Corporation: Investors and Media: Cyanotech Corporation Russell Communications Group Jeffrey H. Sakamoto Bruce Russell (808) 326 1353 (310) 559 4955 x101 jsakamoto@cyanotech.com brucerusse

Cyanotech Corporation Reports

First Quarter Fiscal 2006 Financial Results

Reports Net Income of $153,000 on Sales of $3,029,000

KONA, Hawaii August 11, 2005 Cyanotech Corporation (Nasdaq SmallCap:

CYAN News), a world leader in producing high-value natural products from

microalgae, today announced results for the first fiscal quarter, ended June 30,

the three months ended June 30, 2005 the Company reported net sales of

$3,029,000, an increase of $322,000 or 12%, compared to sales of $2,707,000

reported for the comparable period of the prior fiscal year. Gross profit for the first quarter of fiscal

2006 was $1,025,000, an increase of 16% from gross profit of $887,000 for the

same period last year. The Company

reported gross profit margin of 34% for the current year quarter, a slight

increase from gross profit of 33% reported for the first quarter of the prior

expenses for the first quarter of fiscal 2006 were $817,000, an increase of 13%

from the $726,000 reported for the comparable period of the prior fiscal year, General

and Administrative and Sales and Marketing expense both increased; these

increases were partially offset by decreases in research and development

expense. Income from operations amounted

to $208,000, a 29% increase from income from operations of $161,000 reported

for the comparable quarter of the prior year.

Other expense, net for the first quarter of fiscal 2006 was $50,000, an

increase of 52% from other expense, net of $33,000 reported for the comparable

quarter of the prior fiscal year. The

Company reported net income of $153,000, or $0.01 per diluted share, an

increase from net income of $113,000, or $0.01 per diluted share, for the

comparable quarter of the prior fiscal year.

first quarter of fiscal 2006 was characterized by stronger sales of all of our

products compared to the first quarter of fiscal 2005 and the prior consecutive

quarter, said Gerald R. Cysewski, Ph.D., Chairman, President and Chief

Executive Officer. We have been cultivating

Spirulina Pacifica for 20 years at our Kona facility and our focus on quality,

product safety and high value has attracted customers who desire this high

quality product. In turn, this

translates into high demand for our Spirulina products. Our BioAstin anti-inflammatory antioxidant has

the same reputation for quality, safety and high value and as it is a

relatively new product, we are excited about its potential for increased sales. Contributing to our results for this quarter

were increased sales of NatuRose natural astaxanthin to the Japan aquaculture

market. We remain cautious about the

recovery rate of that market following the disruption caused by a severe

typhoon season a year ago. With the

completion of our production facility upgrade last fiscal year we are now able

to better adapt our cultivation and processing according to market trends. Our results may vary from quarter to quarter,

but our goal is to achieve annual revenue growth and increase profitability.

73-4460 Queen Kaahumanu

Highway, #102 - Kailua-Kona, Hawaii 96740

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

Corporation, a world leader in microalgal technology, produces BioAstin

natural astaxanthin and Spirulina Pacifica all-natural, functional nutrients

that enhance human health and nutrition, providing significant antioxidant,

anti-inflammatory and immune response benefits.

The Company s other compounds, such as NatuRose natural astaxanthin,

promote animal nutrition and health, primarily in aquaculture. Cyanotech extracts these compounds from

microalgae grown at its 90-acre facility in Hawaii using proprietary

processes, and distributes them to nutraceutical, nutritional supplement,

cosmeceutical and aquaculture feed makers and marketers worldwide. Corporate

data and product information are available at www.cyanotech.com

Harbor Statement under the Private Securities Litigation Reform Act of 1995

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.

Corporation will hold a conference call on Thursday, August 11, 2005 at

5:30 p.m. Eastern Time to be broadcast live over the Internet. It can be accessed by all interested parties

by linking through the Investor Broadcast Network s VCall website at

www.vcall.com or through Cyanotech s website, http://www.cyanotech.com. To access the simultaneous webcast on the

Cyanotech site, select the Recent News section from Cyanotech s home

page. Click on the announcement

entitled, Cyanotech Announces Fiscal Year 2006 First Quarter Financial Results

Webcast August 11, 2005. To listen

to the live call, please go to either website at least 15 minutes prior to the

start of the call to register, download, and install any necessary audio

software. For those who are not able to

listen to the live broadcast, a replay will be available shortly after the call

and will be archived for a period of one calendar year.

CYANOTECH CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(In thousands, except per share amounts)

thousands except per share amounts)