KAILUA-KONA, Hawaii--(BUSINESS WIRE)--Oct. 29, 2002--Cyanotech Corporation (Nasdaq:CYAN), a world leader in producing high-value natural products from microalgae, today announced financial results for the second quarter and first six months of fiscal year 2003.
For the second quarter of fiscal 2003, net sales were $2,018,000 versus $1,951,000 for the second quarter of fiscal 2002. The net loss was $540,000, or ($0.03) per diluted share, compared to a net loss of $509,000, or ($0.03) per diluted share, reported for the second quarter of fiscal 2002.
In the second quarter of fiscal 2003, gross profit margins of 28% improved slightly from 25% in the second quarter of fiscal 2002, but decreased from the immediately prior quarter due to increased demand during the second quarter for Certified Organic Spirulina, which has a higher cost of production. Excluding depreciation expense, gross profit margins were 44% in the second quarter of fiscal 2003, compared to 41% in the second quarter of fiscal 2002.
In the second quarter of fiscal 2003, sales to Cyanotech's largest customer, Spirulina International BV, were 14% of total sales, compared to 8% of sales in the prior year's second quarter. Total export sales in the second quarter were 49%, compared to 46% in the prior year comparable period.
For the first six months of fiscal 2003, net sales were $4,050,000 versus $4,264,000 for the first six months of fiscal 2002. The net loss was $1,325,000, or ($0.08) per diluted share, compared to a net loss of $922,000, or ($0.05) per diluted share, reported for the first six months of fiscal 2002.
Cyanotech is working closely with industry-leading cosmetic manufacturers, pharmaceutical companies offering branded nutraceuticals, direct marketing companies and natural food sector supplement makers to integrate the Company's natural astaxanthin products into their nutraceutical and cosmetic formulations. To date, Twinlab and Sea & Ski have introduced products containing natural astaxanthin from Cyanotech and the Company expects to announce additional relationships with other such companies during the next six months.
In October 2002, Cyanotech completed a private placement managed by the Company of $1,250,000 of 10% convertible subordinated debentures, due September 30, 2004, and $300,000 of common stock. Proceeds from the 10% convertible subordinated debentures were used to retire $1,238,000 in 10% convertible subordinated debentures. Net proceeds from the issuance of the common stock will be used for working capital.
"The recent financing enabled Cyanotech to restructure certain obligations that were coming due and provides an improved financial base of support for the Company as it pursues growth opportunities," said Gerald R. Cysewski, Ph.D., chairman, president and CEO. "Additionally, we implemented cost-cutting measures during the second quarter that are expected to reduce operating expenses during the third quarter and beyond. These actions do not have a significant impact on the operations of the Company and were undertaken to pare expense while pursuing growth."
The company's new 30-minute television infomercial for BioAstin(R) started airing in certain market areas around the country on October 23, 2002. The full results of this market test won't be known until late November. This marketing initiative, focused on the joint pain relief provided by BioAstin, capitalizes on the clinical trials completed successfully earlier in the year that showed that taking BioAstin could result in marked improvement in pain relief and joint function for sufferers of Carpal Tunnel Syndrome and rheumatoid arthritis, among other complaints.
Dr. Cysewski noted that the increased demand for NatuRose(R) through the Company's Japanese subsidiary, Cyanotech Japan YK, confirms prior expectations for the strength of NatuRose in the Japanese aquaculture feed market as sales of NatuRose(R) in Japan reached record levels during the second quarter of fiscal 2003.
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, October 29, 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.