SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8 POS
Registration Statement Under
The Securities Act of 1933
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1293167
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
CEA TECH USA, INC
7 Waterfront Plaza, Suite 400
500 Ala Moana Blvd.
Honolulu, HI 96813
(Address of principal executive offices) (Zip Code)
Consultation Agreement Plan
(Full name of the plan)
Gary S. Joiner, 4750 Table Mesa Drive,
Boulder, CO 80303
(Name and address of agent for service)
(303)494-3000
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Title of securities to be registered: Common Stock
Amount to be registered: 85,230 shares
Proposed maximum offering price per share: $0.03
Proposed maximum aggregate offering price: $2,556.90
Amount of registration fee: $N/A
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A)
PROSPECTUS
The information required by Part I is included in documents
sent or given to participants in the Consultation Agreement Plan
pursuant to Rule 428(b)(1)
PART II
INFORMATION REQUIRED IN THE REGISTRATION
STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY
REFERENCE.
The Registrant is subject to the information requirements of
the Securities Exchange Act of 1934 and, in accordance therewith,
files reports with the Securities and Exchange Commission. The
documents listed below are hereby incorporated by reference in
this Registration Statement on Form S-8; and all documents
subsequently filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated herein by reference in
this Registration Statement on Form S-8, and shall be a part hereof
from the date of the filing of such documents.
(a) The annual report of the Registrant on Form 10-KSB/A for the
fiscal year ended January 31, 1997, filed pursuant to Section 13(a)
of the Securities Exchange Act of 1934.
(b) All other reports filed by the Registrant pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 since
January 31, 1997.
(c) The description of common stock contained in Item 8 of Part
I of the Registrant's First Amended Registration Statement on
Form 10-SB filed pursuant to Section 12 of the Securities
Exchange Act of 1934, including any amendment or report filed
for the purpose of updating such description.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Frascona, Joiner and Goodman, P.C., is legal counsel for
the Company. Gary S. Joiner, is a shareholder of Frascona,
Joiner and Goodman, P.C., is the Secretary and a Director of the
Registrant, and is a selling shareholder.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND
OFFICERS.
As permitted by Colorado law, the Company's Articles of In-
corporation provide that the Company will indemnify its directors
and officers against expenses and liabilities they incur to defend,
settle, or satisfy any civil or criminal action brought against them
on account of their being or having been Company directors or
officers unless, in any such action, they are adjudged to have acted
with gross negligence or willful misconduct. The Company's
Articles of Incorporation also exclude personal liability for its
directors for monetary damages based upon any violation of their
fiduciary duties as directors, except as to liability for any breach
of the duty of loyalty, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, acts
which constitute improper distributions to shareholders in violation
of Section 7-106-401 of the Colorado Business Corporation Act,
or any transaction from which a director receives an improper
personal benefit. This exclusion of liability does not limit any
right which a director may have to be indemnified and does not
affect any director's liability under federal or applicable state
securities laws.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Restricted securities of the Registrant are to be reoffered or
resold pursuant to this registration statement. Such securities were
initially offered and sold by the Registrant pursuant to an
exemption from registration under Rule 701. Such securities were
issued pursuant to written contracts and as compensation for bona
fide services performed, and were issued at a time when the
Registrant was not subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act.
ITEM 8. EXHIBITS.
The following documents are included as exhibits to this
registration statement:
4.1 Articles of Incorporation of the Registrant -
Incorporated by reference from annual report of
Registrant on Form 10-KSB for the fiscal year ended January 31,
1997, filed pursuant to Section 13(a) of the Securities Exchange
Act of 1934.
4.2 Bylaws of the Registrant -
Incorporated by reference from annual report of
Registrant on Form 10-KSB for the fiscal year ended January 31,
1997, filed pursuant to Section 13(a) of the Securities Exchange
Act of 1934.
23.1 Consent of Accountants
27 Financial Data Schedule -
Incorporated by reference from annual report of
Registrant on Form 10-KSB/A for the fiscal year ended January
31, 1997, filed pursuant to Section 13(a) of the Securities
Exchange Act of 1934.
ITEM 9. UNDERTAKINGS
1. The undersigned Registrant hereby undertakes to file during
any period in which offers or sales are being made, a post-
effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material
change to such information in the Registration Statement.
2. The undersigned Registrant hereby undertakes that, for the
purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
3. The undersigned Registrant hereby undertakes to remove from
registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination
of the offering.
4. The undersigned Registrant hereby undertakes that for purposes
of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
5. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of counsel the
matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the
Securities Act of 1933, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing
on Form S-8 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Encino, State of California, on November 3, 1997.
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
(Registrant)
/s/
J.A. Garcia, President
(By) (Signature and Title)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in
the capacities and on the date indicated.
(Signature) /s/ J.A. Garcia
(Title) President, Director, Principal Executive Officer
(Date) November 3, 1997
(Signature) /s/ Ronald J. Ilsley
(Title) Principal Financial Officer, Principal Accounting
Officer, Director
(Date) November 3, 1997
(Signature) /s/ Gary S. Joiner
(Title) Director, Secretary of Corporation
(Date) November 3, 1997
(Signature) /s/ Ernest K. Dias
(Title) Director
(Date) November 3, 1997
<PAGE>
Exhibit 23.1 - Independent Auditors' Consent
We consent to the incorporation by reference in Amendment No.
1 to Registration Statement No. 333-28331 of Controlled
Environment Aquaculture Technology, Inc., on Form S-8 of our
report dated September 22, 1997 appearing in the Annual Report
on Form 10-KSB.
/s/
Carpenter, Kuhen & Sprayberry
Oxnard, California
October 30, 1997
<PAGE>
____________________________________________
AMENDED PROSPECTUS
____________________________________________
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
aka CEATECH USA, INC.
("CEATECH", "Company", or "Issuer")
An Offering of 85,230 Shares of the
Common Stock of the Company.
(Title and Amount of Offering)
These securities are offered for the account of certain of the Company's
security holders, as set forth more fully herein.
See "Risk Factors" beginning on page 4 for a discussion of certain risks
associated with an investment in the securities offered hereby. The
securities offered involve a high degree of risk.
___________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
____________________________________________
<PAGE>
<TABLE>
<CAPTION>
Underwriting Proceeds to
Price to discounts and Issuer or other
Public commissions persons
<S> <C> <C> <C>
Per Share $0.03 -0- $0.03
Total $ 2,556.90 -0- $ 2,556.90
</TABLE>
November 3, 1997
The Company is subject to the informational requirements
imposed by the Securities Exchange Act of 1934. In accordance with the
1934 Act, the Company files reports and other information with the
Securities and Exchange Commission.
Reports and other information can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's regional offices located at 7 World Trade Center, 13th
Floor, New York, NY 10048, and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60621. Copies of such material may
also be obtained, at prescribed rates, from the Public Reference Section
of the Commission at 450 Fifth Street N.W, Washington, D.C. 20549.
The Company's securities are not currently listed on any national
securities exchange, and there is currently a limited public market for
resale of such securities on the NASB Bulletin Board.
The Issuer undertakes to provide, at its own expense, and upon
written or oral request by any person, including a beneficial owner, who
receives this Prospectus, a copy of any and all information incorporated
herein by reference (not including exhibits to the information that is
incorporated by reference unless such exhibits are specifically
incorporated by reference into the information incorporated in this
Prospectus). Such requests should be directed to: Gary S. Joiner, 4750
Table Mesa Drive, Boulder, Colorado, 80303; Tel.: (303)494-3000.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the information
appearing elsewhere in this Prospectus. See "Risk Factors" for
information prospective investors should consider.
The Company. The Company was incorporated under the laws
of the State of Colorado on January 19, 1995, under the name of Global
Capital Access Corporation, for the purpose of being a capital market
access vehicle. It was formed with limited capital and its business plan
at the time of formation was to seek to complete a merger or acquisition
transaction with a company or enterprise desiring to become a public
corporation.
The Company became a reporting company under the Securities
Exchange Act of 1934 on June 12, 1995, as a result of filing a
registration statement on Form 10-SB. Since that date, the Company has
filed all required periodical reports and as of the date hereof, is current
in its reporting obligations under the Securities Exchange Act of 1934.
On July 12, 1996, The Rally Group, Ltd., acquired control of the
Company by purchasing approximately 71% of its then outstanding stock
and approximately 93% of its then outstanding Class A Warrants. In
conjunction with this change in control, all of the previously issued and
outstanding Class B Warrants of the Company were cancelled.
As a precondition to the acquisition of control by The Rally
Group, Ltd., on June 21, 1996, the Company changed its name to
Controlled Environment Aquaculture Technology, Inc. In January, 1997,
the Company also adopted the additional assumed name of CEATECH
USA, Inc.
The Company conducted no business activities until the last
quarter of fiscal 1996. At that time, the Company commenced activities
related to implementation of a new business plan involving
commercialization of state of the art technologies for intensive,
sustainable growout production of shrimp and finfish.
On or about October 31, 1996, in a stock for stock exchange, the
Company acquired all of the issued and outstanding stock of Aquacare
Environment, Inc., a Washington corporation, engaged in the business of
development and marketing of equipment and systems used in intensive
land-based fish farming. However, the acquisition of the stock of
Aquacare was subject to rescission by either party in the event that upon
completion, the audited financial statements of Aquacare did not reflect
a specified minimum net worth. Pursuant to this provision, on March 3,
1997, the parties mutually agreed to rescission of the Aquacare
transaction retroactive to October 31, 1996.
In late 1996, the Company hired various key management
personnel and incorporated 3 wholly-owned subsidiaries for the purpose
of commencing operations. The subsidiaries are CEATECH HHGI
Breeding Corp, CEATECH Plantations, Inc., and Hawaii High Health
Seafood Corp.
On January 31, 1997, the Company obtained approximately
$496,000 of working capital as a result of the sale of 5,000 shares of its
Series A, 8.25% Cumulative Convertible Preferred Stock. The rights and
preferences of this class of preferred stock are described elsewhere in the
private placement memorandum.
On or about March 15, 1997, the Company acquired all of the
issued and outstanding stock of Sunkiss Shrimp Co., Ltd., a Hawaii
corporation in a stock for stock transaction. Following completion of the
transaction, Sunkiss became a wholly-owned subsidiary of the Company.
Sunkiss primarily operates as a breeding, hatchery, and maturation
facility for high health genetically improved shrimp, with some
production allocated to growout and sale of full-grown shrimp for the
local Hawaiian market. The current facility of Sunkiss which is fully
permitted, consists of approximately 5 acres located in Kekaha, Hawaii,
on the island of Kauai. It includes 4 circular one-quarter acre grow-out
ponds, two additional nursery tanks, underground electrical systems,
underground plumbing systems including water supply and drainage lines,
and two small buildings housing office and storage space.
Plan of Operations. Management is currently concentrating on
two major aspects of the Company's overall intended business:
1. The production and expanded growth of a large scale
sustainable intensive shrimp growing agri-business located in the
Hawaiian Islands.
2. The breeding, production and usage of HHGI shrimp
hatchery products ("broodstock" - nauplii and post larvae) for the
Company's own operations, with the sale of surplus production to select
independent growers and community cooperative programs to be initiated
in the Hawaiian Islands, and elsewhere.
An expansion program now underway at the Sunkiss facility is
intended to increase the production capability of the facility to raise
sufficient brood stock and seed (nauplii and post larvae) to supply all
stock for the growing operations of the Company, with sales of surplus,
if any, to selected Hawaiian and U.S. shrimp farm growing operations.
The Company is also now negotiating for acquisition of leases on
additional adjoining acreage for the purpose of expanding future growout
operations.
In order to finance these activities, the Company initiated a private
placement offering of its securities as of May 1, 1997, seeking to raise
a minimum of $500,000 and a maximum of $5,000,000. The securities
being offered are units, each of which consists of 20,000 shares of
common stock and 10,000 Class A warrants to purchase an additional
share of common stock at a price of $2 per share. The subscription price
per unit is $50,000. As of September 22, 1997, the Company had
received net proceeds of approximately $1,054,810 from this private
placement offering.
The net proceeds from the private placement offering are allocated
to payment of costs associated with expansion of the hatchery and
maturation facilities at the Sunkiss facility, construction of up to 52 one-
acre growout ponds to be operated by CEATECH Plantations Inc., on
property adjacent to the current Sunkiss facility, and for working capital.
Future plans through fiscal year 1999 call for expenditure of funds for
purposes of increasing inventory, for additional expansion of hatchery
facilities and for construction of up to 104 additional one-acre growout
ponds.
There is currently a limited public trading market for the
Company's securities on the NASD Bulletin Board. As soon as the
Company is able to satisfy applicable eligibility requirements,
management intends to seek listing of the Company's outstanding
securities on NASDAQ and/or other recognized securities exchanges.
The Company maintains its principal executive offices at 7
Waterfront Plaza, Suite 409, 500 Ala Moana Boulevard, Honolulu,
Hawaii 96913. Its telephone number is (808)521-1801.
The Offering. A total of 85,230 shares of common stock are
being offered hereby at a price of $0.03 per share, for the account of
certain of the Company's security holders (see "Selling Security
Holders").
The Company will not realize any net proceeds from the sale of
the shares offered hereby.
As of September 22, 1997, the Company has issued and
outstanding a total of approximately 2,445,000 shares of common stock,
5,000 shares of Series A 8.25% Cumulative Convertible Preferred Stock,
and 2,125,000 Class A Warrants to purchase additional shares of common
stock at a price of $2.00 per share. Sale of shares in this offering on
behalf of selling security holders will not change the number of issued
and outstanding shares of the Company.
Summary Financial Data
<TABLE>
<CAPTION>
Year End Year End
1/31/97 1/31/96
<S> <C> <C>
Operating Statement Data
Revenue 0 0
Net Loss (65,340) (7,272)
Balance Sheet Data
Current Assets 581,000 469
Total Assets 611,701 865
Shareholders' Equity 430,565 (345)
</TABLE>
The Company does not anticipate any substantial revenue until the
fourth quarter of fiscal 1997.
RISK FACTORS
Investment in the Company's securities involves substantial risks,
some of which are summarized below. Prospective investors should
carefully consider the following risk factors, among others, relating to the
Company prior to making an investment.
No Operating History. The Company was formed in January of
1995 for the purpose of registering its common stock under the 1934 Act
and acquiring a business opportunity. The Company faces all the risks
of a new business. The Company must be regarded as a new or
"start-up" venture with all of the unforeseen costs, expenses, problems,
and difficulties to which such ventures are subject. There is no assurance
that it will generate revenues or profits, or that the market price of the
Company's Common Stock will be increased thereby. Although the
Company intends to investigate potential acquisitions compatible to its
operations, it believes that the acquisition of Sunkiss Shrimp Co. Ltd.,
combined with the strengths of its technical and operating management,
assures internal growth without depending on acquisitions.
Competition. The market for production and sale of farm-grown
shrimp is highly competitive. Over fifty countries have existing shrimp
farms including many countries in Asia, as well as Central and South
America. The largest producer is Thailand which currently produces
approximately 23% of the worldwide total. The Company believes it will
be able to compete effectively because of its use of high health
genetically improved shrimp and its ability to grow product in the full
range of true sizes. There is no assurance, however, that the Company
will be able to compete effectively in the future or that it will be able to
realize a profit from its operations.
Need for Additional Capital. The Company requires additional
capital in order to expand its hatchery and maturation facilities in
Kekaha, Kauai, Hawaii, in order to construct grow-out ponds for
production of shrimp, and for working capital purposes. The Company
is currently conducting a private placement offering to accredited
investors of units consisting of common stock and Class A Warrants in
an effort to raise net proceeds of between $450,000 and $4,500,000. This
offering commenced on May 1, 1997, and as of September 22, 1997, the
Company had realized net proceeds of approximately $1,054,810 from
such offering. There is also no assurance that any net proceeds received
by the Company from the offering will be sufficient to allow it to
commence profitable operations. The Company may require additional
capital in the future, particularly in the event that it incurs losses from
operations, and there is no assurance that the Company will be capable
of raising additional capital or that the terms upon which such capital
may be available to the Company will be acceptable.
Risks Associated with Expansion. In the event the Company is
able to raise adequate capital, its plan of operations calls for substantial
expansion. There is no assurance that the Company will be able to
manage any substantially expanded operations, or that such operations
will be profitable. Although management has done limited research
concerning the market for sale of its products, there is no assurance that
the Company will realize an adequate return on its investment.
Restrictions on Transferability of Shares. There is currently a
limited public market for the Company's shares through the NASD
Bulletin Board, but there can be no assurance that a liquid market will
ever exist for the shares. In the absence of such a market, an investor
must be prepared to bear the risk of an investment in the shares for an
indefinite period of time and will not be able to liquidate such investment
readily, even in the event of an emergency. In the event it is able to
meet applicable eligibility requirements, the Company intends in the
future to apply for listing on the NASDAQ and/or other recognized
exchanges for which it may then be eligible. There is no assurance that
it will be able to satisfy the eligibility requirements for any such
exchange or that the necessary approvals will be granted.
Limited Public Market Exists. There is a limited public market
for the Company's common stock, and no assurance can be given that a
more active or liquid market will develop or that a shareholder will ever
be able to liquidate his investment without considerable delay, if at all.
If a more active market should develop, the price may be highly volatile.
Factors such as those discussed in this "Risk Factors" section may have
a significant impact upon the market price of the securities offered
hereby. Owing to the low price of the securities, many brokerage firms
may not be willing to effect transactions in the securities. Even if a
purchaser finds a broker willing to effect a transaction in these securities,
the combination of brokerage commissions, state transfer taxes, if any,
and any other selling costs may exceed the selling price. Further, many
lending institutions will not permit the use of such securities as collateral
for any loans.
Dependence on Current Management. The Company is
substantially dependent on certain members of its current management
who possess business skills which may not be readily replaceable. The
Company has entered into employment or consulting agreements with
such persons, and intends to provide for "key man insurance" to protect
the Company in the event of the death or disability of such persons.
Market Overhang of Warrants. There are a total of approximately
2,125,000 Class A Warrants outstanding. Each Class A Warrant is
exercisable for the purchase of one share of Common Stock during the
period ending December 31, 2001 (unless extended). Each Class A
Warrant carries an exercise price of $2.00. Exercise of the Warrants may
have an adverse effect upon the trading price of and market for the
Common Stock, if any such market develops.
Exercise of Warrants Uncertain. Because of the lack of a market
for the Warrants and the uncertainty of the Company's potential for
success, the Warrants may not be exercised before they expire, with the
result that no proceeds from exercise of the Warrants would be received
by the Company. The Warrants may be exercised only at a time when
a current prospectus is in effect and only if the shares are qualified for
sale under applicable securities laws of the states in which the various
warrant holders reside. Although the Company presently intends to file
a registration statement for the shares underlying the Warrants as soon as
reasonably possible after it qualifies for trading on NASDAQ, or another
exchange, and thereafter to use its best efforts to keep a prospectus
current during the remaining exercise period of the Warrants, there is no
assurance that it will do so or that it will be financially able to do so.
Further, it is not required to do so at any time when the market bid price
for the common stock is less than the exercise price of the Warrants.
Proceeds from the exercise of Warrants may be subject to the escrow
requirements of the Colorado Securities Act.
Government Regulation. The business of the Company is subject
to substantial federal and state regulation, including, but not limited to,
regulation of water quality discharge into the ocean. The Company
believes that it currently has all permits and licenses required for its
intended operations, and that such operations will meet existing
environmental regulations. There is no assurance, however, that the
Company does currently have all necessary permits or licenses, that it
will be able to maintain and renew necessary permits or licenses, or that
it will be able to obtain any additional permits or licenses which may be
required in the future. In addition, there is no assurance that applicable
regulations, including particularly environmental regulations, will not
change in the future causing the Company's operations to no longer be
in compliance.
Dilutive Effects of Issuing Additional Common Stock. The vast
majority of the Company's authorized Common Stock is unissued. The
Board of Directors of the Company has authority to issue such unissued
shares without the consent or vote of the stockholders of the Company.
The issuance of these shares may further dilute the interests of the
shareholders and will reduce their proportionate ownership and voting
power in the Company.
Rights of Preferred Stock. The Company's Articles of
Incorporation authorize the issuance of up to 10,000,000 shares of
Preferred Stock. The Preferred Stock may be issued in series with the
material terms of any series determined by the Board of Directors,
including voting, conversion, or other terms which could be used to
delay, discourage, or prevent a change in control of the Company. Such
terms could include, among other things, dividend payment requirements,
redemption provisions, preferences as to dividends and distributions and
preferential voting rights. The issuance of Preferred Stock with such
rights could have the effect of limiting stockholder participation in certain
transactions such as mergers or tender offers and could discourage or
prevent a change in management of the Company. As of the date of this
Prospectus, the Company has 5,000 shares of Series A, 8.25%
Cumulative Convertible Preferred Stock issued and outstanding. Such
Preferred Stock is entitled to: a cumulative preferential dividend equal
to $8.25 per share payable quarterly, in arrears, commencing in the fiscal
year beginning February 1, 1998; a liquidation preference; a redemption
right in the Company at $110.00 per share (i.e. 110% of face value) until
December 15, 1999; a conversion privilege based upon a conversion price
of $2.00 per common share (i.e. 50 shares of common stock for each
share of Preferred Stock issued and outstanding); and, the sole right to
elect one member of a board of directors consisting of seven (7)
members.
Indemnification of Officers and Directors. The Company's
Articles of Incorporation provide for the indemnification of its directors,
officers, employees, and agents, under certain circumstances, against
attorney's fees and other expenses incurred by them in any litigation to
which they become a party arising from their association with or
activities on behalf of the Company. The Company will also bear the
expenses of such litigation for any of its directors, officers, employees,
or agents, upon such person's promise to repay the Company therefor if
it is ultimately determined that any such person shall not have been
entitled to indemnification. This indemnification policy could result in
substantial expenditures by the Company which it will be unable to
recoup.
Director's Liability Limited. The Company's Articles of
Incorporation exclude personal liability of its directors to the Company
and its stockholders for monetary damages for breach of fiduciary duty
except in certain specified circumstances. Accordingly, the Company will
have a much more limited right of action against its directors than
otherwise would be the case. This provision does not affect the liability
of any director under federal or applicable state securities laws.
No Foreseeable Dividends. The Company has not paid dividends
on its Common Stock and does not anticipate paying such dividends in
the foreseeable future.
Regulation of Penny Stocks. The Company's securities are
currently subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell
such securities to persons other than established customers or accredited
investors. For purposes of the rule, the phrase "accredited investors"
means, in general terms, institutions with assets in excess of $5,000,000,
or individuals having a net worth in excess of $1,000,000 or having an
annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the
rule, the broker-dealer must make a special suitability determination for
the purchaser and receive the purchaser's written agreement to the
transaction prior to the sale. Consequently, the rule may affect the ability
of broker-dealers to sell the Company's securities and also may affect the
ability of purchasers in this offering to sell their securities in any market
that might develop therefor.
In addition, the Securities and Exchange Commission has adopted
a number of rules to regulate "penny stocks." Because the securities of
the Company may constitute "penny stocks" within the meaning of the
rules, the rules would apply to the Company and to its securities. The
rules may further affect the ability of owners of Shares to sell the
securities of the Company in any market that might develop for them.
Shareholders should be aware that, according to Securities and
Exchange Commission Release No. 34-29093, the market for penny
stocks has suffered in recent years from patterns of fraud and abuse.
Such patterns include (i) control of the market for the security by one or
a few broker-dealers that are often related to the promoter or issuer; (ii)
manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases; (iii) "boiler room" practices
involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (iv) excessive and undisclosed bid-ask
differentials and markups by selling broker-dealers; and (v) the wholesale
dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses.
The Company's management is aware of the abuses that have occurred
historically in the penny stock market. Although the Company does not
expect to be in a position to dictate the behavior of the market or of
broker-dealers who participate in the market, management will strive
within the confines of practical limitations to prevent the described
patterns from being established with respect to the Company's securities.
DETERMINATION OF OFFERING PRICE.
The offering price of $0.03 per share for the shares offered hereby
was determined based upon negotiations between the selling security
holder and the President of the Company. Numerous factors were
involved in establishing the agreed-upon price, including the following:
a. There is currently only a limited public trading market for the
common stock of the Company through the NASD Bulletin Board, and
there is no assurance as to when or whether a more liquid market will
develop or when the Company may be meet the eligibility requirements
for its securities to trade on NASDAQ or another exchange.
b. The Company was initially formed as a public shell by the
persons who are named herein as selling security holders. The common
stock being offered hereby on behalf of the selling security holder was
acquired by the selling security holder as compensation for services
rendered to the Company in conjunction with its organization. The value
placed upon such shares at issuance was an agreed-upon amount of
$0.005 per share.
c. The prospective purchasers of the shares offered hereby are
persons designated by the Company. The negotiations between the
selling security holders and the President of the Company regarding the
selling price of the securities were completed prior to the date upon
which the Company sold 5,000 shares of its Series A 8.25% Cumulative
Convertible Preferred Stock for a total of $500,000, and prior to the time
that the Company acquired all of the issued and outstanding stock of
Sunkiss Shrimp Co., Ltd. Accordingly, as of the date that the selling
price was determined, the Company had virtually no assets, and a net
book value per share of approximately zero (0).
SELLING SECURITY HOLDERS.
The following security holders are selling shares under this
Prospectus:
<TABLE>
<CAPTION>
Name/Relationship Amount Amount Amount Percentage
to Registrant Owned Offered of Class of Class
Owned Owned After
After Distribution
Distri-
bution
<S> <C> <C> <C> <C>
Gary S. Joiner -
Officer, Director
and Principal
Shareholder 136,834 85,230 51,604 2.11%
SELLING SECURITY
HOLDERS AS A CLASS 136,834 85,230 51,604 2.11%
</TABLE>
<PAGE>
PLAN OF DISTRIBUTION.
The securities offered hereby are to be offered solely to
designated purchasers selected by the Company, and are not to be offered
through any underwriters or through the selling efforts of brokers or
dealers. All of the securities are to be offered for cash at a price of
$0.03 per share, and no compensation is to be paid to any underwriter,
broker or dealer. Accordingly, the selling security holder shall receive
proceeds equal to the full offering price, without deduction for selling
expenses or other expenses of the offering.
DESCRIPTION OF SECURITIES.
The securities offered hereby are common stock, and are part of
a class of securities of the Company which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934.
The Company is authorized to issue 100,000,000 shares of
common stock and 10,000,000 shares of preferred stock. As of
September 22, 1997, approximately 2,445,000 shares of common stock
and 5,000 shares of Series A, 8.25% Cumulative Convertible Preferred
Stock were issued and outstanding (see "Risk Factors - Rights of
Preferred Stock"). In addition, as of September 22, 1997 the Company
had approximately 2,125,000 Class A Warrants issued and outstanding,
each of which is exercisable until December 31, 2001, for the acquisition
of one share of common stock at a purchase price of $2.00 per share.
INTERESTS OF NAMED EXPERTS AND COUNSEL.
Frascona, Joiner and Goodman, P.C., 4750 Table Mesa Drive,
Boulder, Colorado 80303 is counsel for the Company. Gary S. Joiner,
is a shareholder of Frascona, Joiner and Goodman, P.C., is the Secretary
and a Director of the Company and is the selling security holder named
herein (See "SELLING SECURITY HOLDERS").
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE.
The following documents are incorporated by reference herein:
(1) The Registrant's latest annual report on Form 10-KSB/A,
including financial statements for the fiscal year ended January 31, 1997.
(2) All other reports of the Registrant filed pursuant to Section 13(a)
or 15(d) since the end of the fiscal year ending January 31, 1997.
(3) The description of the common stock of the Registrant which is
contained in a registration statement filed under the Exchange Act,
including any amendments or reports filed for the purpose of updating
such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, and prior to the
termination of this offering shall be deemed to be incorporated herein by
reference.
INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions
of its Articles of Incorporation, Bylaws, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
