Cyanotech losses
hit $442,000
in quarter

By Russ Lynch
Star-Bulletin

Lower sales led Cyanotech Corp. to report a second-quarter loss of $442,000, more than eight times the $54,000 loss that the Kona-based microalgae company recorded for the same period last year.

The company today reported a 25.4 percent dip in net sales, to $1.53 million in the latest quarter from $2.05 million in the 1997 period.

"Revenues for the second quarter of fiscal 1999 were lower due to reduced bulk shipments of Spirulina Pacifica in international markets," said Gerald R. Cysewski, chairman, president and chief executive officer. Spirulina Pacifica is Cyanotech's trademarked nutrient-rich diet supplement.

The company ended its fiscal second quarter on Sept. 30 with eight weeks of Spirulina in stock but continues to produce it at full capacity because the outlook for sales is positive, he said.

Cysewski also said the anticipated sales of the company's NatuRose product were delayed when a sales agreement with a distributor in Japan was canceled. NatuRose is made from astaxanthin, a natural coloring pigment produced in the company's Kona ponds and used as a food additive for farm-raised fish and shrimp.

"The prospects for NatuRose sales remain favorable," Cysewski said. Cyanotech said it has signed a new distribution deal in Japan, where astaxanthin use in the specialty fish market is growing fast.

NatuRose is being tested by an international animal-feed company and Cyanotech is negotiating with another, Cysewski said.

Early in the latest quarter, the company negotiated a $3 million line of credit with a commercial lender and so far has borrowed $1 million from that source, Cyanotech said.

For the first half of the current fiscal year, Cyanotech reported a loss of $1.07 million on sales of $3.29 million, compared with profit of $71,000 on sales of $3.83 million in the year-earlier first half.