Cyanotech Board Approves 1-for-4 Reverse Stock Split and Other News.

KAILUA KONA, Hawaii -- 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.

The Company also announced that it has undertaken specific initiatives in the marketing, sales, production, and scientific areas. Initiatives include the elimination of certain middle management positions, which has increased communication and management effectiveness within the Company's sales and production departments. The Company has also restructured its sales force to bring sales persons into closer contact with customers and their needs. The Company is also conducting a search for an East Coast US-based sales employee to provide a closer link with customers across the Atlantic. Production, facing competition from the robust Hawaii construction industry, is taking specific steps to retain and promote skilled workers as well as taking measures to increase efficiency and reduce costs. With the foregoing initiatives in place, the Company expects that its Chairman, President, and Chief Executive Officer, Gerald R. Cysewski, Ph.D., will be able to focus more of his time on scientific developments and on improving the Company's products and processes. The Company also plans to expand its scientific and accounting staffs.

Spirulina products, such as our Hawaiian Spirulina Pacifica, were recently featured in an article in a leading magazine. The September/October 2006 issue of "AARP The Magazine," said to be the world's largest circulation magazine, published an article on the experiments of researcher Paula Bickford, Ph.D. of the University of South Florida Center of Excellence for Aging and Brain Repair. In the AARP article, spirulina was described as containing "not only the antioxidant phycocyanin but also a bundle of protein, plus omega fatty acids. Once a mainstay food of the Aztecs, spirulina additionally works as an ibuprofenlike nonsteroidal anti-inflammatory." Previously, in "The Journal of Neuroscience" Dr. Bickford reported that spirulina "has demonstrated improved neuron function in the brain, a suppression of inflammatory substances in the brain and a decrease in oxidative damage." The Company believes such articles are effectively spreading the benefits of our Hawaiian Spirulina Pacifica to many new customers.

About Cyanotech -- Cyanotech Corporation, a world leader in microalgae technology, produces BioAstin(R) Natural Astaxanthin and Hawaiian Spirulina Pacifica(R) -- all natural, functional nutrients that enhance human health and nutrition. Cyanotech's spirulina, FDA reviewed and accepted as Generally Recognized as Safe (GRAS) for use as a food ingredient, augments energy and immune response. BioAstin's benefits derive from its superior antioxidant activity and from its ability to support and maintain natural inflammatory response, enhancing skin, muscle and joint health. NatuRose(R) Natural Astaxanthin is a natural pigment source that also promotes animal health and nutrition, primarily in aquaculture. Phycobiliproteins are fluorescent pigments used in medical diagnostic testing and research. Cyanotech produces these products from microalgae grown at its 90-acre facility in Hawaii using patented and proprietary technology and distributes them to nutritional supplement, nutraceutical, cosmeceutical, and animal feed makers and marketers in more than 40 countries worldwide. Cyanotech was the first microalgae company in the world to obtain ISO 9001:2000. Visit www.cyanotech.com for more information.

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

Except 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 Form 10-Q and annual form 10-K filings with the Securities and Exchange Commission.