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Cyanotech Files Fiscal Year 2006 Form 10-K/A Restating Its Financial Results; Seeks Delay of Third Quarter Fiscal 2007 Form 10-Q Financial Report

KAILUA KONA, Hawaii (February 14, 2007) — Cyanotech Corporation (Nasdaq Capital Market: CYAN) has filed its Form 10-K/A report with the Securities and Exchange Commission for fiscal year 2006, restating significant portions of the Company’s previously filed Form 10-K report.  The restatement was initiated due to an accounting matter related to the Company’s historical treatment of certain inventory related costs.  The restatement process resulted in increased net income for some fiscal years and decreased net income for other fiscal years.  For the last three fiscal years ended March 31, 2004, 2005, and 2006, restated net income decreased by $81,000, increased by $115,000, and decreased by $123,000, respectively.  A restatement of net income occurred in the fourth quarter of fiscal year 2006 with net income of $199,000 changing to a loss of $43,000.

Cyanotech also announced in a Form 12b-25 filing with the Securities and Exchange Commission that it will not meet the February 14 deadline for filing its Form 10-Q Report for its fiscal 2007 third quarter ended December 31, 2006.  The Company’s first and second quarter Form 10-Q filings for the current fiscal year have all been delayed due to the restatement process and the work required for the filing of Form 10-K/A.

The Company reported in fiscal 2006 a loss of $210,000 on revenues of $2.3 million for the third quarter ended December 31, 2005 and a $348,000 loss on revenues of $7.9 million for the nine months ended December 31, 2005.  In comparison to the amounts reported for the periods ended December 31, 2005 cited above, the net loss for the three months ended December 31, 2006 is expected to be in the range of $1.0 million to $1.2 million on revenues of approximately $2.4 to $2.5 million.  The net loss for the nine months ended December 31, 2006 is expected to be in the range of $2.0 million to $2.2 million on revenues of approximately $7.3 million to $7.4 million.

The expected increased loss for the three month and nine month periods discussed above results from higher production costs as a result of fixed production costs spread over lower than planned production output, increases in some direct production costs, and substantial costs related to restatement and filing of the Company’s Form 10-K/A.  Costs related to the restatement process and the late filings are estimated to be in the range of $500,000 for the nine month period ended December 31, 2006, with most of this cost incurred in the three month period ended December 31, 2006.

The foregoing estimates of Cyanotech's results of operations for the quarterly period ending December 31, 2006 are subject to change pending the completion of review of such periods.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
Except for statements of historical fact, the statements in this news release are forward-looking.  Such statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made.  These factors include, but are not limited to, general economic conditions, forecasts of sales in future periods, changes in sales levels to our largest customers, weather patterns, production problems caused by contamination, risks associated with the acceptance of new products, competition, foreign exchange fluctuations, government regulation, and other factors more fully detailed in the Company’s recent Form 10-Q and annual form 10-K filings with the Securities and Exchange Commission.

Contact:
Bruce Russell: [email protected]
(310) 559-4955 x101


 

 
 
 
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