Cyanotech Corp. (CYAN) Reports Financial Results for the Second Quarter of Fiscal 2010

Nov. 12, 2009 (Business Wire) — Cyanotech Corporation (Nasdaq Capital Market: CYAN), a world leader in microalgae-based, high-value nutrition and health products, today announced financial results for the second quarter and first six months of fiscal 2010, ended September 30, 2009.

Second Quarter Fiscal 2010

Revenues for the second quarter of fiscal 2010 increased 20% to $3,925,000, compared to revenues of $3,274,000 for the second quarter of fiscal 2009. Gross profit was $1,762,000, with gross profit margin of 45%, in the current quarter compared to a gross profit of $1,378,000 and gross profit margin of 42% reported for the same quarter in 2009. Net income increased 267% to $599,000, or $0.11 per diluted share, compared to $163,000, or $0.03 per diluted share for the second quarter of fiscal 2009.

Cash and cash equivalents were $1,100,000 at September 30, 2009 compared to the March 31, 2009 balance of $977,000. Working capital increased to $4,648,000 at September 30, 2009 compared to $3,892,000 at March 31, 2009.

“These results affirm the company’s strategy of focusing on and building sound business fundamentals throughout the organization,” said Andrew H. Jacobson, President and CEO. “Improved production levels increased inventory, allowing better customer service. Continued cost containment delivered margin growth. Sustained high quality continued our nutritional leadership and our dedicated employees made it all possible.”

Sales of both of Cyanotech’s core products, Spirulina Pacifica® and BioAstin® Natural Astaxanthin, grew during the second quarter. The Company again delivered margin growth, resulting in higher income from the increased sales.

“We are looking forward to the complete roll out of our new Nutrex branding in the second half of 2010 and the introduction of a number of innovative products featuring Hawaiian Spirulina Pacifica® and BioAstin® Natural Astaxanthin,” concluded Mr. Jacobson.

First Six Months Fiscal 2010

Revenues for the first six months of fiscal 2010 increased 14% to $7,946,000, compared to revenues of $6,975,000 for the first six months of fiscal 2009. Gross profit was $3,495,000, with gross profit margin of 44%, compared to a gross profit of $2,682,000 and gross profit margin of 38% reported for the same period in 2009. Net income increased 133% to $1,012,000, or $0.19 per diluted share, compared to $434,000, or $0.08 per diluted share for the first six months of fiscal 2009.

About Cyanotech — Cyanotech Corporation, a world leader in microalgae technology, produces BioAstin® Natural Astaxanthin and Hawaiian Spirulina Pacifica® — all natural, functional nutrients that leverage our experience and reputation for quality, building nutritional brands which promote health and well-being. Cyanotech’s Spirulina products offer complete nutrition, and augment energy and immune response. They are FDA reviewed and accepted as Generally Recognized as Safe (GRAS) for use in food products. BioAstin’s superior antioxidant activity and ability to support and maintain a natural anti-inflammatory response enhance skin, muscle and joint health. All Cyanotech products are produced from microalgae grown at its 90-acre facility in Kona, Hawaii using patented and proprietary technology. Cyanotech distributes to nutritional supplement, nutraceutical and cosmeceutical manufacturers and marketers in more than 40 countries worldwide. Cyanotech was the first microalgae company in the world to obtain quality management standards ISO 9001:2000 certification and is GMP-certified by the Natural Products Association^TM. Visit www.cyanotech.com for more information.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act 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, production problems caused by contamination, 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 and annual Form 10-K filings with the Securities and Exchange Commission.

(Financial Tables Follow: The following tables do not contain footnotes or other information contained in the Company’s Form 10-Q for the period ended September 30, 2010. As such the following Financial Tables are provided only as a guide and other factors are more fully detailed in the Company’s Form 10-Q and annual Form 10-K filings with the Securities and Exchange Commission.)

CYANOTECH CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands except par value and number of shares) (Unaudited)
		September 30,				March 31,
		2009				2009
ASSETS
Current assets:
Cash and cash equivalents		$	1,100			$	977
Accounts receivable, net of allowance for doubtful accounts of $11 at September 30, 2009 and $14 at March 31, 2009		1,830				1,785
Inventories		3,521				3,124
Prepaid expenses and other		194				110
Total current assets		6,645				5,996
Equipment and leasehold improvements, net		4,583				4,316
Other assets		456				475
Total assets		$	11,684			$	10,787
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt		$	471			$	620
Accounts payable		773				1,040
Accrued expenses		753				444
Total current liabilities		1,997				2,104
Long-term debt, less current maturities		752				909
Total liabilities		2,749				3,013
Commitments and contingencies
Stockholders’ equity:
Common stock of $0.02 par value, shares authorized 7,500,000; 5,249,270 shares issued and outstanding at September 30, 2009 and 5,245,770 at March 31, 2009		105				105
Additional paid-in capital		27,737				27,590
Accumulated deficit		(18,907		)		(19,921		)
Total stockholders’ equity		8,935				7,774
Total liabilities and stockholders’ equity		$	11,684			$	10,787

CYANOTECH CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)
		Three Months Ended								Six Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
NET SALES		$	3,925			$	3,274			$	7,946			$	6,975
COST OF PRODUCT SALES		2,163				1,896				4,451				4,293
Gross profit		1,762				1,378				3,495				2,682
OPERATING EXPENSES:
General and administrative		778				864				1,674				1,573
Sales and marketing		303				255				624				522
Research and development		42				54				123				90
Total operating expenses		1,123				1,173				2,421				2,185
Income from operations		639				205				1,074				497
OTHER INCOME (EXPENSE):
Interest expense, net		(28		)		(42		)		(57		)		(84		)
Other income, net		—				—				17				10
Total other expense, net		(28		)		(42		)		(40		)		(74		)
Income before provision (benefit) for income taxes		611				163				1,034				423
PROVISION (BENEFIT) FOR INCOME TAXES		12				—				22				(11		)
NET INCOME		$	599			$	163			$	1,012			$	434
NET INCOME PER SHARE:
Basic		$	.11			$	.03			$	.19			$	.08
Diluted		$	.11			$	.03			$	.19			$	.08
SHARES USED IN CALCULATION OF NET INCOME PER SHARE:
Basic		5,247				5,242				5,246				5,242
Diluted		5,308				5,242				5,300				5,242