Bruce Russell (310) 559-4955 x101 brussell@cyanotech.com Cyanotech Reports Financial Results for the First Quarter of Fiscal 2009 KAILUA KONA, Hawaii (

Cyanotech Reports Financial

Results for the First Quarter of Fiscal 2009

KAILUA KONA, Hawaii (August 15, 2008) Cyanotech

Corporation (Nasdaq Capital Market: CYAN), a world leader in producing

high-value nutrition and health products from microalgae, today announced

financial results for the first quarter of fiscal 2009, ended June 30,

Revenues for the first quarter of fiscal 2009

increased 43% to $3,701,000, compared to revenues of $2,583,000 for the first

quarter of fiscal 2008. Gross profit for the current first quarter was

$1,304,000, with gross profit margin of 35%, compared to a gross profit of

$746,000 and gross profit margin of 29% reported for the same quarter of the

prior year. Net income for the first quarter was $271,000, or $0.05 per basic

and diluted share, compared to net loss of $382,000, or ($0.07) per basic and

diluted share for the first quarter of fiscal 2008.

Sales for the first quarter of fiscal year 2009

increased due to increases in both spirulina and natural astaxanthin product

sales. Spirulina sales increased 33% over the same period of fiscal year 2008,

primarily due to increased units sold of both bulk and packages products while

prices increased only slightly. Natural astaxanthin product sales increased as

well over the comparable prior year period due to an increase in sales of both

bulk and packaged astaxanthin products. Bulk products sales increased by 49%

while packaged nutrition products increased by 126%.

The improvement in net income is the result of

increased sales, increased gross profit and a reduction in operating expenses.

Cash and cash equivalents

were $1,099,000 as of June 30, 2008 compared to the March 31, 2008

balance of $1,090,000. Working capital

was $3,289,000 at June 30, 2008 compared to $3,092,000 at March 31,

We are pleased with first quarter fiscal year 2009

results, said Andrew H. Jacobson, President and Chief Executive Officer. The team really pulled together, there were

improvements in all aspects of the business, including production. Our recent

accomplishments in no way suggest we have turned our issues around, but they do

show momentum toward continued improvement.

Mr. Jacobson went on to say, We expect continued

pressure on input costs going forward and this could cause margins to decline

in future periods. As everyone is aware, rising fuel and energy costs have

taken a toll. This issue is not unique to Cyanotech Corporation. After careful

evaluation, we have determined that we can no longer absorb fuel and energy

increases, especially being located in Hawaii, which has some of the highest

energy costs in the world. We therefore will be instituting a price increase

across all our products. The increase should be fully implemented by the middle

of the third quarter of fiscal year 2009.

About Cyanotech Cyanotech

Corporation, a world leader in microalgae technology, produces BioAstin Natural Astaxanthin and Hawaiian Spirulina Pacifica all natural, functional nutrients that

leverage our experience and reputation for quality, building nutritional brands

which promote health and well-being. Cyanotech s spirulina, FDA reviewed and

accepted as Generally Recognized as Safe (GRAS) for use as a food ingredient,

augments energy and immune response. BioAstin s benefits derive from its

superior antioxidant activity and from its ability to support and maintain

natural inflammatory response, enhancing skin, muscle and joint health. Cyanotech

produces these products from microalgae grown at its 90-acre facility in Hawaii

using patented and proprietary technology and distributes them to nutritional

supplement, nutraceutical and cosmeceutical makers and marketers in more than

40 countries worldwide. Cyanotech was

the first microalgae company in the world to obtain ISO

9001:2000. Visit www.cyanotech.com for more information.

Harbor Statement under the Private Securities Litigation Reform Act of 1995 Except for

statements of historical fact, the statements in this press release are

forward-looking. Such statements are

subject to a number of risks and uncertainties that could cause actual results

to differ materially from the statements made.

These factors include, but are not limited to, general economic

conditions, forecasts of sales in future periods, changes in sales levels to

our largest customers, weather patterns, production problems caused by

contamination, risks associated with the acceptance of new products,

competition, foreign exchange fluctuations, government regulation, and other

factors more fully detailed in the Company s recent Form 10-Q and annual

form 10-K filings with the Securities and Exchange Commission.

(Financial Tables Follow: The following tables do not contain

footnotes or other information contained in the Company s Form 10-Q for

the Quarter ended June 30, 2008. As such the following Financial Tables

are provided only as a guide and other factors are more fully detailed in the

Company s recent Form 10-Q and annual form 10-K filings with the

Securities and Exchange Commission.)

CYANOTECH CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Dollars in thousands, except per share amounts)

CYANOTECH CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands except par value and number of shares)