A spike in legal fees produced a bigger financial loss in the fiscal first quarter for a local company producing nutrition and health products from microalgae on Hawaii island.

Cyanotech Corp. reported a $691,000 loss during the three months ended June 30 compared with a $105,000 loss in the same period last year.

Sales for the company, which makes astaxanthin and spirulina, slipped 4 percent to $7.3 million in the recent quarter from $7.6 million a year earlier. But the nearly sevenfold increase in the company’s net loss for the quarter was mainly because of $580,000 in legal expenses in the recent period compared with $42,000 a year earlier.

Cyanotech said its third-largest shareholder, Meridian OHC Partners LP, filed a lawsuit in May in federal court in Nevada alleging that Cyanotech’s board chairman and largest shareholder, Michael Davis, didn’t properly disclose his connection with a foundation that is the company’s second-largest shareholder.

Davis, who owns 19 percent of Cyanotech stock, is president of Ginungagap Foundation, a nonprofit that is the beneficiary of an endowment fund of Rudolf Steiner Foundation Inc., which owns 14 percent of Cyanotech.

Cyanotech said its board has formed a special committee of independent directors to investigate the lawsuit allegations, which include a claim that Davis breached his fiduciary duty to the company. The investigation is ongoing.

Shares of Cyanotech stock slipped 10 cents after the earnings announcement to close at $4.20 Monday compared with $4.30 on Friday. Over the last 52 weeks, Cyanotech shares have closed between $3.89 on Feb. 11 and $7.73 on Aug. 27.