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CYANOTECH RECEIVES INITIAL FUNDING FOR BETA-CAROTENE FACILITY

 KAILUA-KONA, Hawaii, Sept. 1 /PRNewswire/ -- Cyanotech Corp. (NASDAQ: CYAN) announced that it has received an equity investment of $600,000 which it will use to begin construction on an eight-acre natural beta-carotene production facility. The production facility will consist of eight 500,000-liter algal culture ponds, with a surface area of 4.8 acres, and a 3,000-square-foot process and warehouse building. When completed, the entire facility is expected to produce natural beta- carotene from microalgae with an approximate annual sales value of $2.1 million. Contingent upon receiving additional financing totaling $1.2 million, the production facility is expected to be completed in 12 months.
 Natural beta-carotene from the microalgae Dunaliella salina is a concentrated plant source of pro-Vitamin A, which, unlike Vitamin A, is non-toxic even in very high doses. Recent independent studies have shown a correlation between diets high in beta-carotene and lowered risk of certain cancers and heart disease. As a result, the National Cancer Institute recommends increasing the dietary intake of natural beta- carotene.
 Cyanotech plans to grow the microalgae, Dunaliella salina, and extract the beta-carotene from it. Utilizing proprietary technology developed by the company between 1987 and 1989 at a cost of over $2 million, Cyanotech plans to annually produce over 35,000 kilograms of its Konatene(TM) beta-carotene product worth an estimated $2.1 million at the current market price.
 Cyanotech President and Chief Executive Officer Dr. Gerald Cysewski said, "Because of the growing worldwide demand for beta-carotene and other natural food products, this project represents a significant growth opportunity for the company. Although we have only a third of the financing required to complete the facility, I am confident we will be successful in arranging the remaining financing, and the project will not be delayed as a result. By starting construction on the beta- carotene facility now, we can utilize the construction equipment that is currently at our facility for the four-acre Spirulina production expansion and realize substantial savings. In the event the remaining financing for this project is delayed, the culture ponds funded from this initial financing will be used to produce Spirulina and microalgal products other than beta-carotene."
 The $600,000 in funding for the beta-carotene facility is from the sale of 600,000 restricted shares of the company's common stock to a private investor for $600,000 cash. The same investor previously purchased a total of 1,200,000 restricted shares of common stock in May and June 1993, bringing the investor's total ownership of the outstanding shares of common stock of the company to 22 percent (or 15 percent of the outstanding common stock, assuming full conversion of the convertible preferred stock). This investor is now the second largest holder of the company's common stock.
 Cyanotech Corp. is a leader in marine biotechnology, producing algal products for worldwide nutritional and pharmaceutical markets, based on proprietary production and processing systems. The company's current products include Spirulina Pacifica(TM), a high-protein beta-carotene- rich nutritional product; and phycobiliproteins which are fluorescent pigments used in immunological diagnostics. Nutrex Inc., the company's wholly owned subsidiary, produces and markets a line of Spirulina-based nutritional products for the retail market.
 -0- 9/1/93 R
 /CONTACT: Ronald P. Scott, vice president of finance of Cyanotech, 808-326-1353/
 (CYAN)


CO: Cyanotech Corp. ST: Hawaii IN: FOD SU:

GK -- SF003R -- 7825 09/01/93 09:36 EDT
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Publication:PR Newswire
Date:Sep 1, 1993
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