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The Honolulu Advertiser
Posted on: Wednesday, May 12, 2004

Cyanotech posts first fiscal-year profit since '97

By Sean Hao
Advertiser Staff Writer

Kailua, Kona-based Cyanotech Corp. posted a 12-month profit of $399,000, or 2 cents a share, yesterday, marking the company's first profitable fiscal year since 1997.

The results were an improvement on a loss of $1.78 million, or 10 cents a share, for fiscal 2003. Sales during the 12 months ended March 31 rose 29 percent to $11.58 million. The company said profits were driven by a reduction in marketing, research and other costs and higher sales of dietary supplements for humans and animals.

During the final three months of the fiscal year Cyanotech, which employs about 65 people, posted a profit of $441,000, or 2 cents a share, versus a loss of $270,000, or a penny a share, in the fourth quarter of the prior fiscal year.

The company, which in 2003 faced delisting from the Nasdaq SmallCap Market, also ended the fiscal year with higher profit margins and a greater cash balance.

"We're extremely pleased with the company's profitability for the fourth quarter and the year," said Gerald Cysewski, Cyanotech's chairman, president and chief executive. "As we enter fiscal 2005 our track record of increasing sales on a sequential-quarter basis, managing operating expenses as appropriate for supporting our business initiatives and substantially improved balance sheet place us in very good stead for future growth."

In advance of the results, which were released after the markets closed, shares of Cyanotech closed up a penny at $1.37 a share. Going forward, the company plans to increase profits by converting 10 of its spirulina microalgae growth ponds to grow another product called astaxanthin. Demand for astaxanthin, which is a human dietary supplement and red pigment used in aquaculture, is outstripping Cyanotech's production capacity, Cysewski said.

Astaxanthin sales generate greater profit margins than spirulina, which also is a dietary supplement, he added.

Any new product introductions are at least a year to 18months away, Cysewski said.

During 2003 the Nasdaq SmallCap Market threatened to de-list Cyanotech, but reversed that decision in December after shares consistently closed at or above above $1.

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.