KAILUA-KONA, Hawaii--(BW HealthWire)--Aug. 13, 2002--Cyanotech Corporation (Nasdaq:CYAN), the world leader in producing high-value natural products from microalgae, today announced financial results for the first quarter of fiscal year 2003.
For the first quarter of fiscal 2003, net sales were $2,032,000 versus $2,313,000 for the first quarter of fiscal 2002. The net loss was $785,000, or ($0.05) per diluted share, compared to a net loss of $413,000, or ($0.02) per diluted share reported for the first quarter of fiscal 2002.
In the first quarter of fiscal 2003, net sales decreased due to lower sales of Spirulina powder to certain domestic and foreign customers. In the first quarter of fiscal 2003, sales to Cyanotech's largest customer, Spirulina International BV, were 21% of sales compared to 15% of sales in the year earlier comparable period.
Gross profit margins improved in the first quarter of fiscal 2003 from the year earlier period to 39% from 29%. Excluding depreciation expense, gross profit margins were 54% in the first quarter of fiscal 2003 compared to 43% in the prior year period. First-quarter fiscal 2003 results include a charge of approximately $240,000 related to expenses incurred in connection with the restructuring of the convertible debentures that were originally due April 30, 2002 and are now due October 31, 2002.
"The improvement in gross profit margins resulted from operating all of our culture ponds. We expect gross profit margins will improve further as we continue to focus on improving production yields," said Gerald R. Cysewski, Ph.D., chairman, president and CEO. "Our average farm-wide yield during the first quarter was significantly less than our five-year historical average. We believe that continued focus on yield improvement can increase our production output by as much as 40% without adding additional culture ponds."
Dr. Cysewski noted that the increased output will be needed to support anticipated increases in demand for the Company's branded products and from new customers who are in the process of integrating the Company's products into their cosmetic and nutraceutical formulations.
"Margin improvement will also result when increased sales of the Company's branded products occur," added Dr. Cysewski. "We are working actively on both wholesale and retail fronts to increase sales."
The Company is currently working to obtain additional financing or equity to retire the convertible debentures prior to their maturity on October 31, 2002, and provide additional working capital to support expanded sales and marketing programs for its BioAstin(R) products. However, there can be no assurance that it will be successful in this effort. If the Company is unable to obtain additional financing or equity, on terms acceptable to the Company, this will have a material adverse effect on the Company's financial position and liquidity.
Cyanotech is continuing to remake its 30-minute television infomercial for BioAstin to focus more on joint pain relief. The refined infomercial is scheduled to begin testing in September 2002. First quarter fiscal 2003 results include a charge of $110,000 related to expenses incurred in connection with the production and testing of the first infomercial.
The Company's Nutrex Hawaii division has launched a West Coast sales campaign to more aggressively promote it's BioAstin retail product in health food stores, pharmacies and mass merchandise outlets, beginning in San Diego, California, and moving up the West Coast. This campaign is expected to result in increased BioAstin consumer product sales over the next six to nine months.
Cyanotech is also in advanced discussions with several multi-national cosmetic and skin care companies that are interested in using the BioAstin ingredient in their products, primarily for its antioxidant properties. While these companies are not expected to consume large volumes of BioAstin natural astaxanthin, they will help to increase consumer awareness for the product and its benefits.
Cyanotech Corporation, the world's leader in microalgae technology, produces high-value natural products from microalgae, and is the world's largest commercial producer of natural astaxanthin (pronounced "asta-zan-thin") from microalgae. Products include BioAstin(R) natural astaxanthin, a powerful antioxidant with expanding applications as a human nutraceutical; NatuRose(R) natural astaxanthin for the aquaculture and animal feed industries; Spirulina Pacifica(R), a nutrient-rich dietary supplement; and phycobiliproteins, which are fluorescent pigments used in the immunological diagnostics market. Spirulina and BioAstin are sold directly online through www.nutrex-hawaii.com and www.bioastinxp.com as well as through resellers worldwide in over 30 countries. Corporate and product information is available at www.cyanotech.com.
SAFE HARBOR -- Except for statements of historical fact, the statements in this press release are forward-looking. Such statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include, but are not limited to, general economic conditions, forecasts of sales in future periods, changes in sales levels to our largest customers, weather patterns, risks associated with the acceptance of new products, competition, foreign exchange fluctuations, government regulation, and other factors more fully detailed in the company's recent quarterly 10-Q and annual 10-K filings with the Securities and Exchange Commission.
WEBCAST -- Cyanotech will hold a conference call on Tuesday, August 13, 2002 at 4:30 p.m. Eastern time to be broadcast live over the Internet. It can be accessed by all interested parties by linking from www.cyanotech.com or through the Investor Broadcast Network's Vcall Web site at www.vcall.com. To listen to the live call, please go to the Web site at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the Vcall site and for 90 days thereafter.