Aquasearch Announces Major Cost Reduction Efforts.

Business Editors & Health/Medical Writers

BIOWIRE2K

KAILUA-KONA, Hawaii--(BW HealthWire)--Nov. 2, 2001

The Company Also Announces That an Involuntary Bankruptcy Petition

Recently Filed by Five Individuals is Without Merit

Aquasearch, Inc. (OTCBB:AQSE), a global leader in photobioreactor technology, today announced that it has embarked on a major cost reduction campaign in an effort to achieve profitability. The Company has furloughed most of its production staff while retaining key marketing, technical and support personnel. Personnel were decreased by 45%, which brought the organization to a total of 16 full time employees.

Expenses have been reduced from approximately $4.8 million for fiscal year 2001 to an estimated $2.4 million for fiscal 2002. For fiscal year 2001, the Company estimates it will achieve roughly $1 million in revenues. This compares to $200,000 for the fiscal year 2000, or a potential increase of 500%. The Company believes that it will be able to maintain this growth rate throughout fiscal year 2002. The cost reductions have reduced expenses by approximately 50% and the Company feels that if sales growth continues along this same line, that profitability can be reached more quickly during the next fiscal year.

"We intend to focus the Company's efforts and resources on the continued marketing of The AstaFactor(TM) in Hawaii and on the previously announced mainland rollout," said Mark Huntley, Ph.D., Chief Executive Officer of Aquasearch.

Due to improved processes, the Company stated that it has sufficient inventory on hand to sustain expected order flow for The AstaFactor(TM) for some time. The improved production and extraction techniques can be credited to the efforts of Dr. Michael Cushman who joined the company a little over a year ago. "Dr. Cushman's efficiencies have increased the Company's ability to produce astaxanthin by five fold. This has helped Aquasearch maintain its position as one of the worlds top producers of high quality product," stated Huntley.

The Company will focus almost all its resources on ramping up sales of The AstaFactor(TM), but it will also continue its work with the US Department of Energy on the greenhouse mitigation project, and on efforts to secure new drug development deals.

In addition, Aquasearch has also recently entered into negotiations with several different entities regarding potential strategic joint ventures, which could increase sales and distribution of both astaxanthin and The AstaFactor(TM). These potential strategic joint ventures may also involve capital infusion for the Company.

Aquasearch was also recently made aware of an involuntary bankruptcy petition that has been filed against it in Federal bankruptcy court. The petitioners include a recently terminated employee and four other individuals. The claims of these individuals are disputed. Aquasearch management questions the good faith of the creditors and the legitimacy of the petition.

Mark Huntley, Aquasearch Chairman & CEO said, "Aquasearch is not in bankruptcy. These debt claims are in dispute and I feel these petitioners have no valid claims. There appears to be some hidden agenda on the part of these people, as they have made no formal communication with us in the past six weeks. We intend to vigorously oppose the petition and take further action, including seeking sanctions from the Court in what appears to be a bad faith filing by these individuals."

Dr. Huntley concluded by stating, "In October, Aquasearch had record sales which represented our best month ever. We initiated the California roll-out yesterday with our first sale of The AstaFactor(TM) to our mainland distributor and we fully anticipate that November and beyond should be equally impressive."

About Aquasearch, Inc.

Aquasearch is a biopharmaceutical company dedicated to the discovery, development, and commercialization of prescription drugs and over-the-counter nutraceuticals from microalgae. Aquasearch is a world leader in commercial photobioreactor technology, which enables large-scale cGMP production of single cell plants. Although plants have proven to be the most successful source of new drugs, more than 30,000 species of single cell plants remain unexploited in health and medicine.

Aquasearch's first nutraceutical, The AstaFactor(TM), is a natural dietary supplement rich in astaxanthin, a potent antioxidant with anti-inflammatory properties. The AstaFactor(TM), is expected to be available at many more retail outlets on the U.S. mainland later this year.

"Safe-Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, including statements regarding the outcome of Aquasearch's cost cutting campaign, drug discovery activities, the potential market for The AstaFactor(TM), continued revenues, efforts to accelerate sales and reach profitability, the Company's potential to raise additional financing, statements regarding the validity of claims made against the company, statements regarding the intentions of the individuals who made such claims, as well as statements that include the words "believe," "expects," or similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Aquasearch to differ materially from those implied or expressed by such forward-looking statements. Such factors include, among others, the risk factors included in Aquasearch's Annual Report on Form 10-KSB for the fiscal year ended October 31, 2000 and any subsequent reports filed with the Securities and Exchange Commission under the Exchange Act. This press release speaks as of the date first set forth above and Aquasearch assumes no responsibility to update the information included herein for events occurring after the date hereof.