SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
X - Annual report under section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required] for the fiscal year ended
January 31, 1998.
___- Transition report under section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition period
from ___ to ___.
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
__________________________________________________________
(Exact name of registrant as specified in its charter)
Colorado 0-25868 84-1293167
__________________________________________________________
(State or other (Commission I.R.S.Employer
jurisdiction File Number) Identification No.)
of incorporation)
CEATECH USA, Inc.
7 Waterfront Plaza, Suite 400
500 Ala Moana Blvd.
Honolulu, HI 96813
__________________________________________________________
(Address of Principal Office) (Zip Code)
(808)521-1801
__________________________________________________________
Issuer's telephone number
Securities to be registered under Section 12(b) of the Act:
Title of Each Class - Not applicable
Name of Exchange on which registered - Not applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock, no par value
(Title of class)
Class A Warrants to Purchase Common Stock
(Title of class)
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 ____
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB. ___
State issuer's revenue for its most recent fiscal year: $60,658.
State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of a
specified date within the past 60 days. (See definition of affiliate in
Rule 12b-2): $7,043,253 as of April 29, 1998.
NOTE: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the
aggregate market value of the common equity held by non-affiliates
on the basis of reasonable assumptions, if the assumptions are stated.
(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 registrants) State the number of shares
outstanding of each of the issuer's classes of common equity, as of the
latest practicable date. 3,395,950 (as of April 24, 1998)
(Documents incorporated by reference. If the following documents are
incorporated by reference, briefly describe them and identify the part
of the Form 10-KSB (e.g. Part I, Part II, etc.) into which the
document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933
("Securities Act"). The listed documents should be clearly described
for identification purposes.
Transitional Small Business Disclosure
Format (Check one):
Yes ____ No X<PAGE>
PART I
Item 1. Description of Business.
GENERAL. 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.
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 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.
In late 1996, the Company hired various key management
personnel and incorporated three wholly owned subsidiaries,
CEATECH HHGI Breeding Corp., CEATECH Plantations, Inc. and
Hawaii High Health Seafood Corp. for the purpose of commencing
operations. CEATECH HHGI Breeding Corp. will function as the
Aqua Breeding Center and broodstock repository responsible for
genetic development, hatching and maturation, as well as production
of "seed" (nauplii and post larvae) for Company growout operations
or potential sales to selected clients. CEATECH Plantations, Inc. will
operate the Company's shrimp growout facilities, as well as handling
production and harvest of shrimp for processing and sales and future
recovery of shell waste for conversion to new products (chitin and by-
products). Hawaii High Health Seafood Corp. will engage in the
processing, packing, distribution, and marketing of the Company's
plantation raw shrimp and "value added" cooked and prepared
gourmet and dietary products.
On or about March 15, 1997, in a stock for stock exchange,
the Company acquired all of the issued and outstanding stock of
Sunkiss Shrimp Co., Ltd., a Hawaii corporation. Following
completion of the transaction, Sunkiss became a wholly owned
subsidiary of the Company.
The Company to date remains in a start-up or development
stage without material revenue, and at January 31, 1998 had a total of
13 employees. Inherent in the construction and development stage in
the aquaculture industry are substantial, although mainly nonrecurring,
expenditures for compliance with environmental laws and technical
permitting encountered in special water quality standards for control
of supply and discharge of water and effluent, to federal, state and
local standards. To date all required procedures and requirements
have been met and appropriate permits issued. The Company is not
presently aware of existing or future problems due to government
regulations in this regard.
CURRENT OPERATIONS. It is now generally recognized
that shrimp farming is entering a new era in which producers must
adopt advanced technologies--domestic populations of high health and
genetically improved shrimp; disease diagnosis, prevention, and
treatment programs; advanced feeds and management methods; and
environmental control. Many of these second-generation technologies
were developed at The Oceanic Institute in Hawaii, as part of the
U.S. Shrimp Farming Program sponsored by the U.S. Department of
Agriculture, and the Company evolved from the studies and research
carried on at The Oceanic Institute.
Several of the Company's key technical, management, and
operating personnel played significant roles in and supervised many
facets of the work of The Oceanic Institute. The technology used by
the Company will be an intensive, sustainable controlled environment
shrimp growout process which was developed based upon controlled
full-cycle growout studies conducted over several years by The
Oceanic Institute using prototype ponds. The Company will continue
the same technology using half- and one-acre ponds.
The Company's wholly owned subsidiary, Sunkiss Shrimp Co.
Ltd. at Kekaha, Kauai, Hawaii, has participated for several years in
the U.S. Shrimp Farming Program coordinated by The Oceanic
Institute. Commercial harvests to date from the Company's newly
acquired subsidiary Sunkiss Shrimp Co., Ltd. have produced yield
results consistent with those previously experienced and projected in
prior research at The Oceanic Institute. As a result, the Company
projects that, in Hawaii, it can produce approximately 40,000 lb. per
acre per year (46 weeks) with 3 crops (harvest).
The Company is engaged in an expansion and construction
program at the former Sunkiss site (now CEATECH HHGI Breeding
Corp.) which will substantially increase the production capabilities of
the facility. This facility will serve as a repository for specific
pathogen-free shrimp broodstock utilizing their eggs as "seed" (nauplii
and post larvae) in the hatchery and maturation facilities to produce
the high health genetically improved shrimp in the Company's
growout operations. Any surplus production, when available, is
expected to be offered for sale to other selected shrimp farming
operations. This facility is expected to become fully operational
during the second quarter of the current fiscal year, with stocking of
the nursery ponds and initial seeding of the growout ponds expected to
be completed during the second or third quarter of the current fiscal
year. Upon completion of the seeding of the Company ponds, it is
anticipated that "seed" will be available for sale to other select shrimp
farmers in different areas of the world including new proprietary
disease-resistant strains developed by CEATECH that will complete
final testing and challenge in quarantine in the near future.
The Company's present concentration is on the
commercialization of a full range of improved stocks of Penaeus
Vannamei (Pacific White shrimp), the most important commercially
cultured shrimp species in the Americas for which the market is in
excess of $1 billion annually.
Traditionally, shrimp farms utilize a one or two phase
production cycle. With the two-phase cycle, preferred by
CEATECH, there are nursery ponds and growout ponds. Farms
usually produce two crops a year, but some farms in the tropics
produce three crops a year. The Company currently plans to produce
three crops per year, but with the current trend toward smaller-sized
shrimp, it may be possible to produce four crops per year.
Scope of Available Market
The U.S. aquaculture industry generated approximately $5.6
billion in GDP in 1992. Aquaculture provided approximately 20% of
the global shrimp supply in 1992, according to the United Nations
Food and Agriculture Organization (FAO). Ninety percent of this
cultured shrimp came from seven countries which have subsequently
shown production declines, due primarily to the aforementioned
disease problems. From the 1992 benchmark, FAO projects that
global shrimp aquaculture production will need to increase 80% by
the year 2000 to match the increased demands due solely to
population increases.
CEATECH will initially direct its marketing efforts to the
premium sector of the consumer shrimp market. The Company's
initial marketing and sales focus will be niche market presentation and
concentration in target markets such as resort hotels, premium cruise
ships, airlines, upscale restaurants and retail outlets, specialty food
outlets and caterers. The Company anticipates that the local Hawaiian
market will consume up to 20% of its initial production. As
production increases, the shrimp products will be introduced to
markets in Japan and select U.S. cities with concentrated Asian and
ethnic populations.
Effective December 18, 1997, the United States implemented
new rules governing the importation of seafood, including shrimp and
finfish. A portion of the current imports are expected to fail to meet
the new, more rigid standards. This could have the effect of
enlarging the anticipated supply shortfall in the United States.
Location of Ceatech Production Facilities
The Company believes that the Mana Plain area, near Kekaha,
Kauai, where its growout operations will be located, is an excellent
location for shrimp aquaculture, due to its high solar radiation and
unique rain fall and watershed patterns. In addition, much of this
land which was previously used for sugar cane plantations, is
currently fallow. As a result, the Company presently anticipates that
for the foreseeable future, it will continue to lease State of Hawaii
owned land for any expansion or future growout facilities (see Item 2.
Description of Property).
Funding
Financing for the expansion and alteration of the hatchery and
maturation facilities at the former Sunkiss Shrimp Co. facility at
Kekaha, Kauai, (now CEATECH HHGI Breeding Corp.) the
construction of 52 growout ponds for CEATECH Plantations, Inc.
both wholly owned subsidiaries of the Company, and additional
working capital for operations were provided by or arranged for by:
1. Private Placement of $500,000 8.25% Series A
Cumulative Convertible Preferred Stock as of January 31, 1997.
2. Private Placement dated May 1, 1997 under exemptions
provided by Regulation D and Section 4(2) of the Securities Act and
Rule 506 thereunder for sales to "Accredited Investors" for a
maximum of 100 units at $50,000 per unit or $5,000,000 gross
proceeds. Approximately $2,150,000 of offering proceeds from this
offering had been received as of January 31, 1998 with an additional
$2,000,000 paid or committed by April 30, 1998.
3. In early April, 1998 the Company accepted a
construction loan commitment in the amount of $3,000,000 from the
Bank of America to complete the first phase construction of the
shrimp growout facilities . The anticipated loan will be guaranteed by
the United States Department of Agriculture. The proposed initial
construction loan will be interest only for 12 months at Bank of
America's Reference rate plus 2%. After completion of construction
a 7-year real estate loan also guaranteed by the USDA will go into
effect. The management feels that upon completion of this phase, the
Company can continue its growth through internally generated cash
flow and profits, or alternatively, additional debt financing or equity
placements, as well as private partnership or limited liability
corporation tax structured programs. Conditions precedent to the
corporation receiving funding of the loan include USDA final
approval and satisfaction of covenants and conditions of the
outstanding 8.25% Series A Cumulative Convertible Preferred Stock,
which management believes will be accomplished prior to completion
of the loan processing.
Item 2. Description of Property
The Company's present headquarters are located in the
business and financial district of downtown Honolulu, Hawaii, and
consist of leased office space of approximately 1,000 sq. ft., at an
annual rent of $24,000. All administrative, accounting, purchasing,
engineering, local sales and personnel functions are presently managed
from this location. International sales and marketing functions
presently are handled from El Paso, Texas, and coordinated with the
management of the Company's Hawaii High Health Seafood Corp. in
the Honolulu offices.
CEATECH HHGI Breeding Corp. now occupies the five-acre
former site of Sunkiss Shrimp Co. at Kekaha on the island of Kauai.
The expansion and construction program is nearing completion and it
is anticipated that the facility will become operational for the
Company's SPF broodstock repository, hatchery, maturation, and
genetic breeding operations during the second quarter of the current
fiscal year.
The hatchery building consists of a 5,600 sq. ft Sprung
Structure and is windproof to 110 mph. The interior has a concrete
floor and has been equipped with six 17.5 ton epoxy-coated larval
rearing tanks, four 15 ft diameter maturation tanks, two 14 ft
spawning tanks, a 200 square foot room for feed preparation, and a
mezzanine area for on-site management and communications. This
hatchery is designed to permit production of not less than 6 million
post larvae per month, and includes infrastructure to increase post
larvae production to 12 million per month.
The four existing lined, 1/4-acre ponds will allow the
production of 24,000 broodstock animals per annum. This amount is
considered to be sufficient to fully support the Company's breeding
program for growout operations and additional sale of broodstock to
the outside. Four broodstock holding tanks have been added to aid
handling operations connected with shipping activities. An algae
building of 1,600 square foot cinderblock construction is fully
plumbed, and has a thermal-controlled interior. This building is
sufficient to support all algae feed requirements of the hatchery, and
is designed to permit expansion commensurate with the hatchery. The
equipment building, a 200 square foot Grainger building with a
concrete floor, houses the water filtration, UV sterilizer, and thermal-
control equipment used by hatchery operations.
A lined, covered 32,000 gallon reservoir tank holds sufficient
seawater for daily hatchery operations and a buffer volume in the
event of an emergency. A 100 square foot pump house encloses the
seawater pump to offer protection from the elements. A 1,000 gallon,
EPA-approved, diesel storage tank is in place to support the adjacent
50 kW generator, capable of providing power to pumps, lights, and
air for full hatchery operations in the event of an emergency. A
second seawater well, capable of providing in excess of 300 gpm, is
now functional. An additional 200 square foot office space has been
set up to support communications and clerical functions associated
with the breeding operation.
CEATECH Plantations, Inc. will operate all of the Company's
shrimp growout facilities and will be responsible for the production
and harvesting of all shrimp for further processing, distribution, and
sale. Future recovery of shell waste for conversion to new products
(chitin and by-products) will also be under their control.
Construction of up to 52 round ponds is now underway. A
minimum of six of these ponds will be one-half acre nursery ponds,
with the balance presently planned as one-acre round plastic lined
circular ponds, containing special controlled bottom drainage for
cleaning and water circulation as well as harvest.
This first phase is located on approximately 83 acres of leased
land at the Kekaha Aquacultural Park. The lease with the State of
Hawaii has a 45-year term that expires on December 31, 2043. Base
rent is set at $150 per acre per year for the first 15 years with the rent
in excess of the base value up to 3% of gross proceeds from sales.
The base rent only is subject to increase after the 10th, 20th, and 30th
year of the lease.
The Company is allowed to recover all of its capital investment
prior to the payment of percentage royalty.
On April 9, 1998 the Company was granted a revocable permit
and Immediate Construction Right of Entry to approximately 313
additional adjacent acres from the State of Hawaii, Department of
Land and Natural Resources. Terms on the lease now being finalized
are to be consistent with those for the adjacent Kekaha Aquacultural
Park. This property is expected to be used for additional growout
facilities.
Plans and studies to determine the most advantageous locations
for future processing and packing facilities are underway.
Item 3. Legal Proceedings
The Company is not a party to any actual or pending legal
proceedings of any nature whatsoever and is not aware of any claims
threatened as potential that could lead to the same.
Item 4. Submission of Matters to a Vote of Security Holders
As of January 31, 1998. None.
Item 5. Market for Common Equity and Related Stockholder
Matters
The Company's common shares commenced public trading on
the Over the Counter, Bulletin Board in August 1997 after filing its
15C2-11 statement with the NASD.
The range of high and low bid for the two full quarters since
commencement of trading are as follows:
<TABLE>
<CAPTION>
Aug/Sep/Oct 1997 Nov/Dec/Jan 1998
<S> <C>
Low Bid: 2-1/2 Low Bid: 3-3/8
High Bid: 5 High Bid: 4-1/4
</TABLE>
These quotations reflect inter-dealer prices without retail mark-up,
mark-down, or commission and may not represent actual transactions.
At January 31, 1998 there were 2,939,450 common shares
outstanding held by 394 shareholders of record.
There have been no cash dividends declared or paid on the
shares of common stock and management does not anticipate payment
of dividends in the foreseeable future. Long-term bank loans
presently being finalized will restrict payment of cash dividends,
possibly as long as seven years.
Item 6. Management's Discussion and Analysis or Plan of
Operations
Overview
The Company's balance sheet as of January 31, 1998 showed
substantial improvement as compared to its balance sheet as of
January 31, 1997. As of January 31, 1998, the Company had total
assets of $2,299,243 as compared to $611,701 at January 31, 1997,
current assets of $943,886 as compared to $581,000 at January 31,
1997, stockholders' equity of $2,237,027 as compared to $430,565 at
January 31, 1997, and current liabilities of $62,216 as compared to
$181,136 at January 31, 1997.
Revenues for the year ending January 31, 1998 were a
minimal amount of $60,658 vs. $0 revenues in prior years, with
meaningful revenue from operations still not projected until the second
half of the current fiscal year, and primarily in the fourth quarter
ending January 31, 1999.
The first seven months of the past fiscal year were primarily
spent on preparing and processing all the necessary applications and
environmental studies which are required in order to obtain the
permits, permissions, and leases preparatory to the start of
engineering and construction of the shrimp growout facilities, and
specific design, engineering, and layout of the expansion and
construction of the Sunkiss Facility acquired on March 15, 1997.
Operations for the continued development of SPF broodstock,
including some proprietary crosses now being finally challenged for
taura resistance, were conducted by Company technical personnel and
management. The expansion and construction is nearing completion
with the facility (now CEATECH HHGI Breeding Corp.) expected to
become operational during the second quarter of the current fiscal
year. Immediate breeding and maturation of "seed" will allow the
Company to "plant" the first crops during the second quarter. The
first commercial harvests and revenues from the sale of shrimp should
commence in the third or fourth quarter of the current fiscal year and
revenues are expected to increase as ponds are added or existing
ponds arrive at harvest sizes. The estimated initial production is at
the rate of 2,000,000 lb. per year, growing to an annual rate of
6,000,000 lb. per year by the end of 1999.
The proceeds of the Private Placement completed as of April
30, 1998, the pending $3,000,000 long-term loan guaranteed by the
U.S. Department of Agriculture, and the cash flow and profits from
the operations outlined above should allow the Company sufficient
capital to complete its projected goals successfully. With the addition
of $2,000,000 cash equity since January 31, 1998, and minimal
present debt, management believes the Company has should have
sufficient cash available to satisfy its projected needs for the next 12
months.
The Company at January 31, 1998 had 13 employees. At the
completion of construction and commencement of operations during
1998 and early 1999 at CEATECH HHGI Breeding Corp. and
CEATECH Plantations, Inc. the total of employees could rise to 50.
The added employees would, for the most part, be hourly workers
engaged in the feeding, harvesting, processing, and bulk packing
areas.
Plans and studies now in progress to determine processing,
packaging, and distribution to end users and consumers will determine
additional labor needs in those areas projected for mid-1999.
CAUTIONARY STATEMENT REGARDING FORWARD-
LOOKING INFORMATION
This report contains various forward-looking statements that
are based on the Company's beliefs as well as assumptions made by
and information currently available to the Company. When used in
this report, the words "believe," "expect," "anticipate," "estimate"
and similar expressions are intended to identify forward-looking
statements. Such statements may include statements regarding
completion of construction of facilities, commencement of operations,
operation and expansion of facilities, planned levels of shrimp
production, marketing matters, and the like, and are subject to certain
risks, uncertainties and assumptions which could cause actual results
to differ materially from projections or estimates contained herein.
Factors which could cause actual results to differ materially include,
among others, unanticipated delays or difficulties in completion of
construction of facilities, lack of adequate financing, unexpected
problems in obtaining licenses or permits, environmental costs and
risks, competition and changes in market conditions, unanticipated
problems or difficulties in operation of facilities, lack of adequate
personnel, changes in project parameters as plans continue to be
refined, and the like. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated,
estimated or projected. The Company cautions against placing undue
reliance on forward-looking statements all of which speak only as of
the date made.
Item 7. FINANCIAL STATEMENTS.
See following pages.<PAGE>
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As of January 31, 1998 and for the Period From
January 19, 1995 (Date of Inception) Through January 31, 1998
<PAGE>
C O N T E N T S
Report of Independent Certified Public Accountants
Consolidated Balance Sheet
Consolidated Statements of Operations
Consolidated Statement of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Financial Statements
<PAGE>
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
AND SUBSIDIARIES
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Controlled Environment Aquaculture Technology, Inc.
We have audited the accompanying consolidated balance sheet of
Controlled Environment Aquaculture Technology, Inc. (a development
stage company) and Subsidiaries as of January 31, 1998, and the
related consolidated statements of operations, stockholders' equity,
and cash flows for the year then ended, and for the period from
January 19, 1995 (date of inception) through January 31, 1998.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit. The Company's financial
statements as of and for the year ended January 31, 1996, and for the
period from January 19, 1995 (date of inception) through January 31,
1996, were audited by other auditors whose report, dated February 8,
1996, expressed an unqualified opinion on those statements. The
financial statements for the period from January 19, 1995 (date of
inception) through January 31, 1996 reflect total revenues and net loss
of $-0- and $(9,555), respectively, of the related totals. The other
auditors' report has been furnished to us, and our opinion, insofar as
it relates to the amounts included for such prior period, is based
solely on the report of such other auditors.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit and the report of
other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the aforementioned report of
other auditors, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Controlled Environment Aquaculture Technology, Inc. and
Subsidiaries as of January 31, 1998, and the consolidated results of
their operations and their cash flows for the year then ended, and for
the period from January 19, 1995 (date of inception) through January
31, 1998, in conformity with generally accepted accounting principles.
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 experienced losses since inception, and
substantial doubt exists as to its continuation as a going concern.
Continuation is dependent upon the success of future operations.
Management's plans in regard to those matters are described in Note
2. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Carpenter Kuhen & Sprayberry
Oxnard, California
February 16, 1998<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
January 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash 535,598
Accounts receivable (net of allowance
for doubtful accounts of $0) 12,659
Common stock subscriptions receivable 80,000
Inventory 252,444
Prepaid expenses 19,300
Deposits 3,885
Notes receivable 40,000
TOTAL CURRENT ASSETS 943,886
Property and Equipment, at Cost 1,257,168
Other Assets 98,189
2,299,243
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 7,505
Other current liabilities 54,711
Total current liabilities 62,216
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' EQUITY
Preferred stock - no par value
Authorized - 10,000,000 shares
Issued and outstanding - 5,000
shares Series A 8.25% Cumulative
Convertible at stated value
of $100 per share 495,800
Common stock - no par value
Authorized - 100,000,000 shares
Issued and outstanding -
2,939,450 shares 2,592,544
Additional paid-in capital 2,075
Receivable from stockholders (2,000)
Accumulated deficit during
development stage (851,392)
Total stockholders' equity 2,237,027
2,299,243
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC. (a development stage company)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended January 31, 1998 and 1997 and for the
Period From January 19, 1995 (Date of Inception) through
January 31, 1998
<TABLE>
<CAPTION> Period from
Year ended January 19, 1995
January 31, (inception) through
1998 1997 January 31, 1998
<S> <C> <C> <C>
SALES 60,658 - 60,658
COST OF SALES 87,654 - 87,654
Gross margin (26,996) - (26,996)
GENERAL AND ADMINISTRATIVE EXPENSES:
Professional and
consulting fees 183,482 - 183,482
Wages 181,104 - 181,104
Travel 94,999 - 94,999
Legal and accounting 74,084 28,876 110,395
Insurance 52,577 - 52,577
Depreciation and
amortization expense 48,286 100 48,595
Rent 34,334 450 35,409
Supplies 24,331 - 24,331
Other 17,328 - 17,328
Advertising 16,600 - 16,600
Utilities 15,263 - 15,263
Employee moving expense 9,721 - 9,721
Dues and subscriptions 6,075 - 6,075
Postage and shipping 2,845 - 2,845
License and fees 1,220 - 1,220
Bank charges - 42 90
Directors' fees - - 1,238
Organizational expense - 35,872 35,872
762,249 65,340 837,144
Loss from operations (789,245) (65,340) (864,140)
Other income 3,106 - 3,106
Interest income 9,642 - 9,642
NET LOSS (776,497) (65,340) (851,392)
NET LOSS PER SHARE:
Basic and diluted (0.34) (0.04) (0.45)
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC. (a development stage company)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Years Ended January 31, 1998 and 1997 and for the
Period From January 19, 1995 (Date of Inception) through
January 31, 1995
(page 1 of 2)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Issuance of stock for
services January 19, 1995
($.005 per share) - - 347,500 1,738
Issuance of stock for
cash during January, 1995
($.005 per share) - - 1,347,500 6,737
Rent provided at no charge - - - -
Loss for period ended
January 31, 1995 - - - -
Balance at January 31, 1995 - - 1,695,000 8,475
Issuance of stock for cash,
December 15, 1995,
($.005 per share) - - 18,000 90
Issuance of stock for cash,
January 12, 1996,
($.005 per share) - - 2,000 10
Issuance of stock for cash,
January 24, 1996,
($.005 per share) - - 2,000 10
Rent provided at no charge - - - -
Loss for year ended
January 31, 1996 - - - -
Balance at January 31, 1996 - - 1,717,000 8,585
Issuance of stock, September
30, 1996 ($.01 per share) - - 200,000 1,000
Issuance of stock,
November 1, 1996 - - 300,000 -
Stock contributed back to
the Company, January
31, 1997 - - (332,000) -
Issuance of stock for cash,
January 31, 1997,
($99.16 per share, net) 5,000 495,800 - -
Rent provided at no charge - - - -
Loss for the year ended
January 31, 1997 - - - -
Balance at
January 31, 1997 5,000 495,800 1,885,000 9,585
Issuance of stock,
April 8, 1997 purchase of
Sunkiss ($5.00 per share) - - 100,000 500,000
Issuance of stock for services
April 30, 1997 ($.01 per share) - - 32,000 320
Issuance of stock for cash during
the year ended January 31, 1998
($2.26 per share, net) - - 922,450 2,082,589
Issuance of stock for services,
October 13, 1997
($.01 per share) - - 10,000 100
Cancellation of stock issued for
services - - (10,000) (50)
Loss for the year ended
January 31, 1998 - - - -
Balance, January 31, 1998 5,000 495,800 2,939,450 2,592,544
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC. (a development stage company)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Years Ended January 31, 1998 and 1997 and for the
Period From January 19, 1995 (Date of Inception) through
January 31, 1995
(page 2 of 2)
<TABLE>
<CAPTION>
Accumulated
Additional Receivable Deficit Total
Paid-in from Development Stockholders'
Capital Stockholders Stage Equity
<S> <C> <C> <C> <C>
Issuance of stock for
services January 19, 1995
($.005 per share) - - - 1,738
Issuance of stock for
cash during January, 1995
($.005 per share) - - - 6,737
Rent provided at no charge 25 - - 25
Loss for period ended
January 31, 1995 - - (2,283) (2,283)
Balance at January 31, 1995 25 - (2,283) 6,217
Issuance of stock for cash,
December 15, 1995,
($.005 per share) - - - 90
Issuance of stock for cash,
January 12, 1996,
($.005 per share) - - - 10
Issuance of stock for cash,
January 24, 1996,
($.005 per share) - - - 10
Rent provided at no charge 600 - - 600
Loss for year ended
January 31, 1996 - - (7,272) (7,272)
Balance at January 31, 1996 625 - (9,555) (345)
Issuance of stock, September
30, 1996 ($.01 per share) 1,000 (2,000) - -
Issuance of stock,
November 1, 1996 - - - -
Stock contributed back to
the Company, January
31, 1997 - - - -
Issuance of stock for cash,
January 31, 1997,
($99.16 per share, net) - - - 495,800
Rent provided at no charge 450 - - 450
Loss for the year ended
January 31, 1997 - - (65,340) (65,340)
Balance at
January 31, 1997 2,075 (2,000) (74,895) 430,565
Issuance of stock,
April 8, 1997 purchase of
Sunkiss ($5.00 per share) - - - 500,000
Issuance of stock for services
April 30, 1997 ($.01 per share) - - - 320
Issuance of stock for cash during
the year ended January 31, 1998
($2.26 per share, net) - - - 2,082,589
Issuance of stock for services,
October 13, 1997 ($.01 per share) - - - 100
Cancellation of stock issued for
services - - - (50)
Loss for the year ended
January 31, 1998 - - (776,497) (776,497)
Balance, January 31, 1998 2,075 (2,000) (851,392) 2,237,027
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC. (a development stage company)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended January 31, 1998 and 1997
and for the Period from January 19, 1995 (Date of Inception)
through January 31, 1998
<TABLE>
<CAPTION>
Period from
Year ended January 19, 1995
January 31 (Inception) to
1998 1997 January 31, 1998
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss (776,497) (65,340) (851,392)
Adjustments to reconcile net loss to
net cash used in operating activities:
Noncash items included in net income:
Rent - 450 1,075
Depreciation and amortization 48,515 100 48,515
Stock issued for services 2,870 - 4,608
Net change in operating assets
and liabilities (270,680) 29,648 (239,822)
Net cash used in operating
activities (995,792) (35,142) (1,037,016)
Cash flows from investing activities:
Payments for purchase of
equipment (766,170) (19,512) (785,682)
Payments for organizational
costs (87,000) (10,893) (98,189)
Payments for notes payable (6,250) - (6,250)
Net cash used in investing
activities (859,420) (30,405) (890,121)
Cash flows from financing activities:
Proceeds from issuance of preferred
stock - 495,800 495,800
Proceeds from issuance of common
stock 1,920,088 - 1,926,935
Decrease in notes payable -
stockholder - 80,000 80,000
Decrease in advances from
stockholders (70,278) 70,278 -
Decrease in notes payable (40,000) - (40,000)
Net cash provided by financing
activities 1,809,810 646,078 2,462,735
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (45,402) 580,531 535,598
Cash and cash equivalents, beginning
of year (period) 581,000 469 -
Cash and cash equivalents, end
of year (period) 535,598 581,000 535,598
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC. (a development stage company)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS as of
January 31, 1998 and for the Period from January 19, 1995 (date of
inception) through January 31, 1998
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies of Controlled
Environment Aquaculture Technology, Inc. is presented to assist in
understanding the Company's financial statements. These accounting
policies conform to generally accepted accounting principles.
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.
a. 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
significant 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, 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.
b. PRINCIPLES OF CONSOLIDATION. The consolidated
financial statements include the accounts of Controlled Environment
Aquaculture Technology, Inc. and its wholly-owned subsidiaries,
Ceatech HHGI Breeding Corp., Ceatech Plantations, Inc., Sunkiss
Shrimp Co., Ltd., and Hawaii High Health Seafood Corp. Significant
intercompany transactions and amounts have been eliminated in
consolidation.
c. USE OF ESTIMATES. The preparation of financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
d. CASH AND CASH EQUIVALENTS. The Company
considers all investment instruments purchased with a maturity of
three months or less to be cash equivalents.
e. ACCOUNTS RECEIVABLE. The Company considers
accounts receivable to be fully collectible, accordingly, no allowance
for doubtful accounts is required.
f. INVENTORIES. Inventory is stated at the lower of cost (first-
in, first-out method) or market. Costs include proportionate costs of
broodstock, plus the cost of maintenance to maturity. Purchased
shrimp are carried at purchase cost, plus costs of maintenance to
maturity.
g. PROPERTY, EQUIPMENT, DEPRECIATION AND
AMORTIZATION. Property and equipment are recorded at cost.
Depreciation and amortization of property and equipment are provided
using both the straight-line and declining-balance methods over the
following estimated useful lives:
<TABLE>
<CAPTION>
Estimated
Asset Classification Useful Life
<S> <C>
Agricultural equipment 7-10 years
Land improvements 15 years
Buildings 20 years
Office furniture and fixtures 5-7 years
Vehicles 5 years
</TABLE>
Expenditures for maintenance and repairs are charged to
expense as incurred.
Property and equipment consists of:
<TABLE>
<CAPTION>
<S> <C>
Agricultural equipment 435,422
Land improvements 192,000
Buildings 43,000
Office furniture and fixtures 25,238
Vehicles 25,025
720,685
Less - accumulated depreciation (48,514)
672,171
Construction in progress 584,997
1,257,168
</TABLE>
h. 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.
i. NET LOSS PER SHARE. Net loss per share is based on the
weighted average number of common shares outstanding of 2,251,333
for 1998, 1,853,652 for 1997, and 1,911,692 for the period from
January 19, 1995 (inception) through January 31, 1998. Because
there were no preferred dividends accrued in the current year, there is
no effect on the basic or diluted earnings per share calculation. The
basic and diluted earnings per share calculations are the same because
potential dilutive securities would have had an antidilutive effect for
all periods presented.
Securities that were not included in the earnings per share calculation
because they were antidilutive include the convertible preferred stock
and warrants discussed further in Note 5. Subsequent to year end, the
Company issued 456,500 common shares. These shares would
change the number of common shares outstanding at year-end.
j. CONCENTRATION OF CREDIT RISK - CASH. The
Company maintains its cash balances in one financial institution
located in Honolulu, Hawaii, which at times, may exceed federally
insured limits. The Company has not experienced any losses in such
account and believes it is not exposed to any significant credit risk on
cash and cash equivalents.
(2) 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.
The Company has sustained net losses since inception, and therefore
in accordance with generally accepted accounting principles, doubt
must be expressed regarding the Company's continuing viability.
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. 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.
Upon completion of the transaction, Sunkiss became a wholly-owned
subsidiary of the Company.
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. Condition
(1) has been satisfied; (2) is scheduled to become operational May 1,
1998; (3) is scheduled for June 1998; and (4) is scheduled to be
completed during the 4th quarter of fiscal year ending January 31,
1999.
Sunkiss operations have been consolidated into Ceatech HHGI
Breeding Corporation and primarily operate as a breeding hatchery
and maturation facility for high health genetically improved shrimp.
The facility is located on approximately five acres located in Kekaha,
on the island of Kauai. The expansion program scheduled for
completion and operation by May 1, 1998, 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 to selected independent shrimp farm
growing operations. The Company has leased 83 acres from the State
of Hawaii. 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
April 9, 1998, the Company was granted a revocable permit and
Immediate Construction Right of Entry to approximately 313
additional adjacent acres from the State of Hawaii, Department of
Land and Natural Resources for the construction of additional growout
ponds.
Subsequent to January 31, 1998, the Company accepted a construction
loan commitment in the amount of $3,000,000 from the Bank of
America to complete the construction of the production facilities.
The loan will be guaranteed by the United States Department of
Agriculture, under its Rural Development program. The construction
loan will be for a period of 12 months during which time interest only
payments are due monthly at the Bank of America's Reference Rate
plus 2%. After completion of construction, a seven-year amortizing
real estate loan will be provided by the Bank of America, which will
also be guaranteed by the United States Department of Agriculture.
Interest on the real estate loan for the first two years of the term will
be the Bank of America Reference Rate plus 2%. Thereafter, the
bank may, at its option, offer the following interest rate options: a)
Floating Rate (Reference Rate plus 1.75%); b) adjustable rate based
on a one-year Constant Maturities Treasury Index plus 2.75%; or c)
six month jumbo CD plus 2.5%.
Subsequent to January 31, 1998, the Company issued 456,500 shares
of stock for an issuance price of $1,366,250.
(3) BUSINESS ACQUISITION
As discussed in note 2, during the year ended January 31, 1998, the
Company acquired Sunkiss Shrimp Co., Ltd. a Hawaii corporation in
a stock for stock exchange. The total value of the stock exchanged
was $500,000. This business combination was accounted for using
the purchase method of accounting. The accompanying consolidated
income statement includes the results of operations for Sunkiss from
the period from March 15, 1997 through January 31, 1998. The
following pro forma information shows the results of operations for
the years ended January 31, 1998 and 1997 as though the acquisition
had taken place at the beginning of each respective period:
<TABLE>
<CAPTION>
Year ended January 31,
1998 1997
<S> <C> <C>
Sales 79,673 21,125
Net loss (776,014) (66,094)
Loss per share (0.34) (0.03)
</TABLE>
(4) COMMITMENTS AND CONTINGENCIES
a. Kekaha Agricultural Park Lease
Ceatech Plantations leases 83 acres of land from the State of Hawaii.
The lease has a 45-year term, which expires on December 31, 2043.
Base rent is set at $12,289 per year for the first 15 years of the lease
term. Additional rent due is any amount in excess of the base rent up
to 3% of gross proceeds from the sale of commodities produced on
the land. The rent amounts are to be re-determined after the 15th,
25th and 35th years of the lease.
b. Crown Land of Waimea Lease
Sunkiss leases land from the State of Hawaii. The lease has a 35-year
term, which expires on July 31, 2029. Rent is the greater of $800
per year or 3% of gross receipts. The rent amounts are to be re-
determined after the 10th, 20th and 30th years of the lease.
Minimum future payments required under the leases are as follows:
<TABLE>
<CAPTION>
Years Ending January 31, Amount
<S> <C>
1999 13,089
2000 13,089
2001 13,089
2002 13,089
2003 and thereafter 528,249
580,605
</TABLE>
On both leases the Company is allowed to recover its capital
investment, prior to the payment of percentage royalty.
(5) STOCKHOLDERS' EQUITY
On November 1, 1996, the Company issued 50,000 shares of common
stock in consideration for services performed and for future services.
Also, on November 1, 1996, the Company issued 250,000 shares of
common stock in a trust for the benefit of new and future key
employees of the Company being recruited. On January 31, 1997, the
shares were reissued and transferred to such employees. The fair
value of the common stock issued, the services received and the future
services are not reliably measurable.
On January 31, 1997, a stockholder contributed back to the Company
332,000 shares of Company's common stock for no consideration.
The fair value of these shares is not reliably measurable. These
shares are to be issued in connection with the planned private
placement offering.
The Company also reserves the right to extend the expiration date or
reduce the exercise price of any or all classes of warrants upon giving
five days notice. The warrants can only be exercised when a current
registration statement is on file for the shares underlying the warrants.
On January 31, 1997, the Company issued 5,000 shares of the Series
A 8.25% cumulative convertible preferred stock at a price of $100 per
share. Proceeds from the sale of preferred stock were $495,800, net
of expenses. The convertible preferred stock is redeemable, in whole
or in part, at the option of the Company, at a redemption price of
$110 per share, plus any accrued and unpaid dividends. The
convertible preferred stock has a liquidation value of $100 and is
convertible at the option of the holder into common stock, at a
conversion price of $100 per share, subject to adjustment in certain
events. Dividends on every share of preferred stock shall accumulate,
whether or not earned or declared, for a period of one year from date
of issuance. Thereafter, dividends at an annual rate of $8.25 per
share are payable quarterly in arrears, when and as deemed by the
Board of Directors. The payment of dividends on this Series A shall
be preferred and in priority over dividends upon the common stock of
the Company. Holders of preferred stock have voting rights, the
same and identical as holders of common stock, and they are entitled
to elect one member of the Board of Directors. The shares of
preferred stock are restricted under Rule 144. The preferred stock
dividend of $41,250 was not accrued during the current year beacuse
the Company has a retained deficit. Had this been done, the effect on
earnings per share would be immaterial.
As of January 31, 1998, the Company had 2,939,450 shares of its
common stock issued and outstanding, together with 2,343,399 Class
A warrants to purchase one additional share of common stock at
$2.00. The warrants are exercisable from August 1, 1995, until
December 31, 2001, and are not cancelable. Certain shares of
common stock and warrants are restricted under Rule 144.
(6) PENSION PLAN
During the year ended January 31, 1998, the Company adopted a
qualified profit sharing plan with a 401(k) deferred compensation
provision. All employees who are at least 21 years of age and have
completed one year of service or were full-time employees at the time
of adoption are eligible to participate. Participating employees may
contribute the lesser of $9,500 or up to 15% of compensation per
year. The Company may match a portion of the employee
contributions on a discretionary basis, determined on an annual basis.
During the year ended January 31, 1998, the Company did not make
a matching contribution. Employees are immediately vested in their
contributions.
Company contributions are vested based on the following schedule:
<TABLE>
<CAPTION>
Years of Vested
Service Percent
<S> <C>
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
</TABLE>
(7) INCOME TAXES
Total income tax expense differs from the expected tax expense
(computed by multiplying the United States federal statutory rate of
approximately 35 percent for the years ended January 31, 1998 and
1997 to net income) as a result of the following:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Computed "expected"
tax benefit 271,774 22,869
State tax benefit 49,696 4,182
Other (16,657) (187)
Valuation allowance (304,813) (26,864)
$ -- $ --
</TABLE>
The primary components of temporary differences which give rise to
deferred taxes are as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Deferred tax asset
Other timing differences 12,420 --
Difference between tax
and book basis of
fixed assets (191,201) --
Net operating loss
carryforward 332,275 26,864
Deferred tax valuation
allowance (153,494) (26,864)
$ -- $ --
</TABLE>
At January 31, 1998, an operating loss carryforward of approximately
$800,000 expiring in various years through 2013 is available to offset
future taxable income for financial reporting purposes.
(8) REGISTRATION OF SECURITIES
The Company has registered its common shares and units under
Section 12(g) of the 1934 Exchange Act.
(9) RELATED PARTY TRANSACTIONS
A former Company director and secretary is a partner in the law firm
which is the Company's general and securities counsel. Since
inception, the Company has incurred $43,662 for legal services
rendered.
(10) STATEMENTS OF CASH FLOWS - SUPPLEMENTAL
DISCLOSURES
The net change in operating assets and liabilities shown on the
statements of cash flows consists of the following:
<TABLE>
<CAPTION>
Period from
Year ended Jan. 19, 1995
January 31, (Inception) to
1998 1997 Jan. 31, 1998
<S> <C> <C> <C>
(Increase) Decrease:
(10) Accounts receivable (12,659) -- (12,659)
Inventory (252,444) -- (252,444)
Prepaid expenses (19,300) -- (19,300)
Deposits (3,885) -- (3,885)
Increase (Decrease):
(10) Accounts payable (23,353) 29,468 7,505
Other current liabilities 40,961 -- 40,961
(270,680) 29,468 (239,822)
Non-cash investing and financing transactions:
Purchase of property
and equipment 20,000 -- 20,000
Notes payable (20,000) -- (20,000)
-- -- --
Sale of common stock 80,000 -- 80,000
Common stock subscription
receivable (80,000) -- (80,000)
-- -- --
Issuance of common stock 80,000 -- 80,000
Reduction of note payable (80,000) -- (80,000)
-- -- --
Issuance of common stock 500,000 -- 500,000
Purchase of Sunkiss
subsidiary (500,000) -- (500,000)
-- -- --
Issuance of common stock -- 2,000 2,000
Note receivable -- (2,000) (2,000)
-- -- --
Increase in APIC -- 450 1,075
Rent expense contributed -- (450) (1,075)
-- -- --
Issuance of common stock 2,870 -- 4,608
Services received (2,870) -- (4,608)
-- -- --
</TABLE>
There was no cash paid for interest or taxes for the years ended January 31,
1998 or 1997 or for the period from January 19, 1995 (inception) through
January 31, 1998.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING
AND FINANCIAL DISCLOSURES
(a) DISMISSAL OF PRINCIPAL ACCOUNTANT
Grant Thornton, LLP, Certified Public Accountants, 1132 Bishop
Street, Suite 1000, Honolulu, Hawaii 96813-2830, the independent accountant
previously engaged as the principal accountant to audit the registrant's
financial statements, was dismissed, effective July 31, 1997. The Company
filed a report on Form 8-K to report the dismissal of Grant Thornton, and in
its filing, indicated that there were no known disagreements with Grant
Thornton of a nature which were required to be reported. The Company
believes its statement was accurate.
Grant Thornton subsequently issued a statement indicating that there
were disagreements between it and the Company of a nature which were
required to be reported, and as required by applicable regulations, the
Company filed the statement of Grant Thornton as an exhibit to an amended
report on Form 8-K. It is the Company's position that the letter from Grant
Thornton did not, in many respects, accurately state the facts, and that it was
issued primarily as a result of the fact that there was an on-going billing
dispute between the parties at that time. Additional details regarding the
nature and extent of the dispute with Grant Thornton are included in the
Company's 8-K filings.
The report of Grant Thornton, LLP, on the financial statements of the
registrant for the fiscal year ending January 31, 1997, did contain a going
concern qualification but did not contain any other adverse opinion, disclaimer
of opinion or qualification as to uncertainty, audit scope or accounting
principles.
The decision to change accountants was recommended and approved by
the board of directors of the Company.
(b) ENGAGEMENT OF NEW PRINCIPAL ACCOUNTANT
The registrant has engaged a new independent accountant as the
principal accountant to audit the registrant's financial statements. The
registrant's new principal accountant is Carpenter, Kuhen & Sprayberry, 300
Esplanade Drive, Suite 250, Oxnard, California 93030 and the date of the
engagement was September 11, 1997.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE ACT.
The names, ages and positions of all directors and executive officers
serving the Company as of the end of its fiscal year were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Positions Held
J.A. Garcia 70 President, Chief Executive
Officer, & Chairman of the Board
Ronald Ilsley 57 Chief Financial Officer,
Treasurer & Director
Ernest K. Dias 60 President, Chief Operating
Officer
Robert Greenspan 48 Secretary
Paul Bienfang
Ph.D 50 Senior Vice President, Director
of Environmental Compliance and Technology.
Gordon J. Mau
(effective 1/15/98) 51 Director
Charles Spira
(effective 1/15/98) 66 Director
</TABLE>
BIOGRAPHICAL INFORMATION
J.A. GARCIA. President, Chief Executive Officer and Chairman of the Board
of Directors.
Mr. Garcia has served as President, Chief Executive Officer and
Chairman of the Board of The Rally Group, Ltd., Los Angeles, California, a
venture capital and financial consulting firm, since 1988.
Mr. Garcia's exposure to the shrimp industry began in the late 1950s
when he served on the Board of Directors of Pearl Island Seafood of Panama.
He helped finance their expansion program and served as exclusive marketing
agent for shrimp sales in the United States. For over 30 years since then, he
has served as officer, director, and principal shareholder of several publicly
traded companies. He has demonstrated a strong ability to develop, structure,
and organize new businesses and development stage companies.
Mr. Garcia is a graduate of the Georgetown University of Foreign
Service where he received his Bachelor of Science in Foreign Service.
RONALD ILSLEY. Chief Financial Officer, Treasurer and Director.
Mr. Ilsley has served as Vice President and Chief Financial Officer of
Chemoil Corporation, San Francisco, California, since 1994. Chemoil
Corporation is recognized as the largest independent integrated supplier of
marine fuels in the United States. Chemoil's annual sales are in excess of
$400 million.
Mr. Ilsley served from 1985 - 1994 as Treasurer and Director of
Finance for Santa Fe International Corporation, Los Angeles, California, a
major multi-national company publicly traded on the New York Stock
Exchange.
Mr. Ilsley has served as Senior Executive and Manager for domestic
and international investment banking groups which include the European
American Bank, New York, New York, and Wells Fargo Bank, N.A., San
Francisco, California.
Mr. Ilsley received his Bachelor of Arts degree from California State
University Northridge and is a graduate of Pepperdine University Graduate
School of Business and Finance, Los Angeles, California. He has served as a
faculty member and lecturer in the Graduate School of Banking and
International Finance at Golden Gate University, San Francisco, California.
ERNEST K. DIAS. Senior Vice President, General Manager of Operations
and Director.
Mr. Dias has served as Manager of Facilities Development and
Construction for The Oceanic Institute, Honolulu, Hawaii, since 1988. As
Manager, Mr. Dias was responsible for the planning, implementation and
construction of satellites on the islands of Hawaii and Molokai for both The
Center for Applied Aquaculture at Makapuu Point, Oahu, and The Oceanic
Institute. Mr. Dias directed the design and construction of the Maryut Fish
Farming Company hatchery and facilities in Alexandria, Egypt. This
operation consists of a 6,000 acre facility and hatchery, construction of which
was financed by World Bank/U.S.A.I.D. Mr. Dias represented The Oceanic
Institute in all negotiations with World Bank/U.S.A.I.D., the Egyptian
government and private sector participants.
From 1960 to 1983, Mr. Dias held various key supervisory and
management positions with several major construction and engineering firms
which included: Peter Kiewit & Sons, Guy F. Atkinson, Gordon Ball, Kassler
Corp., and Polich-Benedict.
Mr. Dias received a Bachelor of Science in Engineering from San Jose
State University, San Jose, California. Mr. Dias attended the Pepperdine
University Graduate School of Business, Los Angeles, California.
ROBERT M. GREENSPAN.
Mr. Greenspan is an attorney licensed in the state of California and
various federal courts. Mr. Greenspan's background is in business and
insurance law. He has represented the interests of various businesses and
individuals over the past 25 years in the areas of insurance, construction, and
corporate matters. He is a former member of the Board of Directors of
Western Community Drug Rehabilitation Foundation and the Strategic
Planning Committee of the City of Culver City's Direction 2000.
PAUL BIENFANG, Ph.D. Senior Vice President, Environmental Compliance
and Technology.
Dr. Bienfang has served as Vice President, Senior Scientist, and Co-
Chief Executive Officer for The Oceanic Institute where he has worked since
1973. Dr. Bienfang was responsible for all phases of research, development,
and operations management at the Institute.
He formerly served on the Executive Committee for the Tropical and
Subtropical Aquaculture Region Center and the Board of Directors of the
Western Association of Marine Laboratories. He is currently a member of the
Governor's Hawaiian Aquaculture Council. He is a recognized authority and
evaluator of scientific research for the United States government as well as
technical journals in oceanography, aquaculture, fisheries and marine
environment.
GORDON J. MAU
Mr. Mau is a respected member of both the legal and financial
community in Hawaii where he serves as both a practicing attorney and one of
the directors of Hawaii National Bank and its parent, Hawaii National
Bancshare, Inc. He also serves as an officer and/or director of Overseas
Investors, Inc., Henry H. Wong Foundation and the Waialae Country Club,
among other organizations. Mr. Mau is a member of the State Bar of Hawaii,
Hawaii Board of Realtors, National Association of Realtors and the Hawaii
Chapter of CCIM.
CHARLES P. SPIRA.
Mr. Spira is President of Pacific View Management, Inc. a firm which
is engaged in real estate development and national television syndications. He
has also served on the long-range planning committee of the Board of
Directors of St. Joseph Medical Center Foundation and as Chief Financial
Officer of Newport Communications International, Inc. Mr. Spira is a CPA
whose career included managing the Tax Department of Arthur Anderson &
Company, Los Angeles.
RONALD MORRISON.
Mr. Morrison has been Director of Marketing at El Paso, Texas, since
February 1, 1997. He is the Founder and Managing Director of Dos Aguilas
International Trade Center, Inc., El Paso, Texas, 1992. He was Director of
Operations IBM World Trade Corporation Area de Caribe, Mexico City;
responsible for all IBM marketing and sales operations, all product divisions,
in Mexico, Central America, Northern South America and the countries of the
Caribbean. Served as Executive Assistant to the Chairman and C.E.O. of
IBM, Thomas J. Watson, Jr. Mr. Morrison was also Vice President of
Marketing, Marshall Industries, San Marino, California. He served as
Director of Marketing Booth Resources International, Inc., Los Angeles,
California.
Mr. Morrison holds a B.A. degree in Industrial Economics from the
University of California, at Berkeley, and an M.B.A. (Honors) in Operations
Research and Industrial Management. Following graduation, he was awarded
a Fulbright scholarship for study at Cambridge University, England.
MANAGEMENT/SUBSIDIARIES
<TABLE>
<CAPTION>
Name Age Title
<S> <C> <C>
James N. Sweeney 44 Vice President and Director
of Shrimp Program, all subsidiaries
Ronald M. Bailey 44 Manager, Systems and Services,
all subsidiaries
William K. Richards, Jr. 50 Vice President, Market Research
Director, Hawaii High Health Seafood
Corporation
Robert A. Kanna 37 Vice President and General Manager,
Sunkiss Shrimp Co. Ltd.
Landis Ignacio 43 President, Sunkiss Shrimp Co. Ltd.;
Director of Plantations and Facilities,
CEATECH Plantations, Inc.
Ricky N. Oyama 36 Manager, CEATECH HHGI Breeding
Corp.
David M. Godin 32 Shrimp Growout Manager, CEATECH
Plantations, Inc.
David Anthony Leong 31 Manager, Maturation and Hatchery
Operations, CEATECH HHGI Breeding
Corp.
</TABLE>
JAMES N. SWEENEY. Vice President and Director of Shrimp Program, all
subsidiaries since February 1, 1997. Honolulu, Hawaii.
Shrimp Program Manager, The Oceanic Institute, Honolulu. Since
1983, Mr. Sweeney has managed and participated in all phases of shrimp
research, development, breeding and hatchery, maturation and growout.
Mr. Sweeney is a graduate of the Fuginaga Penaeid Shrimp Institute,
Aio, Japan.
He is an acknowledged authority in his field and has authored
numerous publications and co-authored the Manual of Intensive Shrimp
Production Technology.
RONALD M. BAILEY. Manager, Systems and Services since January 1,
1997. Honolulu, Hawaii.
Since 1993, Mr. Bailey served as Procurement Manager and Director
of Personnel and Compliance at The Oceanic Institute, Honolulu, Hawaii.
Prior to joining The Oceanic Institute, Mr. Bailey served in the United States
Navy holding the positions of Manager, Budget and Procurement; Pacific
Region; Administrative and Personnel Officer, Special Security Officer, Navy
Space Technology; Washington, D.C.; and Master Training Specialist, HQ
United States Pacific Fleet, Honolulu, Hawaii.
WILLIAM K. RICHARDS, JR. Vice President, Market Research Director,
Hawaii High Health Seafood Corporation, since February 1, 1997. Honolulu,
Hawaii.
Manager of The Oceanic Institute, Honolulu, Hawaii, Keahulolu facility
at Kona, Hawaii. The facility is the Institute's Aquaculture Education and
Training Center, as well as the site of its SPF shrimp holding and breeding
operations. During his 18-year tenure at the Institute, Mr. Richards managed
and participated in various projects in all phases of marine shrimp research and
development. He is a registered aquaculture lobbyist in the State of Hawaii.
Additionally, from 1982 to 1984, Mr. Richards served as Manager of the State
of Hawaii funded marine shrimp research and development program.
Mr. Richards was a participant in the Leeward Community College
Marine Technology Program and has authored numerous publications.
ROBERT A. KANNA. Vice President and General Manager, Sunkiss Shrimp
Co. Ltd., Kekaha, Kauai, Hawaii, since March 15, 1997. Hanapepe, Kauai.
From 1984 to 1995, Mr. Kanna was involved in all facets of the shrimp
program at The Oceanic Institute, as a research assistant and supervisor of
intensive shrimp aquaculture technology. Mr. Kanna has traveled extensively
in South America and South East Asia for The Oceanic Institute as an
observer, troubleshooter, and personnel trainer for the transfer of shrimp
technology.
In 1995 he joined Sunkiss Farms Co. Ltd. where he initiated and
successfully operated the shrimp technology developed at The Oceanic Institute
as a total commercial venture, achieving growth and survival rates equaling the
best results and performances reported from previous research and controlled
commercial projects at The Oceanic Institute.
Mr. Kanna has co-authored numerous important publications and
presentations.
Mr. Kanna attended Oregon State University from 1978 to 1983 where
he received his Bachelor of Science degree in Fisheries.
LANDIS IGNACIO. President, Sunkiss Shrimp Co. Ltd., Kekaha, Hawaii.
Director of Plantations and Facilities, CEATECH Plantations, Inc. since
March 15, 1997. Kekaha, Hawaii.
Mr. Ignacio founded Sunkiss Shrimp Co. Ltd. in 1991. In 1979 he
became Senior Agriculture Coordinator, Irrigation Superintendent of Kekaha
Sugar Co. He served as the Manager of Agricultural Operations of Amfac
Sugar Kauai (formerly Kekaha Sugar Co.) from 1983 until January, 1997.
Mr. Ignacio was General Manager and Partner of Waimea Aquatics, an
Aquaculture Farm.
Professional Societies: Associate Director, West Kauai Soil and Water
Conservation. Member, Waimea Professional and Business Association.
Member, Hawaii/Kauai Cattleman Association. Member, Hawaii Aquaculture
Association.
In 1978, Mr. Landis received a Bachelor of Science in Tropical Crop
Production from the University of Hawaii, Hilo, Hawaii, and completed
various management courses at San Jose State University, San Jose,
California.
RICKY N. OYAMA. Manager CEATECH HHGI Breeding Corp. since
March 15, 1997. Lawai, Kauai.
From 1985 to February, 1997, Mr. Oyama was involved in all phases
of the Shrimp Program at The Oceanic Institute, Honolulu, Hawaii,
specializing in the high health, genetically improved breeding program,
maturation system design and development, including coordinating all
maturation experiments. During 1993 and 1994 he was responsible for the
technology transfer, design and setup, receiving and acclimation of broodstock
and training of personnel from startup at high health projects in Panay in the
Philippines and Salinas, Ecuador.
Mr. Oyama received his B.A. in Aquaculture from the University of
Hawaii at Manoa, Honolulu, Hawaii. He has co-authored and published
several papers and articles on maturation, breeding, and broodstock of
specific, pathogen free, and high health, genetically improved shrimp (Penaeus
vannamei).
DAVID M. GODIN. Shrimp Growout Manager, CEATECH Plantations, Inc.
since February 1, 1997. Waimea, Kauai.
From 1988 to January, 1997, Mr. Godin participated in all phases of
shrimp growout, serving as manager and research assistant in that area as well
as interim quarantine and selective breeding programs of The Oceanic
Institute, Honolulu, Hawaii.
Mr. Godin graduated in May, 1987 with a Bachelor of Science Degree,
Major in Natural Resource Studies, Minor in Wildlife Biology from the
University of Massachusetts.
Mr. Godin has published and co-authored various articles and
dissertations on fluorescent elastomer internal tagging, feeding and nursery and
growout performance of Pacific White Shrimp (Penaeus vannamei).
DAVID ANTHONY LEONG. Manager, Maturation and Hatchery
Operations, CEATECH HHGI Breeding Corp. since April 1, 1997. Kekaha,
Hawaii.
December, 1995 to March, 1997, Maturation Department Manager of
GMBS, Inc., Summerland Key, Florida.
1989 to December 1995, The Oceanic Institute, Honolulu, Hawaii.
Consultant for maturation and breeding projects, training specialist, disease
technician, overseas consultant and trainer in hatchery and maturation.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
To the best knowledge and belief of the Company, each of the
directors, officers or beneficial owners of more than 10% of the Company's
securities named herein has filed all reports required to be filed by Section
16(a) of the Securities Exchange Act of 1934. None of such reports were filed
on a timely manner following the changes in control of the Company described
herein. Reporting obligations for Initial Statement of Beneficial Ownership of
Securities, Statement of Changes in Beneficial Ownership, and the Annual
Statement of Changes in Beneficial Ownership were delinquent and are now
fully up to date.
Item 10. EXECUTIVE COMPENSATION.
The following table sets forth the compensation provided by the
Company to its officers or directors for services rendered in all capacities to
the Company during the fiscal year ended January 31, 1998. No executive
officer received compensation in excess of $100,000 for services rendered in
all capacities to the Company during the fiscal year ended January 31, 1998.
<TABLE>
<CAPTION>
Name Position Held Compensation
<S> <C> <C>
J. Albert Garcia Chief Executive Officer 60,000
Chairman of the Board
Ernest K. Dias President, Chief Operating 70,500
Officer, and Director
Ronald L. Ilsley Chief Financial Officer 61,000
Treasurer and Director
Paul Bienfang
Ph.D. Senior Vice President 73,000
Director of Environmental
Compliance and
Technology
Robert Greenspan Secretary 3,000
James N. Sweeney Vice President and
Director of Shrimp Program 64,000
</TABLE>
EMPLOYMENT CONTRACTS. The Company had no employment contracts
with any of its officers or directors during the fiscal year ended January 31,
1998.
DIRECTOR COMPENSATION. The Company's directors do not receive any
cash compensation for service on the Board of Directors, but are reimbursed
for expenses actually incurred in connection with attending meetings of the
Board of Directors.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
The following table sets forth, as of the end of the Company's most
recent fiscal year, the number of shares of Common Stock owned of record
and beneficially by executive officers, directors, and persons who hold 5.0%
or more of the outstanding Common Stock of the Company. Also included are
the shares held by all persons who were executive officers and directors as of
the end of the most recent fiscal year, as a group.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of
of Beneficial Owner Owned Beneficially Class Owned
<S> <C> <C>
J.A. Garcia and 300,000 10.21%
Ruth E. Garcia
7 Waterfront Plaza
Honolulu, HI 98613<F1><F2>
Ernest K. Dias 300,000 10.21%
7 Waterfront Plaza
Honolulu, HI 98613<F1>
Hibiscus Investments, Inc. 200,000 6.8%
San Diego, CA
Imperial Trust Company 150,000 5.1%
TR William H. Ahmanson
Trust 004414-00
Los Angeles, CA
Ronald L. Ilsley 150,000 5.1%
7 Waterfront Plaza
Honolulu, HI 98613<F1>
Robert Greenspan 50,000 1.7%
400 Corporate Pointe, Suite 800
Culver City, CA 90230
Paul Bienfang, Ph.D. 62,000 2.1%
7 Waterfront Plaza
Honolulu, HI 98613<F1>
Gordon J. Mau 149,300 5.1%
1000 Bishop Street, #303
Honolulu, HI 96813<F1>
Charles P. Spira 89,000 3.0%
7 Waterfront Plaza
Honolulu, HI 98613<F1>
All Officers and
Directors as a Group
(6 in number) 1,050,300 35.73%
<FN>
<F1>
The person listed is an officer, a director, or both, of the Company.
<F2>
This listing does not include an additional 42,500 shares owned by The Rally
Group, Ltd., a California corporation, of which Mr. Garcia may be deemed to
be the beneficial owner.
</FN>
</TABLE>
The foregoing table does not take into account 2,343,399 shares which
may be acquired upon exercise of outstanding Class A warrants which expire
December 31, 2001. Such warrants may not be exercised unless a registration
statement for the shares underlying the warrants is filed and becomes effective,
and no such registration statement is currently effective. The table also does
not take into account up to 250,000 shares of common stock issuable upon
conversion of the 5,000 presently outstanding shares of Series A, 8.25%
cumulative convertible preferred stock, held by Unity House, Inc. Unity
House, Inc. is a non-profit organization for the benefit of unionized workers.
Founded and funded originally by The Hawaii Teamster and Allied Workers
Union, Local 996, and The Hotel, Restaurant and Bartenders Union, Local 5.
The Unity House, Inc., investment portfolio funds and provides multiple
benefits and services for its membership, including child care, college
scholarships, retiree center and activities, low cost financing for home
purchases, low cost housing projects, and legislative lobby for member issues.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was incorporated under the laws of the State of Colorado
on January 19, 1995, as Global Capital Access Corporation, for the purpose of
being a capital market access vehicle. Gary S. Joiner, who until January 15,
1998 was an officer and director of the Company, was one of the promoters,
and was an officer, director and principal shareholder of Global Capital Access
Corporation.
On July 12, 1996, The Rally Group, Ltd. acquired control of the
Company by purchasing 1,219,500 shares of common stock, representing
approximately 71% of the then issued and outstanding common stock, and
2,539,000 Class A Warrants, representing approximately 93% of the then
issued and outstanding Class A Warrants of the Company. The Rally Group,
Ltd., purchased such shares and warrants from the then principal shareholders
of the Company, one of whom was Mr. Joiner. The total purchase price paid
by The Rally Group, Ltd. for such shares and warrants was $30,000.
The Rally Group, Ltd. is controlled by J.A. Garcia, who is the Chief
Executive Officer, and a director of the Company.
The Rally Group, Ltd. acted as principal and agent in acquiring such
shares and warrants. It subsequently transferred a portion of such shares and
warrants to various key personnel as incentive to join the Company, including
300,000 shares that were transferred to J.A. and Ruth E. Garcia, as
community property. In addition, The Rally Group, Ltd. contributed 332,000
shares of common stock and 864,000 Class A warrants back to the Company,
without compensation, in order to minimize potential dilution to other
shareholders.
In Late 1996, the Company hired various key management personnel and
incorporated three wholly owned subsidiaries, CEATECH HHGI Breeding
Corp., CEATECH Plantations, Inc. and Hawaii High Health Seafood Corp.
for the purpose of commencing operations. CEATECH HHGI Breeding Corp.
functions as the Aqua Breeding Center and broodstock repository responsible
for genetic development, hatching and maturation, as well as production of
"seed" (nauplii and post larvae) for Company growout operations or potential
sales to selected clients. CEATECH Plantations, Inc. operates the Company's
shrimp growout facilities, as well as production and harvest of shrimp for
processing and sales and future recovery of shell waste for conversion to new
products (chitin and by-products). Hawaii High Health Seafood Corp. will
engage in the processing, packing, distribution, and marketing of the
Company's plantation raw shrimp and "value added" cooked and prepared
gourmet and dietary products.
On or about March 15, 1997, in a stock for stock exchange, the
Company acquired all of the issued and outstanding stock of Sunkiss Shrimp
Co., Ltd., a Hawaii corporation. Following completion of the transaction,
Sunkiss became a wholly owned subsidiary of the Company.
Financing for the expansion and alteration of the hatchery and
maturation facilities at the former Sunkiss Shrimp Co. facility at Kekaha,
Kauai, (now CEATECH HHGI Breeding Corp.) the construction of 52
growout ponds for CEATECH Plantations, Inc. both wholly owned
subsidiaries of the Company, and additional working capital for operations
were provided by or arranged for by:
1. Private placement of $500,000 8.25% Services A Cumulative
Convertible Preferred Stock as of January 31, 1997.
2. Private Placement dated May 1, 1997 under exception provided
by Regulation D and Section 4(2) of the Securities Act and Rule 506
thereunder to "Accredited Investors" for a maximum of 100 units at $50,000
per unit or $5,000,000 gross proceeds. Approximately $2,150,000 of offering
proceeds from this offering had been received as of January 31, 1998 with an
additional $2,000,000 paid or committed by April 30, 1998.
3. In early April, 1998 the Company accepted a construction loan
commitment in the amount of $3,000,000 from the Bank of America to
complete the first phase construction of the shrimp growout facilities . The
loan will be guaranteed by the United States Department of Agriculture. The
initial construction loan will be interest only for 12 months at Bank of
America's Reference rate plus 2%. After completion of construction a 7 year
real estate loan also guaranteed by the USDA will go into effect. The
management feels that upon completion of this phase, the Company can
continue its growth through internally generated cash flow and profits, or
alternatively, additional debt financing or equity placements, as well as
private partnership or limited liability corporation tax structured programs.
Item 13. EXHIBITS AND REPORTS ON FORM 10-KSB.
a. The Exhibits listed below are filed as part of this Annual
Report.
<TABLE>
<CAPTION>
Exhibit No. Document
<S> <C>
3.1 Articles of Incorporation (incorporated by reference to
Form 10-KSB/A filed with the Securities and Exchange Commission on behalf
of the Company on May 13, 1997)
3.2 Bylaws (incorporated by reference to Form 10-KSB/A
filed with the Securities and Exchange Commission on behalf of the Company
on May 13, 1997)
4.1 Warrant Agent Agreement (incorporated by reference to
Form 10-KSB/A filed with the Securities and Exchange Commission on behalf
of the Company on May 13, 1997)
4.2 Specimen Class A Warrant Certificate (incorporated by
reference to Form 10-KSB/A filed with the Securities and Exchange
Commission on behalf of the Company on May 13, 1997)
21 List of Subsidiaries (incorporated by reference to Form
10-KSB/A filed with the Securities and Exchange Commission on behalf of the
Company on May 13, 1997)
27 Financial Data Schedule
</TABLE>
b. There were no reports filed by the Company for the last
quarter of the fiscal year ending January 31, 1998.
<PAGE>
Signatures
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
CONTROLLED ENVIRONMENT AQUACULTURE TECHNOLOGY, INC.
By: /s/ ____________________________________
J.A. Garcia
President, CEO and Director
Date: April __, 1998
By: /s/ ____________________________________
Ronald L. Ilsley
Chief Financial Officer and Director
Date: April __, 1998
By: /s/ ____________________________________
Ernest K. Dias
Director
Date: April __, 1998
By: /s/ ____________________________________
Secretary
Date: April __, 1998
<PAGE>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> JAN-31-1998
<CASH> 535,598
<SECURITIES> 0
<RECEIVABLES> 12,659
<ALLOWANCES> 0
<INVENTORY> 252,444
<CURRENT-ASSETS> 943,886
<PP&E> 1,305,682
<DEPRECIATION> (48,514)
<TOTAL-ASSETS> 2,299,243
<CURRENT-LIABILITIES> 62,216
<BONDS> 0
0
495,800
<COMMON> 2,592,544
<OTHER-SE> 75
<TOTAL-LIABILITY-AND-EQUITY> 2,299,243
<SALES> 60,658
<TOTAL-REVENUES> 60,658
<CGS> 87,654
<TOTAL-COSTS> 87,654
<OTHER-EXPENSES> 762,249
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (776,497)
<INCOME-TAX> 0
<INCOME-CONTINUING> (776,497)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (776,497)
<EPS-PRIMARY> (0.34)
<EPS-DILUTED> (0.34)
</TABLE>
