Cyanotech Corporation

Aloha from Kona, Hawaii. Thank you all for joining us today to report Cyanotech's fourth quarter and full year 2021 earnings result. I am Jerry Sosowski, Chief Executive Officer of Cyanotech. Joining me on the call today is Felicia Layden, our Chief Financial Officer. I will turn the call over to Felicia to provide our forward-looking statement.

Thanks, Jerry. Our discussion today may include forward-looking statements. We do not undertake any obligation to update forward-looking statements either as a result of new information, future events, or otherwise. Our actual results may differ materially from what is described in these forward-looking statements. Some of the factors that may cause results to differ are listed in our publicly filed documents. For additional information, we encourage you to review our 10-K for the fiscal year 2021 filed with the Securities and Exchange Commission. I will turn it back to Jerry for comments on the quarter. Jerry?

For fiscal year 2021, we deleveraged the balance sheet by $1.7 million, generated cash flow from operations of $2.4 million, and invested in capital for the business. Our cash balance improved by $1.4 million from $2.4 million in FY2020 to $3.8 million in FY2021. During the fourth quarter, we launched new labels for both our BioAston Hawaiian Astaxanthin and Hawaiian Spirulina products. The new labels were well received in the marketplace. The company's fourth quarter net sales of $9.4 million increased $804,000, or 9%, over fiscal year 2020. The product mix changed with higher bulk and contract services sales of $1.4 million, offset by lower sales of Nutrex products of $549,000. Our gross margin for fourth quarter was lower than the same quarter prior year due to the mix. Bulk sales have a lower gross margin. In addition to the current quarter was also impacted by higher current year production costs for spirulina per kilo driven by lower production. Turning over to Felicia to discuss the financial results. Felicia?

Thanks, Jerry. Key financial results for the fourth quarter and full year. In the fourth quarter this fiscal year, net sales were $9.6 million last year, an increase of $804,000, or 9%. Total sales for the fiscal year were $32.3 million, as compared to $31.9 million last year, growth of $446,000, or 1%. During the fiscal year, there was a shift in product mix. Sales of Nutrex declined by 3.7 million, or 14%, offset by an increase in sales of bulk product and contract services by 4.1 million, or 67%. Gross profit for the fourth quarter of fiscal 2021 was 2.8 million, with gross profit margin of 29.4%, compared to gross profit of $3.1 million in the fourth quarter of fiscal 2020. The 6.3 percentage point decline was previously discussed. Total gross profit for the fiscal year was $11.1 million, with gross profit margin of 34.4%, as compared to $12.7 million, with gross profit margin of 39.8% last year. The 5.4 percentage point decline is due to the product mix with bulk sales at lower gross profit margin and current year higher Spirulina cost per kilo driven by lower production volumes in the fiscal year. Fourth quarter operating loss was $24,000 compared to operating income of $227,000 in the fourth quarter of fiscal year 2020. For the full year, operating income was $84,000 compared to operating income of $1,053,000 last year. Net loss for the fourth quarter was $200,000 or 3 cents per diluted share compared to net income of $121,000 or 1 cent per diluted share. Net income for the full year was $920,000 or 15 cents per diluted share compared to net income of $387,000, or six cents, per diluted share last year, with the increase due to the forgiveness of the loan under the Paycheck Protection Program in the amount of $1,389,000, including accrued interest of $8,000. The company ended the fiscal year with cash of $3.8 million and working capital of $9.3 million as compared to $2.4 million and $8.3 million, respectively, as of March 31, 2020. I will hand the call back to Jerry for concluding comments. Jerry?

We had one question which we will now address. Are there any efforts underway at Cyanotech to explore the use of spirulina microalgae for biofuels applications? No, we have never considered spirulina for biofuel applications. The production cost of spirulina is at least two orders of magnitude too high to be practical for biofuel application. Thank you all for attending the call. Please stay safe and healthy. Aloha.