Aquasearch Reports Third Quarter Financial Performance.

Business Editors & Health/Medical Writers

BIOWIRE2K

KAILUA-KONA, Hawaii--(BW HealthWire)--Sept. 20, 2001

- On A Sequential Quarter-Over-Quarter Basis, Company Achieves 99% Growth In
Product Sales and Realizes 85% Increase In Contract Revenues.

- Revenue Ramp-Up Results In 37.5% Decrease In Net Losses For The Three Month
Reporting Period Ended July 31, 2001.

- Aquasearch Receives Approval Of Planned Expansion Initiatives At Special
Meeting Of Company Shareholders.

Aquasearch, Inc. (OTCBB:AQSE), a global leader in photobioreactor technology, today announced results for its third fiscal quarter ended July 31, 2001.

During fiscal 2001, the Company has focused on transitioning from a development stage enterprise to a full-scale commercial producer of microalgae products for the nutraceutical and biopharmaceutical markets. Consequently, the Company reported that revenue increased from $0 in the three months ended July 31, 2000 to $268,710 in the three months ended July 31, 2001. Aquasearch generated $48,000 in product sales during the three months ended July 31, 2000, however, management elected to classify this revenue as other income, since it was considered to be incidental to the Company's ongoing research and development activities. Due primarily to the ramp-up in revenue, the Company reduced net losses by 37.5% to $833,234, or $.01 loss per share, for the three months ended July 31, 2001, compared to net losses of $1,334,198, or $.01 loss per share, reported for the comparable three month period in the previous fiscal year.

For the nine month reporting period ended July 31, 2001, Aquasearch generated $737,427 in revenue compared to no revenue for the same nine month period in fiscal 2000. For the same reasons noted above, $186,000 in product sales, realized during the nine month period ended July 31, 2000, were booked as other income on the Company's financial statements. Net losses for the current nine month period decreased by 17.3% to $2,883,734, or $.03 loss per share, from net losses of $3,488,142, or $.04 loss per share, posted for the same nine month period in the prior fiscal year.

On a sequential quarter-over-quarter basis, Aquasearch doubled its sales of The AstaFactor(TM), the Company's first major nutraceutical market introduction, from $60,000 in the second fiscal quarter of 2001 to $143,000 in the third fiscal quarter of 2001. The Company also recognized approximately $30,000, $54,000 and $100,000 of revenues for the quarters ended January 31, April 30 and July 31, 2001, respectively, pursuant to its subcontract with Physical Sciences, Inc. for its work on the U.S. Department of Energy project.

Dr. Mark Huntley, Chairman and Chief Executive Officer of Aquasearch, stated, "We are well aware of the need for continued financing to defray the narrowing difference between expenditures and revenues. Even though we have reduced our net losses over the past year, we still need to significantly increase revenues before the need for interim financing effectively disappears. The competition for financial resources is especially challenging right now, but I am confident that our business model and our track record are will attract qualified investors."

The Company has a number of other nutraceutical products in development, many of which are proprietary to Aquasearch. They are also exploring product line extensions, brand extension, as well as producing other microbial plant-based products that are currently on the market and enjoy wide distribution and acceptance. "We believe that our Company has a unique market advantage over other manufacturers who do not have patented, platform technology capable of mass producing all microalgae-based nutritional supplements, including popular products such as, Beta-carotene ($200 million plus market), Super-Blue-Green Algae ($200 million market) and Chlorella and Spirulina (combined estimated market of more than $150 million)," stated Dr. Huntley.

Dr. Huntley added, "We are very pleased with the progress that we are making in every area of our business development. Specifically, initial test marketing of The AstaFactor(TM) to Hawaiian consumers has resulted in over 80 Hawaiian retail outlets now carrying the product. Aquasearch is currently involved in aggressively pursuing similar distribution channels on the U.S. mainland for The AstaFactor(TM) and is attempting to finalize several key marketing and distribution alliances over the next several months."

In addition, on the biopharmaceutical front, Aquasearch is currently negotiating collaborative research agreements with several biopharmaceutical companies that could generate revenues through technology access fees, milestone payments and royalties. By leveraging its exclusive rights to more than 100 unique, bioactive compounds from microalgae developed by the University of Hawaii, it is the Company's intent to continue developing patentable molecules in the UH collection over the next several years. These molecules can then be screened against numerous infective diseases in a variety of pre-clinical trials, thus offering large biopharmaceutical companies a significant number of new bioactive chemical structures for their product pipelines.

In other news, the Company reported that at a special meeting of its shareholders held on September 14, 2001, shareholders of record as of the close of business on July 31, 2001 approved the reelection of all existing directors for the ensuing year, as well as an amendment to the Company's Articles of Incorporation increasing the number of shares of authorized common stock of the Company from 150 million to 200 million. Shareholders also voted in favor of changing the Company's state of incorporation from the State of Colorado to the State of Delaware, and approved the form of indemnification agreement to be entered into between Aquasearch and its officers and directors.

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), now at all Longs Drugs and Wal-Mart stores in Hawaii, is expected to be available at many more retail outlets on the U.S. mainland later this year. For more information, please visit the Company's Web site at http://www.aquasearch.com.

"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 drug discovery activities, the potential market for The AstaFactor(TM), continued revenues, the Company's potential to raise additional financing, 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.