Bruce Russell Russell Communications Group (310) 559-4955 x101 brucerussell@ruscom.com Cyanotech Reports Fourth Quarter and Fiscal 2006 Financial Results Fiscal year sales down 3%, fourth quarter sa

Reports Fourth Quarter and Fiscal 2006 Financial Results

sales down 3%, fourth quarter sales up 27%

is scheduled for 5:30 pm EDT on May 24, 2006

KAILUA KONA, Hawaii (May 24,

2006) 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 fourth quarter and fiscal year 2006, ended March 31,

Fourth Quarter of Fiscal 2006

Sales for the fourth

quarter of fiscal 2006 were $3,252,000, up 27% from sales of $2,560,000 for the

fourth quarter of fiscal 2005. Gross profit for the fourth quarter was

$1,072,000, with gross profit margin of 33%, compared to a gross profit of

$714,000 and gross profit margin of 28% reported for the same quarter of the

prior year. Net income for the fourth quarter was $194,000, or $0.01 per

diluted share, compared to a net loss of $74,000, or ($0.00) per diluted share

for the fourth quarter of fiscal 2005.

Cash and cash equivalents

and short-term investments were $2,535,000 as of March 31, 2006 compared

to the March 31, 2005 balance of $3,005,000. Working capital was

$5,525,000 at March 31, 2006 compared to $5,102,000 at March 31,

Higher revenue for the

fourth quarter reflected increased order levels for spirulina products and, to

a lesser extent, for NatuRose and BioAstin, said Gerald R. Cysewski, Ph.D.,

Cyanotech s Chairman, President and CEO. Sales of Cyanotech s combined product

lines increased compared to the fourth quarter of fiscal 2005.

quarter, Cyanotech holds a leading share of the high-quality segment of the

spirulina market, but purchasing patterns among our customers are variable. Fourth-quarter

spirulina sales indicate strength in this core market.

BioAstin sales continued

to expand in the fourth quarter of fiscal 2006 with a reduction of orders from

one large customer more than offset by sales to new customers, as a result of

our marketing program in this area.

NatuRose sales for the fourth quarter of

fiscal 2006 to aquaculture markets in Japan were lower than the comparable

period in fiscal 2005 as Sea Bream sales remained reduced and growers used less

natural astaxanthin in their feed. We now feel that this condition is likely to

persist. Overall NatuRose sales were slightly higher compared to the fourth

quarter of fiscal 2005 due to initial ordering by customers in other markets. We

are seeking to expand NatuRose sales to additional markets, such as salmon feed

producers whose customers seek an all-natural designation for their products.

Sales of finished consumer products increased

in the fourth quarter based on new international customers and increased sales

73-4460 Queen Kaahumanu Highway, #102 ~

Kailua-Kona, Hawaii 96740

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

For fiscal 2006, Cyanotech

reported sales of $11,131,000, compared to sales of $11,445,000 for the prior

fiscal year. Gross profit for fiscal 2006 was $3,299,000 with gross profit

margin of 30%, compared to gross profit of $3,818,000 and gross profit margin

of 33% for the prior fiscal year. Decreased gross profit for fiscal 2006 is

attributable to increased natural astaxanthin and other per-unit production

costs due to reduced production volumes reflecting customer demand. This

condition will persist until order levels and production increase on a

sustained basis. Additionally, Cyanotech has experienced higher costs for all

aspects of operations, including imported materials and ingredients, due to

higher energy costs, reflecting the Company s position as an island producer

importing from and exporting to worldwide markets and over 40 countries. The

Company reported a net loss of $268,000, or ($0.01) per diluted share for

fiscal 2006 compared to net income of $486,000, or $0.02 per diluted share

reported for the prior fiscal year.

News Events in the Fourth Quarter

quarter, Cyanotech participated in the Natural Products Expo West trade show in

Anaheim, California where Dr. Cysewski conducted a standing-room-only

seminar on BioAstin Natural Astaxanthin, Nature s Anti-Inflammatory . The presentation may be viewed on the

Company s website at www.cyanotech.com

Cyanotech also reported

the results of two clinical studies of BioAstin during the quarter.

One study evaluated the effects of BioAstin in humans for alleviating

pain associated with Tennis Elbow (Tendonitis or lateral humeral epicondylitis).

The double-blind study by an independent research group found that subjects who

took BioAstin for 56 days showed a significant increase of 93% in grip strength

measurements (GSM) without pain. This correlation of improved GSM without pain

and use of BioAstin suggests that daily use may help alleviate pain

associated with Tennis Elbow, and increase related mobility.

A preliminary study measured the effects of BioAstin

in humans in reducing systemic inflammation as measured by levels of

C-Reactive Protein (CRP) in blood serum. The double-blind study by an

independent research group found that subjects who took BioAstin for 56 days

showed an average decrease in their measured CRP levels of over 20%. Subjects

who took Placebo showed no such decrease. This finding was based on a small

sample size and should be replicated in a larger study before firm conclusions

can be reached. The finding of such a substantial average reduction in CRP

after a regimen of BioAstin is a promising result that deserves further

Protein (CRP) is one of the acute phase proteins that increase during systemic

inflammation. Testing CRP levels in the blood may be a new way to assess cardiovascular

disease risk, according to the American Heart Association

(www.americanheart.org).

Previous studies have

provided data suggesting that daily use of BioAstin can help alleviate pain

associated with joint damage, specifically in carpal tunnel syndrome,

rheumatoid arthritis and joint soreness after strenuous exercise.

More information on the

studies may be viewed at www.cyanotech.com

Cyanotech initiated a

broad-based public relations campaign during the fourth quarter for BioAstin,

the company s leading product for human nutrition and health. The program

targets consumer media to promote growing consumer awareness of BioAstin and

induce consumers to purchase the product from Cyanotech s customers, which

include Vitamin Shoppe, Now Foods, Health Plus, Twin Laboratories, Jarrow