Cyanotech Reports Second Quarter Fiscal 2003 Financial Results.Business Editors & Health/Medical Writers KAILUA-KONA, Hawaii--(BUSINESS WIRE)--Oct. 29, 2002 Cyanotech Corporation (Nasdaq:CYAN), a world leader in producing high-value natural products from microalgae, today announced financial results for the second quarter and first six months of fiscal year 2003. For the second quarter of fiscal 2003, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight were $2,018,000 versus $1,951,000 for the second quarter of fiscal 2002. The net loss was $540,000, or ($0.03) per 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 a net loss of $509,000, or ($0.03) per diluted share, reported for the second quarter of fiscal 2002. In the second quarter of fiscal 2003, gross profit margins 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 28% improved slightly from 25% in the second quarter of fiscal 2002, but decreased from the immediately prior quarter due to increased demand during the second quarter for Certified See certification. Organic 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. , which has a higher cost of production. Excluding depreciation expense, gross profit margins were 44% in the second quarter of fiscal 2003, compared to 41% in the second quarter of fiscal 2002. In the second quarter of fiscal 2003, sales to Cyanotech's largest customer, Spirulina International BV, were 14% of total sales, compared to 8% of sales in the prior year's second quarter. Total export sales in the second quarter were 49%, compared to 46% in the prior year comparable period. For the first six months of fiscal 2003, net sales were $4,050,000 versus $4,264,000 for the first six months of fiscal 2002. The net loss was $1,325,000, or ($0.08) per diluted share, compared to a net loss of $922,000, or ($0.05) per diluted share, reported for the first six months of fiscal 2002. Cyanotech is working closely with industry-leading cosmetic manufacturers, pharmaceutical companies offering branded nutraceuticals, direct marketing companies and natural food sector supplement makers to integrate the Company's natural astaxanthin products into their nutraceutical nu·tra·ceu·ti·cal n. A food or naturally occurring food supplement thought to have a beneficial effect on human health. nutraceutical and cosmetic formulations. To date, Twinlab and Sea & Ski have introduced products containing natural astaxanthin from Cyanotech and the Company expects to announce additional relationships with other such companies during the next six months. In October 2002, Cyanotech completed a private placement managed by the Company of $1,250,000 of 10% convertible subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before , due September 30, 2004, and $300,000 of common stock. Proceeds from the 10% convertible subordinated debentures were used to retire $1,238,000 in 10% convertible subordinated debentures. Net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the issuance of the common stock will be used for working capital. "The recent financing enabled Cyanotech to restructure certain obligations that were coming due and provides an improved financial base of support for the Company as it pursues growth opportunities," said Gerald R. Cysewski, Ph.D., chairman, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Additionally, we implemented cost-cutting measures during the second quarter that are expected to reduce operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. during the third quarter and beyond. These actions do not have a significant impact on the operations of the Company and were undertaken to pare expense while pursuing growth." The company's new 30-minute television infomercial in·fo·mer·cial also in·for·mer·cial n. A relatively long commercial in the format of a television program. [info(rmation) + (com)mercial.] Noun 1. for BioAstin(R) started airing in certain market areas around the country on October 23, 2002. The full results of this market test won't be known until late November. This marketing initiative, focused on the joint pain relief provided by BioAstin, capitalizes on the clinical trials completed successfully earlier in the year that showed that taking BioAstin could result in marked improvement in pain relief and joint function for sufferers of Carpal Tunnel Syndrome carpal tunnel syndrome: see repetitive stress injury. carpal tunnel syndrome (CTS) Painful condition caused by repetitive stress to the wrist over time. and rheumatoid arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. , among other complaints. Dr. Cysewski noted that the increased demand for NatuRose(R) through the Company's Japanese subsidiary, Cyanotech Japan YK, confirms prior expectations for the strength of NatuRose in 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. feed market as sales of NatuRose(R) in Japan reached record levels during the second quarter of fiscal 2003. Cyanotech Corporation, the world's leader in microalgae 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; 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 market. Spirulina and BioAstin are sold directly online through www.nutrex-hawaii.com and www.bioastinxp.com as well as through resellers worldwide in over 30 countries. Corporate and product information is 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. -- 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 quarterly 10-Q and annual 10-K filings with the Securities and Exchange Commission. WEBCAST -- Cyanotech will hold a conference call on Tuesday, October 29, 2002 at 4:30 p.m. Eastern time to be broadcast live over the Internet. It can be accessed by all interested parties by linking from www.cyanotech.com or through the Investor Broadcast Network's Vcall Web site at www.vcall.com. To listen to the live call, please go to the Web site at least fifteen 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 on the Vcall site and for 90 days thereafter.
CYANOTECH CORPORATION
Financial Highlights
(in thousands, except per share data)
2nd Quarter Fiscal 2003 Three Months Ended Sept. 30,
2002 2001
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Income Statement Data
Net sales $ 2,018 $ 1,951
Gross profit $ 568 $ 491
Loss from operations $ (434) $ (399)
Loss before income taxes $ (540) $ (509)
Net loss $ (540) $ (509)
Net loss per common share, basic and diluted $ (0.03) $ (0.03)
Shares used in computing
net loss per common share 17,562 17,038
1st Six Months Fiscal 2003 Six Months Ended Sept. 30,
2002 2001
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Income Statement Data
Net sales $ 4,050 $ 4,264
Gross profit $ 1,353 $ 1,169
Loss from operations $ (873) $ (697)
Loss before income taxes $(1,325) $ (922)
Net loss $(1,325) $ (922)
Net loss per common share, basic and diluted $ (0.08) $ (0.05)
Shares used in computing
net loss per common share 17,413 17,023
At Sept. 30, 2002 Mar. 31, 2002
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Balance Sheet Data
Working capital $ 1,965 $ 1,008
Total assets $17,870 $18,400
Total long-term debt, including current
portion $ 4,160 $ 4,308
Stockholders' equity $12,441 $13,191
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