Cyanotech Corporation (NASDAQ:CYAN) Files An 8-K Other EventsItem 8.01 Other Events.
(a) Spirulina Production
Cyanotech Corporation is an agricultural company that producesdietarysupplements derived from microalgae grown in complex and intricate agricultural systems on the Kona coast of Hawaii. We are unique in that our microalgae are grown year-round in open ponds which, similar to natural land and plant based horticulture, require favorable weather conditions. In our case these conditions include consistent light, warm temperatures and low rainfall to achieve optimum production. Equally important is a nutrient-rich environment, which requires the proper control and balance of necessary nutrients to support growth and yields. Greater variability in these environmental factors more commonly occur in our winter growing season.
Last year, a variety of unexpected events occurred in concert to have an adverse effect on our production of Spirulina. First, several fresh water pumps owned by the County of Hawaii were disabled, and the county instituted restrictions on fresh water supply. To mitigate this challenge, the company adopted several water saving strategies, some of which may have had a detrimental effect on the growth of Spirulina.
Additionally, during the most recent winter months, production of Spirulina wasadversely affected by unusually high rainfall, low temperaturesand significant reductions in sunlight. In response to these production challenges, we have undertaken a re-inoculation of our Spirulina ponds which we believe will allow us to correct the nutrient levels and stabilize production. During the re-inoculation process, which we expect to be completed by mid-May, we will not be able to harvest any new Spirulina. As a result, our Spirulina production and sales in both our bulk and packaged products have been and will be reduced and our production costs have and will increase during the fourth quarter of fiscal year 2018 and the first quarter of the 2019 fiscal year.
Risk factors related to our agricultural process, as well as other risk factors, are discussed in detail in the Forward Looking Statements and Overview sections of Management’s Discussion and Analysis in our Form 10-Q for the three quarters ended December 31, 2017; and in Item 1A in our Form10-K for the year ended March31, 2017.
About Cyanotech Corporation (NASDAQ:CYAN)
Cyanotech Corporation is engaged in the production of natural products derived from microalgae for the nutritional supplements market. The Company’s products include Hawaiian Spirulina Pacifica and Hawaiian BioAstin. Hawaiian Spirulina Pacifica is a dietary supplement used for extra energy, a strengthened immune system, cardiovascular benefits and as a source of antioxidant carotenoids. Hawaiian BioAstin is a dietary antioxidant shown to support and maintain the body’s natural inflammatory response, to enhance skin, and to support eye and joint health. The Company cultivates over two microalgal species from which its product lines, natural astaxanthin products and spirulina products, are derived. The Company produces its algae in Hawaii and manufactures the finished products in Hawaii and California.