Cyanotech loss triples
as rains hurt output

The company also has
opened an office in Tokyo

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By Russ Lynch
rlynch@starbulletin.com

Cyanotech Corp. today reported a net loss of $937,000 for the three months through Dec. 31, its third quarter, almost three times the $322,000 loss it reported for the year-earlier quarter. The current loss amounts to 5 cents a share, compared to 2 cents a year earlier.

The Kona-based company, which makes nutritional and medical products from microalgae, said its production was down because of heavy rains in November and December, which pushed up production costs. The production problems also left Cyanotech with a year-end backlog of $390,000 in goods ordered but not delivered.

The company had quarterly sales of $1.9 million, up 5.6 percent from $1.8 million.

"The $390,000 order backlog, combined with our broader customer base, has caused us to ramp up production to meet current and anticipated demand," said Gerald R. Cysewski, Cyanotech chairman, president and chief executive officer. He said the company now is operating all of its 67 microalgae ponds, covering 90 acres.

In a separate announcement, the company said it has formed a Japanese business unit, called Cyanotech Japan YK, with an office in Tokyo. Initially, it will market the company's Spirulina Pacifica and NatuRose products as feed supplements for the Japanese animal-feed market. Later, it will broaden into the human nutrition market with Spirulina Pacifica, a diet supplement, and BioAstin, an antioxidant.

Having its own base in Japan will allow the company to economize on shipping, provide more timely delivery to customers in Japan and allow the customers to do business in yen.

For the first nine months of its fiscal year, Cyanotech lost $1.86 million, or 11 cents a share, compared to a loss of $384,000, or 2 cents a share, in the equivalent period of the previous year. Nine-months sales of $6.18 million were down 1.7 percent from $6.29 million.