Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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, 2023

☐

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From to

Commission File Number 0-14602

CYANOTECH CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	91-1206026
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

73-4460 Queen Kaahumanu Hwy. #102, Kailua-Kona, HI 96740

(Address of principal executive offices)

(808) 326-1353

(Registrant’s telephone number)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.02 par value per share	CYAN	NASDAQ

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 4, 2023, the number of shares outstanding of the registrant’s common stock was 6,308,010.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report and other presentations made by Cyanotech Corporation (“CYAN”) and its subsidiary contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “expects,” “anticipates,” “intends,” “plan,” “believes,” “predicts”, “estimates” or similar expressions. In addition, any statement concerning future financial performance, ongoing business strategies or prospects and possible future actions are also forward-looking statements. Forward-looking statements are based upon current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning CYAN and its subsidiary (collectively, the “Company”), the performance of the industry in which CYAN does business, and economic and market factors, among other things. These forward-looking statements are not guarantees of future performance. You should not place undue reliance on forward-looking statements.

Forward-looking statements speak only as of the date of the Report, presentation or filing in which they are made. Except to the extent required by the Federal Securities Laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Our forward-looking statements in this Report include, but are not limited to:

●

Statements relating to our business strategy;

●

Statements relating to our business objectives; and

●

Expectations concerning future operations, profitability, liquidity and financial resources.

These forward-looking statements are subject to risk, uncertainties and assumptions about us and our operations that are subject to change based on various important factors, some of which are beyond our control, including those factors described in Item 2 of Part I of this quarterly report and in Item 1A of Part I of the Company’s Annual Report on Form 10-K filed on June 27, 2023. Additionally, the following factors, among others, could cause our financial performance to differ significantly from the goals, plans, objectives, intentions and expectations expressed in our forward-looking statements:

●

The added risks associated with or attributed to the current local, national and world economic conditions, including but not limited to, the volatility of crude oil prices, inflation and currency fluctuations;

●

Access to available and reasonable financing on a timely basis;

●

The Company’s inability to generate enough revenues to meet its obligations or repay maturing indebtedness; and

●

Failure of capital projects to operate as expected or meet expected results.

It is not possible to predict or identify all potential risks and uncertainties and the above referenced factors and list do not comprise a complete list of all potential risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in any forward-looking statement contained in this report. All forward-looking statements speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this report. Except as is required by law, the Company expressly disclaims any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this report. Throughout this report, Cyanotech Corporation, together with its subsidiary, are referred to as “the Company.”

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CYANOTECH CORPORATION

FORM 10-Q

INDEX

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of June 30, 2023 and March 31, 2023 (unaudited)	4
	Condensed Consolidated Statements of Operations for the three months ended June 30, 2023 and 2022 (unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended June 30, 2023 and 2022 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2023 and 2022 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 4.	Controls and Procedures	22

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	23
Item 1A	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults upon Senior Securities	23
Item 5.	Other Information	23
Item 6.	Exhibits	24

SIGNATURES		25

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CYANOTECH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

	June 30, 2023			March 31, 2023
ASSETS
Current assets:
Cash	$	648		$	974
Accounts receivable, net of allowance for credit losses of $11 as of June 30, 2023 and $64 as of March 31, 2023		1,794			1,331
Inventories		10,506			10,707
Prepaid expenses and other current assets		378			484
Total current assets		13,326			13,496

Equipment and leasehold improvements, net		11,065			11,366
Operating lease right-of-use assets, net		4,656			4,776
Other assets		85			90
Total assets	$	29,132		$	29,728

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,721		$	1,021
Accrued expenses		821			1,101
Customer deposits		77			89
Operating lease obligations, current portion		494			483
Line of credit		1,770			1,540
Line of credit – related party		750			500
Current maturities of long-term debt		3,313			3,369
Total current liabilities		8,946			8,103

Long-term debt, less current maturities		1,000			1,000
Long-term operating lease obligations		4,146			4,275
Other long-term liabilities		—			3
Total liabilities		14,092			13,381

Commitments and contingencies

Stockholders’ equity:
Preferred stock of $0.01 par value, authorized 10,000,000 shares; no shares issued and outstanding		—			—
Common stock of $0.02 par value, authorized 50,000,000 shares; issued and outstanding 6,291,086 shares at June 30, 2023 and 6,271,971 shares at March 31, 2023		126			125
Additional paid-in capital		33,917			33,856
Accumulated deficit		(19,003	)		(17,634	)
Total stockholders’ equity		15,040			16,347
Total liabilities and stockholders’ equity	$	29,132		$	29,728

See accompanying notes to condensed consolidated financial statements

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CYANOTECH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,
	2023			2022

Net sales	$	5,146		$	6,716
Cost of sales		3,614			4,398
Gross profit		1,532			2,318

Operating expenses:
General and administrative		1,274			1,329
Sales and marketing		1,276			1,168
Research and development		191			246
Total operating expenses		2,741			2,743

Loss from operations		(1,209	)		(425	)

Interest expense, net		(160	)		(44	)

Loss before income taxes		(1,369	)		(469	)

Income tax expense		—			3

Net loss	$	(1,369	)	$	(472	)

Net loss per share:
Basic	$	(0.22	)	$	(0.08	)
Diluted	$	(0.22	)	$	(0.08	)

Shares used in calculation of net loss per share:
Basic		6,290			6,204
Diluted		6,290			6,204

See accompanying notes to condensed consolidated financial statements

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CYANOTECH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

Three months ended June 30, 2023 and 2022

	Common Stock Shares			Common Stock Amount		Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
	(in thousands, except per share data)
Balances at March 31, 2023		6,271,971		$	125	$	33,856		$	(17,634	)	$	16,347
Issuances of common stock to Directors in lieu of cash		17,672			1		15			—			16
Issuances of vested shares of restricted stock		2,278			—		(1	)		—			(1	)
Shares withheld for tax payments		(835	)		—		—			—			—
Share-based compensation expense		—			—		47			—			47
Net loss		—			—		—			(1,369	)		(1,369	)
Balances at June 30, 2023		6,291,086		$	126	$	33,917		$	(19,003	)	$	15,040

Balances at March 31, 2022		6,202,223		$	124	$	33,557		$	(14,194	)	$	19,487
Issuances of vested shares of restricted stock		2,277			—		(3	)		—			(3	)
Shares withheld for tax payments		(857	)		—		—			—			—
Share-based compensation expense		—			—		22			—			22
Net loss		—			—		—			(472	)		(472	)
Balances at June 30, 2022		6,203,643		$	124	$	33,576		$	(14,666	)	$	19,034

See accompanying notes to condensed consolidated financial statements

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CYANOTECH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Three Months Ended June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,369	)	$	(472	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		407			417
Amortization of debt issue costs and other assets		10			13
Amortization of operating leases right-of-use assets		120			105
Share-based compensation expense		47			22
Provision for doubtful accounts		11			—
Net (increase) decrease in assets:
Accounts receivable		(474	)		463
Inventories		201			(1,233	)
Prepaid expenses and other assets		104			168
Net increase (decrease) in liabilities:
Accounts payable		744			(509	)
Accrued expenses		(264	)		(75	)
Customer deposits		(12	)		(85	)
Operating lease obligations		(118	)		(110	)
Deferred rent and other liabilities		(3	)		(3	)
Net cash used in operating activities		(596	)		(1,299	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in equipment and leasehold improvements		(150	)		(376	)
Net cash used in investing activities		(150	)		(376	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net draws (payments) on line of credit		230			—
Net draws on line of credit – related party		250			—
Principal payments on long-term debt		(59	)		(174	)
Taxes paid related to net share settlement of restricted stock units		(1	)		(3	)
Net cash provided by (used in) financing activities		420			(177	)
Net decrease in cash		(326	)		(1,852	)
Cash at beginning of period		974			2,589
Cash at end of period	$	648		$	737

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	151		$	65
Income taxes	$	—		$	—

See accompanying notes to condensed consolidated financial statements

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CYANOTECH CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

1.	ORGANIZATION AND BASIS OF PRESENTATION

Cyanotech Corporation (the “Company”), located in Kailua-Kona, Hawaii, was incorporated in the state of Nevada on March 3, 1983, and is listed on the NASDAQ Capital Market under the symbol “CYAN”. The Company is engaged in the production of natural products derived from microalgae for the nutritional supplements market.

The Company is an agricultural company that produces high value natural products derived from microalgae grown in complex and intricate open-pond agricultural systems on the Kona coast of Hawaii. The Company's products include Hawaiian Spirulina Pacifica®, a superfood with numerous benefits, including boosting the immune system and overall cellular health; and BioAstin® Hawaiian Astaxanthin®, a powerful antioxidant shown to support and maintain the body's natural inflammatory response.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information pursuant to the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission (“SEC”). These interim condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Stockholders’ Equity and Condensed Consolidated Statements of Cash Flows for the periods presented in accordance with GAAP.

Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year. The Condensed Consolidated Balance Sheet as of March 31, 2023 was derived from the audited consolidated financial statements. These condensed consolidated financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements for the year ended March 31, 2023, contained in the Company’s annual report on Form 10-K as filed with the SEC on June 27, 2023.

Liquidity and Going Concern

The accompanying condensed consolidated financial statements as of and for the three months ended June 30, 2023 and 2022, and as of March 31, 2023, have been prepared assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company sustained operating losses and negative cash flows from operation for these same periods. Further, as discussed below, the Company was not in compliance with a debt covenant requirement at March 31, 2023 and First Foundation Bank (the “Bank”) instituted a freeze on additional advances from the Revolving Credit Agreement (“Credit Agreement”). These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expense that may be necessary if the Company was unable to continue as a going concern.

As of June 30, 2023, the Company had cash of $648,000 and working capital of $4,380,000 compared to $974,000 and $5,393,000, respectively, as of March 31, 2023. The Company has a Credit Agreement with the Bank that provided for borrowings up to $2,000,000 on a revolving basis, however, as part of the covenant waiver at March 31, 2023, the borrowings under this line of credit were frozen at the outstanding balance on June 22, 2023, at $1,770,000. As of March 31, 2023, the Company had outstanding borrowings of $1,540,000 on the line of credit. The line of credit is subject to renewal on August 30, 2023, and the Company intends to renew or replace it with another line of credit on or before the expiration date.

The Company also has a loan facility with a related party that allows the Company to borrow up to $1,000,000 on a revolving basis (the “Revolver”). At June 30, 2023 and March 31, 2023, the Company had $750,000 and $500,000, respectively, outstanding borrowings on the Revolver, which were included in line of credit – related party on the Condensed Consolidated Balance Sheets. The Revolver expires on April 12, 2025 (see Notes 5 and 12). On June 30, 2023, the Company and Skywords Family Foundation, Inc. (“Skywords”) executed a letter of intent to commence drafting and negotiating a definitive Second Agreement to the Amended and Restate Promissory Note, dated as of April 12, 2021, as amended on December 14, 2022, to which the revolving amount that the Company may borrow from time to time would increase from $1,000,000 to $2,000,000, with all other terms of the Amendment remaining the same.

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As of June 30, 2023, the Company had $3,402,000 of debt (“Term Loans”) payable to the Bank that require the payment of principal and interest monthly through August 2032. Pursuant to the Term Loans and the Credit Agreement, the Company is subject to annual financial covenants, customary affirmative and negative covenants and certain subjective acceleration clauses. As of March 31, 2023, the Company debt service coverage ratio fell short of the Bank’s annual requirement. On June 22, 2023, the Bank provided the Company with a letter waiving the covenant violation as of March 31, 2023, but noting that the Bank reserved its right to declare a default in the future if any covenants remain out of compliance at applicable measurement dates. In addition, the Bank’s letter implemented an immediate freeze on any and all further advances of the Credit Agreement through the maturity date.

In April 2019, the Company obtained a loan in the amount of $1,500,000 from a related party. The proceeds were used to pay down accounts payable and for general operating capital purposes. On April 12, 2021 and December 14, 2022, the Company amended this loan (see Notes 5 and 12). As of both June 30, 2023 and March 31, 2023, the Company had $1,000,000 outstanding on the related party note. The loan matures on April 12, 2025.

The Company continues to experience a loss from operations resulting in net cash outflows from operating activities of $596,000 for the three months ended June 30, 2023. The impacts from the macroeconomic environment continued to lead to lower sales across all of the Company's products. Since the second quarter of fiscal year 2023, the Company drew a net of $1,770,000 on its line of credit and $750,000 on the Revolver. To address the resulting cash flow challenges, the Company continues to monitor cost savings initiatives implemented in fiscal year 2023, including stopping or slowing production of inventory in alignment with current customer demand, maintaining a reduced headcount and compensation, primarily through attrition and furloughs, respectively, and eliminating certain discretionary selling, general and administrative expenses.

Funds generated by operating activities and available cash are the Company’s most significant sources of liquidity for working capital requirements, debt service and funding of maintenance levels of capital expenditures. The Company has developed its operating plan to produce the cash flows necessary to meet all financing requirements. Although the Company has a history of either being in compliance with debt covenants, or obtaining the necessary waivers, execution of it operating plan is dependent on many factors, some of which are not within the control of the Company. However, no assurances can be provided that the Company will achieve its operating plan and cash flow projections for this fiscal year or its projected consolidated financial position as of June 30, 2024. Such estimates are subject to change based on future results and such change could cause future results to vary significantly from expected results.

2.	SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The accompanying condensed consolidated financial statements include the accounts of Cyanotech Corporation and its wholly owned subsidiary, Nutrex Hawaii, Inc. (“Nutrex Hawaii” or “Nutrex”, collectively the “Company”). All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of any contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods reported. Management reviews these estimates and assumptions periodically and reflects the effect of revisions in the period that they are determined to be necessary. Actual results could differ from those estimates and assumptions.

Cash

Cash primarily consists of cash on hand and cash in bank deposits.

Concentration Risk

A significant portion of revenues and accounts receivables are derived from a few major customers. For the three months ended June 30, 2023, two customers individually accounted for 32% and 18% of the Company’s total net sales, and for the three months ended June 30, 2022, two customers individually accounted for 24% and 17% of the Company’s total net sales. Two customers accounted for 72% and 46% of the Company’s accounts receivable balance as of June 30, 2023 and March 31, 2023, respectively.

Accounts Receivable

Accounts receivable balances are recorded at the invoiced amount and do not accrue interest. Credit is extended base on evaluation of the customer’s financial condition. Collateral is not required. The allowance for credit losses reflects management’s best estimate of expected credit losses inherent in the accounts receivable balance. Management determines the allowances based on historical experience, specifically identified nonpaying customers and other currently available evidence, including the likelihood of each customer not being able to pay, due to the Company’s small customer and recurring customer base. Management reviews its customer account balances monthly with a focus on significant individual past due balances over 90 days. All other balances are reviewed on a pooled basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers or otherwise.

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Revenue Recognition

The Company records revenue based on the five-step model which includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when the performance obligations are satisfied. Substantially all of the Company’s revenue is generated by fulfilling orders for the purchase of its microalgal dietary supplements to retailers, wholesalers, or direct to consumers via online channels, with each order considered to be a distinct performance obligation. These orders may be formal purchase orders, verbal phone orders, e-mail orders or orders received online. Shipping and handling activities for which the Company is responsible under the terms and conditions of the order are not accounted for as performance obligations but as fulfillment costs. These activities are required to fulfill the Company’s promise to transfer the goods and are expensed when revenue is recognized.

Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling a performance obligation. The Company has elected to exclude sales, use and similar taxes from the measurement of the transaction price. The amount of consideration expected to be received and revenue recognized includes estimates of variable consideration, which includes costs for trade promotion programs, coupons, returns and early payment discounts. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. The Company reviews and updates these estimates at the end of each reporting period and the impact of any adjustments are recognized in the period the adjustments are identified. In assessing whether collection of consideration from a customer is probable, the Company considers the customer's ability and intent to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 days from the invoice date, which occurs on the date of transfer of control of the products to the customer. Revenue is recognized at the point in time that control of the ordered products is transferred to the customer. Generally, this occurs when the product is delivered, or in some cases, picked up from one of the Company’s distribution centers by the customer. Revenue from extraction services is recognized when control is transferred upon completion of the extraction process.

Customer contract liabilities consist of customer deposits received in advance of fulfilling an order and are shown separately on the consolidated balance sheets. During the three months ended June 30, 2023 and 2022, the Company recognized $16,000 and $91,000, respectively, of revenue from deposits that were included in contract liabilities as of March 31, 2023 and 2022, respectively. The Company’s contracts have a duration of one year or less and therefore, the Company has elected the practical expedient of not disclosing revenues allocated to partially unsatisfied performance obligations.

Disaggregation of Revenue

The following table represents revenue disaggregated by major product line and extraction services for the:

($ in thousands)	Three Months Ended June 30, 2023		Three Months Ended June 30, 2022
Packaged sales
Astaxanthin packaged	$	2,809	$	3,524
Spirulina packaged		1,574		1,511
Total packaged sales		4,383		5,035

Bulk sales
Astaxanthin bulk		299		494
Spirulina bulk		363		1,093
Total bulk sales		662		1,587

Contract extraction and R&D services revenue		101		94
Total net sales	$	5,146	$	6,716

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Recently Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” (“Topic 326”), which was subsequently amended in November 2018 through ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses” (“CECL”). CECL requires entities to estimate lifetime expected credit losses for trade and other receivables, net investment in leases, financing receivables, debt securities and other instruments, which will result in earlier recognition of credit losses. The guidance is effective for interim and annual periods beginning after December 15, 2022. The Company adopted this standard as of April 1, 2023, however, due to the relatively short-term nature of its accounts receivable and history of limited bad debt expense, the impact of this guidance was not significant to the Company’s consolidated financial statements and related disclosure. The Company will continue to evaluate the impact of CECL going forward.

3.	INVENTORIES

Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. Inventories consist of the following as of:

	June 30, 2023		March 31, 2023
	(in thousands)
Raw materials	$	1,736	$	1,887
Work in process		1,872		2,049
Finished goods		6,574		6,502
Supplies		324		269
Inventories	$	10,506	$	10,707

The Company recognizes abnormal production costs, including fixed cost variances from normal production capacity, fixed production overhead costs, idle facilities, freight handling costs and spoilage, as an expense in the period incurred, without adjusting overhead absorption rates. Normal production capacity is defined as the production expected to be achieved over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance. The Company expensed abnormal productions costs of $133,000 and $0 to cost of sales for the three months ended June 30, 2023 and 2022, respectively.

Beginning in fiscal year 2021 through fiscal year 2023, cultivation of astaxanthin was completed in the first six months of the fiscal year during the most productive months of the year due to the best growing conditions, compared to year-round production in the prior fiscal years. In fiscal year 2024, cultivation of astaxanthin will be year-round in order to manage staffing constraints. The Company calculates total production costs for the year based on normal capacity of production expected to be achieved in a year under normal circumstances. These costs are then allocated into inventory based on the period of production, not including abnormal production costs. Allocating fixed and overhead costs requires management’s judgement to determine when production is outside of the normal range of expected variation in production.

Other non-inventoriable fixed costs of $189,000 and $35,000 were expensed to cost of sales for the three months ended June 30, 2023 and 2022, respectively.

4.	EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment and leasehold improvements consist of the following as of:

	June 30, 2023			March 31, 2023
	(in thousands)
Equipment	$	21,711		$	21,649
Leasehold improvements		15,064			15,038
Furniture and fixtures		407			407
		37,182			37,094
Less accumulated depreciation and amortization		(26,354	)		(25,947	)
Construction-in-progress		237			219
Equipment and leasehold improvements, net	$	11,065		$	11,366

Management has determined that no asset impairment existed as of June 30, 2023. Depreciation and amortization expense were approximately $407,000 and $417,000 for the three months ended June 30, 2023 and 2022, respectively.

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5.	LINE OF CREDIT AND LONG-TERM DEBT

Total debt consists of the following as of:

	June 30, 2023			March 31, 2023
	(in thousands)
Line of credit	$	1,770		$	1,540
Line of credit – related party		750			500
Long-term debt		3,402			3,461
Long-term debt - related party		1,000			1,000
Unamortized debt issuance costs		(89	)		(92	)
Less current maturities		(5,833	)		(5,409	)
Total long-term debt, net of current maturities	$	1,000		$	1,000

Line of Credit and Term Loans

On August 30, 2016, the Credit Agreement, which the Company entered into with the Bank on June 3, 2016, became effective after the Company and the Bank received the necessary approvals from the State of Hawaii to secure the lien on the Company’s leasehold property in Kona, Hawaii. The Credit Agreement allows the Company to borrow up to $2,000,000 on a revolving basis. Borrowings under the Credit Agreement bear interest at the Wall Street Journal prime rate (8.25% at June 30, 2023 and 8.0% at March 31, 2023) plus 2%, floating, provided that at no time shall the annual interest rate be less than 5.25%.

At June 30, 2023 and March 31, 2023, the outstanding balance under the Credit Agreement was $1,770,000 and $1,540,000, respectively, was included in current liabilities on the Condensed Consolidated Balance Sheets. The line of credit, which is subject to annual renewal, was renewed on August 30, 2022 and will be subject to renewal upon expiration on August 30, 2023.

The Credit Agreement grants the Bank the following security interests in the Company’s property: (a) a lien on the Company’s leasehold interest in its Kona facility; (b) an assignment of the Company’s interest in leases and rents on its Kona facility; and (c) a security interest in all fixtures, furnishings and equipment related to or used by the Company at the Kona facility. Each security interest is further subject to the terms of the Credit Agreement.

In 2012, the Company executed a loan agreement with a lender providing for $5,500,000 in aggregate credit facilities (the “2012 Loan”) secured by substantially all the Company’s assets, including a mortgage on the Company's interest in its lease at the National Energy Laboratory of Hawaii Authority, pursuant to a Term Loan Agreement dated August 14, 2012 (the “2012 Loan Agreement”). The 2012 Loan is evidenced by promissory notes in the amounts of $2,250,000 and $3,250,000, the repayment of which is partially guaranteed under the provisions of a United States Department of Agriculture (“USDA”) Rural Development Guarantee program. The proceeds of the 2012 Loan were used to acquire processing equipment and leasehold improvements at its Kona, Hawaii facility.

The provisions of the 2012 Loan required the payment of interest only for the first 12 months of the term; thereafter, and until its maturity on August 14, 2032, the obligation fully amortizes over nineteen (19) years. Interest on the 2012 Loan accrues on the outstanding principal balance at an annual variable rate equal to the published Wall Street Journal prime rate (8.0% and 7.5% at June 30, 2023 and March 31, 2023, respectively) plus 1.0% and is adjustable on the first day of each calendar quarter and fixed for that quarter, provided that at no time shall the annual interest rate be less than 5.5%. The balance under the 2012 Loan was $3,402,000 and $3,461,000 at June 30, 2023 and March 31, 2023, respectively, and was included in current maturities of long-term debt in the debt table above. See Loan Covenants, Violations and Waiver below.

The 2012 Loan included a one-time origination and guaranty fees totaling $214,500 and an annual renewal fee payable in the amount of 0.25% of the USDA guaranteed portion of the outstanding principal balance as of December 31 of each year, beginning December 31, 2012. The USDA has guaranteed 80% of all amounts owing under the 2012 Loan. The balance in unamortized debt issuance costs was $89,000 and $92,000 at June 30, 2023 and March 31, 2023, respectively, and was included in current maturities of long-term debt in the debt table above. See Loan Covenants, Violations and Waiver below.

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Loan Covenants, Violation and Waiver

The Company’s Credit Agreement and the 2012 Loan are subject to annual debt service and other financial covenants, including covenants which require the Company to meet key financial ratios and customary affirmative and negative covenants. As of March 31, 2023, the Company was not in compliance with the required debt service coverage ratio, however, was in compliance with the two other covenants. Due to this violation, the Bank would be contractually entitled to require immediate repayment of the outstanding term loans and the outstanding line of credit balance. However, on June 22, 2023, the Bank issued the Company a letter waiving the covenant violation as of March 31, 2023, and implemented an immediate freeze on any and all further advances of the Credit Agreement through the maturity date, with an outstanding balance in the amount of $1,770,000 as of June 21, 2023. The next remeasurement date will be March 31, 2024.

Line of Credit and Debt – Related Party

In April 2019, the Company obtained a loan in the amount of $1,500,000 and the interest was payable quarterly. The loan was originally due in April 2021. In April 2021, the Company amended the loan, which extended the expiration to April 2024, converted $500,000 into the Revolver, adjusted the interest rate to reflect a floor of 5%, and granted a security interest in substantially all of the Company’s personal property assets, subject to limited exceptions. Concurrently, with the amendment and conversion of the original loan, the Company repaid in cash the principal amount of $500,000 plus accrued interest to date of $1,900 (see Note 12). In December 2022, the Company amended the loan to extend the expiration to April 2025 and increase the Revolver to $1,000,000. At both June 30, 2023 and March 31, 2023, the balance under this loan was $1,000,000, which was included in long-term debt in the debt table above. At June 30, 2023 and March 31, 2023, the balance under the Revolver was $750,000 and $500,000, respectively, which was included in line of credit – related party in the debt table above. Interest accrues on the outstanding principal balance and the Revolver at an annual variable rate equal to the published Wall Street Journal prime rate (8.0% and 7.5% at June 30, 2023 and March 31, 2023, respectively) plus 1.0% and is adjustable on the first day of each calendar quarter and fixed for that quarter, provided that at no time shall the annual interest rate be less than 5.0%.

Future principal payments under the loans at June 30, 2023 are as follows:

Fiscal year payments due	(in thousands)
Remainder of 2024	$	3,402
2026		1,000
Total principal payments	$	4,402

6.	OPERATING LEASES

The Company leases facilities, equipment and land under non-cancelable operating leases expiring through 2037. One of its facility leases contains price escalations and a renewal option for five years. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Right-of-use assets and liabilities were recognized at April 1, 2019 based on the present value of lease payments over the lease term, using the Bank’s incremental borrowing rate based on the information available at recognition, and the Company has elected to exclude non-lease components. The Company also leases two 84-month solar leases for two of its buildings, which are included in the right-of-use assets and liabilities. At June 30, 2023, the weighted average remaining lease terms of all operating leases was 9.6 years, the weighted average discount rate was 7.3%, and for the three months ended June 30, 2023 and 2022, the operating lease costs were $203,000 and $171,000, respectively.

Supplemental balance sheet information related to leases consist of the following as of:

Operating leases	Balance Sheet Classification	June 30, 2023			March 31, 2023
		(in thousands)
Right-of-use assets	Operating lease right-of-use assets	$	6,149		$	6,149
Accumulated lease amortization	Operating lease right-of-use assets		(1,493	)		(1,373	)

Total right-of-use assets		$	4,656		$	4,776

Current lease liabilities	Operating lease obligations	$	494		$	483
Non-current lease liabilities	Long-term operating lease obligations		4,146			4,275

Total lease liabilities		$	4,640		$	4,758

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Maturities of lease liabilities at June 30, 2023 are as follows:

Payments	(in thousands)
Remainder of 2024	$	609
2025		817
2026		794
2027		801
2028		591
Thereafter		2,854
Total undiscounted lease payments		6,466
Less: present value discount		(1,826	)
Total lease liability balance	$	4,640

7.	ACCRUED EXPENSES

Accrued expenses consist of the following as of:

	June 30, 2023		March 31, 2023
	(in thousands)
Bonus and profit sharing	$	143	$	143
Wages		79		215
Vacation		384		393
Interest and legal		47		30
Other accrued expenses		168		320
Total accrued expenses	$	821	$	1,101

8.	COMMITMENTS AND CONTINGENCIES

From time to time, the Company may be involved in litigation and investigations relating to claims and matters arising out of its operations in the normal course of business. There were no significant legal matters outstanding at June 30, 2023.

9.	SHARE-BASED COMPENSATION

The Company has share-based compensation plans, which are more fully described in Note 10, Share-Based Compensation, to the Consolidated Financial Statements included in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2023 as filed with the SEC on June 27, 2023.

As of June 30, 2023, the Company had two equity-based compensation plans: the 2016 Equity Incentive Plan (the “2016 Plan”) and the 2014 Independent Director Stock Option and Restricted Stock Grant Plan and Amendment (the “2014 Directors Plan”). The Company has also issued stock options, which remain outstanding as of June 30, 2023, under an equity-based compensation plan which has expired according to its terms: the 2004 Independent Director Stock Option and Stock Grant Plan (the “2004 Directors Plan”). This plan allowed the Company to award stock options and shares of restricted common stock to eligible employees, certain outside consultants and independent directors. No additional awards will be issued under the 2004 Directors Plan.

The following table presents shares authorized, available for future grant and outstanding under each of the Company’s plans:

	As of June 30, 2023
	Authorized		Available		Outstanding

2016 Plan		1,300,000		873,737		310,756
2014 Directors Plan		650,000		205,534		12,000
2004 Directors Plan		—		—		6,000
Total		1,950,000		1,079,271		328,756

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Stock Options

All stock option grants made under the equity-based compensation plans were issued at exercise prices no less than the Company’s closing stock price on the date of grant. Options under the 2016 Plan, 2004 Directors Plan and 2014 Directors Plan were determined by the Board of Directors or the Compensation Committee of the Board of Directors in accordance with the provisions of the respective plans. The terms of each option grant include vesting, exercise, and other conditions set forth in a Stock Option Agreement evidencing each grant. No option can have a life in excess of ten (10) years. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. The model requires various assumptions, including a risk-free interest rate, the expected term of the options, the expected stock price volatility over the expected term of the options, and the expected dividend yield. Compensation expense for employee stock options is recognized ratably over the vesting term. Compensation expense recognized for options issued under all Plans was $26,000 and $17,000 for the three months ended June 30, 2023 and 2022, respectively.

A summary of option activity under the Company’s stock plans for the three months ended June 30, 2023 is presented below:

Option Activity	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at March 31, 2023		253,000	$	2.88		7.5	$	—
Outstanding at June 30, 2023		253,000	$	2.88		7.2	$	—
Exercisable at June 30, 2023		144,666	$	2.97		6.8	$	—

The aggregate intrinsic value in the table above is before applicable income taxes and represents the excess amount over the exercise price optionees would have received if all options had been exercised on the last business day of the period indicated, based on the Company’s closing stock price of $0.86 and $0.88 at June 30, 2023 and March 31, 2023, respectively.

A summary of the Company’s non-vested options for the three months ended June 30, 2023 is presented below:

Nonvested Options	Shares			Weighted Average Grant-Date Fair Value
Nonvested at March 31, 2023		141,667		$	1.55
Vested		(33,333	)		1.77
Nonvested at June 30, 2023		108,334		$	1.48

As of June 30, 2023, total unrecognized stock-based compensation expense related to all unvested stock options was $103,000, which is expected to be expensed over a weighted average period of 1.4 years.

Restricted Stock

To reduce the Company’s ongoing cash expenses, the Nominating and Corporate Governance Committee of the Board of Directors adopted a resolution allowing each director to elect to receive his or her quarterly director fees in the form of restricted stock in lieu of cash. Two Board members elected to receive shares of restricted stock in lieu of cash for the third fiscal quarter of 2023. On April 3, 2023, 17,672 shares of fully vested restricted stock were issue to the two Board members. For the three months ended June 30, 2023, there was no compensation expense related to the issuance of this stock, as it was earned and recognized in fiscal year 2023 in the amount of $15,500.

Restricted Stock Units (“RSUs”)

RSUs are service-based awards granted to eligible employees under the 2016 Plan. Compensation expense recognized for RSUs issued under the 2016 Plan was $21,000 and $5,000 for the three months ended June 30, 2023 and 2022, respectively.

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The following table summarizes information related to awarded RSUs:

Nonvested Restricted Stock Units	Shares			Weighted Average Grant Price
Nonvested restricted stock units at March 31, 2023		70,334		$	3.04
Granted		7,900			0.94
Vested		(2,278	)		2.39
Forfeited		(200	)		0.94
Nonvested restricted stock units at June 30, 2023		75,756		$	2.85

As of June 30, 2023, total unrecognized stock-based compensation expense related to unvested restricted stock units was $114,000, which is expected to be expensed over a weighted average period of 2.1 years.

10.

INCOME TAXES

The Company utilizes its estimated annual effective tax rate to determine its provision or benefit for income taxes for interim periods. The income tax provision or benefit is computed by multiplying the estimated annual effective tax rate by the year-to-date pre-tax book income (loss). The Company recorded no income tax expense and $3,000 of income tax expense for the three months ended June 30, 2023 and 2022, respectively. The Company’s effective tax rate was (0.7%) for the three months ended June 30, 2022. The effective tax rates differ from the statutory rate of 21% as a result of state taxes (net of federal benefit) and the net change in valuation allowance against the net deferred tax asset the Company believes is not more likely than not to be realized. The Company continues to carry a full valuation allowance on its net deferred tax assets.

The Company is subject to taxation in the United States and eight state jurisdictions. The preparation of tax returns requires management to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by the Company. Management, in consultation with its tax advisors, files its tax returns based on interpretations that are believed to be reasonable under the circumstances. The income tax returns, however, are subject to routine reviews by the various taxing authorities. As part of these reviews, a taxing authority may disagree with respect to the tax positions taken by management (“uncertain tax positions”) and therefore may require the Company to pay additional taxes. Management evaluates the requirement for additional tax accruals, including interest and penalties, which the Company could incur as a result of the ultimate resolution of its uncertain tax positions. Management reviews and updates the accrual for uncertain tax positions as more definitive information becomes available from taxing authorities, completion of tax audits, expiration of statute of limitations, or upon occurrence of other events.

As of June 30, 2023 and 2022, there was no liability for income tax associated with unrecognized tax benefits. The Company recognizes accrued interest related to unrecognized tax benefits as well as any related penalties in interest income or expense in its Consolidated Condensed Statements of Operations, which is consistent with the recognition of these items in prior reporting periods.

With few exceptions, the Company is no longer subject to U.S. federal, state, local, and non-U.S. income tax examination by tax authorities for tax years before 2019.

11.

EARNINGS PER SHARE

Basic earnings (loss) per share is computed on the basis of the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed on the basis of the weighted average number of common shares outstanding plus the potentially dilutive effect of outstanding stock options using the treasury stock method.

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Reconciliations between the numerator and the denominator of the basic and diluted (loss) income per share computations for the three months ended June 30, 2023 and 2022 are as follows:

	Three Months Ended June 30, 2023
	Net Loss			Shares		Per Share
	(Numerator)			(Denominator)		Amount
	(in thousands)
Basic and diluted loss per share	$	(1,369	)		6,290	$	(0.22	)

	Three Months Ended June 30, 2022
	Net Loss			Shares		Per Share
	(Numerator)			(Denominator)		Amount
	(in thousands)
Basic and diluted loss per share	$	(472	)		6,204	$	(0.08	)

Basic and diluted per share amounts are the same in periods of a net loss because common share equivalents are anti-dilutive when a net loss is recorded. Diluted earnings per share does not include the impact of common stock options and restricted stock units totaling 3,000 and 12,000 for the three months ended June 30, 2023 and 2022, respectively, as the effect of their inclusion would be anti-dilutive. Restricted stock units become dilutive within the period granted and remain dilutive until the units vest and are then included in the calculation of basic earnings per share.

12.

RELATED PARTY TRANSACTIONS

In April 2019, the Company obtained an unsecured subordinated loan from Skywords in the principal amount of $1,500,000 pursuant to a Promissory Note (the "Skywords Note”) executed by the Company in favor of Skywords. Skywords is controlled by the Company’s Chairman of the Board of Directors and largest stockholder. The Skywords Note bore interest at a rate of 1% plus the prime rate (as published by the Wall Street Journal), which was recalculated and payable on a quarterly basis. The principal amount and any accrued and unpaid interest were due and payable on April 12, 2021. The proceeds of the Skywords Note were used to pay down accounts payable and for general operating capital purposes.

On April 12, 2021, the Company entered into an Amended and Restated Promissory Note (the “Skywords Amended Note”) with Skywords. The Company and Skywords agreed to amend, restate, replace and otherwise modify without novation, the Skywords Note in order to convert $500,000 of the outstanding principal amount into revolving loans that may be prepaid and reborrowed from time to time in principal amounts not to exceed $500,000, extend the maturity date by three years, adjust the interest rate to reflect a floor of 5% and secure Skywords’ interest by granting a security interest in substantially all of the Company’s personal property assets, subject to limited exceptions (the “Collateral”). On April 12, 2021, concurrently with the conversion, the Company repaid in cash to Skywords, the principal amount of $500,000 plus accrued interest to date of $1,900. The Skywords Amended Note bears interest at a rate of 1% plus the prime rate (as published by the Wall Street Journal), which will be recalculated and payable on a quarterly basis, provided that at no time shall the annual interest rate be less than 5%. The Company may prepay the Skywords Amended Note at any time without penalty.

On April 12, 2021, in connection with the grant of a security interest in the Collateral, the Company also entered into an Intercreditor and Subordination Agreement with the Bank and Skywords. The Company is indebted to the Bank pursuant to two Term Loans and a Credit Agreement, each of which granted the Bank a security interest in substantially all of the Company’s personal property assets. The Bank’s security interest in the Company’s personal property assets ranks senior to Skywords’ security interest in the Collateral, and the Intercreditor and Subordination Agreement generally governs the relationship between the Bank and Skywords as secured lenders to the Company and includes customary terms.

On December 14, 2022, the Company entered into a First Amendment (the “Amendment”) to the Skywords Amended Note. The Amendment extends the maturity date to April 12, 2025 and increases the revolving amount that the Company may borrow from time to time under the Skywords Note from $500,000 to $1,000,000. All other terms of the Skywords Note remain the same.

At both June 30, 2023 and March 31, 2023, the Skywords Note principal balance was $1,000,000, and was included in long-term debt on the Condensed Consolidated Balance Sheets. At June 30, 2023 and March 31, 2023, the balance on the Revolver was $750,000 and $500,000, respectively, and was included in line of credit – related party on the Condensed Consolidated Balance Sheets. At June 30, 2023 and March 31, 2023, the interest rates were 8.0% and 7.5%, respectively.

On June 30, 2023, the Company and Skywords executed a letter of intent to commence drafting and negotiating a definitive Second Agreement to the Amended and Restate Promissory Note, dated as of April 12, 2021, as amended on December 14, 2022, to which the revolving amount that the Company may borrow from time to time would increase from $1,000,000 to $2,000,000, with all other terms of the Amendment remaining the same. Entry into this Second Amendment is subject to the completion of definitive documentation and the other terms and conditions specified in the letter of intent. On August 10, 2023, the Company received approval from First Foundation Bank and the USDA to move forward with the Second Agreement.

13.

SUBSEQUENT EVENTS

On August 10, 2023, the Company was notified by Nasdaq that the Company is not in compliance with Nasdaq's Listing Rule 5550(a)(2), as the minimum bid price of the Company's common stock had been below $1.00 per share for 30 consecutive business days. Under Nasdaq's rules, the notification of noncompliance had no immediate effect on the listing or trading of the Company's common stock on Nasdaq under the symbol "CYAN". Under Nasdaq's rule, the Company was given 180 days, or until February 6, 2024, to achieve compliance with the minimum bid price requirement. To regain compliance, the minimum bid price of the Company's stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days prior to the expiration of the 180-day grace period. Failure to regain compliance during this period could result in delisting.

The Company had no additional subsequent events, other than those mentioned above and in Note 12 regarding the Bank and USDA approval.

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview:

We are an agricultural company and a world leader in the production of natural products derived from microalgae grown in complex and intricate agricultural systems on the Kona coast of Hawaii. Incorporated in 1983, we are guided by the principle of providing beneficial, quality microalgal products for health and human nutrition in a sustainable, reliable and environmentally sensitive operation. We are Good Manufacturing Practices (“GMP”) certified by the Merieux NutriSciences, reinforcing our commitment to quality in our products, quality in our relationships (with our customers, suppliers, employees and the communities we live in), and quality of the environment in which we work. Our products include:

●

BioAstin® Hawaiian Astaxanthin® - a powerful dietary antioxidant shown to support and maintain the body’s natural inflammatory response, to enhance skin, and to support eye, joint and immune health*. It has expanding applications as a human dietary supplement and dietary ingredient; and

●

Hawaiian Spirulina Pacifica® - a nutrient-rich dietary supplement used for extra energy, a strengthened immune system, cardiovascular benefits and as a source of antioxidant carotenoids*

*These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.

Microalgae are a diverse group of microscopic plants that have a wide range of physiological and biochemical characteristics and contain, among other things, high levels of natural protein, amino acids, vitamins, pigments and enzymes. Microalgae have the following properties that make commercial production attractive: (1) microalgae grow much faster than land grown plants, often up to 100 times faster; (2) microalgae have uniform cell structures with no bark, stems, branches or leaves, permitting easier extraction of products and higher utilization of the microalgae cells; and (3) the cellular uniformity of microalgae makes it practical to control the growing environment in order to optimize a particular cell characteristic. Efficient and effective cultivation of microalgae requires consistent light, warm temperatures, low rainfall and proper chemical balance in a very nutrient-rich environment, free of environmental contaminants and unwanted organisms. This is a challenge that has motivated us to design, develop and implement proprietary production and harvesting technologies, systems and processes in order to commercially produce human dietary supplement products derived from microalgae.

Our production of these products at the 96-acre facility on the Kona Coast of the island of Hawaii provides several benefits. We selected the Keahole Point location in order to take advantage of relatively consistent warm temperatures, sunshine and low levels of rainfall needed for optimal cultivation of microalgae. This location also offers us access to cold deep ocean water, drawn from an offshore depth of 2,000 feet, which we use in our Ocean-Chill Drying system to eliminate the oxidative damage caused by standard drying techniques and as a source of trace nutrients for microalgal cultures. The area is also designated a Biosecure Zone, with tight control of organisms allowed into the area and free of genetically modified organisms (“GMO”). We believe that our technology, systems, processes and favorable growing location generally permit year-round harvest of our microalgal products in a cost-effective manner.

Results of Operations

The following tables present selected consolidated financial data for each of the periods indicated ($ in thousands):

	Three Months Ended
	June 30,
	2023			2022
Net sales	$	5,146		$	6,716
Net sales decrease		23.4	%		25.1	%
Gross profit	$	1,532		$	2,318
Gross profit as % of net sales		29.8	%		34.5	%
Operating expenses	$	2,741		$	2,743
Operating expenses as % of net sales		53.3	%		40.8	%
Operating loss	$	(1,209	)	$	(425	)
Operating loss as % of net sales		(23.5	)%		(6.3	)%
Income tax expense	$	—		$	3
Net loss	$	(1,369	)	$	(472	)

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Comparison of the Three Months Ended June 30, 2023 and 2022

*Net Sales* (in thousands)
	Three Months Ended
	June 30,				$			%
	2023		2022		Change			Change
Packaged sales
Astaxanthin	$	2,809	$	3,524	$	(715	)		(20.3	)%
Spirulina		1,574		1,511		63			4.2	%
Total Packaged sales	$	4,383	$	5,035	$	(652	)		(12.9	)%

Bulk sales
Astaxanthin	$	299	$	494	$	(195	)		(39.5	)%
Spirulina		363		1,093		(730	)		(66.8	)%
Total Bulk sales	$	662	$	1,587	$	(925	)		(58.3	)%

Contract extraction revenue	$	101	$	94	$	7			7.4	%

Total sales
Astaxanthin	$	3,108	$	4,018	$	(910	)		(22.6	)%
Spirulina		1,937		2,604		(667	)		(25.6	)%
Contract extraction and R&D services revenue		101		94		7			7.4	%
Total sales	$	5,146	$	6,716	$	(1,570	)		(23.4	)%

Net Sales The net sales decrease of 23.4% for the current quarter compared to the same period last year was driven by a decrease in astaxanthin packaged sales and astaxanthin and spirulina bulk sales. During the period, we continued to experience overall lower demand resulting from higher inflation as consumers shift their spending from goods to experiences and services. For our packaged sales, in addition to the macroeconomic impacts, noted above, there was a decrease in sales due to the timing of shipments to a few customers.

Gross Profit Gross profit as a percent of net sales for the first quarter of fiscal 2024 decreased by 4.7 percentage points compared to the same period last year, which was the result of higher costs related to lower production volumes.

Operating Expenses Operating expenses of $2.7 million for the first quarter of fiscal 2024 compared to the prior year same quarter, remained relatively flat. Sales and marketing expenses increased slightly primarily due to higher selling fees, offset by lower general and administrative and research and development costs.

Income Taxes We recorded no income tax expense for the first quarter of fiscal 2024 compared to an income tax expense of $3,000 for the same period last year. We continue to carry a full valuation allowance on our net deferred tax assets.

Liquidity and Going Concern

The accompanying condensed consolidated financial statements as of and for the three months ended June 30, 2023 and 2022, and as of March 31, 2023, have been prepared assuming we will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We sustained operating losses and negative cash flows from operation for these same periods. Further, as discussed below, the Company was not in compliance with a debt covenant requirement at March 31, 2023 and the Bank instituted a freeze on additional advances from the Credit Agreement. These conditions raise substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expense that may be necessary if we were unable to continue as a going concern.

As of June 30, 2023, we had cash of $0.6 million and working capital of $4.4 million compared to $1.0 million and $5.4 million, respectively, at March 31, 2023. We have a Credit Agreement with the Bank that provided for borrowings up to $2.0 million on a revolving basis, however, as part of the covenant waiver at March 31, 2023, the borrowings under this line of credit were frozen at the outstanding balance on June 22, 2023, at $1.8 million. As of March 31, 2023, we had outstanding borrowings of $1.5 million on the line of credit. The line of credit is subject to renewal on August 30, 2023, and we intend to renew or replace it with another line of credit on or before the expiration date.

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We also have a loan facility with a related party that allows us to borrow up to $1.0 million on the Revolver. At June 30, 2023 and March 31, 2023, we had $0.8 million and $0.5, respectively, outstanding borrowings on the Revolver, which were included in line of credit – related party on the Condensed Consolidated Balance Sheets. The Revolver expires on April 12, 2025 (see Notes 5 and 12 in the notes to our condensed consolidated financial statements). On June 30, 2023, the Company and Skywords executed a letter of intent to commence drafting and negotiating a definitive Second Agreement to the Amended and Restate Promissory Note, dated as of April 12, 2021, as amended on December 14, 2022, to which the revolving amount that we may borrow from time to time would increase from $1,000,000 to $2,000,000, with all other terms of the Amendment remaining the same.

As of June 30, 2023, we had $3.4 million in Term Loans payable to the Bank that require the payment of principal and interest monthly through August 2032. Pursuant to the Term Loans and the Credit Agreement, we are subject to annual financial covenants, customary affirmative and negative covenants and certain subjective acceleration clauses. As of March 31, 2023, our debt service coverage ratio fell short of the Bank’s annual requirement. On June 22, 2023, the Bank provided us with a letter waiving the covenant violation as of March 31, 2023, but noting that the Bank reserved its right to declare a default in the future if any covenants remain out of compliance at applicable measurement dates. In addition, the Bank’s letter implemented an immediate freeze on any and all further advances of the Credit Agreement through the maturity date.

In April 2019, we obtained a loan in the amount of $1.5 million from a related party. The proceeds were used to pay down accounts payable and for general operating capital purposes. On April 12, 2021 and December 14, 2022, we amended this loan (see Notes 5 and 12 in the notes to condensed consolidated financial statements). As of both June 30, 2023 and March 31, 2023, we had $1.0 million outstanding on the related party note. The loan matures on April 12, 2025.

We continue to experience a loss from operations resulting in net cash outflows from operating activities of $0.6 million for the three months ended June 30, 2023. The impacts from the macroeconomic environment have continued to lead to lower sales across all of our products. Since the second quarter of fiscal year 2023, we drew a net of $1.8 million on our line of credit and $0.8 million on the Revolver. To address the resulting cash flow challenges, we continue to monitor cost savings initiatives implemented in fiscal year 2023, including stopping or slowing production of inventory in alignment with current customer demand, maintaining a reduced headcount and compensation, primarily through attrition and furloughs, respectively, and eliminating certain discretionary selling, general and administrative expenses.

Funds generated by operating activities and available cash are our most significant sources of liquidity for working capital requirements, debt service and funding of maintenance levels of capital expenditures. We have developed our operating plan to produce the cash flows necessary to meet all financing requirements. Although we have a history of either being in compliance with debt covenants or obtaining the necessary waivers, execution of our operating plan is dependent on many factors, some of which are not within the control of the Company. However, no assurances can be provided that we will achieve our operating plan and cash flow projections for this fiscal year or our projected consolidated financial position as of June 30, 2024. Such estimates are subject to change based on future results and such change could cause future results to vary significantly from expected results.

Cash Flows The following table summarizes our cash flows for the periods indicated ($ in thousands):

	Three Months Ended June 30,
	2023			2022
Total cash provided by (used in):
Operating activities	$	(596	)	$	(1,299	)
Investing activities		(150	)		(376	)
Financing activities		420			(177	)

Decrease in cash	$	(326	)	$	(1,852	)

Cash used in operating activities for the three months ended June 30, 2023 was the result of a net loss of $1.4 million, an increase of $0.5 million in accounts receivable, offset by non-cash charges of $0.6 million and lower inventories.

Cash used in investing activities for the three months ended June 30, 2023 primarily includes costs for capital improvements at our Kona facility.

Cash provided by financing activities for the three months ended June 30, 2023 consists primarily of draws on the line of credit of $230,000 and on the related party line of credit of $250,000 offset by debt service payments of $59,000.

Sources and Uses of Capital

As of June 30, 2023, our working capital was $4.4 million, a decrease of $1.0 million compared to March 31, 2023. There was a decrease in inventories in the first quarter of fiscal 2024 as we manage our production in line with sales demand, offset by the start-up of astaxanthin cultivation in April.

Our results of operations and financial condition can be affected by numerous factors, many of which are beyond our control and could cause future results of operations to fluctuate materially as it has in the past. Future operating results may fluctuate as a result of changes in sales volumes to our largest customers, weather patterns, increased competition, increased materials, nutrient and energy costs, government regulations and other factors beyond our control.

A significant portion of our expense levels are relatively fixed, so the timing of increases in expenses is based in large part on forecasts of future sales. If net sales are below expectations in any given period, the adverse impact on results of operations may be magnified by our inability to adjust spending quickly enough to compensate for the sales shortfall. We may also choose to reduce prices or increase spending in response to market conditions, which may have a material adverse effect on financial condition and results of operations.

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Outlook

This outlook section contains a number of forward-looking statements, all of which are based on current expectations. Actual results may differ materially.

Our strategic direction has been to position as a world leader in the production and marketing of high-value natural products from microalgae. We are vertically aligned, producing raw materials in the form of microalgae processed at our 96-acre facility in Hawaii, and integrating those raw materials into finished products. Our primary focus is stabilizing our production volume, rationalizing market channel participation, and leveraging our centers of core competence. We will continue to place emphasis on our Nutrex Hawaiian consumer products while exploring further opportunities for bulk sales orders for Spirulina and Astaxanthin, both domestically and internationally. Extraction services to third party customers utilizing our 1,000 bar super critical CO2 extractor process are expected to generate additional income throughout the year. We will leverage our experience and reputation for quality, nutritional products which promote health and well-being. The foundation of our nutritional products is naturally cultivated Hawaiian Spirulina Pacifica® in powder and tablet form; and BioAstin® Hawaiian Astaxanthin® antioxidant in extract and softgel form. Information about our Company and our products can be viewed at www.cyanotech.com and www.nutrex-hawaii.com. Consumer products can also be purchased online at www.nutrex-hawaii.com.

Gross profit margin percentages going forward can be impacted by lower production volumes along with pressure on input costs as well as greater competition in the market place. This could cause margins to decline in future periods. We will continue to focus on higher margin consumer products that promote health and well-being and strive for continuous improvements in processes and production methods to stabilize costs and production levels for the future. However, significant sales variability between periods may occur based on historical results.

Producing the highest quality microalgae is a complex biological process which requires balancing numerous factors including microalgal strain variation, temperature, acidity, nutrient and other environmental considerations, some of which are not within our control. An imbalance or unexpected event can occur resulting in production levels below normal capacity. The allocation of fixed production overheads (such as depreciation, rent and general insurance) to inventories is determined based on normal production capacity. When our production volumes are below normal capacity limits, certain fixed production overhead costs cannot be inventoried and are recorded immediately in cost of sales. In addition, when production costs exceed historical averages, we evaluate whether such costs are one-time-period charges or an ongoing component of inventory cost.

To manage our cash resources effectively, we will balance production with sales demand, minimizing the cost associated with inventory levels when appropriate and manage our expenses judiciously. We could experience unplanned cash outflows and may need to utilize other cash resources to meet working capital needs. A prolonged downturn in sales could impair our ability to generate sufficient cash for operations and hamper our ability to attract additional capital investment which could become necessary to maintain optimal production levels and efficiencies.

Our future results of operations and the other forward-looking statements contained in this Outlook, in particular the statements regarding revenues, gross margin and capital spending, involve a number of risks and uncertainties. In addition to the factors discussed above, any of the following could cause actual results to differ materially: business conditions and growth in the natural products industry and in the general economy; changes in customer order patterns; changes in demand for natural products in general; changes in weather conditions; changes in health and growing conditions of our astaxanthin and spirulina products; competitive factors, such as increased production capacity from competing spirulina and astaxanthin producers and the resulting impact, if any, on world market prices for these products; government actions and increased regulations both domestic and foreign; shortage of manufacturing capacity; and other factors beyond our control. Risk factors are discussed in detail in Part II, Item 1A of this quarterly report and in Part I, Item 1A of our Form 10-K report for the year ended March 31, 2023.

We believe that our technology, systems, processes and favorable growing location generally permit year-round harvest of our microalgal products in a cost-effective manner. However, previously experienced imbalances in the highly complex biological production systems, together with volatile energy costs and rapidly changing world markets, suggest a need for continuing caution with respect to variables beyond our reasonable control. Therefore, we cannot, and do not attempt to, provide any definitive assurance with regard to our technology, systems, processes, location, or cost-effectiveness.

Off-Balance Sheet Arrangements

As of June 30, 2023, we had no off-balance sheet arrangements or obligations.

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Impact of Inflation

Inflationary factors such as increases in the costs of materials, utilities and labor affected our operations in fiscal year 2023. In the first quarter of fiscal year 2024, we have seen stabilization in our underlying costs. We are also experiencing overall lower demand as consumers are feeling the impacts of higher inflation and are re-allocating their spending from goods to experiences and services. Given the lower demand, our bulk customers have higher than normal inventory levels. The exact impact on our results is difficult to isolate and quantify given the macroeconomic environment. Most of our leases provide for cost-of-living adjustments and require us to pay for insurance and maintenance expenses, all of which are subject to inflation. Additionally, our future lease cost for new facilities may include potentially escalating costs of real estate and construction. There is no assurance that we will be able to pass on increased costs to our customers.

Depreciation expense is based on the historical cost of fixed assets and is therefore potentially less than it would be if it were based on current replacement cost. While property and equipment acquired in prior years will ultimately have to be replaced at higher prices, it is expected that replacement will be a gradual process over many years.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, filed with the SEC on June 27, 2023. In the three months ended June 30, 2023, there were no changes to the application of critical accounting policies previously disclosed in our most recent Annual Report on Form 10-K.

Item 4.

Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer (“CEO”) and chief financial officer (“CFO”), we have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15(d)-15(e) of the Exchange Act as of the end of the period covered by this Report. Based on that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our management evaluated the effectiveness of our internal control over financial reporting as of June 30, 2023. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control - Integrated Framework” (2013 Framework). Based on our assessment, using those criteria, management concluded that our internal control over financial reporting was effective as of June 30, 2023.

Changes to Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended June 30, 2023, that has materially affected, or was reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our management, including our CEO and CFO, do not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all errors and all fraud. A control system no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

The inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, or by collusion of two or more people. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

This Form 10-Q should be read in conjunction with Item 9A “Controls and Procedures” of the Company’s Form 10-K for the fiscal year ended March 31, 2023, filed June 27, 2023.

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PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

From time to time, the Company may be involved in litigation and investigations relating to claims and matters arising out of its operations in the normal course of business. There were no significant legal matters outstanding at June 30, 2023.

Item 1A.

Risk Factors

For a discussion of the risk factors relating to our business, please refer to Part I, Item 1A of our Form 10-K for the year ended March 31, 2023, which is incorporated by reference herein.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults upon Senior Securities

None.

Item 5.

Other Information

None.

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Item 6.

Exhibits

	31.1*	Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed as of August 11, 2023

	31.2*	Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed as of August 11, 2023

	32*	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed as of August 11, 2023

	99.1*	Press Release dated August 11, 2023

	101	The following financial statements from Cyanotech Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.

	104	Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101)

		*Included herewith. Other exhibits were filed as shown above.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CYANOTECH CORPORATION
	(Registrant)


August 11, 2023	By:	/s/ Matthew K. Custer
(Date)		Matthew K. Custer
		President and Chief Executive Officer


August 11, 2023	By:	/s/ Felicia Ladin
(Date)		Felicia Ladin
		Chief Financial Officer, Vice President — Finance & Administration, and Treasurer
		(Principal Financial Officer)

Table of Contents

EXHIBIT INDEX

Exhibit Number		Description
31.1*		Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed as of August 11, 2023

31.2*		Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed as of August 11, 2023

32*		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed as of August 11, 2023

99.1*		Press Release dated August 11, 2023

101		The following financial statements from Cyanotech Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements

104		Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101)

		*Included herewith. Other exhibits were filed as shown above.

Exhibit 31.1

Certification Pursuant

To 18 U. S. C. Section 1350,

As Adopted Pursuant To

Section 302 of the Sarbanes-Oxley Act of 2002

I, Matthew K. Custer, Chief Executive Officer certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Cyanotech Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 11, 2023	/s/ Matthew K. Custer
	Matthew K. Custer
	President and Chief Executive Officer

Exhibit 31.2

Certification Pursuant

To 18 U. S. C. Section 1350,

As Adopted Pursuant To

Section 302 of the Sarbanes-Oxley Act of 2002

I, Felicia Ladin, Chief Financial Officer certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Cyanotech Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 11, 2023	/s/ Felicia Ladin
	Felicia Ladin
	Chief Financial Officer; Vice President— Finance & Administration, and Treasurer
	(Principal Financial Officer)

Exhibit 32

Certification of CEO and CFO

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Cyanotech Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2023 (the “Report”) as filed with the Securities and Exchange Commission on the date hereof, each of the undersigned certifies that:

1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act (15 U.S.C. 78m or 78o (d)); and

2)	The information contained in the Report fairly presents, in all material aspects, the financial condition and results of operations of the Company.

Date: August 11, 2023	/s/ Matthew K. Custer
	Matthew K. Custer
	President and Chief Executive Officer


Date: August 11, 2023	/s/ Felicia Ladin
	Felicia Ladin
	Chief Financial Officer; Vice President— Finance & Administration, and Treasurer
	(Principal Financial Officer)

Exhibit 99.1

News Release

Contact: Bruce Russell

(310) 346-6131

brussell@cyanotech.com

Cyanotech Reports Financial Results for the First Quarter of Fiscal 2024

KAILUA KONA, Hawaii (August 11, 2023) — Cyanotech Corporation (Nasdaq Capital Market: CYAN), a world leader in microalgae-based, high-value nutrition and health dietary supplement products, announced financial results for the first quarter of fiscal year 2024, ended June 30, 2023.

Commenting on the first quarter fiscal year 2024 results, Cyanotech’s President and Chief Executive Officer, Matthew K. Custer, said:

“This quarter we continue to see the impact of consumers shifting their spend from goods to experiences and services and reallocation of spending related to the high cost of living. Due to these shifting consumer trends, we have added a new position to the Company, Chief Strategic and Commercial Officer, to oversee and drive market strategy and revenue opportunities.”

“Our production is performing efficiently, and we are managing production volumes in line with sales demand to control costs.”

“I am optimistic about the Company's future as we continue to build brand awareness to our naturally derived high value nutritional products.”

First Quarter Fiscal 2024

Cyanotech reported net sales of $5,146,000 for the first quarter of fiscal 2024 compared to $6,716,000 for the first quarter of fiscal 2023, a decrease of 23.4%. Gross profit was $1,532,000, with gross profit margin of 29.8%, compared to gross profit of $2,318,000, with gross profit margin of 34.5%. Operating loss for the first quarter of fiscal 2024 was $1,209,000 compared to operating loss of $425,000 in the same period of the prior year. Net loss for the current fiscal quarter was $1,369,000, or $0.22 per diluted share, compared to net loss of $472,000, or $0.08 per diluted share, for the same period of the prior year.

Trailing Twelve Months

For the trailing twelve months ended June 30, 2023, compared to the trailing twelve months ended June 30, 2022, net sales were $21,607,000 compared to $33,720,000, respectively. Gross profit was $6,473,000, with gross profit margin of 30.0%, compared to $12,212,000 and 36.2%. Net loss was $4,337,000, or $0.69 per diluted share, compared to net income of $1,161,000, or $0.19 per diluted share.

73-4460 Queen Kaahumanu Highway, #102 ~ Kailua-Kona, Hawaii 96740

(808) 326-1353 fax (808) 329-3597 ~ www.cyanotech.com

Please review the Company’s Form 10-Q for the period ended June 30, 2023 for more detailed information.

---------------

— Cyanotech will host a virtual broadcast at 8:00 PM EST on Monday, August 14, 2023 to respond to questions about its operating results and other topics of interest. Interested parties are asked to submit questions to questions@cyanotech.com before 12 p.m. (noon) EST on Monday, August 14, 2023. The Company will respond only to relevant questions relating to the Company’s first quarter fiscal 2024 financial performance and will not be accepting any questions or comments during the broadcast.

To join the broadcast, please browse http://cyanotech.com/meet approximately five minutes prior to the start time.

---------------

About Cyanotech — Cyanotech Corporation, a world leader in microalgae technology for more than 30 years, produces BioAstin® Hawaiian Astaxanthin® and Hawaiian Spirulina Pacifica®. These all-natural, dietary ingredients and supplements leverage our experience and reputation for quality, building nutritional brands which promote health and well-being. The Company’s mission is to fulfill the promise of whole health through Hawaiian microalgae. Cyanotech’s BioAstin® offers superior antioxidant activity which supports skin, eye and joint health, as well as recovery from exercise*. Cyanotech's Spirulina products offer nutrition that supports cardiovascular health and immunity*. All Cyanotech products are produced from microalgae grown at our 96-acre facility in Kona, Hawaii using patented and proprietary technology and are Generally Recognized as Safe (“GRAS”) for use in food products. Cyanotech sells its products direct to consumers at retail locations in the United States and online at www.nutrex-hawaii.com and also distributes to dietary supplement, nutraceutical and cosmeceutical manufacturers and marketers. The Company is regulated by the Food and Drug Administration. Visit www.cyanotech.com for more information.

*These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.

“Safe Harbor” Statement under the U.S. Private Securities Litigation Reform Act of 1995 Besides statements of present fact and historical fact, this press release may contain forward-looking statements. Forward-looking statements relate to the future and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by forward-looking statements. We caution against relying on forward-looking statements. Important factors that could change actual, future results include: changes in sales levels to our largest customers, weather patterns in Hawaii, production problems, risks associated with new products, foreign exchange fluctuations, and availability of financing, as well as national and global political, economic, business, competitive, market and regulatory conditions. Other factors are more fully detailed in the Company’s annual Form 10-K filings with the Securities and Exchange Commission.

Financial Tables Follow: The following tables do not contain footnotes or other information contained in the Company’s Form 10-Q for the first quarter fiscal 2024 ended June 30, 2023, which can be found on the Cyanotech website (www.cyanotech.com) under Investors>Investor Filings upon filing. As such, the following Financial Tables are provided only as a guide and other factors are more fully detailed in the Company’s annual Form 10-K filings with the Securities and Exchange Commission.

73-4460 Queen Kaahumanu Highway, #102 ~ Kailua-Kona, Hawaii 96740

(808) 326-1353 fax (808) 329-3597 ~ www.cyanotech.com

CYANOTECH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

	June 30, 2023			March 31, 2023
ASSETS
Current assets:
Cash	$	648		$	974
Accounts receivable, net of allowance for credit losses of $11 as of June 30, 2023 and $64 as of March 31, 2023		1,794			1,331
Inventories		10,506			10,707
Prepaid expenses and other current assets		378			484
Total current assets		13,326			13,496

Equipment and leasehold improvements, net		11,065			11,366
Operating lease right-of-use assets, net		4,656			4,776
Other assets		85			90
Total assets	$	29,132		$	29,728

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,721		$	1,021
Accrued expenses		821			1,101
Customer deposits		77			89
Operating lease obligations, current portion		494			483
Line of credit		1,770			1,540
Line of credit – related party		750			500
Current maturities of long-term debt		3,313			3,369
Total current liabilities		8,946			8,103

Long-term debt, less current maturities		1,000			1,000
Long-term operating lease obligations		4,146			4,275
Other long-term liabilities		—			3
Total liabilities		14,092			13,381

Commitments and contingencies

Stockholders’ equity:
Preferred stock of $0.01 par value, authorized 10,000,000 shares; no shares issued and outstanding		—			—
Common stock of $0.02 par value, authorized 50,000,000 shares; issued and outstanding 6,291,086 shares at June 30, 2023 and 6,271,971 shares at March 31, 2023		126			125
Additional paid-in capital		33,917			33,856
Accumulated deficit		(19,003	)		(17,634	)
Total stockholders’ equity		15,040			16,347
Total liabilities and stockholders’ equity	$	29,132		$	29,728

73-4460 Queen Kaahumanu Highway, #102 ~ Kailua-Kona, Hawaii 96740

(808) 326-1353 fax (808) 329-3597 ~ www.cyanotech.com

CYANOTECH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,
	2023			2022

Net sales	$	5,146		$	6,716
Cost of sales		3,614			4,398
Gross profit		1,532			2,318

Operating expenses:
General and administrative		1,274			1,329
Sales and marketing		1,276			1,168
Research and development		191			246
Total operating expenses		2,741			2,743

Loss from operations		(1,209	)		(425	)

Interest expense, net		(160	)		(44	)

Loss before income taxes		(1,369	)		(469	)

Income tax expense		—			3

Net loss	$	(1,369	)	$	(472	)

Net loss per share:
Basic	$	(0.22	)	$	(0.08	)
Diluted	$	(0.22	)	$	(0.08	)

Shares used in calculation of net loss per share:
Basic		6,290			6,204
Diluted		6,290			6,204

73-4460 Queen Kaahumanu Highway, #102 ~ Kailua-Kona, Hawaii 96740

(808) 326-1353 fax (808) 329-3597 ~ www.cyanotech.com

Document And Entity Information - shares	3 Months Ended
Document And Entity Information - shares	Jun. 30, 2023	Aug. 04, 2023
Document Information [Line Items]
Entity Central Index Key	0000768408
Entity Registrant Name	Cyanotech Corp
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2023
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	0-14602
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	91-1206026
Entity Address, Address Line One	73-4460 Queen Kaahumanu Hwy. #102
Entity Address, City or Town	Kailua-Kona
Entity Address, State or Province	HI
Entity Address, Postal Zip Code	96740
City Area Code	808
Local Phone Number	326-1353
Title of 12(b) Security	Common Stock, $0.02 par value per share
Trading Symbol	CYAN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,308,010

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2023	Mar. 31, 2023
Current assets:
Cash	$ 648,000	$ 974,000
Accounts receivable, net of allowance for credit losses of $11 as of June 30, 2023 and $64 as of March 31, 2023	1,794,000	1,331,000
Inventories	10,506,000	10,707,000
Prepaid expenses and other current assets	378,000	484,000
Total current assets	13,326,000	13,496,000
Equipment and leasehold improvements, net	11,065,000	11,366,000
Operating lease right-of-use assets, net	4,656,000	4,776,000
Other assets	85,000	90,000
Total assets	29,132,000	29,728,000
Current liabilities:
Accounts payable	1,721,000	1,021,000
Accrued expenses	821,000	1,101,000
Customer deposits	77,000	89,000
Operating lease obligations, current portion	494,000	483,000
Line of credit	1,770,000	1,540,000
Line of credit – related party	750,000	500,000
Current maturities of long-term debt	3,313,000	3,369,000
Total current liabilities	8,946,000	8,103,000
Long-term debt, less current maturities	1,000,000	1,000,000
Long-term operating lease obligations	4,146,000	4,275,000
Other long-term liabilities	0	3,000
Total liabilities	14,092,000	13,381,000
Commitments and contingencies
Stockholders’ equity:
Preferred stock of $0.01 par value, authorized 10,000,000 shares; no shares issued and outstanding	0	0
Common stock of $0.02 par value, authorized 50,000,000 shares; issued and outstanding 6,291,086 shares at June 30, 2023 and 6,271,971 shares at March 31, 2023	126,000	125,000
Additional paid-in capital	33,917,000	33,856,000
Accumulated deficit	(19,003,000)	(17,634,000)
Total stockholders’ equity	15,040,000	16,347,000
Total liabilities and stockholders’ equity	$ 29,132,000	$ 29,728,000

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023
Accounts receivable, allowance for doubtful accounts	$ 11	$ 64
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred, authorized shares (in shares)	10,000,000	10,000,000
Preferred, issued shares (in shares)	0	0
Preferred outstanding, shares (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.02	$ 0.02
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	6,291,086	6,271,971
Common stock, shares outstanding (in shares)	6,291,086	6,271,971

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands	3 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Net sales	$ 5,146,000	$ 6,716,000
Cost of sales	3,614,000	4,398,000
Gross profit	1,532,000	2,318,000
Operating expenses:
General and administrative	1,274,000	1,329,000
Sales and marketing	1,276,000	1,168,000
Research and development	191,000	246,000
Total operating expenses	2,741,000	2,743,000
Loss from operations	(1,209,000)	(425,000)
Interest expense, net	(160,000)	(44,000)
Loss before income taxes	(1,369,000)	(469,000)
Income tax expense	0	3,000
Net loss	$ (1,369,000)	$ (472,000)
Net loss per share:
Basic (in dollars per share)	$ (0.22)	$ (0.08)
Diluted (in dollars per share)	$ (0.22)	$ (0.08)
Shares used in calculation of net loss per share:
Basic (in shares)	6,290	6,204
Diluted (in shares)	6,290	6,204

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Mar. 31, 2022	6,202,223
Balance at Mar. 31, 2022	$ 124	$ 33,557	$ (14,194)	$ 19,487
Issuances of vested shares of restricted stock (in shares)	2,277
Issuances of vested shares of restricted stock	$ 0	(3)	0	(3)
Shares withheld for tax payments (in shares)	(857)
Shares withheld for tax payments	$ 0	0	0	0
Share-based compensation expense	0	22	0	22
Net income (loss)	0	0	(472)	(472)
Shares withheld for tax payments	0	0	0	0
Net loss	$ 0	0	(472)	(472)
Balance (in shares) at Jun. 30, 2022	6,203,643
Balance at Jun. 30, 2022	$ 124	33,576	(14,666)	19,034
Balance (in shares) at Mar. 31, 2023	6,271,971
Balance at Mar. 31, 2023	$ 125	33,856	(17,634)	16,347
Issuances of common stock to Directors in lieu of cash (in shares)	17,672
Issuances of common stock to Directors in lieu of cash	$ 1	15	0	16
Issuances of vested shares of restricted stock (in shares)	2,278
Issuances of vested shares of restricted stock	$ 0	(1)	0	(1)
Shares withheld for tax payments (in shares)	(835)
Shares withheld for tax payments	$ 0	0	0	0
Share-based compensation expense	0	47	0	47
Net income (loss)	0	0	(1,369)	(1,369)
Shares withheld for tax payments	(0)	(0)	(0)	(0)
Net loss	$ 0	0	(1,369)	(1,369)
Balance (in shares) at Jun. 30, 2023	6,291,086
Balance at Jun. 30, 2023	$ 126	$ 33,917	$ (19,003)	$ 15,040

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,369,000)	$ (472,000)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	407,000	417,000
Amortization of debt issue costs and other assets	10,000	13,000
Amortization of operating leases right-of-use assets	120,000	105,000
Share-based compensation expense	47,000	22,000
Provision for doubtful accounts	11,000	0
Net (increase) decrease in assets:
Accounts receivable	(474,000)	463,000
Inventories	201,000	(1,233,000)
Prepaid expenses and other assets	104,000	168,000
Net increase (decrease) in liabilities:
Accounts payable	744,000	(509,000)
Accrued expenses	(264,000)	(75,000)
Customer deposits	(12,000)	(85,000)
Operating lease obligations	(118,000)	(110,000)
Deferred rent and other liabilities	(3,000)	(3,000)
Net cash used in operating activities	(596,000)	(1,299,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in equipment and leasehold improvements	(150,000)	(376,000)
Net cash used in investing activities	(150,000)	(376,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net draws (payments) on line of credit	230,000	0
Net draws on line of credit – related party	250,000	0
Principal payments on long-term debt	(59,000)	(174,000)
Taxes paid related to net share settlement of restricted stock units	(1,000)	(3,000)
Net cash provided by (used in) financing activities	420,000	(177,000)
Net decrease in cash	(326,000)	(1,852,000)
Cash at beginning of period	974,000	2,589,000
Cash at end of period	648,000	737,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest	151,000	65,000
Income taxes	$ 0	$ 0

Note 1 - Organization and Basis of Presentation

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

1.	ORGANIZATION AND BASIS OF PRESENTATION

Liquidity and Going Concern

Note 2 - Significant Accounting Policies

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2.	SIGNIFICANT ACCOUNTING POLICIES

Consolidation

Use of Estimates

Cash

Cash primarily consists of cash on hand and cash in bank deposits.

Concentration Risk

Accounts Receivable

Revenue Recognition

Disaggregation of Revenue

The following table represents revenue disaggregated by major product line and extraction services for the:

($ in thousands)	Three Months Ended June 30, 2023		Three Months Ended June 30, 2022
Packaged sales
Astaxanthin packaged	$	2,809	$	3,524
Spirulina packaged		1,574		1,511
Total packaged sales		4,383		5,035

Bulk sales
Astaxanthin bulk		299		494
Spirulina bulk		363		1,093
Total bulk sales		662		1,587

Contract extraction and R&D services revenue		101		94
Total net sales	$	5,146	$	6,716

Recently Accounting Pronouncements

Note 3 - Inventories

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Inventory Disclosure [Text Block]

3.	INVENTORIES

Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. Inventories consist of the following as of:

	June 30, 2023		March 31, 2023
	(in thousands)
Raw materials	$	1,736	$	1,887
Work in process		1,872		2,049
Finished goods		6,574		6,502
Supplies		324		269
Inventories	$	10,506	$	10,707

Other non-inventoriable fixed costs of $189,000 and $35,000 were expensed to cost of sales for the three months ended June 30, 2023 and 2022, respectively.

Note 4 - Equipment and Leasehold Improvements

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

4.	EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment and leasehold improvements consist of the following as of:

	June 30, 2023			March 31, 2023
	(in thousands)
Equipment	$	21,711		$	21,649
Leasehold improvements		15,064			15,038
Furniture and fixtures		407			407
		37,182			37,094
Less accumulated depreciation and amortization		(26,354	)		(25,947	)
Construction-in-progress		237			219
Equipment and leasehold improvements, net	$	11,065		$	11,366

Note 5 - Line of Credit and Long-term Debt

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

5.	LINE OF CREDIT AND LONG-TERM DEBT

Total debt consists of the following as of:

	June 30, 2023			March 31, 2023
	(in thousands)
Line of credit	$	1,770		$	1,540
Line of credit – related party		750			500
Long-term debt		3,402			3,461
Long-term debt - related party		1,000			1,000
Unamortized debt issuance costs		(89	)		(92	)
Less current maturities		(5,833	)		(5,409	)
Total long-term debt, net of current maturities	$	1,000		$	1,000

Line of Credit and Term Loans

Loan Covenants, Violation and Waiver

Line of Credit and Debt – Related Party

Future principal payments under the loans at June 30, 2023 are as follows:

Fiscal year payments due	(in thousands)
Remainder of 2024	$	3,402
2026		1,000
Total principal payments	$	4,402

Note 6 - Operating Leases

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

6.	OPERATING LEASES

Supplemental balance sheet information related to leases consist of the following as of:

Operating leases	Balance Sheet Classification	June 30, 2023			March 31, 2023
		(in thousands)
Right-of-use assets	Operating lease right-of-use assets	$	6,149		$	6,149
Accumulated lease amortization	Operating lease right-of-use assets		(1,493	)		(1,373	)

Total right-of-use assets		$	4,656		$	4,776

Current lease liabilities	Operating lease obligations	$	494		$	483
Non-current lease liabilities	Long-term operating lease obligations		4,146			4,275

Total lease liabilities		$	4,640		$	4,758

Maturities of lease liabilities at June 30, 2023 are as follows:

Payments	(in thousands)
Remainder of 2024	$	609
2025		817
2026		794
2027		801
2028		591
Thereafter		2,854
Total undiscounted lease payments		6,466
Less: present value discount		(1,826	)
Total lease liability balance	$	4,640

Note 7 - Accrued Expenses

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

7.	ACCRUED EXPENSES

Accrued expenses consist of the following as of:

	June 30, 2023		March 31, 2023
	(in thousands)
Bonus and profit sharing	$	143	$	143
Wages		79		215
Vacation		384		393
Interest and legal		47		30
Other accrued expenses		168		320
Total accrued expenses	$	821	$	1,101

Note 8 - Commitments and Contingencies

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

8.	COMMITMENTS AND CONTINGENCIES

Note 9 - Share-based Compensation

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

9.	SHARE-BASED COMPENSATION

The following table presents shares authorized, available for future grant and outstanding under each of the Company’s plans:

	As of June 30, 2023
	Authorized		Available		Outstanding

2016 Plan		1,300,000		873,737		310,756
2014 Directors Plan		650,000		205,534		12,000
2004 Directors Plan		—		—		6,000
Total		1,950,000		1,079,271		328,756

Stock Options

A summary of option activity under the Company’s stock plans for the three months ended June 30, 2023 is presented below:

Option Activity	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at March 31, 2023		253,000	$	2.88		7.5	$	—
Outstanding at June 30, 2023		253,000	$	2.88		7.2	$	—
Exercisable at June 30, 2023		144,666	$	2.97		6.8	$	—

A summary of the Company’s non-vested options for the three months ended June 30, 2023 is presented below:

Nonvested Options	Shares			Weighted Average Grant-Date Fair Value
Nonvested at March 31, 2023		141,667		$	1.55
Vested		(33,333	)		1.77
Nonvested at June 30, 2023		108,334		$	1.48

Restricted Stock

Restricted Stock Units (“RSUs”)

The following table summarizes information related to awarded RSUs:

Nonvested Restricted Stock Units	Shares			Weighted Average Grant Price
Nonvested restricted stock units at March 31, 2023		70,334		$	3.04
Granted		7,900			0.94
Vested		(2,278	)		2.39
Forfeited		(200	)		0.94
Nonvested restricted stock units at June 30, 2023		75,756		$	2.85

Note 10 - Income Taxes

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

10.

INCOME TAXES

With few exceptions, the Company is no longer subject to U.S. federal, state, local, and non-U.S. income tax examination by tax authorities for tax years before 2019.

Note 11 - Earnings Per Share

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Earnings Per Share [Text Block]

11.

EARNINGS PER SHARE

Reconciliations between the numerator and the denominator of the basic and diluted (loss) income per share computations for the three months ended June 30, 2023 and 2022 are as follows:

	Three Months Ended June 30, 2023
	Net Loss			Shares		Per Share
	(Numerator)			(Denominator)		Amount
	(in thousands)
Basic and diluted loss per share	$	(1,369	)		6,290	$	(0.22	)

	Three Months Ended June 30, 2022
	Net Loss			Shares		Per Share
	(Numerator)			(Denominator)		Amount
	(in thousands)
Basic and diluted loss per share	$	(472	)		6,204	$	(0.08	)

Note 12 - Related Party Transactions and Balances

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

12.

RELATED PARTY TRANSACTIONS

Note 13 - Subsequent Events

3 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Subsequent Events [Text Block]

13.

SUBSEQUENT EVENTS

The Company had no additional subsequent events, other than those mentioned above and in Note 12 regarding the Bank and USDA approval.

Note 2 - Significant Accounting Policies (Tables)

3 Months Ended

Jun. 30, 2023

Notes Tables

Disaggregation of Revenue [Table Text Block]

($ in thousands)	Three Months Ended June 30, 2023		Three Months Ended June 30, 2022
Packaged sales
Astaxanthin packaged	$	2,809	$	3,524
Spirulina packaged		1,574		1,511
Total packaged sales		4,383		5,035

Bulk sales
Astaxanthin bulk		299		494
Spirulina bulk		363		1,093
Total bulk sales		662		1,587

Contract extraction and R&D services revenue		101		94
Total net sales	$	5,146	$	6,716

Note 3 - Inventories (Tables)

3 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 30, 2023		March 31, 2023
	(in thousands)
Raw materials	$	1,736	$	1,887
Work in process		1,872		2,049
Finished goods		6,574		6,502
Supplies		324		269
Inventories	$	10,506	$	10,707

Note 4 - Equipment and Leasehold Improvements (Tables)

3 Months Ended

Jun. 30, 2023

Notes Tables

Property, Plant and Equipment [Table Text Block]

	June 30, 2023			March 31, 2023
	(in thousands)
Equipment	$	21,711		$	21,649
Leasehold improvements		15,064			15,038
Furniture and fixtures		407			407
		37,182			37,094
Less accumulated depreciation and amortization		(26,354	)		(25,947	)
Construction-in-progress		237			219
Equipment and leasehold improvements, net	$	11,065		$	11,366

Note 5 - Line of Credit and Long-term Debt (Tables)

3 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Long-Term Debt Instruments [Table Text Block]

	June 30, 2023			March 31, 2023
	(in thousands)
Line of credit	$	1,770		$	1,540
Line of credit – related party		750			500
Long-term debt		3,402			3,461
Long-term debt - related party		1,000			1,000
Unamortized debt issuance costs		(89	)		(92	)
Less current maturities		(5,833	)		(5,409	)
Total long-term debt, net of current maturities	$	1,000		$	1,000

Schedule of Maturities of Long-Term Debt [Table Text Block]

Fiscal year payments due	(in thousands)
Remainder of 2024	$	3,402
2026		1,000
Total principal payments	$	4,402

Note 6 - Operating Leases (Tables)

3 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Supplement Balance Sheet Information for Operating Lease [Table Text Block]

Operating leases	Balance Sheet Classification	June 30, 2023			March 31, 2023
		(in thousands)
Right-of-use assets	Operating lease right-of-use assets	$	6,149		$	6,149
Accumulated lease amortization	Operating lease right-of-use assets		(1,493	)		(1,373	)

Total right-of-use assets		$	4,656		$	4,776

Current lease liabilities	Operating lease obligations	$	494		$	483
Non-current lease liabilities	Long-term operating lease obligations		4,146			4,275

Total lease liabilities		$	4,640		$	4,758

Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]

Payments	(in thousands)
Remainder of 2024	$	609
2025		817
2026		794
2027		801
2028		591
Thereafter		2,854
Total undiscounted lease payments		6,466
Less: present value discount		(1,826	)
Total lease liability balance	$	4,640

Note 7 - Accrued Expenses (Tables)

3 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	June 30, 2023		March 31, 2023
	(in thousands)
Bonus and profit sharing	$	143	$	143
Wages		79		215
Vacation		384		393
Interest and legal		47		30
Other accrued expenses		168		320
Total accrued expenses	$	821	$	1,101

Note 9 - Share-based Compensation (Tables)

3 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Share-based Compensation Shares Authorized Available and Outstanding by Plan [Table Text Block]

	As of June 30, 2023
	Authorized		Available		Outstanding

2016 Plan		1,300,000		873,737		310,756
2014 Directors Plan		650,000		205,534		12,000
2004 Directors Plan		—		—		6,000
Total		1,950,000		1,079,271		328,756

Share-Based Payment Arrangement, Option, Activity [Table Text Block]

Option Activity	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at March 31, 2023		253,000	$	2.88		7.5	$	—
Outstanding at June 30, 2023		253,000	$	2.88		7.2	$	—
Exercisable at June 30, 2023		144,666	$	2.97		6.8	$	—

Schedule of Nonvested Share Activity [Table Text Block]

Nonvested Options	Shares			Weighted Average Grant-Date Fair Value
Nonvested at March 31, 2023		141,667		$	1.55
Vested		(33,333	)		1.77
Nonvested at June 30, 2023		108,334		$	1.48

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

Nonvested Restricted Stock Units	Shares			Weighted Average Grant Price
Nonvested restricted stock units at March 31, 2023		70,334		$	3.04
Granted		7,900			0.94
Vested		(2,278	)		2.39
Forfeited		(200	)		0.94
Nonvested restricted stock units at June 30, 2023		75,756		$	2.85

Note 11 - Earnings Per Share (Tables)

3 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended June 30, 2023
	Net Loss			Shares		Per Share
	(Numerator)			(Denominator)		Amount
	(in thousands)
Basic and diluted loss per share	$	(1,369	)		6,290	$	(0.22	)

	Three Months Ended June 30, 2022
	Net Loss			Shares		Per Share
	(Numerator)			(Denominator)		Amount
	(in thousands)
Basic and diluted loss per share	$	(472	)		6,204	$	(0.08	)

Note 1 - Organization and Basis of Presentation (Details Textual) - USD ($)	3 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 22, 2023	Mar. 31, 2023	Apr. 30, 2019	Aug. 30, 2016
Cash and Cash Equivalents, at Carrying Value	$ 648,000			$ 974,000
Working Capital (Deficit)	4,380,000			5,393,000
Line of Credit, Current	1,770,000			1,540,000
Lines of Credit, Related Party, Current	750,000			500,000
Long-term Debt and Capital Lease Obligations, Current and Noncurrent	3,402,000
Net Cash Provided by (Used in) Operating Activities	(596,000)	$ (1,299,000)
Proceeds from Lines of Credit, Related Parties	250,000	$ 0
Unsecured Subordinated Loan From Skywords [Member]
Debt Instrument, Face Amount	1,000,000			1,000,000	$ 1,500,000
First Foundation Bank [Member]
Proceeds from Lines of Credit	1,770,000
First Foundation Bank [Member] \| Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity				2,000,000		$ 2,000,000
Line of Credit, Current	1,770,000		$ 1,770,000	1,540,000
Related Party 1 [Member] \| Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	1,000,000			1,000,000
Lines of Credit, Related Party, Current	750,000			$ 500,000
Proceeds from Lines of Credit, Related Parties	750,000
Related Party 1 [Member] \| Revolving Credit Facility [Member] \| Maximum [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 2,000,000

Note 2 - Significant Accounting Policies (Details Textual)	3 Months Ended		12 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Mar. 31, 2023
Contract with Customer, Liability, Revenue Recognized	$ 16,000	$ 91,000
Customer Concentration Risk [Member] \| Revenue Benchmark [Member]
Number of Major Customers	2	2	2
Customer Concentration Risk [Member] \| Revenue Benchmark [Member] \| Customer Number 1 [Member]
Concentration Risk, Percentage	32.00%	24.00%
Customer Concentration Risk [Member] \| Revenue Benchmark [Member] \| Customer Number 2 [Member]
Concentration Risk, Percentage	18.00%	17.00%
Customer Concentration Risk [Member] \| Accounts Receivable [Member]
Number of Major Customers	2
Customer Concentration Risk [Member] \| Accounts Receivable [Member] \| Two Customers [Member]
Concentration Risk, Percentage	72.00%		46.00%

Note 2 - Significant Accounting Policies - Revenue By Product (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Net sales	$ 5,146	$ 6,716
Packaged Astaxanthin [Member]
Net sales	2,809	3,524
Packaged Spirulina [Member]
Net sales	1,574	1,511
Packaged Products [Member]
Net sales	4,383	5,035
Bulk Astaxanthin [Member]
Net sales	299	494
Bulk Spirulina [Member]
Net sales	363	1,093
Bulk Products [Member]
Net sales	662	1,587
Contract Extraction and R&D Services [Member]
Net sales	$ 101	$ 94

Note 3 - Inventories (Details Textual) - USD ($)	3 Months Ended
Note 3 - Inventories (Details Textual) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Inventory Abnormal Production Costs	$ 133,000	$ 0
Non Inventoriable Fixed Costs	$ 189,000	$ 35,000

Note 3 - Inventories - Components of Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023
Raw materials	$ 1,736	$ 1,887
Work in process	1,872	2,049
Finished goods	6,574	6,502
Supplies	324	269
Inventories	$ 10,506	$ 10,707

Note 4 - Equipment and Leasehold Improvements (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023
Asset Impairment Charges			$ 0
Depreciation, Depletion and Amortization	$ 407,000	$ 417,000

Note 4 - Equipment and Leasehold Improvements - Components of Equipment and Leasehold Improvements (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023
Equipment and leasehold improvements, gross	$ 37,182	$ 37,094
Less accumulated depreciation and amortization	(26,354)	(25,947)
Construction-in-progress	237	219
Equipment and leasehold improvements, net	11,065	11,366
Equipment [Member]
Equipment and leasehold improvements, gross	21,711	21,649
Leasehold Improvements [Member]
Equipment and leasehold improvements, gross	15,064	15,038
Furniture and Fixtures [Member]
Equipment and leasehold improvements, gross	$ 407	$ 407

Note 5 - Line of Credit and Long-term Debt (Details Textual) - USD ($)			1 Months Ended	3 Months Ended		6 Months Ended	12 Months Ended
	Apr. 12, 2021	Aug. 14, 2012	Apr. 30, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Mar. 31, 2023	Mar. 31, 2020	Jun. 30, 2203	Jun. 22, 2023	Jun. 21, 2023	Dec. 14, 2022	Mar. 31, 2022	Apr. 30, 2019	Aug. 30, 2016
Line of Credit, Current				$ 1,770,000		$ 1,770,000	$ 1,540,000
Long-term Debt and Capital Lease Obligations, Current and Noncurrent				3,402,000		3,402,000
Debt Issuance Costs, Current, Net				89,000		89,000	92,000
Long-term Debt, Current Maturities, Total				5,833,000		5,833,000	5,409,000
Interest Paid, Excluding Capitalized Interest, Operating Activities				151,000	$ 65,000
Lines of Credit, Related Party, Current				750,000		750,000	500,000
Unsecured Subordinated Loan [Member]
Long-Term Debt, Gross				$ 1,000,000		$ 1,000,000	$ 1,000,000
Term Loan Agreement, Maturing on August 14, 2032 [Member]
Debt Instrument Reference Rate				8.00%		8.00%	7.50%
Debt Instrument, Basis Spread on Variable Rate		1.00%
Proceeds from Issuance of Debt		$ 5,500,000
Debt Instrument Interest Payment Period (Month)		12 months
Debt Instrument Amortization Period (Year)		19 years
Long-term Debt and Capital Lease Obligations, Current and Noncurrent				$ 3,402,000		$ 3,402,000	$ 3,461,000
Debt Instrument One Time Origination and Guaranty Fees							$ 214,500
Debt Instrument Annual Renewal Fee Payable Percentage							0.25%
Debt Instrument Guaranteed Portion							80.00%
Debt Covenant, Further Advances of Credit Agreement, Immediate Freeze											$ 1,770,000
Term Loan Agreement, Promissory Note One [Member]
Proceeds from Issuance of Debt		$ 2,250,000
Term Loan Agreement, Promissory Note Two [Member]
Proceeds from Issuance of Debt		$ 3,250,000
Skywords Note [Member]
Debt Instrument Reference Rate				8.00%		8.00%	7.50%
Repayments of Long-term Debt, Total	$ 500,000		$ 500,000
Interest Paid, Excluding Capitalized Interest, Operating Activities	1,900		1,900
Skywords Note [Member] \| Unsecured Subordinated Loan [Member]
Debt Instrument, Face Amount								$ 1,500,000						$ 1,500,000
Long-term Debt, Current Maturities, Total			$ 500,000
Long-Term Debt, Gross				$ 1,000,000		$ 1,000,000							$ 1,000,000
Skywords Amended Note [Member]
Debt Instrument, Face Amount	$ 500,000											$ 1,000,000
Debt Instrument, Floor Interest Rate	5.00%		5.00%
Minimum [Member] \| Term Loan Agreement, Maturing on August 14, 2032 [Member]
Debt Instrument, Interest Rate During Period		5.50%
Prime Rate [Member] \| Skywords Note [Member]
Debt Instrument, Basis Spread on Variable Rate			1.00%
Prime Rate [Member] \| Skywords Note [Member] \| Unsecured Subordinated Loan [Member]
Debt Instrument, Basis Spread on Variable Rate								1.00%
Prime Rate [Member] \| Skywords Amended Note [Member]
Debt Instrument, Basis Spread on Variable Rate	1.00%
Prime Rate [Member] \| Minimum [Member] \| Skywords Note [Member]
Debt Instrument, Interest Rate During Period			5.00%
First Foundation Bank [Member] \| Minimum [Member]
Debt Instrument, Interest Rate, Stated Percentage				5.25%		5.25%
First Foundation Bank [Member] \| Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity							$ 2,000,000								$ 2,000,000
Line of Credit, Current				$ 1,770,000		$ 1,770,000	$ 1,540,000			$ 1,770,000
First Foundation Bank [Member] \| Revolving Credit Facility [Member] \| Prime Rate [Member]
Debt Instrument Reference Rate							8.00%		8.25%
Debt Instrument, Basis Spread on Variable Rate						2.00%
Related Party 1 [Member] \| Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity				$ 1,000,000		$ 1,000,000	$ 1,000,000
Debt Instrument, Interest Rate, Stated Percentage				8.00%		8.00%	7.50%
Lines of Credit, Related Party, Current				$ 750,000		$ 750,000	$ 500,000

Note 5 - Line of Credit and Long-term Debt - Summary of Line of Credit and Long-term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023
Unamortized debt issuance costs	$ (89)	$ (92)
Less current maturities	(5,833)	(5,409)
Total long-term debt, net of current maturities	1,000	1,000
Line of Credit Excluding Related Party [Member]
Long-term debt	1,770	1,540
Line of Credit, Related Party [Member]
Long-term debt	750	500
Long-term Debt, Excluding Related Party Debt [Member]
Long-term debt	3,402	3,461
Unsecured Subordinated Loan [Member]
Long-term debt	$ 1,000	$ 1,000

Note 5 - Line of Credit and Long-term Debt - Future Payments (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Remainder of 2024	$ 3,402
2026	1,000
Total principal payments	$ 4,402

Note 6 - Operating Leases (Details Textual)	3 Months Ended
Note 6 - Operating Leases (Details Textual)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Mar. 31, 2023
Operating Lease, Weighted Average Remaining Lease Term (Year)	9 years 7 months 6 days
Operating Lease, Weighted Average Discount Rate, Percent			7.30%
Operating Lease, Expense	$ 203,000	$ 171,000
Solar Lease for Buildings [Member]
Leases, Number of Lease Properties	2
Lessee, Operating Lease, Term of Contract (Month)	84 months

Note 6 - Operating Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023
Right-of-use assets	$ 6,149	$ 6,149
Accumulated lease amortization	(1,493)	(1,373)
Total right-of-use assets	4,656	4,776
Current lease liabilities	494	483
Non-current lease liabilities	4,146	4,275
Total lease liabilities	$ 4,640	$ 4,758

Note 6 - Operating Leases - Operating Leases Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023
Remainder of 2024	$ 609
2025	817
2026	794
2027	801
2028	591
Thereafter	2,854
Total undiscounted lease payments	6,466
Less: present value discount	(1,826)
Total lease liability balance	$ 4,640	$ 4,758

Note 7 - Accrued Expenses - Components of Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023
Bonus and profit sharing	$ 143	$ 143
Wages	79	215
Vacation	384	393
Interest and legal	47	30
Other accrued expenses	168	320
Total accrued expenses	$ 821	$ 1,101

Note 9 - Share-based Compensation (Details Textual)		3 Months Ended		12 Months Ended
Note 9 - Share-based Compensation (Details Textual)	Apr. 03, 2023 shares	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Mar. 31, 2023 USD ($) $ / shares
Number of Shareholder Approved Share-based Compensation Plans		2
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares) \| shares		1,079,271
Share-Based Payment Arrangement, Option [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount		$ 103,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)		1 year 4 months 24 days
Share-Based Payment Arrangement, Option [Member] \| Employees [Member]
Share-Based Payment Arrangement, Expense		$ 26,000	$ 17,000
Share Price (in dollars per share) \| $ / shares		$ 0.86		$ 0.88
Share-Based Payment Arrangement, Option [Member] \| Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)		10 years
Restricted Stock [Member] \| Two Board Members [Member] \| Share-Based Payment Arrangement, Nonemployee [Member]
Share-Based Payment Arrangement, Expense		$ 0		$ 15,500
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) \| shares	17,672
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) \| shares		7,900
Restricted Stock Units (RSUs) [Member] \| Employees [Member]
Share-Based Payment Arrangement, Expense		$ 21,000	$ 5,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount		$ 114,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)		2 years 1 month 6 days
The 2004 Directors Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares) \| shares		0

Note 9 - Share-based Compensation - Shares Authorized, Available for Future Grant and Outstanding Under Each Plan (Details)	Jun. 30, 2023 shares
Authorized (in shares)	1,950,000
Available (in shares)	1,079,271
Outstanding (in shares)	328,756
The 2016 Plan [Member]
Authorized (in shares)	1,300,000
Available (in shares)	873,737
Outstanding (in shares)	310,756
2014 Directors Plan [Member]
Authorized (in shares)	650,000
Available (in shares)	205,534
Outstanding (in shares)	12,000
The 2004 Directors Plan [Member]
Available (in shares)	0
Outstanding (in shares)	6,000

Note 9 - Share-based Compensation - Summary of Option Activity Under Stock Plans (Details) - USD ($)	3 Months Ended	12 Months Ended
	Jun. 30, 2023	Mar. 31, 2023
Outstanding (in shares)	253,000
Outstanding, weighted average exercise price (in dollars per share)	$ 2.88
Outstanding, weighted average remaining contractual term (Year)	7 years 2 months 12 days	7 years 6 months
Outstanding, aggregate intrinsic value	$ 0
Outstanding (in shares)	253,000	253,000
Outstanding, weighted average exercise price (in dollars per share)	$ 2.88	$ 2.88
Exercisable (in shares)	144,666
Exercisable, weighted average exercise price (in dollars per share)	$ 2.97
Exercisable, weighted average remaining contractual term (Year)	6 years 9 months 18 days
Exercisable, aggregate intrinsic value	$ 0

Note 9 - Share-based Compensation - Summary of Non-vested Options (Details)	3 Months Ended
	Jun. 30, 2023 $ / shares shares
Nonvested (in shares) \| shares	141,667
Nonvested (in dollars per share) \| $ / shares	$ 1.55
Vested (in shares) \| shares	(33,333)
Vested (in dollars per share) \| $ / shares	$ 1.77
Nonvested (in shares) \| shares	108,334
Nonvested (in dollars per share) \| $ / shares	$ 1.48

Note 9 - Share-based Compensation - Restricted Stock Units (Details) - Restricted Stock Units (RSUs) [Member]	3 Months Ended
	Jun. 30, 2023 $ / shares shares
Nonvested restricted stock units (in shares) \| shares	70,334
Nonvested restricted stock units, weighted average grant price (in dollars per share) \| $ / shares	$ 3.04
Granted (in shares) \| shares	7,900
Granted, weighted average grant price (in dollars per share) \| $ / shares	$ 0.94
Vested (in shares) \| shares	(2,278)
Vested, weighted average grant price (in dollars per share) \| $ / shares	$ 2.39
Forfeited (in shares) \| shares	(200)
Forfeited, weighted average grant price (in dollars per share) \| $ / shares	$ 0.94
Nonvested restricted stock units (in shares) \| shares	75,756
Nonvested restricted stock units, weighted average grant price (in dollars per share) \| $ / shares	$ 2.85

Note 10 - Income Taxes (Details Textual) - USD ($)	3 Months Ended		12 Months Ended
Note 10 - Income Taxes (Details Textual) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Mar. 31, 2023	Dec. 31, 2022
Income Tax Expense (Benefit)	$ 0	$ 3,000
Effective Income Tax Rate Reconciliation, Percent		0.70%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			21.00%
Unrecognized Tax Benefits	$ 0			$ 0

Note 11 - Earnings Per Share (Details Textual) - shares	3 Months Ended
Note 11 - Earnings Per Share (Details Textual) - shares	Jun. 30, 2023	Jun. 30, 2022
Common Stock Options and Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	3,000	12,000

Note 11 - Earnings Per Share - Summary of Reconciliations Between the Numerator and the Denominator of the Basic and Diluted Earnings Per Share Computations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Net loss	$ (1,369)	$ (472)
Basic (in shares)	6,290	6,204
Basic (in dollars per share)	$ (0.22)	$ (0.08)

Note 12 - Related Party Transactions and Balances (Details Textual) - USD ($)		1 Months Ended	3 Months Ended		12 Months Ended
	Apr. 12, 2021	Apr. 30, 2021	Jun. 30, 2023	Jun. 30, 2022	Mar. 31, 2020	Mar. 31, 2023	Dec. 14, 2022	Apr. 30, 2019
Interest Paid, Excluding Capitalized Interest, Operating Activities			$ 151,000	$ 65,000
Lines of Credit, Related Party, Current			750,000			$ 500,000
Revolving Credit Facility [Member] \| Related Party 1 [Member]
Line of Credit Facility, Maximum Borrowing Capacity			1,000,000			1,000,000
Lines of Credit, Related Party, Current			$ 750,000			$ 500,000
Debt Instrument, Interest Rate, Stated Percentage			8.00%			7.50%
Revolving Credit Facility [Member] \| Related Party 1 [Member] \| Maximum [Member]
Line of Credit Facility, Maximum Borrowing Capacity			$ 2,000,000
Conversion of Skywords Note Into Revolving Loans [Member]
Debt Conversion, Original Debt, Amount	$ 500,000
Skywords Note [Member]
Repayments of Long-term Debt, Total	500,000	$ 500,000
Interest Paid, Excluding Capitalized Interest, Operating Activities	1,900	$ 1,900
Skywords Note [Member] \| Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		1.00%
Skywords Note [Member] \| Unsecured Subordinated Loan [Member]
Debt Instrument, Face Amount					$ 1,500,000			$ 1,500,000
Skywords Note [Member] \| Unsecured Subordinated Loan [Member] \| Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate					1.00%
Skywords Amended Note [Member]
Debt Instrument, Face Amount	$ 500,000						$ 1,000,000
Debt Instrument, Term (Year)	3 years
Debt Instrument, Floor Interest Rate	5.00%	5.00%
Skywords Amended Note [Member] \| Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	1.00%

Note 13 - Subsequent Events (Details Textual)	Aug. 10, 2023 $ / shares
Subsequent Event [Member]
Nasdaq Minimum Bid Price (in dollars per share)	$ 1.00

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