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Charge exacerbates
Cyanotech’s losses
The company loses $3.2 million
By Russ Lynch
after pulling out of a proposed
joint venture
Star-BulletinA one-time charge from pulling out of a proposed international joint venture pushed Cyanotech Corp. into a net loss of $3.2 million, or 24 cents a share, in its fiscal third quarter.
In the year-earlier quarter, the Kona-based producer of food and health products made from pond-grown microalgae had a net loss of $719,000, equal to 6 cents a share.
Cyanotech also reported today that third-quarter net sales of $2.04 million, up 22.2 percent from $1.67 million in the year-earlier quarter.
The company said that it took a $2.8 million charge in the latest quarter because of its withdrawal from a proposed joint venture with a Norway-based Norsk Hydro ASA. Without the charge, Cyanotech said it would have shown a loss of $392,000, or 3 cents a share, in the latest quarter, which ended Dec. 31.
Cyanotech reached an agreement with Norsk Hydro in June to produce and market Cyanotech's patented NatuRose astaxanthin, a natural food supplement that increases color in farm-raised animals, such as pond-grown salmon. In return for funding astaxanthin development, Norsk Hydro would have received some worldwide marketing rights and a 51 percent share of the joint venture.
Gerald R. Cysewski, Cyanotech chairman, president and chief executive officer, said his company made progress with its own astaxanthin development while the deal was being finalized and improved its production economics to the point where the joint venture was no longer needed.
Cyanotech said it was required to take the $2.8 million charge to account for reduced property value after it scrapped plans for a 93-acre expansion related to the joint venture. The company said it doesn't have the financing to go ahead with the expansion now and its existing facilities are running at full capacity.
During the quarter, Cyanotech started marketing NatuRose in Chile and is moving ahead with plans to distribute forms of natural astaxanthin as a human nutrition product and for medicinal use. Cysewski said sales of Spirulina Pacifica, the company's nutrient-rich diet supplement, improved in all markets and during the quarter the company resumed sales of the product to a customer in China who had stopped buying.
"It is our belief that the market in China holds promise for our products and we expect to see continued sales to the region," he said.
He said the company is working with a lender to refinance its debt and provide working capital.
Cyanotech's shares, which hit $3 today in intraday trading, closed up 3 cents at $2.84.
