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(NASDAQ:CYAN) Q4/FY 2012 - YoY Revenues/Earnings Spike. Q4 Revs Down v Q3...

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June 21, 2012 – Comments (12) | RELATED TICKERS: CYAN , ABT , BMY

(NASDAQ:CYAN) Q4/FY 2012 - YoY Revenues/Earnings spike. Q3 v Q4 Revs Down

Fiscal Year 2012

For fiscal year 2012 compared to fiscal year 2011, revenues were $24,631,000 compared to $16,827,000. Gross profit was $9,774,000, with gross profit margin of 39.7%, compared to gross profit of $6,341,000 and gross profit margin of 37.7%. Net income was $3,632,000 or $0.66 per diluted share, compared to net income of $1,730,000 or $0.32 per diluted share.

Highlighting the fiscal year 2012 results, Brent Bailey, President and CEO, noted:

Net sales increased $7.8 million or 46.4% over the prior year to a record $24.6 million, driven primarily by an increase in demand for astaxanthin products. Gross margin increased to 39.7% from 37.7%, aided by the growth in higher margin astaxanthin sales. Operating income increased $1.7 million or 136% to $2.9 million, driven by the net sales growth. Net income increased $1.9 million or 110% to $3.6 million, driven by the volume increase and a partial reversal of the valuation allowance on our deferred tax asset. Earnings per diluted share increased $0.34 to $0.66. Cash from operating activities increased $3.3 million to $5.1 million, resulting from the increased volume and non-cash items such as stock option compensation and increases in accounts payable and accrued expenses. Cash and cash equivalents at March 31, 2012 increased $3.0 million to $5.1 million. As a result, working capital increased $1.8 million or 29% to $8.1 million at March 31, 2012.

In addition, we continue to gain distribution on the mainland in the natural products channel where our Nutrex-Hawaii brand grew 72% in fiscal 2012.”

For the year, spirulina sales accounted for 35% of total revenues and natural astaxanthin sales for 65%. International sales were 33% of total sales.

Mr. Bailey commented, “We are pleased with our business results and made significant progress in improving our processes, systems, facilities and organization in fiscal 2012. We are focused on continuing to strengthen our infrastructure to support the substantial growth we expect to generate for the foreseeable future.”

Vice President and CFO Jolé Deal commented that “as part of strengthening our foundation, we’ve made significant improvements in the effectiveness of our internal controls and procedures. As a result, the material weakness that had been identified in previous years no longer exists.”

Fourth Quarter 2012

For the fourth quarter of fiscal 2012 compared to the fourth quarter of fiscal 2011, revenues were $5,986,000 compared to $5,218,000. Gross profit was $2,053,000, with gross profit margin of 34.3%, compared to gross profit of $1,798,000 and gross profit margin of 34.5%. Net income was $1,158,000 or $0.20 per diluted share, compared to net income of $795,000 or $0.14 per diluted share. Net income for the fourth quarter included a reversal of the valuation allowance on our deferred tax asset of $892,000 in the current year and $552,000 last year.

Source: June 21, 2012 Cyanotech.

 

Key Statistics:

CYAN Revenues decreased 10.74% Q4 2012 ending Mar 31 v Q3 2012 ending Dec 31

CYAN Revenues increased 33.2% Q4 2011 ending Mar 31 v Q3 2011 ending Dec 31     

Trailing P/E: 10.92 (based on $.66 eps for 12-months ending March 31, 2012) on 46.4% YoY Revenue growth.


References:

(June 21, 2012) SEC Form 10-K For the Fiscal Year Ended March 31, 2012

(February 19, 2012) (NASDAQ:CYAN) Q3 2012 - Record Sales EPS .20 v. .00. *The Little Engine That Is.

(November 17, 2011) (NASDAQ:CYAN) Q2 2012 - Record Sales, Net +66%. The Little Engine That Could.

12 Comments – Post Your Own

#1) On June 22, 2012 at 5:08 PM, gnulaw (51.61) wrote:

(Cyanotech:CYAN) Closes down 3.3% its first full trading day after announcing FY/Q4 2012 numbers...under $7.00 to $6.97 on 2.3X ADV (3 mo)...

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#2) On June 24, 2012 at 11:23 AM, gnulaw (51.61) wrote:

(Cyanotech:CYAN) Technical Breakdown

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#3) On July 03, 2012 at 11:53 PM, gnulaw (51.61) wrote:

BREAKING NEWS Issues of Fact

"...The legal wrangling began on May 24 when Valensa filed a complaint against Cyanotech in Florida accusing it of ‘tortious interference with a business relationship’..." Source: FindLaw

FULL STORY HERE

                    ----------

Astaxanthin wars: Cyanotech and Valensa row over competition, IP

Hawaii-based microalgae specialist Cyanotech and Florida-based nutraceutical firm US Nutraceuticals (doing business as Valensa International) have become embroiled in a bitter legal dispute over the potent red antioxidant astaxanthin.

http://www.nutraingredients-usa.com/Regulation/Astaxanthin-wars-Cyanotech-and-Valensa-row-over-competition-IP

                    ----------

What Did They Know and When Did They Know It?

Of signficance between March 2, 2012 and June12, 2012 Wilmington Trust sold 307,650 sharesof CYAN common. 

On May 14, 2012 CYAN closed at $10.28 on 12,300 shares volume. On May 17th CYAN closed at $7.93 on 95,100 shares volume.

According to the NUTRA ingrediants-usa article (cited above) Valensa filed suit on May 24th.

On June 20th Cyanotech filed Cyanotech v. University of Illinois and U.S. Neutraceuticals in US District Court for the District of Hawaii.

Of further significance Cyanotech filed their 2012 SEC Form 10-K for the year ended March 31, 2012 on June 21st, 2012 (the day after they filed the above suit). There is [no] mention of this litigation in this 10-K, not even under subsequent events. This could be an alleged  violation of State and Federal Securiites Statutes including but not limited to SEC Rule 10b-5 and possibly entail alleged Selective Disclosure implications as is being discussed on the Cyanotech Yahoo! Finance Message Board.

...and on June 29th U.S. Nutraceuticals LLC and the Board of Trustees of The University of Illinois filed v. Cyanotech Corporation and Nutrex Hawaii, Inc.for 35:271 Patent Infringement in Florida Middle District Court.

story developing...

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#4) On July 07, 2012 at 8:25 AM, gnulaw (51.61) wrote:

Comment #3, continued.

May 23 Valensa files v. Cyanotech


June 6 Amended Complaint filed by Valensa

June 20 Cyanotech files Complaint v. Valensa and University of Illinois

June 29 Valensa, University of Illinois files v. Cyanotech
 

 "...According to Cyanotech, Valensa "repeatedly threatened to shut down Cyanotech's business" and embroil Cyanotech in expensive patent litigation unless it agreed to purchase a license of the patent in question in order to carry on selling it astaxanthin products for eye health...As a result of these practices and the threat of litigation, Cyanotech has "suffered economic losses in excess of $75,000..."

Supplementary Information 

(January 31, 2008) Cyanotech Provides Marketing Update

"...Cyanotech has also formed an important relationship with Valensa International (www.valensa.com), the world leader in supercritical CO2 extraction.  Valensa’s state-of-the-art facility is capable of extracting large volumes of Haematococcus microalgae under very high pressure without the use of solvents to produce a very high quality Astaxanthin oleoresin.  A contract has been signed between Valensa and Cyanotech to guarantee Valensa supply of Cyanotech’s Haematococcus to produce Valensa’s trademarked Astaxanthin product, “Zanthin®.”  On its part, Cyanotech is availing itself of Valensa’s outstanding extraction capabilities to produce its “BioAstin®” raw material.  Both companies view this relationship as a significant step toward bringing the benefits of Astaxanthin to a growing consumer base, and in ensuring the very highest quality product..."

Source: Cyanotech

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#5) On July 07, 2012 at 8:52 AM, gnulaw (51.61) wrote:

AS A MATTER OF RECORD

As of July 7, 2012 Cyanotech has not provided a formal/full disclosure of said litigation and alleged material facts either by formal press release nor within its SEC Form 10-K filed June 21, 2012.

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#6) On July 18, 2012 at 5:45 PM, gnulaw (51.61) wrote:

(July 18, 2012) Update on the Valensa v Cyanotech litigation.

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#7) On August 04, 2012 at 5:36 PM, gnulaw (51.61) wrote:

Note: Cyanotech has updated both Nutrex-Hawaii and more recently Cyanotech.com. This was a substantive smoking gun previously cited as it was so bad Cyanotech simply had no credibility as a leading neutra/pharmaceutical player. This has now changed. It may be due to the recent hiring of another member to sr mgt associated with CEO Brent Bailey and Pharmavite/Nature Made.

The remaining wildcard, the Valensa litigation viz-a-viz outcome, legal expenses, distraction to CEO...

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#8) On August 11, 2012 at 11:27 PM, gnulaw (51.61) wrote:

CYAN reports Q1 2013 numbers...


(August 10, 2012) Cyanotech’s fiscal Q1 earnings flat on sales of $6.5M


"...Cyanotech Corp. reported net income of $493,000, or 8 cents per diluted share, for the company’s fiscal first quarter, compared to net income of $486,000, or 9 cents per diluted share, for the same quarter last year.

Kailua-Kona-based Cyanotech (Nasdaq: CYAN) said revenues for the quarter ended June 30 were $6.5 million, compared to $5.95 million for the same quarter last year....
"

Valensa Legal Proceedings [also] not mentioned in FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarterly Period Ended June 30, 2012

Item 1.    Legal Proceedings

We are subject to legal proceedings and claims from time to time in the ordinary course of business.  Although we cannot predict with certainty the ultimate resolution of legal proceedings and claims asserted against us, we do not believe that any currently pending legal proceeding to which we are a party is likely to have a material adverse effect on our business, results of operations, cash flows or financial condition.

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#9) On February 08, 2013 at 5:49 PM, gnulaw (51.61) wrote:

Legal Proceedings [finally]* mentioned in Q3 Fiscal 2013 ending December 31 release as CYAN gross profit margins decline and net income plunges.

"...For the third quarter of fiscal 2013 compared to the third quarter of fiscal 2012, revenues were $7,242,000 compared to $6,706,000, an increase of 8%. Gross profit was $2,865,000, with gross profit margin of 40%, compared to gross profit of $2,827,000 and gross profit margin of 42%. Net income was $607,000 or $0.11 per diluted share, compared to net income of $1,113,000 or $0.20 per diluted share...

“Three factors negatively impacted profitability in the third quarter:

Planned sales and marketing expenses, which increased 59% due to increased advertising, promotional events and web support to drive our packaged products business; our new Scientific Advisory Board and public relations services; and incremental headcount. Continued higher cost of Spirulina production, due to lower than expected harvests, which are expected to continue in the fourth quarter. Increased legal fees..." Source; Cyanotech

Bottomline and has been consistently relayed here is that this Company is simply disingenuous running CYAN as a privately-held family-owned business. Given they are publicly-held they are allegedly violating Securities regulations including but not limited to Rule SEC Rule 10b-5 in re: reliance and causation*, at a minimum, specifically and alleged criminal gross negligence, in general(.)

 

* See comment #5 above.

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#10) On June 01, 2013 at 8:36 AM, gnulaw (51.61) wrote:

Update here on Seeking Alpha Blog "Emerging Health Food Company With Upside Potential", Comment 18 http://seekingalpha.com/article/1370231-emerging-health-food-company-with-upside-potential

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#11) On June 14, 2013 at 10:11 AM, gnulaw (51.61) wrote:

ADDENDUM TO CYANOTECH VALENSA LITIGATION

(July 13, 2012) Cyanotech Corp. embroiled in IP lawsuits. *

"...Seth Reiss, a Honolulu patent and intellectual property attorney who also is not involved in the Cyanotech litigation, says that there has been a growing awareness of intellectual property in Hawaii, and he thinks that Cyanotech’s case, if anything, will bring more awareness to the issue here.

As far as Cyanotech’s chances in the lawsuit against Valensa, Reiss feels that defending the lawsuits could substantially hurt Cyanotech based on what the average litigation for these cases cost.

“Patent litigations could be very expensive,” he said, adding that multimillion-dollar defense costs are not uncommon. And that doesn’t include any potential damage awards..."

 

* AS A MATTER OF RECORD This article was released July 13, 2012. (NASDAQ:CYAN) chose [NOT] to disclose said material issues of fact until Q3 ending December 31 numbers were released February 07, 2013 per Comment #9 above.

 

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#12) On June 24, 2013 at 7:41 PM, gnulaw (51.61) wrote:

Cyanotech announces Q4/Fy 2013 numbers ending March 31 2013. Revenues increase 12% and Operating Income decreased 21%. - Source: SEC Form 10-K.

 

"...Item 3.  Legal Proceedings

We are subject to legal proceedings and claims from time to time in the ordinary course of business.  Although we cannot predict with certainty the ultimate resolution of legal proceedings and claims asserted against us, we do not believe that any currently pending legal proceeding to which we are a party is likely to have a material adverse effect on our business, results of operations, cash flows or financial condition..."  Source: SEC Form 10K filed June 24, 2013

"...Operating income for the year was negatively impacted by three factors:

1.  Under absorbed overhead due to lower than expected Spirulina production in the first three quarters of the year.

2.  The investments we are making in people, infrastructure and marketing which are driving our topline growth

3.  Increased legal fees..." - Source: Cyanotech, June 24, 2013  [Emphasis added]

Cyanotech's SEC Form 10K filed 6/24/2013. See SEC Rule 10b5-c.

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