Aquasearch Biotech firm Aquasearch Inc., which entered Chapter 11 reorganization bankruptcy in November, plans to move its commercial production away from Kona and outside the United States within the next year.
to move production
The biotechnology firm plans
to keep research at its five-acre
facility at Keahole Point in KonaBy Tim Ruel
truel@starbulletin.comThe move would likely reduce production costs.
"The company intends to identify and enter into agreements with a production partner in the Pacific Rim," Aquasearch said in its annual report, released yesterday. "The company is in preliminary discussions with one such company." Details were unavailable.
If the move is successful, Aquasearch plans to continue using its current base at Keahole Point on the Big Island for research and development, the company said. Aquasearch is negotiating with the state for a new 30-year lease for the five-acre site in Kona.
In the past year, Aquasearch reduced its staff to 16 employees from 42, primarily because the firm cut production in the face of high inventory.
Aquasearch first moved to the state in 1993 to form a joint venture with another Kona biotech firm, Cyanotech Corp. Aquasearch and Cyanotech later broke off the venture and sued each other over intellectual property. The lawsuits were settled last year. Aquasearch's legal troubles resumed in October, however, when five creditors sued to force the firm into bankruptcy.
One of the creditors, Honolulu broker-dealer Gregory Kowal, accused Aquasearch leaders Mark Huntley and Earl Fusato of mismanagement. In a deal with the creditors, Huntley stepped down as chairman and chief executive and Aquasearch entered voluntary bankruptcy in November. Fusato is also stepping down as chief financial officer.
Aquasearch's annual report, audited by an outside accounting firm, contained no mention of mismanagement at the firm.
Huntley, who founded Aquasearch in 1988 and has assumed the title of chief technical officer, could not be reached for comment yesterday. Huntley and Fusato remain on Aquasearch's board of directors.
Aquasearch has until April to come up with its own plan for reorganization.
The release of Aquasearch's annual report to the Securities & Exchange Commission was delayed this year, partly because the firm recently replaced its accounting firm, Ernst & Young, with Buttke Bersch & Wanzek of Lake Havasu City, Ariz. Aquasearch owes $51,637 to Ernst & Young and the two firms could not agree on a payment for an audit of the annual report, according to SEC and U.S. Bankruptcy Court filings.
For the year ended Oct. 31, Aquasearch lost $4 million, a 13 percent decrease from a loss of $4.6 million in the previous year. The per-share loss fell to 4 cents from 5 cents.
At the same time, revenues more than quadrupled to $1 million from $221,000, with much of the growth coming from increased sales of AstaFactor, a nutritional supplement that Aquasearch makes from microalgae.
The company has lost a total of $20.4 million since it offered its stock publicly in 1989. Sales of AstaFactor, which began in March 2000, were just starting to get off the ground when the creditors sought to place the firm into bankruptcy.
Aquasearch has more than 2,000 shareholders, owning a total of 122.13 million shares, according to the annual report. The firm's stock remained unchanged today at 5.5 cents a share.