Tech firm profits elusive
By John Duchemin
Advertiser Staff Writer
All three of Hawai'i's publicly traded agricultural biotechnology companies have recently reported substantial losses, and the largest, Cyanotech, faces a possible stock de-listing that company officials say reflects the poor results.
Big Island algae grower Cyanotech has until September to demonstrate it can keep its stock price above $1 per share for at least 10 consecutive trading days. If the Kailua, Kona, company fails to meet that threshold, the National Association of Securities Dealers will remove Cyanotech stock (ticker symbol CYAN) from the Nasdaq stock exchange.
That may be a tall order for the stock, which closed yesterday at 58 cents per share. Cyanotech has closed at less than $1 per share since May 3, 2002.
Jeff H. Sakamoto, Cyanotech's vice president of finance, says the company's financial outlook is improving, but said the depressed stock price probably reflects investors' grim view of the company's prospects. The stock traded above $3 per share in early 2000.
"We're trading this low because of our financial performance," said Sakamoto, who has worked at Cyanotech since 1995. "I can't say I'm that surprised our stock price has been having issues — our results have not been profits."
But Sakamoto says the company has reason to believe profitability could return after more than five consecutive years of losses.
Cyanotech has struggled since 1998, when it lost a key customer for its algae-derived spirulina powder. Since then, the world price of spirulina has plunged, and Cyanotech has tried to shift to another product, the anti-oxidant astaxanthin.
The demand for astaxanthin has lately picked up, and the company is starting to see better yields from its algae ponds, Sakamoto said.
"In the last six months, our results have started to improve to the point that we're making significant progress toward profitability," he said.
Meanwhile, two other Hawai'i-based producers of aquatic foodstuffs — "aquaculture" companies — are also struggling to make ends meet, according to the latest financial filings.
Kaua'i shrimp farm Ceatech said Tuesday that it lost $600,000 in the quarter ended April 30. That compared to a $900,000 loss in the same quarter of 2002.
Quarterly sales dropped to $400,000, down from $1.1 million in the same quarter of 2002.
Ceatech has struggled since its mid-1990s inception to effectively operate its shrimp-farming business, and has yet to post a quarterly profit. Its stock was last sold on May 23 for 15 cents per share on the over-the-counter board.
Despite Ceatech's troubles, the state Board of Agriculture recently approved a seven-year, $1.8 million loan for the company to build more shrimp ponds.
Also, Mera Pharmaceutical, another Big Island algae-farming producer of nutritional supplements, this week requested extra time from regulators to disclose its quarterly report. But in its last quarterly report in February, Mera reported $670,000 in losses on only $180,000 in revenue.
Mera emerged from a Chapter 11 bankruptcy reorganization last year as the successor of Aquasearch, a company that lost millions of dollars for years as it struggled to develop products.
Mera's principal investor, Richard D. Propper, has invested millions of dollars to help resuscitate the company, which entered bankruptcy with millions of dollars in debt and negligible revenues. In the February report, the company forecast losses would continue for at least another year.
