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 April 30, 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: 2,017,000 shares of common
stock outstanding as of April 30, 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 April 30, 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>
April 30, January 31,
1997 1997
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 123,024 581,000
Prepaid expenses 417
Inventory 326,904
Total current assets 450,345 581,000
FIXED ASSETS:
Fixed assets, cost 392,813 19,512
Accumulated depreciation (11,806)
Total fixed assets 381,007 19,512
OTHER ASSETS 54,452 11,189
Total assets 885,804 611,701
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 30,858
Notes Payable to Shareholder 80,000 80,000
Advances from stockholder 5,000 70,278
Accrued liabilities 45,438
Total current liabilities 130,438 181,136
STOCKHOLDERS' EQUITY
Preferred Stock - authorized,
10,000,000 shares issued and
outstanding 5,000 shares at
stated value of $100 per share 500,000 495,800
Common Stock, authorized,
100,000,000 shares without par
value, issued and outstanding,
1,985,000 shares at stated
value of $.005 per share 10,085 9,585
Additional paid-in capital 499,575 75
Accumulated deficit during
development stage (254,294) (74,895)
Total stockholders' equity 755,366 430,565
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY 885,804 611,701
</TABLE>
<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 APRIL 30, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
Period from
Jan 19, 1995
For the For the (inception)
period ended period ended through April
1997 1996 30, 1997
<S> <C> <C> <C>
REVENUES 5,451 5,451
COST AND EXPENSES
Cost of Sales 2,180 2,180
General and
administrative
expenses 182,670 2,120 257,565
Total expenses 184,850 2,120 259,745
NET LOSS 179,399 2,120 254,294
Accumulated deficit
Beginning of period 74,895 9,555 0
End of period 254,294 11,675 254,294
Loss per common
share 0.09 nil 0.14
Weighted number of
shares outstanding 1,923,652 1,697,395 1,822,363
/TABLE
<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
and subsidiaries
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 1997 AND 1996
<TABLE>
<CAPTION>
Period from
Jan 19, 1995
For the For the (inception)
period ended period ended through
1997 1996 April 30, 1997
<S> <C> <C> <C>
Increase (decrease) in cash:
Cash flows from operating activities:
Net Loss (179,399) (2,120) (254,294)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
CEA TECH
Prepaid expenses (417) (417)
Accounts Payable (30,858) 0
Amortization 25 204
Rent 150 1,075
Accrued liabilities 39,032 1,915 39,032
Stock issued for
services 1,238
ACQUIRED SUBSIDIARY (FROM MARCH 15, 1997)
Depreciation 3,286 3,286
Prepaid expenses 6,166 6,166
Inventory (23,154) (23,154)
Accounts payable (3,820) (3,820)
Accrued liabilities 6,406 6,406
Net cash used in
operating activities (182,758) (30) (224,278)
Cash flows from investing activities:
Purchase of
equipment (21,614) (41,126)
Organizational
costs (43,263) (54,156)
Net cash used in
investing activities (64,877) (95,282)
Cash flows from financing activities:
Proceeds from issuance of
preferred stock 4,200 500,000
Proceeds from issuance of
common stock 6,847
Proceeds from notes payable
to stockholders 80,000
Payment on advances to
stockholders (65,278) 5,000
Advances to subsidiary
prior to merger (151,112) (151,112)
Net cash used in
financing activities (212,190) 440,735
Net increase (decrease)
in cash and cash
equivalents (459,825) (30) 121,175
Cash and cash equivalents,
beginning of period 582,849 468 1,849
Cash and cash equivalents,
end of period 123,024 438 123,024
</TABLE>
Supplemental Disclosure:
<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS - APRIL 30, 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Controlled Environment Aquaculture Technology, Inc. ("the
Company"), formerly known as Global Capital Access Corporation, was
incorporated under the laws of the State of Colorado on January 19,
1995.
1. DEVELOPMENT STAGE COMPANY. 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.
2. PRINCIPLES OF CONSOLIDATION. The consolidated
financial statements include the accounts of Controlled Environment
Aquaculture Technology, Inc. and its wholly-owned subsidiaries, C.E.A.
Tech HHGI Breeding Corp., CEA Tech Plantations, Inc., and Hawaii
High Health Seafood Corp. for the entire period, and its wholly-owned
subsidiary Sunkiss Shrimp Co., Ltd., for the period from March 16,
1997. Significant intercompany transactions and amounts have been
eliminated in consolidation.
3. USE OF ESTIMATES. In preparing the Company's consolidated
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
4. INCOME TAXES. The Company files a consolidated federal
income tax return. The subsidiaries pay to or receive from the Parent
Company the amount of federal income taxes they would have paid or
received had the subsidiaries filed separate federal income tax returns.
Deferred tax assets and liabilities are reflected at currently enacted
income tax rates applicable to the period in which the deferred tax assets
or liabilities are expected to be realized or settled. As changes in tax
laws or rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes.
5. STATEMENT OF CASH FLOWS. For the purposes of
presentation in the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
NOTE B - GOING CONCERN
The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern. However,
the Company has sustained net losses since inception and continuation
is dependent upon the success of future operations and obtaining
additional capital.
The Company plans to utilize and breed high health, genetically
improved and specific pathogen free shrimp stocks. These stocks will
be used in a controlled environment, super intensive aquaculture
production facility. The Company plans to build this facility which will
utilize state-of-the-art technology. These breeding stocks and
technologies have been developed over the last ten years by the U.S.
Shrimp Farming Program under the direction of the Oceanic Institute.
Sunkiss Shrimp Co, Ltd. (Sunkiss) has participated in this program for
the last four years.
In accordance with the terms of an Agreement and Plan or
Reorganization dated January 14, 1997, on March 15, 1997, the
Company acquired all of the issued and outstanding stock of Sunkiss, a
Hawaii corporation, in a stock for stock exchange intended to qualify as
a tax-free reorganization under Section 368(a)(1)(B) of the Internal
Revenue Code of 1986. The acquisition was accounted for under the
purchase basis method. Based on an expert's opinion, the current value
of broodstock inventory was increased by $240,000, and the fixed assets
was increased by $213,036, which approximates the current replacement
costs. Upon completion of the transaction, Sunkiss became a wholly-
owned subsidiary of the Company and the Company became operational.
In the transaction, the Company issued 100,000 shares of its common
stock to the former stockholders of Sunkiss, and agreed to issue up to
100,000 additional shares of its common stock ("earn-out" shares) to the
stockholders of Sunkiss upon completion of certain conditions. The
conditions for issuance of the earn-out shares include (1) obtaining a
lease from the State of Hawaii on approximately 78 acres of real
property, (2) completion of construction of expanded hatchery facilities
and one-half acre growout ponds, (3) completion of stocking of the first
36 one-acre growout ponds on the newly leased property, and (4)
completion of the first full harvest of the 36 ponds. There is no
assurance as to when or whether these conditions will be satisfied.
At May 30, 1997, the parties entered into an addendum to the
Agreement and Plan of Reorganization whereby the Company agreed to
guarantee a value of not less than $500,000 for the stock issued to the
shareholders of Sunkiss. The guarantee is for a period of two years
ending March 15, 1999, and any deficiency in value as of that date is to
be paid through the issuance of up to 100,000 additional shares of
common stock. The value of any shares issued for performance shall be
included in determining the value. In no event shall more than 100,000
additional shares of common stock be issued in total to satisfy both
performance and price guarantee provisions.
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 consists of
approximately five acres located in Kekaha, Hawaii, on the island of
Kauai. An expansion program now underway will increase the
production capability 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 currently
negotiating with the State of Hawaii (State) for acquisition of leases on
additional adjoining acreage for the purpose of expanding future growout
operations.
On May 1, 1997, the Company commenced a private placement offering
of units for 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 $2.00 per share. The purpose of
the offering is to secure additional capital which will be required for it
to pursue its objectives in the field of sustainable intensive aquaculture,
particularly as it relates to the breeding and growing of high health,
genetically improved shrimp.
NOTE C - NOTES PAYABLE TO STOCKHOLDER
Notes payable to stockholder consist of two notes payable with unpaid
principal and interest at the rate of 8.25% payable on or before July 31,
1997. The stockholder has agreed to convert these notes to restricted
common stock at $2.50 per share in a private placement to be offered
prior to July 31, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION.
GENERAL
During the quarter ended April 30, 1997, the Company acquired
all of the issued and outstanding stock of Sunkiss Shrimp Co., Ltd.,
("Sunkiss") in a stock for stock exchange. As a result of this
acquisition, Sunkiss became a wholly-owned subsidiary of the Company.
Sunkiss operates primarily as a broodstock repository, hatchery
and maturation facility for high-health, genetically improved shrimp,
with some production allocated to grow-out and sale of full grown
shrimp for the local Hawaiian market. The current facility of Sunkiss,
located in Kekaha, on the island of Kauai, Hawaii, is fully permitted and
consists of approximately 5 acres. Effective April 18, 1997, the
Company received approval to access approximately 120 acres adjacent
to the present Sunkiss facility to commence construction of its growout
facilities. Pending receipt of final subdivision survey and documentation
being performed by the County of Kauai, the Company will continue its
negotiations with the State of Hawaii, Department of Land and Natural
Resources for the lease of substantial additional state-owned land for its
projected future expansion and growth.
PLAN OF OPERATIONS
The Company's business plan is to commercialize state-of-the-art
technologies for intensive, sustainable grow-out production of shrimp.
In order to implement its business plan, the Company requires additional
working capital which it is currently seeking to raise. As of May 1,
1997 (subsequent to the end of the first quarter), the Company
commenced a private placement offering of a minimum of $500,000 and
a maximum of $5,000,000. The offering is for the sale of up to 100
units, each of which consists of 20,000 common shares and 10,000 Class
A Warrants to purchase common shares at $2.00 per share. The
offering price per unit is $50,000. The Company has also commenced
negotiations and discussions with two different banks relating to
obtaining long-term loans sponsored and guaranteed by the U.S.
Department of Agriculture. These negotiations and discussions are
currently proceeding but there is no assurance as to when or whether
such loans may be available.
The Company's plan of operations for the remainder of it current
fiscal year, which is based upon obtaining necessary working capital
either from the proceeds of its private placement offering or from other
sources, is as follows:
1. A total of $320,000 has been allocated to expansion of the
Sunkiss hatchery facility, including acquisition of equipment and fixed
assets, which will enable it to produce an adequate level of broodstock
to supply the Company's growout operations.
2. A total of $2,080,000 has been allocated to construction of 52
one-acre growout ponds on property adjacent to the current Sunkiss
facility, and acquisition of related equipment.
3. A total of $1,200,000 has been allocated to investment in
broodstock inventory.
The Company believes that the net proceeds from its current
private placement, together with its projected revenues from expanded
operations of Sunkiss, will be sufficient to allow the Company to sustain
itself indefinitely. In addition, if the planned expansion of the growout
facilities is delayed for any reason, the Company believes that the
expansion of the Sunkiss facilities will assure sufficient revenue and
earnings to sustain operations and produce profits from the sale of
broodstock and "seed" to other producers.
Part II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) One report on Form 8-K dated March 15, 1997, was filed
during the quarter ended April 30, 1997, to report the acquisition of all
of the issued and outstanding stock of Sunkiss Shrimp Co., Ltd. As of
the date of filing of the report on Form 8-K, the audited financial
statements of Sunkiss Shrimp Co., Ltd. were not available. As a result,
no financial statements were included with the report on Form 8-K.
<PAGE>
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)
/s/
J.A. Garcia, President June 16, 1997
________________________________________
(Name, Title) (Date)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-01-1998
<PERIOD-END> APR-30-1997
<CASH> 123,024
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 326,904
<CURRENT-ASSETS> 450,345
<PP&E> 392,813
<DEPRECIATION> (11,806)
<TOTAL-ASSETS> 885,804
<CURRENT-LIABILITIES> 130,438
<BONDS> 0
0
500,000
<COMMON> 10,085
<OTHER-SE> 499,575
<TOTAL-LIABILITY-AND-EQUITY> 885,804
<SALES> 0
<TOTAL-REVENUES> 5,451
<CGS> 2,180
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 182,670
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (179,399)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (179,399)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> 0
</TABLE>
