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, 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 _________.
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: 3,564,950 shares of
common stock outstanding as of June 5, 1998.
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, 1998<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 - April 30, 1998
(unaudited)
<TABLE>
<CAPTION>
April 30,
1998
(UNAUDITED)
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 1,276,660
Accounts receivable (net) 1,890
Stock Subscription Receivable 50,000
Inventory 310,295
Deposits and Prepaid Expenses 28,065
Notes Receivable 45,000
Total current assets 1,711,911
PROPERTY AND EQUIPMENT (net) 1,694,679
OTHER ASSETS (net) 132,690
TOTAL ASSETS 3,539,279
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 75,052
Other Current Liabilities 106,550
TOTAL CURRENT LIABILITIES 181,602
TOTAL LIABILITIES 181,602
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 -
3,564,950 shares as of April
30, 1998 4,008,794
Additional paid-in capital 75
Retained Deficit (1,146,992)
TOTAL STOCKHOLDERS' EQUITY 3,357,677
TOTAL EQUITY AND LIABILITIES 3,539,279
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE TECHNOLOGY, INC.
(a development stage company)
and subsidiaries
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS AND
ACCUMULATED DEFICIT FOR THE THREE MONTHS ENDED April 30,
1998 AND 1997
(unaudited)
Page 1 of 2
<TABLE>
<CAPTION>
Period from
Jan 19, 1995
For the For the (inception)
three months three months through April
1998 1997 30, 1998
<S> <C> <C> <C>
Sales 9,450 5,451 70,108
Cost of Goods Sold 9,588 2,180 97,242
Gross Operating
Profit (Loss) (138) 3,271 (27,134)
General and Administrative
Expenses 285,148 182,670 1,119,858
Net Profit (Loss) (285,287) (179,399) (1,146,992)
Accumulated deficit
Beginning of period (861,705) (74,895) -
End of period (1,146,992) (254,294) (1,146,992)
Loss per common
share 0.11 .09 0.48
Weighted number of
shares outstanding 2,530,229 1,923,652 2,444,983
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE TECHNOLOGY, INC.
(a development stage company)
and subsidiaries
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS FOR THE
THREE MONTHS ENDED April 30, 1998 AND 1997
<TABLE>
<CAPTION>
Period from
Jan 19, 1995
For the For the (inception)
three months three months through
1998 1997 April 30, 1998
<S> <C> <C> <C>
Cash flows from
operating activities
Net cash used in
operating activities (218,863) (182,758) (1,255,880)
Cash flow from investing
activities
Net cash used in
investing activities (471,010) (64,877) (1,361,132)
Cash flow from financing
activities
Net cash used in
financing activities 1,430,937 (212,190) 3,893,672
Net increase (decrease)
in cash and cash
equivalents 741,061 (459,825) 1,276,659
Cash and cash equivalents at
beginning of period 535,598 582,849 0
Cash and cash equivalents at
end of period 1,276,659 123,024 1,276,659
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS - April 30, 1998
NOTE 1. Basis of Presentation
The information included in the consolidated condensed
financial statements is unaudited, but includes all adjustments
(consisting of normal recurring items) which are, in the opinion of
management, necessary for a fair representation of the interim period
presented.
The consolidated statements include the accounts of Controlled
Environment Aquaculture Technology, Inc. (the "Company") and its
wholly-owned subsidiaries, Ceatech HHGI Breeding Corp., Ceatech
Plantations, Inc., and Sunkiss Shrimp Co., Ltd. All significant inter-
company transactions and balances have been eliminated in
consolidation. The consolidated financial statements and notes
included herein should be read in conjunction with the financial
statements and notes included in the Company's Annual Report on
Form 10-KSB for the fiscal year ended January 31, 1998.
NOTE 2. Development Stage Company
The Company, formerly known as Global Capital Access
Corporation, was incorporated under the laws of the State of Colorado
on January 19, 1995. The Company is an enterprise in the
development stage as defined by Statement No. 7 of the Financial
Accounting Standards Board and has not engaged in any business
other than organizational efforts. The Company has made an
aggressive commitment to commercialize state of the art, second
generation technologies for intensive, sustainable growout production
of shrimp, utilizing high health genetically improved (HHGI) specific
pathogen free (SPF) broodstock, technologies and breeding techniques
developed and verified at commercial scales in the State of Hawaii.
NOTE 3. Interest and Income Tax Expenses
The Company neither incurred nor paid any interest or income
tax liabilities during the interim periods presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION.
The information included in this Form 10-QSB should be read in
conjunction with the Management's Discussion and Analysis of
Financial Conditions or Plan of Operations and financial statements
and notes thereto, included in the Company's Report 10-KSB dated
January 31, 1998.
During the quarter ended April 30, 1998, the Company made
significant progress in the construction and substantial completion of
the hatchery operated by its wholly owned subsidiary, CEATECH
HHGI Breeding Corp. The facility at Kekaha, on the island of Kauai,
Hawaii, became operational May 1, 1998, and will operate as the
broodstock repository, hatchery and maturation facility for the
Company's high-health, genetically improved shrimp "seed supply."
The facility will be able to provide shrimp nauplii and post larvae
("seed") for the Company's growout ponds. The management also
believes that the facility will be able to sell surplus seed on a
commercial basis to other selected growers in the United States and
abroad.
This second fiscal quarter also saw the start of development and the
clearing of the 83 acre former agricultural park leased from the State
of Hawaii, for the initial growout ponds. The first stage calls for the
construction of 24 one-acre growout ponds and six half-acre nursery
ponds. Management intends that the construction of additional ponds
outlined above should be completed by early July with harvests
starting on a continuing basis by mid fourth quarter of the current
fiscal year.
Negotiations continue for lease by the Company of additional nearby
state-owned land for additional future growout operations. The
Company has to date been granted a Right of Entry Permit for an
additional 300 acres, presently being surveyed prior to final
acceptance by the Company.
The Company's overall financial position improved substantially for
the period and as compared to the same period of the previous fiscal
year primarily as a result of the receipt of additional proceeds
totalling $1,366,000 from the sale of private placement units.
The sale of additional units from the Private Placement was
terminated by the Company effective May 31, 1998. The Company
believes that Private Placement proceeds received to date, coupled
with the anticipated receipt of proceeds from the pending long-term
loan commitment will provide sufficient capital to fulfill its projected
first-phase needs until the commencement of regular harvest of shrimp
product and start of steady revenue expected to begin during the last
quarter of this year.
Total stockholders equity increased from $755,366 as of the end of
the first quarter of the previous fiscal year and $2,237,027 at the
fiscal year ended January 31, 1998 to $3,357,676. Cash increased to
$1,276,660 from $535,598, as of the end of the fiscal year and
$123,024 as of the end of the first quarter of the previous fiscal year.
Total current assets increased to $1,711,911 from $943,886 at January
31, 1998, and $450,345 at April 30, 1997. As of April 30, 1998, the
Company had no long-term debt and total liabilities of $181,602, as
compared to total liabilities of $130,438 as of April 30, 1997, and
total liabilities of $62,216 as of January 31, 1998. The increase in
liabilities during the first quarter is primarily the result of accounts
payable incurred in conjunction with construction of the Company's
hatchery and the start of development of the Company's initial
growout ponds.
During the quarter ended April 30, 1998, the Company received
approval from the Bank of America of a long-term $3,000,000 loan to
be used for the funding of additional "growout" Aquaculture. The
approval of the Hawaii Office of the USDA has been granted and it
has been forwarded to Washington, DC for final approval and
processing. Management believes that the USDA will grant final
approval of the loan. However, in the event that final approval is not
received, it is likely that the Company will be required to seek other
sources of capital.
The Company continued in the development and start-up stage during
this quarter with minimal revenue and continued losses during
continued construction of the facilities.
It is anticipated that the Company will continue to receive only
minimal revenue and will continue to incur operating losses until the
fourth quarter of the current fiscal year. The Company anticipates
that it will begin to receive revenues from the regular harvest and sale
of shrimp during the fourth quarter.
On May 1, 1998, the Company engaged Mr. "Tom" Furukawa to
serve as a Senior Vice President of CEATECH and Director of
Processing and Distribution. For over 26 years Mr. Furukawa
worked in various capacities for Fish King Processors, Inc., the
national processor and distributor of Mrs. Fridays brand frozen
seafood. Most recently he served as President and Vice Chairman of
that company. The Company considers this a positive and important
step in solidifying its in-house processing and marketing capabilities
anticipatory to the initial production harvest.
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 form those anticipated,
estimated or projected. The Company cautions again placing undue
reliance on forward-looking statements all of which speak only as of
the date made.
Part II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) The Company's private placement offering of unregistered
securities continued during the quarter ended April 30, 1998. The
unregistered securities, which are units consisting of 20,000 shares of
common stock and 10,000 Class A warrants, are being offered and
sold solely to accredited investors pursuant to an exemption from
registration provided by Regulation D and Section 4(2) of the
Securities Act of 1933, and Rule 506 thereunder. The Class A
Warrants included as part of the units give holders the right to
purchase one additional share of common stock at a price of $2.00 per
share, and expire, if not exercised, on December 31, 2001. The
offering price is $50,000 per unit.
During the quarter the Company received gross cash proceeds
of $1,366,250.00 from the sale of units to accredited investors and as
a result, issued a total of 625,500 additional shares of its common
stock. The offering proceeds have been applied in part to working
capital and in part to the payment of costs incurred in conjunction
with construction of the Company's hatchery and the start of
development of the Company's initial growout ponds.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
ended April 30, 1998.
<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, Chairman and CEO
(Name, Title)
Date: June 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> APR-30-1998
<CASH> 1,276,660
<SECURITIES> 0
<RECEIVABLES> 1,890
<ALLOWANCES> 0
<INVENTORY> 310,295
<CURRENT-ASSETS> 1,711,911
<PP&E> 1,694,679
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,539,279
<CURRENT-LIABILITIES> 181,602
<BONDS> 0
0
495,800
<COMMON> 4,008,794
<OTHER-SE> 75
<TOTAL-LIABILITY-AND-EQUITY> 3,539,279
<SALES> 9,450
<TOTAL-REVENUES> 9,450
<CGS> 9,588
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 285,148
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (285,287)
<INCOME-TAX> 0
<INCOME-CONTINUING> (285,287)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (285,287)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
