Cyanotech Corp. (CYAN, Financial) filed Quarterly Report for the period ended 2008-12-31.
CYANOTECH CORP. develops and commercializes natural products from microalgae. Co. is currently producing microalgae products for the nutritional supplement and immunological diagnostics markets and is also developing microalgae-based products for the aquaculture feed/pigments biopesticide and food coloring markets. Microalgae are a diverse group of over 30000 species of microscopic plants which have a wide range of physiological and biochemical characteristics and naturally contain high levels of nutrients. Cyanotech Corp. has a market cap of $7.5 million; its shares were traded at around $1.85 with and P/S ratio of 0.66.
Operating expenses for the nine months ended December 31, 2008 were $3,195,000, an increase of $112,000 or 4% from the comparable prior year period. Sales and marketing expense decreased by $276,000 or 25% as a result of cost reduction measures, including headcount and promotional programs, initiated in the third quarter of fiscal year 2008. General and administrative expense increased $338,000 due to $156,000 of stock related compensation, $100,000 increase in accounting and legal costs to comply with regulatory requirements and inflationary increases, rather than added spending in the nine month period. While it is our goal to contain discretionary operating spending it may become necessary for the Company to selectively increase spending in some or all of these areas to remain competitive and to comply with regulatory requirements.
Cash and cash equivalents decreased $814,000 or 75% to $276,000 at December 31, 2008, from $1,090,000 million at March 31, 2008. This decrease in cash resulted from cash used in investing activities of $331,000, and cash used in financing activities of $422,000, and cash used in operating activities of $61,000. Cash used in operating activities for the nine months ended December 31, 2008 represents the results of operations adjusted for non-cash depreciation, amortization and share based compensation expenses of $521,000, increases in inventory and accounts receivable of $1,903,000, offset by increases in accounts payable and accrued expenses of $449,000 and other less significant changes. Cash flows used in investing activities reflect capital expenditures during the nine months of fiscal 2009. Cash flows used in financing activities are attributable to debt payments during that period.
At December 31, 2008, the Companys working capital was $3,772,000, an increase of $680,000 compared to $3,092,000 at March 31, 2008. Cash and cash equivalents at December 31, 2008 totaled $276,000, a decrease of $814,000 from $1,090,000 at March 31, 2008.
The Company has two Term Loan Agreements (Term Loans) with a lender. These provided up to $4.6 million in combined credit facilities and are secured by substantially all the assets of the Company. The outstanding combined balance under the Term Loans as of December 31, 2008 is approximately $1,650,000. The Term Loans have maturity dates of May 1, 2010 as to $665,000 and March 1, 2015 as to $985,000 and are payable in equal monthly principal and interest payments totaling approximately $55,000.
· The Company has experienced significant recurring net losses. At December 31, 2008, the Company had an accumulated deficit of $20,115,000 compared to an accumulated deficit of $21,063,000 at March 31, 2008. The accumulated deficit decreased by $514,000 for the quarter ended December 31, 2008. As discussed earlier, and as required under SFAS No. 144, Accounting for the Impairment and Disposal of Long-Lived Assets, as of March 31, 2007 the Company recorded a non-cash impairment charge, reducing by $4.5 million the values of certain production equipment and leasehold improvement assets. This non-cash charge did not impact liquidity.
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CYANOTECH CORP. develops and commercializes natural products from microalgae. Co. is currently producing microalgae products for the nutritional supplement and immunological diagnostics markets and is also developing microalgae-based products for the aquaculture feed/pigments biopesticide and food coloring markets. Microalgae are a diverse group of over 30000 species of microscopic plants which have a wide range of physiological and biochemical characteristics and naturally contain high levels of nutrients. Cyanotech Corp. has a market cap of $7.5 million; its shares were traded at around $1.85 with and P/S ratio of 0.66.
Highlight of Business Operations:
Operating expenses for the third quarter of fiscal 2009 were 28% of sales or $1,010,000, compared to 33% of sales or $914,000 for the third quarter of fiscal 2008. This decrease in operating expenses as a percentage of sales in the three months ended December 31, 2008 as compared with the three months ended December 31, 2007 was primarily the result of the increase in sales. Sales and marketing expenses decreased by $93,000 or 24%, offset by a $146,000 or 29% increase in general and administrative expense and a $43,000 or 195% increase in research and development expense for the third quarter of 2009 from the third quarter of 2008. These changes are primarily due to headcount variations in the respective departments as the Company executes its focused operating plan.Operating expenses for the nine months ended December 31, 2008 were $3,195,000, an increase of $112,000 or 4% from the comparable prior year period. Sales and marketing expense decreased by $276,000 or 25% as a result of cost reduction measures, including headcount and promotional programs, initiated in the third quarter of fiscal year 2008. General and administrative expense increased $338,000 due to $156,000 of stock related compensation, $100,000 increase in accounting and legal costs to comply with regulatory requirements and inflationary increases, rather than added spending in the nine month period. While it is our goal to contain discretionary operating spending it may become necessary for the Company to selectively increase spending in some or all of these areas to remain competitive and to comply with regulatory requirements.
Cash and cash equivalents decreased $814,000 or 75% to $276,000 at December 31, 2008, from $1,090,000 million at March 31, 2008. This decrease in cash resulted from cash used in investing activities of $331,000, and cash used in financing activities of $422,000, and cash used in operating activities of $61,000. Cash used in operating activities for the nine months ended December 31, 2008 represents the results of operations adjusted for non-cash depreciation, amortization and share based compensation expenses of $521,000, increases in inventory and accounts receivable of $1,903,000, offset by increases in accounts payable and accrued expenses of $449,000 and other less significant changes. Cash flows used in investing activities reflect capital expenditures during the nine months of fiscal 2009. Cash flows used in financing activities are attributable to debt payments during that period.
At December 31, 2008, the Companys working capital was $3,772,000, an increase of $680,000 compared to $3,092,000 at March 31, 2008. Cash and cash equivalents at December 31, 2008 totaled $276,000, a decrease of $814,000 from $1,090,000 at March 31, 2008.
The Company has two Term Loan Agreements (Term Loans) with a lender. These provided up to $4.6 million in combined credit facilities and are secured by substantially all the assets of the Company. The outstanding combined balance under the Term Loans as of December 31, 2008 is approximately $1,650,000. The Term Loans have maturity dates of May 1, 2010 as to $665,000 and March 1, 2015 as to $985,000 and are payable in equal monthly principal and interest payments totaling approximately $55,000.
· The Company has experienced significant recurring net losses. At December 31, 2008, the Company had an accumulated deficit of $20,115,000 compared to an accumulated deficit of $21,063,000 at March 31, 2008. The accumulated deficit decreased by $514,000 for the quarter ended December 31, 2008. As discussed earlier, and as required under SFAS No. 144, Accounting for the Impairment and Disposal of Long-Lived Assets, as of March 31, 2007 the Company recorded a non-cash impairment charge, reducing by $4.5 million the values of certain production equipment and leasehold improvement assets. This non-cash charge did not impact liquidity.
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