Cyanotech loss
narrows on growth
in overseas revenues
Cyanotech Corp., facing a possible delisting from the Nasdaq SmallCap Market, said today its fiscal 2004 first-quarter loss narrowed from a year ago as revenues climbed 19 percent.
The Kona company, which makes nutritional and feed products from microalgae, had a net loss for the quarter ended June 30 of $141,000, or 1 cent a share, compared with a loss of $785,000, or 5 cents a share, a year ago. It was the 24th consecutive losing quarter since the company's last profitable three-month period in the fiscal 1998 first quarter ending June 30, 1997.
Revenues rose to $2.4 million from $2 million a year ago with foreign customers accounting for 56 percent of total sales during the quarter, up from 52 percent in the same period a year ago.
"This is the third consecutive quarter with sales over $2.4 million, which indicates to us that the market for our company's products is improving," said Gerald Cysewski, chairman, president and chief executive officer. "Our customers' demand for natural astaxanthin products continued with higher sales of both NatuRose and BioAstin for the quarter."
NatuRose gives fish farmers the ability to grow salmon and other fish using the natural pinkish substance rather than using synthetic pigmentation that could create health concerns for people who eat fish.
BioAstin contains natural astaxanthin --an antioxidant produced by microalgae -- that has been shown to have benefits surpassing many vitamins and beta carotene. Spirulina is not a single compound but a whole food that offers several nutrients.
Cysewski said sales of NatuRose through Cyanotech Japan YK have improved steadily since the subsidiary was established in January 2002. In Japan, NatuRose is used as a feed additive for sea bream, or "tai."
"While not well-known as the salmon industry, this market holds tremendous potential for our natural astaxanthin product and has become a significant part of our business in a relatively short period of time," Cysewski said.
Cyanotech's stock, meanwhile, likely will be delisted by the Nasdaq SmallCap Market and moved to the Over-the-Counter Bulletin Board unless it can reach $1 or higher by Aug. 26 and stay at that level for 10 consecutive trading days. The stock, which needs to more than double to reach that mark, last traded at $1 on May 3, 2002.
The company could implement a reverse split to boost the stock over $1 and retain its Nasdaq listing, but Chief Financial Officer Jeff H. Sakamoto said today he was against that move. Cyanotech implemented a 1-for-5 reverse split in December 1990.
"I'm not in favor of a reverse split because, in my opinion, it is not a good value for the shareholders in the long run," said Sakamoto, adding that the ultimate decision will be made by Cysewski and the board of directors. "I prefer to focus our attention as a company on generating bottom-line results."
A final decision, Sakamoto said, will come later this month.
