Cyanotech(US:CYAN)2024-02-07 16:00Financial Performance - As of December 31, 2023, the company reported a net loss of $3,186,000 compared to a net loss of $2,010,000 for the same period in 2022, indicating a year-over-year increase in losses of approximately 58.5%[32] - The company reported a net loss of $1,020,000 for the three months ended December 31, 2023, compared to a net loss of $598,000 for the same period in 2022, reflecting a 70.4% increase in loss[145] - Total net sales for the three months ended December 31, 2023, were $5,582,000, a decrease of 5.2% compared to $5,891,000 for the same period in 2022[70] - Operating expenses for the first nine months of fiscal 2024 were $8,000,000, primarily due to higher online selling fees[133] - The company recognized $24,000 and $94,000 of revenue from customer deposits during the nine months ended December 31, 2023, and 2022, respectively, indicating a decrease in revenue recognition from contract liabilities[47] Cash Flow and Liquidity - The company had cash of $661,000 and working capital of $3,747,000 as of December 31, 2023, down from $974,000 and $5,393,000, respectively, as of March 31, 2023[36] - The company experienced a decrease in cash used in operating activities, with a net cash used of $762,000 for the three months ended December 31, 2023, compared to $2,683,000 for the same period in 2022[32] - The company sustained operating losses and negative cash flows from operations, raising substantial doubt about its ability to continue as a going concern[134] Debt and Financing - The company has $3,282,000 of debt payable to the bank, requiring monthly principal and interest payments through August 2032[37] - The company’s debt service coverage ratio fell short of the bank's annual requirement, leading to a covenant waiver from the bank[37] - As of December 31, 2023, the outstanding balance on the 2023 Loan was $1,360,000, with an interest rate of 8.5%[54] - The company had $1,250,000 outstanding on the related party Revolver as of December 31, 2023, which allows borrowing up to $2,000,000[60] - Future principal payments due under loans total $4,282,000, with $3,282,000 due in the remainder of 2024[104] Sales and Revenue - For the nine months ended December 31, 2023, two customers accounted for 36% and 18% of total net sales, highlighting a significant reliance on major customers[44] - Packaged sales of astaxanthin for the three months ended December 31, 2023, were $3,691,000, up 18.5% from $3,113,000 in the prior year[70] - Total packaged sales for December 2023 reached $4,968,000, an increase of 16.6% compared to $4,260,000 in December 2022[130] - Astaxanthin packaged sales increased by 18.6% to $3,691,000 in December 2023 from $3,113,000 in December 2022[130] - Total bulk sales decreased by 57.4% to $573,000 in December 2023 from $1,345,000 in December 2022[130] - Contract extraction and R&D services revenue fell by 85.7% to $41,000 in December 2023 from $286,000 in December 2022[130] Cost Management - The company has implemented cost-saving initiatives, including reducing production and headcount, to address cash flow challenges stemming from lower sales[40] - The company reported abnormal production cost recovery of $73,000 for the three months ended December 31, 2023, compared to $64,000 for the same period in 2022[74] - Depreciation and amortization expenses for the three months ended December 31, 2023, were approximately $395,000, compared to $409,000 for the same period in 2022[76] - Operating lease costs for the nine months ended December 31, 2023, were $615,000, an increase from $517,000 in the same period of 2022[84] Stock and Compensation - The company had a total of 297,000 stock options outstanding at December 31, 2023, with a weighted average exercise price of $2.47[89] - Total unrecognized stock-based compensation expense related to unvested stock options was $79,000, expected to be expensed over 1.4 years[90] - The company issued 17,672 shares of fully vested restricted stock in April 2023, with no compensation expense recognized for this issuance[91] - As of December 31, 2023, total unrecognized stock-based compensation expense related to unvested restricted stock units was $92,000, expected to be expensed over 1.6 years[115] - Compensation expense recognized for stock options was $24,000 for the three months ended December 31, 2023, compared to $25,000 for the same period in 2022[88] Assets and Liabilities - Total right-of-use assets as of December 31, 2023, were $4,409,000, a decrease from $4,776,000 as of March 31, 2023[86] - Total lease liabilities decreased to $4,400,000 from $4,758,000 over the same period[86] - Inventories decreased to $9,124,000 as of December 31, 2023, from $10,707,000 as of March 31, 2023[96] - Total long-term debt, net of current maturities, remained stable at $1,000,000 as of December 31, 2023[99] - The principal balance of the Skywords Note was $1,000,000 as of December 31, 2023, with an interest rate of 9.5%[150] Tax and Legal Matters - The effective tax rate for the three months ended December 31, 2023, was (1.4%) compared to (0.1%) for the same period in 2022[142] - The company continues to carry a full valuation allowance on its net deferred tax assets, reflecting ongoing uncertainty regarding realization[142] - The company incurred legal expenses of $8,000 related to the private placement transaction[141]