U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
X...Quarterly report under section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended October 31, 1997.
....Transition report under section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required] for the transition period from _________
to _________.
Commission File No: 0-25868
CONTROLLED ENVIRONMENT
AQUACULTURE TECHNOLOGY, INC.
(Name of small business in its charter)
Colorado 84-1293167
(State or other (IRS Employer Id. No.)
jurisdiction of Incorporation)
CEA TECH USA, Inc.
7 Waterfront Plaza, Suite 400
500 Ala Moana Blvd.
Honolulu, HI 96813
(Address of Principal Office) Zip Code
Issuer's telephone number: (808) 521-1801
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 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 ....
Applicable only to issuers involved in bankruptcy proceedings during the
past five years
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes ____
No ____
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 2,597,550 shares of
common stock outstanding as of October 31, 1997.
Transitional Small Business Disclosure
Format (Check one):
Yes ____ No X <PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
and subsidiaries
Quarter Ended October 31, 1997<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
and subsidiaries
Index to Consolidated Condensed Financial Statements
Consolidated Condensed Balance Sheet
Consolidated Condensed Statement of Operations
and Accumulated Deficit
Consolidated Condensed Statement of Cash Flows
Notes to Consolidated Condensed Financial Statements<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
and subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
October 31,
1997
(UNAUDITED)
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 586,908
Accounts receivable 5,725
Inventory 260,343
Total current assets 852,976
FIXED ASSETS, net 1,014,675
OTHER ASSETS 107,247
Total assets 1,974,898
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 93,611
Accrued liabilities 30,333
Total current liabilities 123,944
STOCKHOLDERS' EQUITY
Preferred Stock - authorized,
10,000,000 shares issued and
outstanding 5,000 shares at
stated value of $100 per share 500,000
Common Stock, authorized,
100,000,000 shares without par
value, issued and outstanding,
2,597,550 shares at stated
value of $.005 per share 12,988
Additional paid-in capital 1,840,560
Accumulated deficit during
development stage (502,594)
Total stockholders' equity 1,850,954
Total Liabilities and Stockholders'
Equity 1,974,898
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE TECHNOLOGY, INC.
(a development stage company)
and subsidiaries
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS AND
ACCUMULATED DEFICIT FOR THE NINE MONTHS ENDED October 31,
1997 AND 1996
(unaudited)
Page 1 of 2
<TABLE>
<CAPTION>
Period from
Jan 19, 1995
For the For the (inception)
nine months nine months through October
1997 1996 31, 1997
<S> <C> <C> <C>
Sales 28,189 28,189
Cost of Sales 19,421 19,421
Gross Margin 8,768 8,768
General and
administrative
expenses 436,467 (2,511) 511,362
Net Profit/(Loss) (427,699) 2,511 (502,594)
Accumulated deficit
Beginning of period 74,895 11,675 0
End of period 502,594 9,164 502,594
Loss per common
share 0.19 nil 0.24
Weighted number of
shares outstanding 2,213,651 1,697,395 2,122,348
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE TECHNOLOGY, INC.
(a development stage company)
and subsidiaries
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS AND
ACCUMULATED DEFICIT FOR THE THREE MONTHS ENDED October 31,
1997 AND 1996
(unaudited)
Page 2 of 2
<TABLE>
<CAPTION>
For the For the
three months three months
1997 1996
<S> <C> <C>
Sales 4,572
Cost of Sales 1
Gross Margin 4,571
General and
administrative
expenses 142,032 (4,175)
Net Profit/(Loss) (137,461) 4,175
Accumulated deficit
Beginning of period 365,133 13,339
End of period 502,594 9,164
Loss per common
share 0.06 nil
Weighted number of
shares outstanding 2,213,651 1,697,395
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE TECHNOLOGY, INC.
(a development stage company)
and subsidiaries
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS FOR THE
NINE MONTHS ENDED OCTOBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Period from
Jan 19, 1995
For the For the (inception)
nine months nine months through
1997 1996 October 31, 1997
<S> <C> <C> <C>
Net cash used in
operating activities (515,794) (428) (557,314)
Net cash used in
investing activities (526,846) (557,251)
Net cash used in
financing activities 1,046,699 0 1,699,624
Net increase (decrease)
in cash and cash
equivalents 4,059 (428) 585,059
Cash and cash equivalents at
beginning of period 582,849 0 1,849
Cash and cash equivalents at
end of period 586,908 428 586,908
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
Supplemental disclosure:
Effective, after the close of business on March 15, 1997, the Company
issued 100,000 shares of common stock (valued at approximately $5.00
per share) in exchange for all of the outstanding shares of Sunkiss
Shrimp Co., Ltd. The acquisition was accounted for under the purchase
basis method. Based on an experts opinion the current value of the fixed
assets was increased by $453,036, which approximates the current
replacement costs.
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS - October 31, 1997
NOTE 1. Basis of Presentation
The information included in the consolidated condensed financial
statements is unaudited, but includes all adjustments (consisting of
normal recurring items) which are, in the opinion of management,
necessary for a fair representation of the interim period presented.
The consolidated statements include the accounts of Controlled
Environment Aquaculture Technology, Inc. (the "Company") and its
wholly-owned subsidiaries, C.E.A. Tech, HHGI Breeding Corp., and
CEA TECH Plantations, Inc., for the entire period, and its wholly-
owned subsidiary, Sunkiss Shrimp Co., Ltd. for the period from March
16, 1997. All significant inter-company transactions and balances have
been eliminated in consolidation.
NOTE 2. Development Stage Company
The Company, formerly known as Global Capital Access
Corporation, was incorporated under the laws of the State of Colorado
on January 19, 1995. The Company is an enterprise in the development
stage as defined by Statement No. 7 of the Financial Accounting
Standards Board and has not engaged in any business other than
organizational efforts. The Company has made an aggressive
commitment to commercialize state of the art, second generation
technologies for intensive, sustainable growout production of shrimp and
finfish, utilizing high health genetically improved (HHGI) specific
pathogen free (SPF) broodstock, technologies and breeding techniques
developed and verified at commercial scales in the State of Hawaii.
NOTE 3. Loss Per Common Share
Loss per common share has been computed based upon the
weighted average number of shares of common stock outstanding during
each period. In March, 1997, the Financial Accounting Standards Board
issued SFAS No. 128, Earnings Per Share. SFAS No. 128 establishes
standards for computing and presenting earnings to per share and applies
to entities with publicly held common stock. This statement is effective
for interim and annual periods ending after December 15, 1997, and
early adoption is not permitted. The Company will adopt this statement
for its fiscal year ending January 31, 1997, and when adopted, the
statement will require restatement of prior years' earnings per share.
NOTE 4. Interest and Income Tax Expenses
The Company neither incurred or paid any interest or income tax
liabilities during the interim periods presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION.
During the three months ending October 31, 1997, significant progress
was made in implementing management plans to commence shrimp
aquaculture production on the island of Kauai. Our subsidiary company,
Sunkiss Shrimp Co., continued to operate at a break even from shrimp
sales from limited production due to the construction and expansion of
the Company's Hatchery facility which started in August; however, after
General and Administrative expenses, the consolidated Company results
showed a loss for the quarter. These results were in line with
management's expectations as operations are expanded to support the
Company's projected growth plans. The Hatchery's construction
program will be substantially completed and added equipment installed
by the end of the fourth quarter.
The Company will commence construction of "growout" ponds for the
production of shrimp in early December, 1997, on the initial 80 acres of
land leased from the Department of Agriculture of the State of Hawaii.
Ongoing lease negotiations with the Hawaii Department of Land and
Natural Resources for an additional approximately 300 acres of adjacent
property are progressing positively and should be finalized no later than
the first quarter of 1998. The stocking of juveniles raised from high
health genetically improved seed produced at the Company's own
hatchery facilities will commence in the one acre ponds early in the first
quarter of 1998, with continuous production harvest of "Hawaiian
Planation Shrimp" being available for market beginning in the second
quarter of 1998.
The Company's cash, working capital, and net equity positions have
improved substantially over previous quarters.
During the fiscal third quarter ended October 31, 1997, the Company
continued to raise additional equity capital through a private placement
offering of units consisting of common stock and warrants. The offering
is being made to accredited investors pursuant to an exemption from
registration provided by Regulation D and Rule 506 thereunder. At
October 31, 1997, approximately $1,300,000 had been received by the
Company in response to its Private Placement Memorandum. The
Company is in receipt of verbal commitments and indications for
additional equity funds expected to be received during the fourth quarter.
Negotiations with a local Hawaiian bank to fund and service a $2.6
million long term loan guaranteed by the US Department of Agriculture
have reached the documentation stage, and management anticipates a
successful completion prior to the end of the current fiscal year.
Proceeds from the private placement offering and from the loan
described above are expected to be sufficient to satisfy the Company's
cash needs for the next twelve months.
Part II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
(2) Recent Sales of Unregistered Securities.
During the second quarter, which ended July 31, 1997, the
Company commenced a private placement offering of unregistered
securities. The unregistered securities, which are units consisting of
20,000 shares of common stock and 10,000 Class A warrants, are being
offered and sold solely to accredited investors pursuant to an exemption
from registration provided by Regulation D and Section 4(2) of the
Securities Act of 1933, and Rule 506 thereunder. The Class A Warrants
included as part of the units give holders the right to purchase one
additional share of common stock at a price of $2.00 per share, and
expire, if not exercised, on December 31, 2001. The offering price is
$50,000 per unit.
During the second quarter the Company received gross cash
proceeds of $585,000 from the sale of units to accredited investors.
During the third quarter the Company received additional gross cash
proceeds of $722,500. In addition, during the third quarter the
Company paid commissions and expenses of $33,411.18 which were
attributable to sales of unregistered securities in both the second and
third quarters. Thus, as of the end of the third quarter, the Company
had received total net proceeds of $1,274,088.19 from its on-going
offering of unregistered securities to accredited investors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter ended October
31, 1997.
Three reports on Form 8-K were filed during the quarter ended
October 31, 1997. The first 8-K report, dated September 11, 1997, was
made to report additional information regarding the previously reported
dismissal of the Company's principal independent accountant and the
engagement of a new principal accountant. The other two 8-K reports
during the quarter, both of which were dated September 20, 1997, were
amendments to the filing dated September 11, 1997, and included
additional information regarding dismissal of the previous principal
accountant.
Signatures
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC.
(Registrant)
____________________________________________
J.A. Garcia, President December 5, 1997
(Name, Title) (Date)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-01-1998
<PERIOD-END> OCT-31-1997
<CASH> 586,908
<SECURITIES> 0
<RECEIVABLES> 5,725
<ALLOWANCES> 0
<INVENTORY> 260,343
<CURRENT-ASSETS> 852,976
<PP&E> 1,060,467
<DEPRECIATION> 18,792
<TOTAL-ASSETS> 1,974,898
<CURRENT-LIABILITIES> 123,944
<BONDS> 0
0
500,000
<COMMON> 12,988
<OTHER-SE> 1,840,560
<TOTAL-LIABILITY-AND-EQUITY> 1,974,898
<SALES> 28,189
<TOTAL-REVENUES> 28,189
<CGS> 19,421
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 436,467
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (427,699)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (427,699)
<EPS-PRIMARY> (0.19)
<EPS-DILUTED> 0
</TABLE>
