Cyanotech Corporation Form 8-K

KAILUA KONA, Hawaii (September 21, 2006) Cyanotech

Corporation (Nasdaq Capital Market: CYAN) announced today that its Board of

Directors at a meeting held on September 15, 2006 authorized a one for four

shares reverse stock split of its common stock to take effect on the date a

Certificate of Change relating thereto is filed with the Secretary of State of

the State of Nevada or at such later date as may be specified in such

Certificate not to exceed 90 days after such filing. The reverse stock split is expected to become

effective, taking into account the time required to print stock certificates

and to complete other details, no later than November 17, 2006.

As previously reported, the Company has appealed a

Nasdaq notice that its common stock is subject to delisting from the Nasdaq

stock market for its failure to file its Form 10-Q report for the quarter ended

June 30, 2006. The Company is also

subject to delisting for failure of the stock to trade at $1.00 per share or

above. The hearing on the failure to

file deficiency appeal is to be held on October 12, 2006. That hearing will

also consider the $1.00 per share trading deficiency, previously announced,

which made the stock subject to delisting on November 26, 2006.

The reverse stock split decision by the Board was

taken to bring the outstanding shares of common stock in line with the Company s

size and value and to bring the price of such stock into compliance with the

NASDAQ listing requirement of at least $1.00 per share. The closing price of the Company s common

stock on Nasdaq on September 20, 2006 was $0.47 per share. On such date there

were 20,928,265 shares of the common stock outstanding.

Harbor Statement under the Private Securities Litigation Reform Act of 1995

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 Form 10-Q and annual form 10-K

filings with the Securities and Exchange Commission.

Kaahumanu Highway, #102 ~ Kailua-Kona, Hawaii 96740

fax (808) 329-3597 ~