Cyanotech Reports Net Sales Up

Microalgae firm, Cyanotech Corporation, Kailua-Kona, Hawaii, has announced financial results for the third quarter and first nine months of fiscal year 2003, ended December 31, 2002.
January 30, 2003

Cyanotech reports that for the third quarter of fiscal 2003, net sales were $2,474,000 versus $1,916,000 for the third quarter of fiscal 2002. The net loss was $180,000, or ($0.01) per diluted share, compared to a net loss of $937,000, or ($0.05) per diluted share, reported for the third quarter of fiscal 2002.

In the third quarter of fiscal 2003, net sales increased 29% from the prior year quarter results and gross profit margins were 29% compared to 3% in the third quarter of fiscal 2002. The sales increase was due to higher sales of bulk Spirulina products and astaxanthin products, both NatuRose® and BioAstin®.
Total net sales for the prior year third quarter included $204,000 of a non-recurring settlement related to product distribution license fees. Excluding this amount, net sales from product shipments increased 45% from the year earlier period. Third quarter fiscal 2003 results include $332,000 of depreciation expense, a non-cash charge, compared to $327,000 of depreciation expense in the third quarter of fiscal 2002.

“Our goal during the third quarter was to return the Company to generating positive operating cash flow. This has been achieved and now our goal is to return the Company to profitability as well,” said Gerald R. Cysewski, Ph.D., chairman, president and CEO. “Our expectation is that the apparent demand for our products will continue to increase and allow us to achieve this goal in the near future.”

Increased demand for Cyanotech’s NatuRose product through its wholly-owned subsidiary in Japan, Cyanotech Japan YK, continued during the third quarter of fiscal 2003, accounting for 12% of total net sales for the quarter. Cyanotech expects such NatuRose sales to be lower in the fourth quarter of fiscal 2003 due to seasonal conditions in the Japanese aquaculture industry, but to increase again in the first quarter of fiscal 2004.

Last week Cyanotech announced the resignation of Ronald P. Scott as Chief Financial Officer of the Company, effective February 28, 2003. Mr. Scott will continue to serve on Cyanotech’s Board of Directors. The Company’s Controller, Jeffrey H. Sakamoto, was promoted to the position of Vice President, Finance and Administration, and will assume Mr. Scott’s job responsibilities.

Mr. Scott, 48, resigned for personal reasons and is relocating to the U.S. Mainland. He joined the Company in 1990 as Vice President–Finance and Administration. In 1995, he was elected to the Board of Directors and also promoted to the position of Executive Vice President and Chief Financial Officer.

“We deeply appreciate Ron’s service to Cyanotech over the past 12 years and the many contributions he made to the Company at multiple levels,” said Gerald R. Cysewski, Ph.D., chairman, president and CEO. “We will miss his participation in our day-to-day decision-making, particularly now when the results of our common efforts are being realized in terms of growing demand for the Company’s products.”

Mr. Sakamoto, 45, joined Cyanotech in 1995 as Controller and has worked closely with Mr. Scott in all aspects of financial management of the Company. Prior to joining Cyanotech, Mr. Sakamoto was the Assistant Controller at Hale Makua Health Care Systems and Accounting Manager at the Hawaii Division of NBI, Inc., a supplier of business computers. Mr. Sakamoto holds a Bachelors of Business Administration degree in accounting from the University of Hawaii, Manoa, and has over 20 years of experience in financial and accounting positions.