromise under
reorganization proceedings 141,496 141,606

Commitments and contingencies

Stockholder's deficit:
Common stock, $.01 par value, 300,000
shares authorized; 42,000 shares issued
and outstanding - -
Additional paid-in capital 39,479 39,123
Accumulated deficit (58,313) (60,258)
--------- ---------

Total stockholder's deficit (18,834) (21,135)
--------- ---------

Total liabilities and stockholders' deficit $ 174,024 $ 139,530
========= =========

See accompanying notes to the consolidated financial statements.

Page 17



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

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
- -----------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30,
($ IN THOUSANDS) 2004 2003
- -----------------------------------------------------------------------

Cash flows from operating activities:
Net income (loss) $ 1,945 $ (7,721)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 2,392 2,563
Write-off of debt issuance costs - 912
(Gain) loss on disposal of assets (1,165) 258
Removal of under performing crops 608 86
Shares of KADCO stock earned for services - (625)
Compensation charge for deferred stock
units 20 144
Changes in operating assets and
liabilities:
Increase in accounts receivable (24,289) (13,071)
Increase in inventories (11,735) (13,975)
Decrease (increase) in prepaid expenses
and other (49) (1,022)
Increase in accounts payable 11,387 11,963
Increase (decrease) in accrued
liabilities 1,360 430
Decrease in due to parent - (47)
Increase (decrease) in other liabilities (12) (10)
--------- ---------

Net cash used for operating activities
before reorganization items (19,538) (20,115)
--------- ---------

Increase in liabilities subject to compromise
under reorganization proceedings (110) 525
--------- ---------

Net cash used for operation activities (19,648) (19,590)
--------- ---------

Cash flows from investing activities:
Additions to property, plant and equipment (1,597) (556)
Additions to developing crops (2,031) (1,298)
Proceeds from disposal of property, plant
and equipment 2,824 844
(Increase) decrease in other assets (148) (189)
--------- ---------

Net cash used for investing activities (952) (1,199)
--------- ---------

Cash flows from financing activities:
Proceeds from issuance of long-term debt - 136
Principal payments on long-term debt (61) (916)
Borrowings from intercompany revolver, net - 51
Proceeds from short-term borrowings 19,965 22,425
--------- ---------

Net cash provided by financing activities 19,904 21,696
--------- ---------

Net increase (decrease) in cash and cash
equivalents (696) 907

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

Cash and cash equivalents at end of period $ 852 $ 3,947
========= =========

See accompanying notes to the consolidated financial statements.

Page 18



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

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2004
($ IN THOUSANDS)
- --------------------------------------------------------------------------------
ADDITIONAL TOTAL
COMMON STOCK PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT DEFICIT
------ ------ ------- ------- -------
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 - - - 1,945 1,945
--------- ------ -------- --------- ---------
Balance as of
June 30, 2004 42,000 $ - $ 39,479 $ (58,313) $ (18,834)
========= ====== ======== ========= =========

Page 19


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 agricultural segment of Cadiz Inc. ("Cadiz"). The
Company is an integrated agricultural operation that owns
approximately 17,100 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 three cold storage and/or packing
facilities located in California, of which two are operated and
one is leased to a third party.

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 no-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 2004-2004 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
the 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"). Under the Plan, which is subject to amendment and
modification, the Reorganized Sun World will continue to operate
as a going concern on and after the Plan's effective date. The
Plan provides 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. Exit financing to be provided by an exit lender
under the Plan should meet the Company's need for seasonal
financing following the effective date. The hearing to consider
the adequacy of the disclosure statement accompanying the Plan,
most recently scheduled for June 11, 2004, has been subject to
several postponements and no

Page 20

hearing date is currently scheduled.

In Sun World's filings with the Bankruptcy Court, Sun World
has reported that it believes that the Plan likely cannot be
confirmed absent the acceptance of the holders of the First
Mortgage Notes, in their capacity as secured creditors. Sun
World has further reported to the Bankruptcy Court that the
holders of the First Mortgage Notes have not reached a consensus
with respect to certain corporate governance issues relating to
the reorganized company, and that they have been unable to
finalize a shareholder agreement term sheet. In the meantime,
Sun World has, with Bankruptcy Court approval, expanded the scope
of its engagement with Ernst & Young Corporate Finance LLC to
include services related to (i) a sale of substantially all of
its assets pursuant to a motion or a plan of reorganization, and
(ii) obtaining an equity investor and financing under a plan of
reorganization and is actively pursuing the sales/investment
process . Sun World has chosen to delay the preparation of an
amended Plan and disclosure statement and the scheduling of a
disclosure statement hearing date pending the outcome of these
most recent developments. Sun World's exclusivity period (i.e.
the period during which only Sun World may file a plan of
reorganization) currently expires on December 31, 2004. The
Company cannot predict at this time what changes, if any, will be
made to the Plan as a result of the foregoing or whether or not
the Plan, as amended, will be approved.

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 or 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.

Inherent in a successful Plan of Reorganization is a capital
structure that permits the Company to generate cash flows after
reorganization to meet its restructured obligations and fund the
current operations of the Company. The Company's objective in
the Chapter 11 proceeding is to achieve the highest possible
recovery for all creditors and shareholders consistent with the
Company's ability to pay and the continuation of its business.
There can be no assurance that the Company will be able to attain
these objectives or reorganize successfully. Because of the
ongoing nature of the reorganization case, the financial
statements contained herein are subject to material
uncertainties.

Page 21

NOTE 2 - BASIS OF PRESENTATION
- ------------------------------

The Consolidated Financial Statements have been prepared by
Sun World International, Inc. and its subsidiaries, collectively
referred to as "Sun World" without audit and should be read in
conjunction with the Sun World Consolidated Financial Statements
and notes thereto included in the Cadiz Inc. Form 10-K for the
year ended December 31, 2003. The foregoing Consolidated
Financial Statements include all adjustments, consisting only of
normal recurring adjustments, which Sun World considers necessary
for a fair presentation. The results of operations for the three
months and six months ended June 30, 2004 are not necessarily
indicative of the results to be expected for the full fiscal year
as Sun World's harvest seasons and revenues are seasonal in
nature.

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 the business. As
disclosed in the Consolidated Statements of Operations,
reorganization items consist of professional fees directly
associated with the reorganization of $1,008,000 for the six
months ended June 30, 2004 and the write off of unamortized debt
issuances costs as of the Petition Date of $912,000 and
professional fees directly associated with the reorganization of
$2,631,000 for the six months ended June 30, 2003.

See Note 2 to the Sun World Consolidated Financial
Statements included in the Cadiz Inc. latest Form 10-K for a
discussion of Sun World's accounting policies.


NOTE 3 - INVENTORIES
- --------------------
Inventories consist of the following (dollars in thousands):


JUNE 30, DECEMBER 31,
2004 2003
---- ----
Growing crops $ 17,231 $ 10,427
Harvested product 3,577 189
Materials and supplies 4,262 2,235
--------- ---------

$ 25,070 $ 12,851
========= =========


NOTE 4 - LIABILITIES SUBJECT TO COMPROMISE UNDER REORGANIZATION
PROCEEDINGS
- ---------------------------------------------------------------

Under bankruptcy law, actions by creditors to collect
indebtedness Sun World owed prior

Page 22

to the Petition Date are stayed and certain other pre-petition
contractual obligations may not be enforced against the Company.
We have 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.

Liabilities subject to compromise under reorganization
proceedings are summarized as follows (dollars in thousands):

JUNE 30, DECEMBER 31,
2004 2003
---- ----
Accounts payable $ 4,201 $ 4,311
Interest payable 3,795 3,795
Due to parent company 13,500 13,500
Long-term debt 120,000 120,000
--------- ---------

Total $ 141,496 $ 141,606
========= =========

Page 23


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (UNAUDITED)

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; the uncertainty of the outcome of Sun World's
bankruptcy proceedings; our outstanding guarantee of Sun World's
First Mortgage Notes; 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"
in Item 7 of our Annual Report on Form 10-K for the year ended
December 31, 2003.

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.

CADIZ GROUNDWATER STORAGE AND DRY-YEAR SUPPLY PROGRAM. In
1997, we commenced discussions with the Metropolitan Water
District of Southern California (Metropolitan) in order to
develop principles and terms for a long-term agreement for a
joint venture water storage and supply program on and under our
Cadiz, California property. In July 1998, Cadiz and Metropolitan
approved the Principles and Terms for Agreement for the Cadiz
Groundwater Storage and Dry-Year Supply Program (the Cadiz
Program). At the same time, Cadiz and Metropolitan authorized
preparation of a final agreement based on these principles and
initiated the environmental review process for the Cadiz Program.
Following extensive negotiations with Cadiz to further refine and
finalize these basic principles, Metropolitan's Board of
Directors approved definitive economic terms and responsibilities
at their April 2001 board meeting. The Cadiz Program definitive
economic terms were to serve as the basis for a final agreement
to be executed between Metropolitan and Cadiz, subject to the
then-ongoing environmental review process.

Under the Cadiz Program, during wet years or periods of
excess supply, surplus water from the Colorado River Aqueduct
would be stored in the groundwater basin underlying our property.
During dry years or times of reduced allocations from the
Colorado River, the previously imported water, together with
additional existing groundwater, would be extracted and
delivered, via a conveyance pipeline, back to the aqueduct.

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

Page 24

federal environmental review process for the Cadiz Program. The
Record of Decision amends 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 September 17, 2002, the Metropolitan Subcommittee on
Rules and Ethics scheduled a series of meetings in October and
November 2002 to consider (a) acceptance of the Record of
Decision and the terms and conditions of the right-of-way grant,
(b) certification of the environmental documentation for the
Cadiz Program under state law, and (c) the final agreement
between Cadiz and Metropolitan.

On October 8, 2002, Metropolitan's Board considered
acceptance of the Record of Decision and the terms and conditions
of the right-of-way grant. 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.

Irrespective of Metropolitan's actions, Southern
California's need for water storage and supply programs has not
abated. We believe there are several different scenarios to
maximize the value of this water resource, all of which are under
current evaluation.

Until October 2002 we had expected that the Cadiz Program
would be implemented upon the previously negotiated terms, and we
had structured our financing arrangements with a view to such
implementation. Following Metropolitan's vote in October 2002 to
not proceed with the Cadiz Program, these financing arrangements
were no longer workable on their then existing terms.

In January 2003, Sun World filed a voluntary petition for
Chapter 11 bankruptcy protection in order to access seasonal
financing. Historically, we, as the parent company of Sun World,
had supplemented Sun World's annual working capital requirements.
However, at the time of Sun World's filing we did not have the
ability to do this. The only way Sun World could obtain the new
financing needed to provide working capital for its 2003-2004
growing seasons was to seek court approval, pursuant to Chapter
11, to a new Debtor in Possession ("DIP") facility.

Sun World's financial situation and bankruptcy filing, in
turn, negated an agreement we had previously reached with our
primary lender, ING Capital LLC ("ING") for a three year
extension of approximately $35 million of senior secured loans
with a maturity date of January 31, 2003. As we were unable to
make payment of this debt when due, in February 2003 ING declared
these loans to be in default, although we remained in
negotiations with ING for an overall restructuring of this debt.

Our financing activities during 2003 were directed primarily
towards completion of an overall restructuring of our capital
structure which would preserve our ability to continue with our
water resource development programs. This overall capital
restructuring was successfully completed in December 2003, and
featured the following components, in chronological order:

Page 25

* In June 2003 we completed a private equity offering of
800,000 shares of our common stock (after giving effect
to our one for twenty-five reverse stock split
effective December 15, 2003 (the "Reverse Split")).
672,000 shares were issued in consideration for $1.68
million in cash, 112,000 were issued in consideration
for $280 thousand in services rendered to us, and
16,000 were issued as consideration for fees related to
the equity offering. The proceeds raised in this
offering provided sufficient working capital for us to
continue operations pending completion of the larger
$8.6 million private placement in December 2003
described below.

* In August 2003 our stockholders approved
implementation of a reverse split of our outstanding
common stock, with the exact ratio for the split to be
determined by our Board of Directors at the time of the
split. The reverse split was intended to increase the
likelihood of our being able to meet the minimum
trading price required for listing our stock on The
Nasdaq SmallCap Market or other national securities
exchange, as well as to provide us with additional
authorized but unissued shares of common stock to be
used for capital raising and other purposes.

* In October 2003 we entered into an agreement with the
holder of all of our outstanding Series D, Series E-1
and Series E-2 preferred stock whereby we issued
400,000 shares of our common stock (after giving effect
to the Reverse Split) in exchange of all of our then
outstanding Series D, Series E-1 and Series E-2
preferred stock. In connection with this conversion,
we recorded a change against paid-in capital as an
inducement to convert.

* In December 2003, as described in further detail in
our most recent Form 10-K, we simultaneously completed:

* An extension of up to three years of our $35
million debt facility with ING,

* A one for twenty-five reverse split of our
outstanding common stock;

* An additional equity infusion of $8.6 million
through the issuance of 3,440,000 shares of
common stock;

* The transfer of our properties to Cadiz Real
Estate LLC, a Delaware limited liability company
wholly owned by us and created at the behest of
ING; and

* The completion of our global settlement agreement
with the holders of a majority of Sun World's
First Mortgage Notes (the "Bondholders") which
provides for the pledge of our equity in Sun World
together with an unsecured claim due to us from
Sun World of $13.5 million to a trust controlled
by the Bondholders.

As a consequence of all of these transactions, the number
of outstanding shares of our common stock

Page 26

(after giving effect to our December 2003 one for twenty-five
reverse stock split) has increased from 1,858,659 shares as of
December 31, 2002 (including 400,000 common shares issuable upon
the conversion of outstanding Series D and E preferred stock) to
8,200,340 shares as of December 31, 2003 (including 1,728,955 common
shares issuable upon the conversion of outstanding Series F preferred
stock).

With the completion of these transactions, we have provided
for our short-term working capital needs and are able to refocus
our efforts on obtaining and utilizing the capital necessary to
proceed with our water resource development programs.

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 will no longer be consolidated
with ours, but instead, we will 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 investments.

Our consolidated financial statements for the three month
and six month periods ended June 30, 2003 and June 30, 2004
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
consolidated in these consolidated financial statements. As a
result of the foregoing, direct comparisons of our consolidated
results of operations for the six months ended June 30, 2004 with
results for the six months ended June 30, 2003 will 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
unconsolidated results of Cadiz Inc., 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. Therefore, in the following
discussion of results of operations, we are using only the
unconsolidated results of Cadiz Inc.

Tables which disclose the results of Cadiz Inc. separate
from its consolidated subsidiary Sun World for the periods ending
June 30, 2003, and from which the numbers used in the following
discussion are derived, can be found in Note 3 to the
Consolidated Financial Statements in Item 1 above.

THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THREE MONTHS ENDED
JUNE 30, 2003
- ---------------------------------------------------------------

We have not received significant revenues from our water
resource activity to date. As a result, we have historically
incurred a net loss from operations. We had revenues of $9
thousand for the three months ended June 30, 2004 and $97
thousand for the three months ended June 30, 2003. Our net loss
totaled $2.7 million for the three months ended June 30, 2004
compared to $1.4 million for the three months ended June 30,
2003.

Page 27

Our primary expenses are our ongoing overhead costs (i.e.
general and administrative expense) and our interest expense.

REVENUES. Cadiz had revenues of $9 thousand for the three
months ended June 30, 2004 and $97 thousand for the three months
ended June 30, 2003 with the primary reason for the reduction
being the loss of rental income from Cadiz Ranch.


GENERAL AND ADMINISTRATIVE EXPENSES. General and
administrative expenses for Cadiz during the three months ended
June 30, 2004 totaled $479 thousand compared to $743 thousand for
the three months ended June 30, 2003. The decrease in general and
administrative expenses is primarily due to reductions in
professional fees, salaries and other costs associated with a
reduction in staffing

DEPRECIATION AND AMORTIZATION. Depreciation and
amortization expense for the three months ended June 30, 2004 and
2003 totaled $131 thousand and $142 thousand.

INTEREST EXPENSE, NET. Net interest expense totaled $2.1
million during the three months ended June 30, 2004, compared to
$0.6 million during the same period in 2003. The following table
summarizes the components of net interest expense for the two
periods (in thousands):

THREE MONTHS ENDED JUNE 30,
2004 2003
---- ----
Interest on outstanding debt $ 1,105 $ 583
Amortization of financing costs 1,027 16
Interest income (9) (13)
--------- ---------
$ 2,123 $ 586
========= =========

The increase in interest on outstanding debt during the
second quarter of 2004 is primarily due to a combination of
higher interest rates on the ING loan and the amortization of
financing costs. These financing costs, which include fees and
preferred stock issued in conjunction with the ING loan extension,
are amortized over the life of the debt agreement. For the 2004
period the amortization of financing costs is non-cash, as is
$0.7 million of the interest on outstanding debt representing the
PIK portion which is added to the loan principal. The result is
that approximately $0.4 million of the $2.1 million interest expense
represents a current cash outlay when it is paid from Restricted Cash
every six months. See Note 3 to Cadiz financial statements.


SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO SIX MONTHS ENDED
JUNE 30, 2003
- -----------------------------------------------------------

We have not received significant revenues from our water
resource activity to date. As a result, we have historically
incurred a net loss from operations. We had revenues of $20
thousand for the six months ended June 30, 2004 and $284 thousand
for the six months ended June 30, 2003. The decrease in revenue
was mainly attributable to the loss of management fees which had
been charged to Sun World. Our net loss totaled $5.5 million for
the six months ended June 30, 2004 compared to $6.1 million for
the six months ended June 30, 2003. The

Page 28

loss for the six months ended June 30, 2003 included a loss of
$2.5 from Sun World, without which, Cadiz loss would have been
$3.6 million. The increased loss for the 2004 period resulted
primarily from an increase in net interest expense.

Our primary expenses are our ongoing overhead costs (i.e.
general and administrative expense) and our interest expense.

REVENUES We had revenues of $20 thousand for the six months
ended June 30, 2004 and $284 thousand for the six months ended
June 30, 2003. The decrease in revenue was attributable to the
loss of management fees which had been charged to Sun World and the
loss of fixed rental revenue from Cadiz Ranch.

GENERAL AND ADMINISTRATIVE EXPENSES. General and
administrative expenses for the six months ended June 30, 2004
totaled $1.0 million compared to $1.8 million for the same 2003
period. The decrease in general and administrative expenses is
primarily due to reductions in professional fees, salaries and
other costs associated with a reduction in staffing.

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 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.

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and
amortization expense for the six months ended June 30, 2004
totaled $262 thousand compared to $289 thousand during the same
period in 2002.

INTEREST EXPENSE, NET. Net interest expense totaled $4.3
million during the six months ended June 30, 2004 as compared to
$1.5 million in 2003. The following table summarizes the
components of net interest expense for the two periods (in
thousands):

SIX MONTHS ENDED JUNE 30
2004 2003
---- ----
Interest on outstanding debt - Cadiz 2,244 1,216
Amortization of financing costs 2,054 366
Interest income (18) (79)
--------- ---------
$ 4,280 $ 1,503
========= =========

The increase in net interest on outstanding debt during the
second quarter of 2004 is primarily due to a combination of
higher interest rates on the ING loan and the amortization of both
debt discount and borrowing fees. These financing costs, which
include fees and preferred stock issued in conjunction with the ING
loan extension are amortized over the life of the debt agreement.
For the 2004 period the amortization of financing costs is non-cash,
as is approximately $1.4 million of the interest on outstanding debt
representing the PIK portion which is added to the loan principal.
The result is that only approximately $0.7 million of the $4.3

Page 29

million interest expense represents a current cash outlay when it is
paid from Restricted Cash every six months. See Note 3 to Cadiz financial
statements.


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.

As of December 31, 2002, we were obligated for approximately
$10,095,068 under a senior term loan facility and $25 million
under a revolving credit facility with our primary secured
lender, ING Capital LLC. Each facility had a maturity date of
January 31, 2003. Sun World's bankruptcy filing negated an
agreement we had previously reached with ING for a three year
extension of these loans, and in February 2003 ING declared these
loans to be in default.

During 2003 we remained in continuing discussions with ING
concerning an overall restructuring of this debt and in December
2003, as part of an overall restructuring of our capital
structure, we entered into agreements with ING which provided for
establishing the outstanding principal balance owed to ING at $35
million and extended the maturity date of the credit facilities
until March 31, 2005, with three additional automatic 6 month
extensions conditioned on our maintaining, as of the commencement
date of each extension, cash in an amount equal to at least 4% of
the outstanding principal balance of the credit facilities in a
cash collateral account held by ING. Additional details
concerning the terms of this December 2003 restructuring are
included in our Form 10-K for the year ended December 31, 2003.

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
anticipated this need at the time of our credit restructuring,
the restrictive covenants in our credit facility were crafted in
a way that, in our view, should not materially limit our ability
to undertake debt or equity financing in order to finance our
water development activities.

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
are currently in default as a consequence of the Sun World
bankruptcy filing. Sun World's proposed plan of reorganization
currently provides for settlement of claims held by the holders
of these notes through the issuance of equity interests in Sun
World to such holders.

The Sun World notes are also secured by the guarantee of
Cadiz. As we are not a party to the Sun World bankruptcy filing,
the effectiveness of a plan of reorganization which discharges
Sun World's obligation to holders of these notes will not, in and
of itself, release us

Page 30

of any obligations which we may still have under this guarantee.
The Plan, as currently proposed, includes a release in our favor
with respect to any of our remaining obligations under this
guarantee; however, we do not know whether this provision of the
Plan will be approved by the Bankruptcy Court.

We have limited any potential obligation we may have
otherwise had under the guarantee by entering into release
agreements with the majority of the holders of the Sun World
notes. For example, in December 2003 we entered into a global
settlement agreement with Sun World and with the holders of a
majority of Sun World's First Mortgage Notes (the "Bondholders").
Pursuant to this global settlement agreement, the Bondholders
waived their rights to seek recovery against us on account of our
guarantee of Sun World's obligations under the First Mortgage
Notes. This right will similarly be waived by any other note
holder which elects to opt into this settlement. The identity and
ownership interests of Sun World's bondholders is not a matter of
public record, however, based on the results of investigations
performed on behalf of Sun World, we believe that we have
obtained waivers and/or releases to date from Bondholders which
hold, together with their affiliates, approximately 88% in
interest of outstanding Sun World notes. All of the remaining
Sun World notes (other than a nominal interest of less than 1%)
are held by persons who are also shareholders of ours.

No non-releasing bondholder has sought to enforce our
guarantee of Sun World's obligations against us, nor has any such
bondholder given any indication to us that it plans to do so. As
part of our December 2003 global settlement agreement, the
Bondholders gave written direction to the indenture trustee
irrevocably instructing the trustee to take no action against us
on behalf of bondholders or on account of the guarantee.
Further, we believe that if a bondholder's claim against Sun
World is ultimately satisfied in whole or in part through a Sun
World plan of reorganization, then such bondholder will not be
entitled to enforce the guarantee against us as to the amount of
the claim so satisfied.

In view of all of these factors, we do not anticipate that
significant claims will be made against us under the guarantee
and we are not setting aside existing working capital or seeking
to raise additional working capital in order to pay claims under
the guarantee.

We have no other obligations or working capital needs with
respect to Sun World. As part of our 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, Sun World will not be receiving working
capital contributions from us while it is in bankruptcy
proceedings. Sun World's currently proposed plan of
reorganization provides for our ownership interests in Sun World
to be canceled.

CASH USED FOR OPERATING ACTIVITIES. Cash used for operating
activities totaled $2.1 million for the six months ended June 30,
2004, as compared to $3.4 million for the six months ended June
30, 2003. These amounts are not comparable because of the
deconsolidation of Sun World in January 2003. Cash used by Cadiz
for operating activities totaled $2.1 million for the six months
ended March 31, 2004 compared to $1.7 million for the same period
in 2003. The increased cash usage is primarily due to a greater
loss in the 2004 period.

CASH USED FOR INVESTING ACTIVITIES. Cash used for investing
purposes in the six months ended June 30, 2004 was almost
entirely interest paid from the restricted cash account,

Page 31

while in the prior year the use of $1.4 million was the result of the
deconsolidation of Sun World in January 2003 of $1.0 million
and $0.3 million used for additions to fixed and other assets.

CASH PROVIDED BY FINANCING ACTIVITIES. Cash provided by
financing activities totaled $0 for the six months ended June 30,
2004, compared to $2.0 million in 2003. In the 2003, cash
inflows resulted from the issuance of a $200 convertible note
and $1.7 million from issuance of stock.

OUTLOOK

SHORT TERM OUTLOOK. The proceeds of our 2003 private
placements have provided us with sufficient cash to meet our
expected working capital needs through approximately May 2005.
$2.0 million of the proceeds of our December 2003 private
placement were used to bring current our outstanding interest
payments owed to ING under our ING credit facilities. $2.1
million of the proceeds of our December 2003 private placement
were placed in a cash collateral account with ING in order to
extend the maturity date of the credit facility through March 31,
2005. These funds can be applied, if necessary, to the payment of
accrued interest due under our credit facilities with ING. The
remainder of the proceeds will be used to meet our ongoing
working capital needs.

LONG TERM OUTLOOK. In the longer term, our working capital
needs will be determined based upon the specific measures we
pursue in the development of our water resources. Whichever
measure or measures are chosen, we expect that we will need to
raise additional cash from time to time until we are able to
generate cash through our development activities. 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.

NEW ACCOUNTING PRONOUNCEMENTS

In March 2004, the consensus of Emerging Issues Task Force (EITF)
Issue No. 03-06, Participating Securities and the Two-Class Method
under FASB Statement 128, was published. EITF Issue No. 03-06
addresses the computations of earnings per share by companies that
have issued securities other than common stock that contractually
entitle the holder to participate in dividends and earnings of the
company. Further guidance on the application and allocations of the
two-class method of calculating earnings per share is also included.
The provisions of EITF Issue No. 03-06 will be effective for reporting
periods beginning after March 31, 2004. The adoption of this guidance
is not expected to have significant impact on the Company's financial
results of operations and financial position.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information about market risks for the period ended June 30,
2004 does not differ materially from that discussed under Item 7A
of Cadiz' Annual Report on Form 10-K for the year ended December
31, 2003.

Page 32

ITEM 4. 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 June 30, 2004. Based upon, and 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.


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See "Legal Proceedings" included in the Company's latest
Form 10-K for a complete discussion.

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 2. SECURITIES AND USE OF PROCEEDS UNREGISTERED SALES OF
EQUITY

None


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.


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

Not applicable.


ITEM 5. OTHER INFORMATION

Not applicable.

Page 33

ITEM 6. EXHIBITS

A. EXHIBITS
-------------

The following exhibits are filed or incorporated by
reference as part of this Quarterly Report on Form 10-Q.

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

B. REPORTS ON FORM 8-K
------------------------

None.

Page 34


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


CADIZ INC.




By: /s/ Keith Brackpool November 1, 2004
------------------------------------------- -------------------
Keith Brackpool, Chairman of the Board and Date
Chief Executive and Financial Officer