You know it’s the next big thing when you turn on Food Network and the secret ingredient on Iron Chef America is (pause for dramatic purposes) – Sablefish!
Sablefish, which is apparently much like the over-fished Chilean sea bass in taste, has apparently been popular in Japanese cuisine for some time. Also called black cod, even though it’s not actually a member of the cod family (Thanks, Alton Brown), the fish has a delicate texture and a flavor that stands up to a variety of spices and preparations.
It’s also becoming more popular in western countries. Edgewater Foods (EDWT: OTCBB) now finds itself in prime position at the beginning of what some are predicting to be a sablefish boom, something they can add to an already promising scallop-farming operation with its subsidiary, Island Scallops, which is located in British Columbia, Canada.
The technologies Edgewater uses in hatching and spawning other marine life have also helped them become the first company to produce commercial quantities of young sablefish, something that took years of research and quite a bit of investment, because the fish spawns in cold water – and at depths of anywhere from 800 to 2,400 feet. Edgewater says that an initial test of one market area – Vancouver – showed a going rate of about $10 per kilogram for sablefish. Currently, only two hatcheries are producing farmed sablefish – and Edgewater is one of them.
Lest we forget Edgewater’s bread and butter, the company announced last month that the company’s 2007 scallop season was off to a good start, with 480 million eggs and 110 million scallop setting larvae produced and spawned. The company picked the scallops using MRI techniques to find the largest ones.
“To our knowledge this is a world first for the use of MRI methods as a selection tool for breeding high meat yielding scallops,” the company said in a press release, adding that it was expecting to spawn a billion scallop larvae this year. It also plans on planting 100 million scallop seed to the ocean this year.
The scallops started in 2005 are now being harvested as well, Edgewater said. The company plans on harvesting and selling three to four million scallops through the fall and winter of 2007, and the effort should be profitable, with scallop prices recently rising to as much as $4.20 a pound.
In addition, Edgewater has no competition in the scallop farming business in British Columbia, and Island Scallops is the only hatchery producing the popular Pacific scallop.
According to the company’s most recent financials – which compare the three and six month marks from this year and last year, revenue for the quarter ending Feb. 28, 2007, amounted to $182,000, from $143,000 for the same time frame last year – a 27 percent increase.
Revenue for the six months ending Feb. 28, 2007 were $305,000, compared to $304,000 last year.
“The slower than expected increase in our revenues was mainly the result of a slower than anticipated start to the 2004 harvest and an unexpected early season winter storm that forced us to curtail harvesting operations during at least one week in November,” Edgewater explained in its filing. “Handling and harvesting of our 2004 ear-hung scallops also proved to be tougher and more time consuming than originally expected, thereby slowing our anticipated harvest rates.”
Revenue was bolstered by a one-time sale on some equipment and large scallop seed sales as well. Scallop-only sales were higher this year, the company said.
The company lost about $92,000 in the three-month quarter ending Feb. 28, 2007. During the same time frame in 2006, the company only lost $10,000. For the six months ending Feb. 28, 2007, gross loss was $108,000, compared to $2,000 the year before. The company said those losses were directly related to the late start from the bad weather and a slower than anticipated start to the harvest of the 2004 class as they were developing better processing and handling facilities.
The company had a cash balance of about $2.25 million as of Feb. 28, thanks partially to the completion of financing with five different private equity parties that brought in an infusion of about $7 million. The financings contain warrants that, if fully exercised, could raise an additional $49.35 million for the company.
The financing garnered through those transactions were primarily used to pay off short term loans and debt, which has allowed the company to use the bulk of that new financing to push forward with its business strategy, which could include acquiring a clam farming operation in Morocco, the Edgewater said in its filings.
Currently, Edgewater is holding at $1.05, with a 52-week range of $1 to $1.85. It has an average daily volume of 1,887.