Exhibit 99.1

RISK FACTORS

You should carefully consider the risks described below. The risks described are not the only ones we face. Any of the following risks could have a material
adverse effect on our business, financial condition and operating results. You should also refer to the other information contained in this report, including our financial statements and the related
notes.

A Significant or Prolonged Economic Downturn Could have a Material Adverse Effect on Our Results of Operations.

Our results of operations are affected by the level of business activity of our clients and customers, which in turn is affected by the level of economic activity
in the industries and markets that they serve. A decline in the level of business activity of our clients could have a material adverse effect on our revenues and profit margin.

Our Quarterly Operating Results May vary from Quarter to Quarter, Which May Result in Increased Volatility of Our Share Price.

We have experienced, and may in the future continue to experience, fluctuations in our quarterly operating results. These fluctuations could reduce the market
price of our Common Stock.

Factors
that may cause our quarterly operating results to vary include, but are not limited to:



A
significant portion of our expense levels are relatively fixed, and the timing of increases in expense levels is based in large part on our forecasts of future sales. If net sales are
below expectations in any
given period, the adverse impact on results of operations may be magnified by our inability to adjust expenses quickly enough to compensate for the sales shortfall.

Our Global Operations Post Complex Management, Foreign Currency, Legal, Tax and Economic Risks, Which We May Not Adequately Address

We conduct business in a number of countries around the world. In the fiscal year ended March 31, 2003, approximately 54% of our net revenues were from
sales to foreign customers. As a result, we are subject to a number of risks which include, but are not limited to:



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Competition in Our Industry is Intense

The nutritional products market is highly competitive. It includes international, national, regional and local producers and distributors, many of whom have
greater resources than Cyanotech and many of whom offer a greater variety of products. Increased competition in our industry could result in price reductions, reduced gross profit margin or loss of
market share, any of which could have a material effect on our business, results of operations and financial condition.

Our Revenues Could Be Adversely Affected by the Loss of a Significant Customer or the Failure to Collect a Large Accounts Receivable.

We have in the past derived, and may continue in the future to derive, a significant portion of our revenues from a relatively limited number of major customers.
From quarter to quarter, revenues from one or more individual customers may exceed 10% of our revenues for the quarter. During the fiscal year ended March 31, 2003, sales to one customer,
Spirulina International, were approximately 17% of net revenues. If sales to this customer or other such major customers, decrease significantly, this may materially affect our results of operations.
In addition, if we fail to collect large accounts receivable from such major customers we could be subject to significant financial exposure.

If We Are Unable to Protect Our Intellectual Property Rights of If We Infringe Upon the Intellectual Property Rights of Others Our Business May Be Harmed.

Cyanotech has received five United States patents; two on aspects of our production methods and three for use of our BioAstinproducts.
Although we regard our proprietary technology, trade secrets, trademarks and similar intellectual property as critical to our
success, we rely on a combination of trade secret, contract, patent, copyright and trademark law to establish and protect our rights in our products and technology. There can be no assurance that we
will be able to protect our technology adequately or that competitors will not be able to develop similar technology independently. In addition, the laws of certain foreign countries may not protect
the Company's intellectual property rights to the same extent as the laws of the United States. Litigation in the United States or abroad
may be necessary to enforce our patent or other intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against
claims of infringement. Such litigation, even if successful, could result in substantial costs and diversion of resources and could have a material adverse effect on our business, results of
operations and financial condition. Additionally, if any such claims are asserted against us, we may seek to obtain a license under the third party's intellectual property rights. There can be no
assurance, however, that a license would be available on terms acceptable or favorable to us, if at all.

Market Price for Our Common Stock Has Been Unpredictable; Potential Delisting.

Our Common Stock is presently listed on the NASDAQ SmallCap Market. The Company's Common Stock has until September 10, 2003 to demonstrate compliance with
Marketplace Rule 4450(a)(5) in order to remain listed. If at anytime before September 10, 2003, the bid price of the Company's Common Stock closes at $1.00 per share or more for a
minimum of 10 consecutive trading days, NASDAQ Staff will provide written notification that the Company complies with listing

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requirements
for the SmallCap Market. If compliance with this rule cannot be demonstrated by September 10, 2003, NASDAQ Staff will provide written notification that the Company's securities
will be delisted from the SmallCap Market and begin trading on the NASDAQ Over-The-Counter Bulletin Boards. In such case Common Stock of the Company will be traded on a less
active market to the possible detriment of the stockholders.

We May Need to Raise Additional Capital in the Future Which May Not Be Available.

During the years ended March 31, 2003, 2002 and 2001, the Company incurred losses of $1,775,000, $2,589,000 and $1,067,000, respectively. At
March 31, 2003 the Company's working capital was $2,352,000 with cash balances amounting to $579,000. The Company's continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis, to comply with the terms of its financing agreements, to obtain additional financing or refinancing as may be required, to attain
profitability, or a combination thereof. There can be no assurance that our efforts will be successful or that the Company will return to generating profit on either a quarterly or annual basis.

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