Ceatech USA says sales
increase and loss narrows

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By Dave Segal
dsegal@starbulletin.com

Ceatech USA Inc., benefiting from the doubling of its shrimp ponds to 40, said sales rose 14.6 percent in its 2002 fiscal year while its loss narrowed from 2001.

But it still was another tough year for the Kauai shrimp producer, formerly known as Controlled Environment Aquaculture Technology Inc. The company said it experienced a large increase in its inventory for frozen shrimp due to the effects of Sept. 11.

"There was an immediate decline in demand for sales of fresh product in both local markets and high-end retail markets on the West Coast," the company said in a Securities and Exchange Commission filing. "As a result, the company experienced a large increase in its inventory of frozen product, which it is currently engaged in reducing to pre-Sept. 11 levels."

Ceatech, which said it has lost more than $7.4 million since inception in January 1995, posted sales of $2.6 million in the year ending Jan. 31, 2002, compared with $2.2 million in the previous fiscal year. It had a net loss of $1.6 million, or 22 cents a share, compared with a loss of just under $2 million, or 42 cents a share, in fiscal 2001.

The company said its 40 growout ponds at Kekaha Agricultural Park won't be able to produce enough shrimp for a positive cash flow. In its filing, Ceatech said it needs to lease additional land to construct more ponds and intends to finance the expansion by issuing additional debt or stock.

Ceatech has a short-term revocable permit for the use of 246 acres of state land across the street from its present farm site. The company said it is seeking to commit to a long-term use of the property and currently is in discussions with other potential land users and with the state.

In its quarter that ended Jan. 31, Ceatech received approval from the state Department of Agriculture for a $2.5 million loan to be used primarily for the construction of 20 growout ponds, four nursery ponds and related infrastructure and equipment on the state land adjacent to Ceatech's existing facility. The lease arrangement currently is under negotiation.

Ceatech also said it received a loan commitment for $2.3 million from Central Pacific Bank that is conditional upon the Agriculture Department's $2.5 million loan and upon obtaining a 90 percent loan guarantee from the U. S. Department of Agriculture.

The company said it intends to use $1.3 million of the $2.3 million loan to fund the construction of eight additional growout ponds and related infrastructure on the two remaining parcels of land in Kekaha Agriculture Park not yet under lease to Ceatech. The company said it would use the remaining $1 million for working capital.