Cyanotech Corporation Reports Fourth Quarter and Fiscal Year-End 2005 Financial Results; Company Reports Net Income of $486,000 for the Fiscal Year Ended

CYANOTECH EXHIBIT 99.1

Cyanotech Corporation Reports Fourth Quarter

and Fiscal Year-End 2005 Financial Results; Company Reports Net Income

of $486,000 for the Fiscal Year Ended March 31, 2005

KAILUA KONA, Hawaii--(BUSINESS WIRE)--May 16, 2005--Cyanotech

Corporation (Nasdaq:CYAN), a world leader in producing high-value

natural products from microalgae, today announced financial results

for the fourth quarter and fiscal year ended March 31, 2005.

Financial Results -- Fiscal 2005

For the 12 months ended March 31, 2005 (Fiscal 2005), the Company

reported net income of $486,000, or $0.02 per diluted share, a net

income increase of 22% from the $399,000, and $0.02 per diluted share

reported a year ago. Despite the impact of weather on our Japan

operations this past year the Company achieved comparable year-to-year

sales and gross profit margins with fiscal 2005 net sales of

$11,445,000 compared to $11,582,000 reported a year ago. Gross profit

was $3,818,000 with gross profit margin of 33% in the current year

compared to $3,940,000 and 34% respectively reported for fiscal 2004.

Foreign sales accounted for 49% of net sales for fiscal 2005 compared

During fiscal 2005, operating expenses increased slightly to

$3,256,000, from the $3,211,000 reported for the prior fiscal year.

The Company recorded income from operations for fiscal 2005 of

$562,000, a decrease of 23% from $729,000 reported for the prior

fiscal year, due primarily to the $108,000 increase in research and

development expenses and decreased gross profit. Other expense for the

12 months ended March 31, 2005 was $117,000, compared to $255,000

reported for the prior fiscal year, due primarily to reduced interest

expense on less debt.

The Company ended fiscal 2005 with increased working capital of

$5,102,000, compared to $4,083,000 at the beginning of the fiscal

year. At March 31, 2005 the Company had cash, cash equivalents and

short-term investments totaling $3,005,000, compared to cash and cash

equivalents of $2,531,000, at March 31, 2004.

Financial Results -- Fourth Quarter FY 2005

For the fourth quarter of fiscal 2005, the Company reported a net

loss of $74,000, or ($0.00) per diluted share, in contrast to the net

income of $441,000 or $0.02 per diluted share for the comparable prior

year period. Net sales for the fourth quarter of fiscal 2005 were

$2,560,000, a decrease of 22% from net sales of $3,290,000 for the

comparable prior year quarter. This sales decrease for the fourth

quarter of fiscal 2005 is due primarily to lower bulk sales of

Spirulina and NatuRose(R), offset somewhat by increased bulk sales of

BioAstin(R). Foreign sales were 52% and 53% of total sales in the

fourth quarters of fiscal years 2005 and 2004, respectively.

Gross profit for the fourth quarter of fiscal 2005 was $714,000, a

decrease of 40% compared to gross profit of $1,191,000 for the

comparable period of the prior year. The Company reported gross profit

margin of 28% for the fourth quarter of fiscal 2005, down from 36% for

the fourth quarter of the prior year. During the fourth quarter of

fiscal 2005, the Company completed a periodic maintenance of pond

liners which resulted in higher unit costs of production and

correspondingly, a decrease in gross profit margins.

Operating expenses for the fourth quarter of fiscal 2005 were

$804,000, or 31% of sales, an increase of $68,000 from the comparable

period of the prior fiscal year ($736,000 and 22% of sales). The

combined effect of lower net sales and the decreased gross profit

margins resulted in a loss from operations of $90,000, for the three

months ended March 31, 2005, in contrast to the comparable period of

the prior fiscal year when the Company reported income from operations

of $455,000. Other expense for the quarter ended March 31, 2005

amounted to $46,000, compared to $35,000 for the comparable period of

the prior fiscal year.

Cyanotech ended the quarter with higher backlog orders for

Spirulina products compared to that of a year ago. Demand for

Spirulina products remains strong and with the Company's pond

maintenance complete, Cyanotech is adjusting production to meet this

demand. The increased capacity for natural astaxanthin production has

allowed the Company to meet current demand for all natural astaxanthin

products. Management believes sales of NatuRose into the Japan

aquaculture market in the coming year will return to levels consistent

with that experienced in fiscal 2004. The Company does, however,

anticipate increased competition in all markets.

"Although our fiscal 2005 results did not meet our expectations we

were able to maintain revenue levels consistent with the prior year

despite the impact of weather-related difficulties encountered by our

Japan aquaculture customers," said Gerald R. Cysewski, Ph.D.,

Chairman, President and Chief Executive Officer. "During this year we

concluded our pond conversion plan thereby greatly improving our

ability to meet market demand. It is no small feat that these

improvements were funded entirely from operations while we

concurrently increased our working capital by 25% from a year ago. We

now have a better production infrastructure in place and will be

focusing our efforts in the coming year on increasing our market share

for NatuRose and BioAstin through scientific studies and promotional

Cyanotech Corporation, a world leader in microalgal technology,

produces high-value natural products from microalgae and is the

world's largest commercial producer of natural astaxanthin (pronounced

"asta-zan-thin") from microalgae. Products include BioAstin(R) natural

astaxanthin, a powerful antioxidant with expanding applications as a

human nutraceutical; NatuRose(R) natural astaxanthin for the

aquaculture and animal feed industries; Spirulina Pacifica, a

nutrient-rich dietary supplement; and phycobiliproteins, which are

fluorescent pigments used in the immunological diagnostics market.

Spirulina Pacifica and BioAstin are sold directly online through the

Company's website, www.nutrex-hawaii.com, as well as through resellers

in over 30 countries worldwide. Technical information for the

Company's phycobiliproteins products is available at

www.phycobiliprotein.com. Corporate data and other product information

are available at www.cyanotech.com.

"Safe Harbor" Statement under the Private Securities Litigation