Cyanotech loses
By Russ Lynch
$609,000, lender
Star-Bulletin
Cyanotech Corp. today announced a net loss of $609,000 for its fiscal second quarter, 37.7 percent worse than the $442,000 loss of the year-earlier period.
The Big Island biotechnology company also announced that its lender, Coast Business Credit, has said it will pull out of a loan agreement Dec. 31. That caused Cyanotech to list $1.6 million in loans as a liability on its balance sheet.
Ronald P. Scott, Cyanotech's executive vice president for finance and administration, said today the company is confident it can arrange alternative financing.
Meanwhile, Cyanotech said it has been reducing expenses by downsizing operations and managing assets carefully. It also expects increased demand for existing products and new sales agreements for emerging products.
The company said it had net sales of $1,496,000 in the three months through Sept. 30, down 1.9 percent from $1,525,000 in the year-earlier quarter.
Details of the company's financial position filed with the Securities & Exchange Commission show that Coast Business Credit in July invoked a clause of the loan agreement that allows it to declare the company in default if its "ability to continue as a going concern" comes into question.
Scott said today that when the loan deal was made last year, the parties agreed to set $20 million as Cyanotech's minimum net worth. If it fell below that, the lender could cancel and demand full payment. Scott said the company's net worth is just below $20 million and the lender invoked the "going concern" clause. Coast Business Credit did not, however, exercise its right to demand immediate payment. Several other lenders have expressed interest in providing alternative financing for the company, Scott said.
Cyanotech, founded in 1983, makes diet supplements, natural food coloring additives and other products from microalgae grown in Kona ponds.
