Cyanotech Corporation Reports Second Quarter Fiscal 2005 Financial Results; Reports Sales of $2,998,000, Net Income of $121,000.KAILUA Kailua (käēl  `ə), uninc. city (1990 pop. 36,818), Honolulu co., Hawaii, on the southeastern coast of Oahu, on Kailua Bay. A Univ. KONA Kona (kō`nə), district, along the western coast of the island of Hawaii. It is Hawaii's coffee belt and the only coffee-producing area in the United States. The Kona coast, with fine deep-sea fishing offshore, is a favorite tourist spot. , Hawaii Hawaii, island, United StatesHawaii, island (1990 pop. 120,217), 4,037 sq mi (10,456 sq km), largest and southernmost island of the state of Hawaii and coextensive with Hawaii co.; known as the Big Island. -- Cyanotech Corporation (Nasdaq:CYAN), a world leader in producing high-value natural products from microalgae microalgae unicellular aquatic plants (phytoplankton), the starting point of the aquatic food chain. Include toxic microalgae which are important causes of marine fish mortalities, especially Alexandrium, Chaltonella, Heterosigma spp. , today announced financial results for the second quarter of its fiscal year 2005, ended September September: see month. 30, 2004. Sales for the second quarter of fiscal 2005 were $2,998,000, a sequential increase of 11 percent from the $2,707,000 reported in the first quarter and a year-over-year increase of 6 percent compared to the $2,840,000 reported for the same quarter a year ago. The company noted that demand for natural Astaxanthin Astaxanthin (pronounced as-tuh-zan'-thin) is a carotenoid. It belongs to a larger class of phytochemicals known as terpenes. It is classified as a xanthophyll, which means "yellow leaves". Like many carotenoids, it is a colorful, fat/oil-soluble pigment. during the quarter was impacted by inclement in·clem·ent adj. 1. Stormy: inclement weather. 2. Showing no clemency; unmerciful. in·clem environmental factors in Japan which affected customers' fish farming Fish farming is the principal form of aquaculture, while other methods may fall under mariculture. It involves raising fish commercially in tanks or enclosures, usually for food. operations, as well as by competitive pricing issues from synthetic Astaxanthin products in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .
Net income for the second quarter was $121,000, or $0.01 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income for the first quarter of fiscal 2005 of $113,000, or $0.01 per fully diluted share, and compared to net loss of $10,000, or $0.00 per fully diluted share for the comparable quarter of the prior fiscal year. Gross profit for the second quarter was $1,054,000 with a gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. of 35 percent. These results are an improvement over both the prior quarter's gross profit of $887,000 with a gross profit margin of 33 percent, as well as the second quarter of fiscal 2004 results of gross profit of $861,000 with a gross profit margin of 30 percent. The company's cash and cash equivalents decreased by $136,000 from the March 31, 2004 balance of $2,531,000 to $2,395,000 at September 30, 2004. Working capital increased by $391,000 from $4,083,000 at March 31, 2004 to $4,474,000 at September 30, 2004. For the first six months of fiscal 2005, the company reported sales of $5,705,000, gross profit of $1,941,000 and net income of $234,000, or $0.01 per fully diluted share. This represents an improvement from sales of $5,268,000, gross profit of $1,565,000 and contrasts with the net loss of $151,000 reported for the first six months of the prior fiscal year. Cyanotech's Chairman, President and Chief Executive Officer, Gerald R. Cysewski, said, "This is the company's fourth consecutive quarter of profitability. Our increased revenue and year-over-year improved gross profit margin of five basis points for the quarter, as compared to the comparable quarter of the prior fiscal year, demonstrate our company's progress in sales, product mix and reduced production costs since the last fiscal year. Demand for NatuRose(R) was lower than we anticipated due in large part to the effect of weather on our customer's operations in Japan but we believe our market there remains strong in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the difficulties encountered by the Japanese aquaculture aquaculture, the raising and harvesting of fresh- and saltwater plants and animals. The most economically important form of aquaculture is fish farming, an industry that accounts for an ever increasing share of world fisheries production. market. "While we anticipate demand for natural astaxanthin over the next two quarters to be consistent with that of current quarter levels, we believe the demand will rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective in the future to levels consistent with prior demand patterns. The conversion of certain of our Spirulina spirulina Any cyanobacteria in the genus Spirulina. A traditional food source in parts of Africa and Mexico, spirulina is an exceptionally rich source of vitamins, minerals, and protein, and one of the few nonanimal sources of vitamin B12. ponds to Astaxanthin ponds to increase Astaxanthin production is proceeding on target, with expected completion by the end of calendar year 2004. Upon completion, the converted ponds will increase our flexibility to adjust production as required to respond to the varying demands of the marketplace." Dr. Cysewski concluded, "We continue to make strategic investments in operations and infrastructure proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. to our increase in revenues and improved gross profit. We are controlling our expenditures well and allocating our resources appropriately as we move our company forward." About Cyanotech Cyanotech Corporation, a world leader in microalgal technology, produces high-value natural products from microalgae and is the world's largest commercial producer of natural astaxanthin (pronounced "asta-zan-thin") from microalgae. Products include BioAstin(R) natural astaxanthin, a powerful antioxidant antioxidant, substance that prevents or slows the breakdown of another substance by oxygen. Synthetic and natural antioxidants are used to slow the deterioration of gasoline and rubber, and such antioxidants as vitamin C (ascorbic acid), butylated hydroxytoluene with expanding applications as a human nutraceutical nu·tra·ceu·ti·cal n. A food or naturally occurring food supplement thought to have a beneficial effect on human health. nutraceutical ; NatuRose(R) natural astaxanthin for the aquaculture and animal feed industries; Spirulina Pacifica(R), a nutrient-rich dietary supplement Noun 1. dietary supplement - something added to complete a diet or to make up for a dietary deficiency diet - a prescribed selection of foods vitamin pill - a pill containing one or more vitamins; taken as a dietary supplement ; and phycobiliproteins, which are fluorescent fluorescent having the quality of fluorescence. fluorescent antibody see fluorescence microscopy. fluorescent antibody test see fluorescence microscopy. pigments used in the immunological immunologic, immunological emanating from or pertaining to immunology. immunologic competence see immunocompetence. immunologic domains diagnostics (1) Software routines that test hardware components (memory, keyboard, disks, etc.). Diagnostics are often stored in ROM chips and activated on startup. (2) Error messages in a programmer's source code that refer to statements or syntax that the compiler or assembler market. Spirulina Pacifica and BioAstin are sold directly online through the Company's website, www.nutrex-hawaii.com, as well as through resellers in over 30 countries worldwide. Technical information for the Company's phycobiliproteins products is available at www.phycobiliprotein.com. Corporate data and other product information are available at www.cyanotech.com. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 Except for statements of historical fact, the statements in this press release are forward-looking. Such statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include, but are not limited to, general economic conditions, forecasts of sales in future periods, changes in sales levels to our largest customers, weather patterns, risks associated with the acceptance of new products, competition, foreign exchange fluctuations, government regulation, and other factors more fully detailed in the Company's recent Form 10-Q Form 10-Q See 10-Q. and annual form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filings with the Securities and Exchange Commission. Webcast Cyanotech Corporation will hold a conference call on Monday, November 1, 2004 at 5:30 p.m. Eastern Time to be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . It can be accessed by all interested parties by linking through the Investor Broadcast Network's VCall website at www.vcall.com or through Cyanotech's website, http://www.cyanotech.com. To access the simultaneous webcast on the Cyanotech site, select the Recent News section from Cyanotech's home page. Click on the announcement entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: , "Cyanotech Announces Fiscal Year 2005 Second Quarter Financial Results Webcast November 1, 2004." To listen to the live call, please go to either website at least 15 minutes prior to the start of the call to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. , and install any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call and will be archived for a period of one calendar year.
CYANOTECH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Six Months
Ended Ended
September 30, September 30,
---------------- ----------------
2004 2003 2004 2003
------- ------- ------- -------
NET SALES $ 2,998 $ 2,840 $ 5,705 $ 5,268
COST OF PRODUCT SALES 1,944 1,979 3,764 3,703
------- ------- ------- -------
Gross profit 1,054 861 1,941 1,565
------- ------- ------- -------
OPERATING EXPENSES:
Research and development 62 26 127 64
Sales and marketing 297 354 591 663
General and administrative 522 449 889 856
------- ------- ------- -------
Total operating expenses 881 829 1,607 1,583
------- ------- ------- -------
Income (loss) from
operations 173 32 334 (18)
------- ------- ------- -------
OTHER INCOME (EXPENSE):
Interest income 9 4 17 12
Interest expense (40) (78) (79) (166)
Other income (expense), net (9) 32 (11) 3
------- ------- ------- -------
Total other expense, net (40) (42) (73) (151)
------- ------- ------- -------
Income (loss) before
income taxes 133 (10) 261 (169)
INCOME TAX BENEFIT (EXPENSE) (12) - (27) 18
------- ------- ------- -------
NET INCOME (LOSS) $ 121 $ (10) $ 234 $ (151)
======= ======= ======= =======
NET INCOME (LOSS) PER SHARE
Basic $ 0.01 $ (0.00) $ 0.01 $ (0.01)
======= ======= ======= =======
Diluted $ 0.01 $ (0.00) $ 0.01 $ (0.01)
======= ======= ======= =======
SHARES USED IN CALCULATION OF
NET INCOME (LOSS) PER SHARE:
Basic 20,752 18,317 20,744 18,317
======= ======= ======= =======
Diluted 21,035 18,317 21,017 18,317
======= ======= ======= =======
COMPREHENSIVE INCOME (LOSS):
Net income (loss) $ 121 $ (10) $ 234 $ (151)
Other comprehensive income
(loss) (24) 24 (10) 19
------- ------- ------- -------
$ 97 $ 14 $ 224 $ (132)
======= ======= ======= =======
CYANOTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share amounts)
(Unaudited)
September March
30, 2004 31, 2004
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 2,395 $ 2,531
Accounts receivable, net 2,102 2,211
Refundable income taxes - 11
Inventories 1,404 1,099
Prepaid expenses 225 55
-------- --------
Total current assets 6,126 5,907
Equipment and leasehold improvements, net 11,598 11,844
Other assets 572 606
-------- --------
Total assets $ 18,296 $ 18,357
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 346 $ 346
Accounts payable 676 874
Accrued expenses 630 604
-------- --------
Total current liabilities 1,652 1,824
Long-term debt, excluding current maturities 1,924 2,093
-------- --------
Total liabilities 3,576 3,917
-------- --------
Stockholders' equity:
Common Stock of $0.005 par value; as of
September 30, 2004, 30,000,000 shares
authorized, 20,764,140 shares issued and
outstanding; and as of March 31, 2004,
25,000,000 shares authorized, 20,714,246
shares issued and outstanding 104 104
Additional paid-in capital 27,197 27,141
Accumulated other comprehensive income
foreign currency translation adjustments 20 30
Accumulated deficit (12,601) (12,835)
-------- --------
Total stockholders' equity 14,720 14,440
-------- --------
Total liabilities and stockholders'
equity $ 18,296 $ 18,357
======== ========
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