UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

        For the fiscal year ended March 31, 1998 Commission file 0-146-02

                              CYANOTECH CORPORATION
             (Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
<S>            <C>                                                               <C>
               Nevada                                                                91-1206026
  (State or other jurisdiction of                                                 (I.R.S. Employer
   incorporation or organization)                                                Identification No.)
</TABLE>
         73-4460 Queen Kaahumanu Hwy., Suite 102, Kailua-Kona, HI 96740
                    (Address of principal executive offices)

                                 (808) 326-1353
                         (Registrant's telephone number)

      Securities registered pursuant to Section 12(b) of the Exchange Act:
                                      NONE
      Securities registered pursuant to Section 12(g) of the Exchange Act:

                                 Title of class
                     Common Stock, Par value $.005 per share

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes/X/ No / /

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. /X/

      At June 5, 1998,  the aggregate  market value of the  registrant's  Common
Stock held by non-affiliates of the registrant was approximately $ 37,564,631.

      At June 5, 1998, the number of shares  outstanding of registrant's  Common
Stock was 13,599,572.


                       DOCUMENTS INCORPORATED BY REFERENCE

      Portions of Registrant's Annual Report to Stockholders for the fiscal year
ended March 31, 1998 are  incorporated  by reference into Part II and Part IV of
this Report.  Portions of the  Registrant's  Definitive  Proxy Statement for its
1998  Annual  Meeting  of  Stockholders,  to be filed  with the  Securities  and
Exchange  Commission  on or prior to July 29, 1998 and to be used in  connection
with the Annual Meeting of Stockholders  expected to be held September 17, 1998,
are incorporated by reference in Part III of this Form 10-K.


<PAGE>
                                     PART I


Item 1. Description of Business

      Except for historical  information contained in this document, the matters
discussed in this report contain forward  looking  statements that involve risks
and  uncertainties.  These  future  risks and  uncertainties  could cause actual
results to differ materially.

General

      Cyanotech Corporation is a leader in the development and commercialization
of high value products derived from  microalgae.  Microalgae are a diverse group
of over  30,000  species  of  microscopic  plants  which  have a wide  range  of
physiological and biochemical  characteristics and naturally contain high levels
of proteins,  amino acids,  vitamins,  pigments and enzymes. Since 1983, we have
designed,  developed  and  implemented  proprietary  production  and  harvesting
technologies,  systems and processes  which  eliminate many of the stability and
contamination  problems frequently  encountered in the production of microalgae.
We  believe  that our  technology,  systems,  processes  and  favorable  growing
location  permit  year-round  harvesting  of our  microalgal  products in a cost
effective manner.

      We currently  produce natural products from microalgae for the nutritional
supplement, aquaculture feed, and immunological diagnostics markets. Since 1985,
Cyanotech  has been  producing  microalgae-based  "Spirulina"  products  for the
vitamin and supplement  market.  Spirulina Pacifica(TM), which is our  principal
source  of  revenue,  is a unique  strain  of  Spirulina  developed  by us which
provides a vegetable-based,  highly absorbable source of natural  beta-carotene,
mixed carotenoids,  B vitamins, gamma linolenic acid ("GLA"), protein, essential
amino acids and other phytonutrients. We currently market our Spirulina products
in the United States and  thirty-seven  other countries  though a combination of
retail,  wholesale,  and private  label  channels.  In early 1997, we introduced
NatuRose(TM) to the worldwide aquaculture industry.   NatuRose is our brand name
for  natural  astaxanthin  (pronounced "as-ta-zan-thin").   Astaxanthin is a red
pigment from the microalgae, Haematococcus, and is used in aquaculture to impart
a pink  to  red  color  to pen-raised  fish and shrimp.  NatuRose  competes with
synthetic  astaxanthin  whose  worldwide  annual  sales  are  estimated  at more
than $150 million.

      Cyanotech has recently  increased its commitment to developing  microalgae
for the expression of native as well as heterologous  proteins through molecular
biology.  Because microalgae  naturally contain high levels of protein,  because
they have a uniform  cell  structure,  and because they can grow up to 100 times
faster than land plants,  they offer unique advantages over plant,  bacterial or
mammalian  systems for the  expression of proteins.  Like higher  plants,  algal
expression  systems can be produced on a large-scale  with culture volumes of up
to 600,000 liters without problems of  contamination by bacterial  endotoxins or
animal  viruses.  Unlike  higher  plants,  however,  the time  required  to grow
transgenic  algae  expressing the desired  protein is on the order of one to two
months  rather  than the one to two  years  that  would be  required  in corn or
soybeans,  for example.  Since 1996, Cyanotech has been developing a genetically
engineered biopesticide for the control of mosquitoes. A natural toxin gene from
Bacillus  thuringiensis  var.  israelensis  (Bti)  is being  transformed  into a
blue-green algae,  Synechococcus,  a food for mosquito larvae. When applied to a
mosquito-infested  body of  water,  the  algae  could  act as an  effective  and
environmentally  safe means of control.  In April 1998, we announced the signing
of a licensing  agreement and collaboration  with The Scripps Research Institute
in La Jolla,  California to produce a new compound for use in chiral  chemistry.
Under the terms of this  agreement,  Cyanotech will be responsible for the large
scale production and purification of a catalytic antibody which was generated in
the Scripps  laboratory  and  subsequently  expressed as a transgene in algae by
Scripps  scientists.  Cyanotech  intends  to  continue  to exploit  the  largely
untapped  commercial  opportunities of microalgae by producing  natural products
and also genetically engineered products through molecular biology.

                                       2
<PAGE>
      Cyanotech  Corporation is incorporated in Nevada. Our principal  executive
offices are located at 73-4460 Queen Kaahumanu Highway,  Suite 102, Kailua-Kona,
Hawaii  96740,  and our telephone  number is (808)  326-1353.  Unless  otherwise
indicated, all references in this report to the "Company", "we", and "Cyanotech"
refer  to  Cyanotech  Corporation,  a  Nevada  corporation,   its  wholly  owned
subsidiaries,  Nutrex, Inc., a Hawaii corporation,  and Cyanotech  International
FSC, Inc., a Barbados corporation.


Industry Background

      Microalgae  are a diverse  group of  microscopic  plants  that have a wide
range of physiological and biochemical  characteristics  and naturally  contain,
among other things, high levels of proteins, amino acids, vitamins, pigments and
enzymes.   Microalgae  have  the  following   properties  that  make  commercial
production  attractive:  (1) microalgae grow much faster than land grown plants,
often up to 100 times faster;  (2) microalgae have a uniform cell structure with
no bark, stems,  branches or leaves, which permits easier extraction of products
and higher  utilization of the microalgae cells; (3) the cellular  uniformity of
microalgae  makes it practical to manipulate and control  growing  conditions in
order to optimize a particular  cell  characteristic;  (4) microalgae  contain a
wide array of vitamins and other  important  nutrients;  (5) microalgae  contain
natural pigments; and (6) are a potential source of medical products.

      Current  commercial  applications  for these  microscopic  plants  include
nutritional  products,  diagnostic  products,  aquaculture  feed  and  pigments,
natural food colorings and research grade  chemicals.  The Company believes that
microalgae  could  potentially  be  used  for  other  commercial   applications,
including   genetically   engineered   products   for   the   biopesticide   and
pharmaceutical  industries.  The most significant  microalgae  products produced
today are algae utilized as food supplements.

      While many  unique  compounds  have been  identified  in  microalgae,  the
efficient  and cost  effective  commercial  production of microalgae is elusive.
Many  microalgae  culture  systems over the last 20 years have  failed.  Because
microalgae produced for food supplements are typically  cultivated and harvested
outdoors,  production is significantly  affected by climate,  weather conditions
and the chemical  composition of the culture media. Without consistent sunlight,
warm temperature,  low rainfall and proper chemical balance, microalgae will not
grow quickly,  resulting in longer harvesting cycles, decreased pond utilization
and increased cost. Furthermore, microalgal growth requires a very nutrient rich
environment.  The high  nutrient  levels  in the  ponds  promote  the  growth of
unwanted organisms, or "weeds," if the chemical composition of the ponds changes
from its required balance.  Once  contamination  occurs, a pond must be emptied,
cleaned and refilled,  a process that further  decreases  pond  utilization  and
increases production costs.


Cyanotech's Technology

         Since 1983, we have  designed,  developed and  implemented  proprietary
production and harvesting technologies,  systems and processes which reduce many
of the  stability  and  contamination  problems  frequently  encountered  in the
production  of  microalgae.  This  proprietary  production  system  is  known as
Integrated  Culture Biology  Management (or "ICBM").  Through the application of
this  technology,  our  Spirulina  culture  ponds can be  productive  year-round
without any significant loss in productivity  due to  contamination  and many of
our production  ponds, all based in Hawaii,  have been in continuous  production
since 1988. We believe that such an accomplishment remains unique to Cyanotech.

                                       3
<PAGE>
         In addition to the advantages of our ICBM technology, we have developed
a patented  system for the  recovery of carbon  dioxide  from our drying  system
exhaust  gas,  called  Ocean-Chill  Drying.  Since  microalgae  are  essentially
microscopic "plants", they require sunlight, water, carbon dioxide and nutrients
for optimal  growth.  By  recovering  carbon  dioxide  that would  otherwise  be
released into the atmosphere, we can divert the recovered carbon dioxide back to
the algae  cultures.  This  process  provides us with another  significant  cost
advantage  over other  microalgae  producers who must purchase  carbon  dioxide.
Moreover,   Ocean-Chill  Drying  dries  microalgal  products  in  a  low  oxygen
environment,  which protects oxygen sensitive  nutrients.  In addition,  we have
developed an  automated  Spirulina  processing  system,  which  enables a single
operator to harvest and dry the Spirulina powder.

         Another  major  advantage  for us is  the  location  of our  production
facility at the Hawaii Ocean  Science and  Technology  ("HOST")  Park at Keahole
Point,  Hawaii.  We believe that the combination of consistent warm temperature,
abundant  sunlight,  and low  rainfall  at this  facility  makes  this a  highly
favorable location for the economical, large-scale cultivation of microalgae. In
contrast to our  facility,  microalgae  producers in other areas  lacking  these
favorable characteristics stop producing for up to four months a year because of
less favorable climate or weather  conditions.  At the HOST Park, we have access
to cold,  clean,  deep sea water that is pumped from a depth of 2,000 feet. This
sea water is used both as a source of nutrients for microalgae  culture and as a
cooling agent in the Ocean-Chill Drying process.  Additionally, our facility has
access to a complete  industrial  infrastructure  and is located 30 miles from a
deep water port and adjacent to an international airport.

         Applying our experience in cultivating  and  harvesting  Spirulina,  we
began commercial production of our natural astaxanthin product, NatuRose, during
the fourth quarter of fiscal 1997. The product is produced using our large-scale
photo-bioreactor  system,  referred to as the PhytoMax Pure Culture  System,  or
PhytoMax PCS, which  incorporates  closed-culture  technology and allows for the
large-scale  commercial  cultivation  of  microalgae  strains that are otherwise
highly susceptible to environmental contamination. With the PhytoMax PCS, we now
have the potential to produce a broader  range of new products from  microalgae.
Such    products    could    include    genetically-engineered    biopesticides,
nutraceuticals,     additional     nutritional    products,     pharmaceuticals,
poly-unsaturated  fatty acids,  anti-microbial  agents, plant growth regulators,
and anti-viral compounds.

         Our primary  objective is to be the leading  developer  and producer of
microalgal  products in our  existing  and future  markets.  We believe that the
combination of our ICBM technology, our PhytoMax PCS technology, our Ocean-Chill
Drying process, our automated processing system and a favorable growing location
with year-round  production  capabilities,  can be  successfully  applied to the
commercial cultivation of many species of microalgae.


Products

  Spirulina

         Our principal product,  accounting for 95% and 98% of net sales for the
years ended March 31, 1998 and 1997,  respectively,  is a nutritional microalgae
marketed as Spirulina Pacifica. Developed by us and sold worldwide to the health
and natural  foods market,  Spirulina  Pacifica is a unique strain of microalgae
that is a highly absorbable source of natural beta carotene,  mixed carotenoids,
B vitamins,  GLA, protein,  essential amino acids and other  phytonutrients.  We
believe we were the first Spirulina  producer to have its products and processes
certified  organic and we are the only  microalgae  producer to have its quality
system registered under the ISO 9002-94 standards.

         Cyanotech produces Spirulina Pacifica in three forms: powder, flake and
tablets.  Powder is used as an ingredient in nutritional  supplements and health
food drinks while flakes are used as a seasoning on various  foods.  Tablets are
consumed daily as a dietary supplement.  We also produce and market two products
under the Hawaiian  Energizer  name.  Hawaiian  Energizer  sports drink contains
complex  carbohydrates  and  vegetarian  protein in  combination  with Spirulina
Pacifica,  Bee Pollen and Siberian Ginseng.  Hawaiian  Energizer tablets contain
Spirulina Pacifica, Bee Pollen and Siberian Ginseng.

                                       4
<PAGE>


         We  anticipate  that  sales of our  Spirulina  Pacifica  products  will
continue to  constitute a  substantial  portion of net sales during fiscal 1999.
Any decrease in the overall  level of sales of, or the prices for, our Spirulina
Pacifica  products,  whether  as a result of  competition,  change  in  consumer
demand, increased worldwide supply of Spirulina or any other factors, would have
a material  adverse effect on our business,  financial  condition and results of
operations.

  Natural Astaxanthin

         The  fiscal  year  ended  March  31,  1998 was the  first  full year of
commercial production for our natural astaxanthin product, NatuRose. Astaxanthin
is a red pigment used primarily in the aquaculture industry to impart pink color
to the flesh of pen-raised fish and shrimp.  The astaxanthin market currently is
dominated  by  a  single  producer,  Hoffmann-LaRoche,  who  produces  synthetic
astaxanthin  from  petrochemicals.  Hoffmann-LaRoche  currently  sells synthetic
astaxanthin  to the  aquaculture  industry  at  approximately  $2,500  per  pure
kilogram. As a result of continued growth in the world aquaculture industry, the
world market for  astaxanthin is estimated to currently  exceed $150 million per
year.  Although  sales of NatuRose for the fiscal year ended March 31, 1998 were
nominal,  we anticipate that such sales will constitute a significant portion of
total sales in future periods.

  Phycobiliproteins

         Cyanotech also produces phycobiliproteins which are sold to the medical
and biotechnology  research industry.  Phycobiliproteins  are highly fluorescent
pigments purified from microalgae. Their spectral properties make them useful as
tags or markers  in many kinds of  biological  assays,  such as flow  cytometry,
fluorescence  immunoassays and fluorescence microscopy. We anticipate that sales
of phycobiliproteins  will not represent a significant  component of total sales
in future periods.


Products Under Development

         A new  product  which we are  continuing  to develop  is a  genetically
engineered   mosquitocide   from  microalgae.   The  toxin  gene  from  Bacillus
thuringiensis  var.  israelensis (Bti) is being cloned into the blue-green algae
Synechococcus.  The bacterial toxin Bti is very specific to mosquitoes and black
flies,  while the  blue-green  algae is a food for  mosquito larvae.  We believe
that, when applied to a mosquito-infested body of water, this algae could act as
an effective and environmentally safe means of control.

         In April  1998,  we  signed an  exclusive  agreement  with The  Scripps
Research  Institute  to produce  the  Institute's  patented  Aldolase  Catalytic
Antibody 38C2 in  microalgae.  The  genetically  engineered  aldolase  catalytic
antibody may have  numerous  potential  applications  in  industrial  synthesis,
including the synthesis of certain anti-cancer compounds. Under the terms of the
exclusive license  agreement,  Scripps will provide the genetically  engineered,
live  microalgae   containing  the  catalytic  aldolase  protein  to  Cyanotech.
Production of reagent quantities is expected to be available within eight months
if development tests prove its feasibility.

         Development  of these  products is continuing and there is no assurance
that commercial products will be achieved. Our inability to successfully develop
or commercialize additional products could have a material adverse effect on our
business, financial condition and results of operations.


Research & Development

         Cyanotech's  expertise is in the  development of efficient,  stable and
cost-effective  production  systems for  microalgal  products.  Our  researchers
investigate  specific  microalgae   identified  in  scientific   literature  for
potentially  marketable  products and then develop the  technology  to grow such
microalgae on a commercial scale.

                                        5
<PAGE>

         During  fiscal  1998,  the Company  incurred  $677,000 in research  and
development expenses,  compared with $587,000 and $351,000 in the years 1997 and
1996, respectively.  The Company intends to continue to develop new products and
prioritizes its research and development activities to focus on projects that it
believes will have the greatest market acceptance and achieve the highest return
on the Company's investment. Successful microalgal product development is highly
uncertain  and is  dependent on numerous  factors,  many of which are beyond the
Company's control. Products that appear promising in early phases of development
may be found to be  ineffective,  may be uneconomical  because of  manufacturing
costs or other  factors,  may be  precluded  from  commercialization  due to the
proprietary  rights  of  other  companies,  or may  fail  to  receive  necessary
regulatory approvals.


Distribution

         The majority of our bulk  Spirulina  sales are to companies  with their
own  Spirulina  product  lines.  Many of these  companies  identify  and promote
Cyanotech's Hawaiian Spirulina in their products.  In the United States, we sell
directly to health food  manufacturers  and health  food  formulators.  Packaged
consumer products sell in the domestic market through an established health food
distribution  network.  Orders for packaged  consumer  products are taken at the
store level by one of 23 regional broker representatives and shipped through one
of 36 distributors.  In selected foreign  markets,  we have appointed  exclusive
sales distributors for both bulk Spirulina and packaged consumer products.

         In the years ended March 31, 1998, 1997 and 1996,  international  sales
accounted for approximately 44%, 62% and 55%, respectively, of our net sales. We
expect that international sales will continue to represent a significant portion
of our net sales.  Our business,  financial  condition and results of operations
may be  materially  adversely  affected  by  any  difficulties  associated  with
managing accounts receivable from international  customers,  tariff regulations,
imposition of governmental controls, political and economic instability or other
trade restrictions.  Although our international sales are currently  denominated
in United States dollars,  fluctuations  in currency  exchange rates could cause
our products to become  relatively  more  expensive to customers in the affected
country, leading to a reduction in sales in that country.


Customers

Spirulina

         No single customer  accounted for more than 10% of net sales during the
year ended March 31, 1998. Our largest  customer during 1997 and 1996 was a Hong
Kong-based network marketing company which purchases both bulk Spirulina and our
packaged consumer  products for distribution,  primarily in mainland China. From
March through  September  1997,  this customer was  restricted  from hosting any
large scale  distributor  meetings due to a delay in  receiving  recertification
from the  Chinese  government.  As a  result,  orders  from this  customer  were
significantly  reduced from previous periods. For the year ended March 31, 1998,
this customer  accounted for less than 5% of  Cyanotech's  net sales,  down from
approximately  34% and 29% of sales in the years  ended March 31, 1997 and 1996,
respectively.  Subsequent  to the end of fiscal  1998,  the  Chinese  government
imposed a ban on all network market organizations, effective October 1, 1998.
Sales to this customer are expected to be minimal.

                                       6
<PAGE>
         We  market  and sell  our  Spirulina  products  to a  variety  of other
customers, including:

          Health  Food  Manufacturers.   Health  food  manufacturers  often  use
Cyanotech's  Spirulina  products as a key  ingredient  in their  Spirulina-based
products, or as an ingredient in their health food formulations. These customers
purchase bulk powder or bulk tablets and package the products  under their brand
label for sale to the health and  natural  food  markets.  Many of the  products
produced by these  customers are often marketed and sold  domestically in direct
competition  with our  Nutrex  line of retail  consumer  products.  However,  we
differentiate  our Nutrex products from those of our bulk customers by reserving
the certified organic line of products for sale in the United States exclusively
under our Nutrex label.

         Private  Label  Customers.  We currently  provide  private label retail
consumer products to two international  customers.  Products for these customers
are  manufactured  only  upon  receipt  of an  order  and  no  finished  product
inventories are maintained.

         Retail Distributors.  Retail distributors act as product wholesalers to
independent  and chain  retailers.  The majority of domestic Nutrex sales in the
year ended March 31, 1998 were to 36 distributors.

         Natural  Products  Distributors.  In the year ended March 31, 1998,  we
sold bulk Spirulina products to ten domestic and seven foreign customers engaged
in the business of distributing natural raw materials to health and natural food
manufacturers.  These  distributors  provide their  customers with  standardized
quality control,  warehousing and distribution services, and charge a mark-up on
the products for providing these services.  These distributors may differentiate
the products they sell,  but they generally  treat the products as  commodities,
with price being the major determining factor in their purchasing decision.

Natural Astaxanthin

         Our  NatuRose  product  is being  sold  through a network of agents and
distributors  directly to aquaculture  farmers,  vitamin suppliers,  aquaculture
feed  manufacturers  and other end users in 15 countries for use in  aquaculture
feed, poultry feed and pet feed industries.  In March 1998, the Company signed a
letter of intent with a major European life sciences  company  operating in over
150  countries  for sales  and  distribution  of  NatuRose  and other  Cyanotech
products in certain European countries.  This distributor  posesses  significant
expertise  and worldwide  marketing  experience  in animal  nutrition  products.
Initially,  the  distributor  will test NatuRose and Spirulina for use in animal
feeds for up to six months and, if the testing is successful, we would negotiate
a definitive sales and distribution agreement.

Competition

 Spirulina

         Our  Spirulina  Pacifica  products  compete with a variety of vitamins,
dietary  supplements,  other algal  products  and similar  nutritional  products
available to consumers.  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.  Our  direct  competition  in the
Spirulina market currently is from Dainippon Ink and Chemical Company's facility
in California and several farms in China.  To a lesser  extent,  we compete with
numerous  smaller  farms in China,  India,  Thailand,  Brazil and South  Africa.
Packaged  consumer  products  marketed  under our Nutrex brand also compete with
products  marketed by health  food  manufacturing  customers  of  Cyanotech  who
purchase bulk  Spirulina  from us and package it for retail sales. A decision by
another  company  to  focus on  Cyanotech's  existing  or  target  markets  or a
substantial  increase in the overall  supply of Spirulina  could have a material
adverse effect on our business,  financial  condition and results of operations.
There can be no  assurance  that we will not  experience  competitive  pressure,
particularly with respect to pricing,  that could adversely affect our business,
financial condition and results of operations.

                                       7
<PAGE>
Natural Astaxanthin

         Our natural astaxanthin product,  NatuRose,  competes directly with the
synthetic    astaxanthin    product   produced   and   marketed   worldwide   by
Hoffmann-LaRoche.  In addition,  several other companies have announced plans to
produce commercial quantities of natural astaxanthin from microalgae and Phaffia
yeast. We believe that these  companies are only producing small  quantities for
test purposes.  Although we are unaware of any studies  indicating  that natural
astaxanthin has any benefits not otherwise provided by synthetic astaxanthin, we
believe there is commercial  demand for a natural  astaxanthin  product and that
our NatuRose product can compete on the basis of product performance and price.

Phycobiliproteins

         Four major competitors manufacture  phycobiliprotein products for sale,
including Molecular Probes, Inc., Quantify Inc., Martek Biosciences  Corporation
and Prozyme Inc.  Cyanotech  competes with these companies on the basis of price
and quality. New synthetic  fluorescent compounds have been developed by a third
party  which  are  superior  to  phycobiliproteins  in  some  applications.  The
advantage of the  synthetic  compounds is their lower  molecular  weight and, in
some cases,  their lower cost.  While our  phycobiliprotein  products may not be
able to compete  effectively  against synthetic  compounds in some applications,
Cyanotech's  phycobiliproteins  have gained a  reputation  for high quality at a
competitive price.


Government Regulation

         Cyanotech's  products,  potential  products and its  manufacturing  and
research  activities are subject to varying degrees of regulation by a number of
government  authorities in the United States and in other  countries,  including
the Food and Drug  Administration (the "FDA") pursuant to the Federal Food, Drug
and Cosmetic Act and by the  Environmental  Protection  Agency ("EPA") under the
Federal  Insecticide,   Fungicide,   and  Rodenticide  Act  ("FIFRA").  The  FDA
regulates, to varying degrees and in different ways, dietary supplements,  other
food products, diagnostic medical devices and pharmaceutical products, including
their  manufacture,   testing,  exportation,   labeling,  and,  in  some  cases,
advertising.  Generally,  prescription  pharmaceuticals  and  certain  types  of
diagnostic products, such as medical devices, are regulated more rigorously than
dietary supplements.  The EPA also rigorously regulates pesticides,  among other
types of products.

         Cyanotech is also  subject to other  federal,  state and foreign  laws,
regulations  and policies with respect to labeling of its products,  importation
of organisms,  and occupational safety, among others. Federal, state and foreign
laws,  regulations  and policies are always subject to change and depend heavily
on   administrative   policies  and   interpretations.   We  work  with  foreign
distributors  to ensure  our  compliance  with  foreign  laws,  regulations  and
policies.  There can be no  assurance  that any changes with respect to federal,
state and foreign laws, regulations and policies, and, particularly with respect
to the FDA and EPA or other such regulatory  bodies,  with possible  retroactive
effect,  will not have a  material  adverse  effect on our  business,  financial
condition and results of  operations.  There can be no assurance that any of our
potential products will satisfy applicable regulatory requirements.

         The Federal  Dietary  Supplement  Health and  Education  Act  ("DSHEA")
regulates  the use and  marketing  of  dietary  supplements,  including  vitamin
products.  The DSHEA  covers only dietary  supplements  and contains a number of
provisions that  differentiate  dietary  supplements from other foods. The DSHEA
also sets forth standards for adulteration of dietary supplements or ingredients
thereof and  establishes  current  food Good  Manufacturing  Practices  ("cGMP")
requirements for dietary supplements. It also provides detailed requirements for
the  labeling  of  dietary  supplements,   including  nutrition  and  ingredient
labeling.  We currently believe that Spirulina  Pacifica,  marketed as a dietary
supplement, is exempt from FDA regulation as a food additive.

                                       8
<PAGE>
         Our Spirulina  manufacturing  processes  and our contract  bottlers are
required  to adhere to cGMP as  prescribed  by the FDA.  We believe  that we are
currently in compliance  with all  applicable  cGMP and other food  regulations.
Compliance  with relevant cGMP  requirements  can be onerous and time consuming,
and there can be no assurance  that  Cyanotech can continue to meet relevant FDA
manufacturing  requirements for existing  products or meet such requirements for
any future  products.  Ongoing  compliance  with food cGMP and other  applicable
regulatory  requirements are monitored through periodic inspections by state and
federal  agencies,  including  the FDA,  the  Hawaii  Department  of Health  and
comparable  agencies  in  other  countries.  Our  processing  facility  is  also
inspected annually for organic certification by Quality Assurance  International
and for Kosher  certification  by the Kosher Overseers  Association.  The use of
Spirulina as a food  additive for seasoning on salads or pasta or for such other
food  uses has not been  cleared  by the FDA,  however,  the FDA has  recognized
Spirulina as a safe food. We currently market the product for these food uses on
the basis of our belief  that its use in these food  applications  is  generally
recognized as safe and therefore is not subject to FDA pre-market  clearances as
a food additive.

         Our natural astaxanthin product,  NatuRose,  has received clearance for
use as a feed and food color  additive in Japan but will need  clearance for use
as a feed color  additive  in the  United  States and  Canada.  We are  actively
pursuing  clearance for use in the U.S. markets and in February 1998,  submitted
our petition for FDA  approval.  We are  presently  assembling  our petition for
approval  for the  Canadian  Food  Industry  Agency,  and expect to submit  this
petition by the end of calendar 1998. The process of obtaining  clearances for a
new color  additive is expensive and time  consuming.  Extensive  information is
required on the toxicity of the additive,  including carcinogenicity studies and
other  animal  testing.  No  assurances  can be given  that any of our  proposed
products  intended  for use as a feed  additive  will be approved for use in the
United States or Canada on a timely basis, if at all.

         As in vitro  diagnostic  medical  device  components,  phycobiliprotein
products do not currently require pre-market  clearances by the FDA. However, as
a component of a medical  device,  they can be subject to other various  medical
device requirements, including cGMP requirements.

         Work is continuing on our genetically-engineered  mosquitocide project.
We are aware  that any  resulting  product  will be  subject  to  validation  of
efficacy  though field trials.  If proven  effective,  any potential  commercial
product will be subject to regulatory  approval by the EPA for use in the United
States.  However, Bti is currently approved for use as a biopesticide by the EPA
and the World Health Organization.  We are uncertain of regulatory  requirements
in other potential markets at this point.


Patents, Licenses and Trademarks

         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.  Cyanotech has had two United States patents issued to it. 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,  although  currently  there are no pending claims or lawsuits that
have been brought against us, 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.

                                       9
<PAGE>
Associates

         Cyanotech  employed 65 associates as of March 31, 1998, of which 64 are
full-time.  Approximately  31  associates  are  involved in the  harvesting  and
production process, 16 are involved in research and product development, and the
remainder are involved in sales, administration and support. Management believes
that its  relations  with  its  associates  are  good.  We have not  experienced
difficulty in attracting personnel and none of our associates are represented by
a labor union.


Industry Segments and Export Sales

         The Company has no assets oustide of the United  States.  The Company's
business  consists of one industry  segment and is grouped into five  geographic
areas:  United States,  Canada/South  America,  Europe,  China and Asia/Pacific,
excluding  China. The following table summarizes the product sales revenues from
unaffiliated customers in each of the five geographic regions:
<TABLE>
<CAPTION>
<S>                                     <C>              <C>       <C>              <C>      <C>               <C>
                                                  1998                      1997                       1996
                                        ----------------------     ----------------------    ----------------------
United States                              $  4,297       56%        $  4,303        38%        $  3,614        45%
Canada/South America                            404        5%             851         8%             896        11%
Europe                                        1,284       17%           1,292        11%             747         9%
China                                           358        5%           3,905        34%           2,375        29%
Asia/Pacific, excluding China                 1,284       17%           1,048         9%             449         6%
                                        ------------ ---------     ----------- ----------    ------------ ----------
Total Product Sales Revenues               $  7,627      100%        $ 11,399       100%        $  8,081       100%
                                        ============ =========     =========== ==========    ============ ==========
</TABLE>
         The  Company  believes  that its profit  margin on export  sales is not
significantly  different from that realized on sales in the United  States.  All
foreign product sales transactions are consummated in U.S. dollars.


Item 2. Description of Properties

         Cyanotech  Corporation is located in Kailua-Kona,  Hawaii,  at the HOST
Park and also owns a 2,500 square foot sales office in a light  industrial  area
located  approximately  four miles from the HOST  Park.  The HOST Park  facility
consists of  approximately  183 leased acres.  Approximately  90 acres have been
fully  developed  and  contain  production  ponds,  a  processing   facility,  a
laboratory,  and  administrative  offices.  All  products  are  produced at this
facility.  The  property  is leased  from the  State of  Hawaii  under a 30-year
commercial  lease  expiring  in 2025.  During  1997,  we  reached a  preliminary
agreement  with the State of Hawaii to lease an additional 93 acres for 30 years
at the HOST Park, which increased the total acreage under lease to 183 acres. We
plan to use this new property to construct a larger NatuRose production facility
and  additional  culture  ponds that would use the PhytoMax PCS  technology.  We
believe  that there is  sufficient  available  land at the HOST Park to meet our
currently planned future needs. Our Nutrex,  Inc.  subsidiary  maintains a sales
office in Kailua-Kona, Hawaii.


Item 3. Legal Proceedings

         Cyanotech  is not  currently  subject  to any  material  pending  legal
proceedings.

         We maintain product liability insurance in limited amounts for products
involving  human  consumption.  In the opinion of  management,  broader  product
liability insurance coverage is prohibitively expensive at this time.

                                       10

<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders

         No matters  were  submitted  to a vote of the  stockholders  during the
fourth quarter of fiscal 1998.


                                     Part II


Item 5. Market for Common Equity and Related Stockholder Matters

         The  information  required by this Item is incorporated by reference to
the Section labeled "Market for Common Equity and Related  Stockholder  Matters"
appearing in the Company's 1998 Annual Report to Stockholders.


Item 6. Selected Financial Data

         The  information  required by this Item is incorporated by reference to
the Section  labeled  "Selected  Financial Data" appearing in the Company's 1998
Annual Report to Stockholders.


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

         The  information  required by this Item is incorporated by reference to
the Section labeled "Management's Discussion and Analysis of Financial Condition
and Results of  Operations"  appearing in the  Company's  1998 Annual  Report to
Stockholders.


Item 8. Financial Statements and Supplementary Data

         The  consolidated  balance sheets of the Company and subsidiaries as of
March 31, 1998 and 1997, and the related consolidated  statements of operations,
stockholders'  equity,  and cash  flows for each of the years in the  three-year
period ended March 31, 1998,  together  with the related notes and the report of
KPMG Peat Marwick LLP, independent  certified public accountants,  all contained
in the Company's 1998 Annual Report to Stockholders are  incorporated  herein by
reference.


Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

         Not applicable.

                                    Part III


Item 10. Directors and Executive Officers; Compliance with Section 16(a) of the
Exchange Act

(a)  Identification of Directors

The  information  required by this Item is  incorporated  by reference  from the
Sections   captioned   "Proposal   One:   Election   of   Directors,"   "Certain
Transactions," " Security Ownership of Certain Beneficial Owners and Management"
and "Compliance with Section 16(a) of the Exchange Act" contained in Cyanotech's
definitive 1998 Proxy Statement.

                                       11
<PAGE>
(b)  Identification of Executive Officers

The executive officers of Cyanotech and their ages and positions as of March 31,
1998 are as follows:
<TABLE>
<CAPTION>
                            Name                      Age                      Position
                            ----                      ---                      --------
<S>                                                   <C>   <C>
         Gerald R. Cysewski, Ph.D. ................    49   Chairman of the Board, President and Chief
                                                            Executive Officer
         Glenn D. Jensen...........................    39   Vice President - Operations
         Kelly J. Moorhead.........................    42   Vice President - Sales and Marketing
                                                            President - Nutrex, Inc.
         Ronald P. Scott...........................    43   Executive Vice President - Finance and
                                                            Administration, Secretary, Treasurer
</TABLE>
Dr.  Cysewski  co-founded  Cyanotech in 1983 and has served as a director  since
that time.  Since March 1990,  Dr.  Cysewski has served as  President  and Chief
Executive  Officer of Cyanotech  and in October  1990 was also  appointed to the
position of Chairman of the Board. From 1988 to November 1990, he served as Vice
Chairman  and from 1983 to June,  1996 he served as  Scientific  Director of the
Company. From 1980 to 1982, Dr. Cysewski was group leader of microalgae research
and development at Battelle Northwest, a major contract research and development
firm.  From  1976 to  1980,  Dr.  Cysewski  was an  assistant  professor  in the
Department of Chemical and Nuclear  Engineering at the University of California,
Santa  Barbara,  where he received a two-year  grant from the  National  Science
Foundation  to  develop a culture  system for  blue-green  algae.  Dr.  Cysewski
received his doctorate in Chemical Engineering from the University of California
at Berkeley.

Mr. Jensen has served as Vice  President - Operations  since May 1993. He joined
Cyanotech in 1984 as Process  Manager and was promoted to Production  Manager in
1991,  in which  position  he served  until his  promotion  to Vice  President -
Operations.  Prior to joining Cyanotech,  Mr. Jensen worked for three years as a
plant  engineer at a  Spirulina  production  facility,  Cal-Alga,  near  Fresno,
California,  which ceased to do business in 1983. Mr. Jensen holds a B.S. degree
in Health Science from California State University, Fresno.

Mr.  Moorhead  has served as Vice  President  - Sales and  Marketing  and of the
Company and President of Nutrex,  Inc.  since October 1997.  From August 1996 to
October 1997 he served as Vice President -  International  Sales.  From December
1991 to August  1996 he  served as Vice  President  - Sales  and  Marketing  and
President of Nutrex,  Inc. From August 1987 to December  1991, he served as Vice
President  -  Production  of the  Company.  Mr.  Moorhead  joined  Cyanotech  as
Production Biologist in December 1984. Prior to joining Cyanotech,  Mr. Moorhead
worked at the Oceanic Institute in Honolulu,  Hawaii where he conducted research
on production of Spirulina from agricultural  wastes.  Mr. Moorhead holds a B.S.
degree in Aquatic Biology from the University of California, Santa Barbara.

Mr.  Scott was  appointed  to the Board of  Directors of the Company in November
1995, has served as Executive Vice President - Finance and Administration  since
August 1995,  and has served as Secretary and Treasurer  since November 1990 and
June 1990,  respectively.  From December 1990 until August 1995 Mr. Scott served
as Vice President - Finance and Administration.  From September 1990 to December
1990,  Mr.  Scott  served as  Controller.  From 1989 to 1990,  he was  Assistant
Controller for PRIAM Corporation, a manufacturer of Winchester disk drives. From
1980 to 1989, he served in various accounting management positions with Measurex
Corporation,  a manufacturer of industrial  process control  systems.  Mr. Scott
holds a B.S. degree in Finance and Management from California State  University,
San Jose, and an M.B.A. degree from the University of Santa Clara.


Item 11. Executive Compensation

The  information  required by this Item is  incorporated  by reference  from the
section  captioned  "Executive  Compensation and Other  Information,"  "Director
Remuneration" and "Stockholder Return Performance Graph" contained in
Cyanotech's  definitive 1998 Proxy  Statement.

                                       12
<PAGE>
Item 12.  Security  Ownership of Certain Beneficial Owners and Management

The  information  required by this Item is  incorporated  by reference  from the
section  captioned   "Security   Ownership  of  Certain  Beneficial  Owners  and
Management" contained in Cyanotech's definitive 1998 Proxy Statement.


Item 13. Certain Relationships and Related Transactions

Not applicable.


Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  (1).  The  following   Consolidated   Financial   Statements  of  Cyanotech
Corporation and its subsidiaries are incorporated  herein by reference  pursuant
to Item 8:
                                                                 Page in 1998
                                                                 Annual Report
                                                                 To Stockholders
Independent Auditors' Report....................................              24
Consolidated Balance Sheets as of March 31, 1998 and 1997.......               9
Consolidated Statements of Operations for each of the years
in the three-year period ended March 31, 1998...................              10
Consolidated Statements of Stockholders' Equity for
each of the years in the three-year period ended March 31, 1998..             11
Consolidated Statements of Cash Flows for each of the years
in the three-year period ended March 31, 1998....................             12
Notes to Consolidated Financial Statements.......................       13 to 23


(a) (2). The following financial statement schedules are included in this report
on the pages indicated below:

Schedule of Valuation and Qualifying Accounts....................        Page 16
Independent Auditors' Report.....................................        Page 17


Schedules not listed above are omitted  because of the absence of the conditions
under which they are required or because the required information is included in
the  consolidated   financial  statements  or  notes  thereto,  which  financial
statements are incorporated herein by reference.

                                       13
<PAGE>
(a) (3).  Index to exhibits

<TABLE>
<CAPTION>
Exhibit Number        Document Description
<S>                   <C>
3.1                   Restated Articles of  Incorporation.  (Incorporated by reference to Exhibit 3.1 to
                      the Company's  Quarterly  Report on Form 10-QSB for the quarter ended December 31,
                      1996, file no. 0-14602.)
3.2                   Bylaws of the Registrant,  as amended.  (Incorporated  by reference to Exhibit 3.1
                      to  the  Company's   Quarterly  Report  on  Form  10-QSB  for  the  quarter  ended
                      December 31, 1995, file no. 0-14602.)
4.1                   Specimen Common Stock  Certificate.  (Incorporated  by reference to Exhibit 4.1 to
                      the  Company's  Registration  Statement  on Form SB-2 filed on February  28, 1996,
                      file no. 333-00951.)
4.2                   Terms of the Series C Preferred Stock as Revised 1991.  (Incorporated by reference
                      to  Exhibit 4.1  to the  Company's  Annual Report on Form 10-K for the fiscal year
                      ended December 31, 1990, file no. 0-14602.)
10.1                  1985 Incentive Stock Option Plan dated March 18,  1985, as amended.  (Incorporated
                      by reference to Exhibit 4(d) to the Company's  Registration  Statement on Form S-8
                      filed on December 3, 1992, file no. 33-55310.)
10.2                  Stockholders  Agreement dated as of May 17,  1993.  (Incorporated  by reference to
                      Exhibit 10.8  to the Company's  Annual Report on  Form 10-KSB  for the fiscal year
                      ended March 31, 1994, file no. 0-14602.)
10.3                  1994  Non-Employee  Directors Stock Option and Stock Grant Plan.  (Incorporated by
                      reference to  Exhibit 10.7  to the Company's  Annual Report on Form 10-KSB for the
                      fiscal year ended March 31, 1994, file no. 0-14602.)
10.4                  Term Loan Agreement dated April 1,  1995 between Spirulina  International B.V. and
                      the Company.  (Incorporated  by reference to Exhibit 10.13 to the Company's Annual
                      Report on Form 10-KSB for the fiscal year ended March 31, 1995, file no. 0-14602.)
10.5                  License  Agreement by and between The  University of Memphis and the Company dated
                      June 19,  1995.  (Incorporated  by reference  to  Exhibit 10.14  to the  Company's
                      Annual Report on Form 10-KSB  for the fiscal year ended  March 31,  1995, file no.
                      0-14602.)
10.6                  Term Loan Agreement dated July 11, 1995 between the Company and Satoshi  Sakurada.
                      (Incorporated  by reference to Exhibit 10.3 to the Company's  Quarterly  Report on
                      Form 10-QSB for the quarter ended December 31, 1995, file no. 0-14602)
10.7                  1995  Stock  Option  Plan for  Cyanotech  Corporation  dated  August 9,  1995,  as
                      amended.  (Incorporated by reference to Exhibit 4(c) to the Company's Registration
                      Statement on Form S-8 filed on October 27, 1995, file no. 33-63789.)
10.8                  Sub-Lease  Agreement  between the Company and Natural Energy  Laboratory of Hawaii
                      Authority dated December 29,  1995.  (Incorporated by reference to Exhibit 10.1 to
                      the Company's  Quarterly Report on Form 10-QSB for the quarter ended  December 31,
                      1995, file no. 0-14602.)
10.9                  Preferred  Stock  Conversion  and  Registration   Rights Agreement by and between 
                      the  Company  and  Firemen's Insurance Company of Newark,  New  Jersey,  dated as
                      of February 20, 1996.(Incorporated by reference to Exhibit 10.16 to the Company's
                      Registration  Statement  on  Form SB-2  as  filed on  February 28, 1996,  file no. 
                      333-00951.)
</TABLE>

                                       14
<PAGE>
<TABLE>
<CAPTION>
<S>                   <C>                                                                                                    
10.10                 Registration Rights Agreement by and between  the Company  and  American  Cynamid
                      Company  dated as of February 20, 1996. (Incorporated  by  reference  to  Exhibit
                      10.17 to the Company's  Registration  Statement on Form SB-2 as filed on February
                      28, 1996, file no 333-00951.)
10.11                 Credit Agreement between the Company and First Hawaiian Bank, dated  February 27,
                      1997. (Incorporated  by  reference  to  Exhibit  10.14  to the  Company's  Annual
                      Report on Form 10-K for the fiscal  year ended March 31, 1997, file no. 0-14602.)
10.12                 Promissory Note between the Company and First Hawaiian  Bank,  dated February 27,
                      1997.  (Incorporated by reference to Exhibit 10.15 to the Company's Annual Report
                      on Form 10-K for the fiscal year ended March 31, 1997, file no. 0-14602)
10.13                 Security  Agreement  between the Company and First Hawaiian  Bank, dated February
                      27, 1997.  (Incorporated  by reference to Exhibit  10.16 to the  Company's  Annual
                      Report on Form 10-K for the fiscal year ended March 31, 1997, file no. 0-14602)
10.14                 License  agreement by and between The Scripps  Research  Institute and the Company
                      dated April 14, 1998.
10.15                 Workout/Suspension  Agreement  between  the  Company  and Kiewit Pacific Co. dated
                      March 30, 1998.
10.16                 Security  Agreement  between  the  Company and Kiewit Pacific Co. dated January 1,
                      1998.
11.1                  Statement re: Computation of Earnings per Share
13                    1998 Annual Report to Stockholders (portions only)
21.1                  Subsidiaries of the Company.
23.1                  Accountants' Consent
27                    Financial Data Schedule.
</TABLE>
---------------------

(b)      Reports on Form 8-K

The Registrant did not file any reports on Form 8-K during the fourth quarter of
the 1998 fiscal year.

No Annual Report to Stockholders or proxy material has been sent to Stockholders
as  of  this  date.  Such  report  and  proxy  material  will  be  furnished  to
Stockholders  after the filing of this Form and copies of such materials will be
furnished to the Commission when they are sent to Stockholders.

                                       15

<PAGE>
<TABLE>
<CAPTION>
                                   Schedule II
                     Cyanotech Corporation and Subsidiaries
                Valuation and Qualifying Accounts (in thousands)
                    Years Ended March 31, 1998, 1997 and 1996

<S>               <C>                 <C>                     <C>                     <C>                 <C>
                  Column A            Column B                Column C                Column D            Column E
                                                              Additions
                                      Balance at      Charged to    Charged to                            Balance at
                                      Beginning        Costs and         Other                            End of 
               Description            of year           Expenses      Accounts        Deductions          Year

Allowance for Doubtful Receivables
     1998                             $       --             10             --                --          $       10
     1997                             $       --             --             --                --          $       --
     1996                             $       --             --             --                --          $       --
`</TABLE>

                                       16
<PAGE>
                    INDEPENDENT AUDITORS' REPORT ON SCHEDULE




The Board of Directors
Cyanotech Corporation:

Under date of April 27, 1998, we reported on the consolidated  balance sheets of
Cyanotech  Corporation  and  subsidiaries as of March 31, 1998 and 1997, and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for each of the years in the  three-year  period ended March 31, 1998,  as
contained  in  the  1998  annual  report  to  stockholders.  These  consolidated
financial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year ended March 31, 1998. In connection with
our audits of the  aforementioned  consolidated  financial  statements,  we also
audited the related financial  statement  schedule as listed in the accompanying
index. The financial  statement  schedule is the responsibility of the Company's
management.  Our  responsibility  is to  express  an  opinion  on the  financial
statement schedule based on our audits.

In our opinion,  such financial statement schedule,  when considered in relation
to the  basic  consolidated  financial  statements  taken as a  whole,  presents
fairly, in all material respects, the information set forth therein.




/s/KPMG Peat Marwick LLP
Honolulu, Hawaii
April 27, 1998
                                       17
<PAGE>
SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the 23rd day of
June, 1998.

                              CYANOTECH CORPORATION

                          By:/s/Gerald R. Cysewski, Ph.D
                             ----------------------------
                             Gerald R. Cysewski, Ph.D
                             Chairman of the Board,
                             President and Chief
                             Executive Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
         Signature                                          Title                              Date
<S>                                          <C>                                               <C>
/s/Gerald R. Cysewski, Ph.D                  Chairman of the Board, President and              June 23, 1998
--------------------------                   Chief Executive Officer  (Principal
Gerald R. Cysewski, Ph.D                     Executive Officer)

/s/Ronald P. Scott                           Executive Vice President - Finance and            June 23, 1998
--------------------------                   Administration, Secretary and Treasurer
Ronald P. Scott                              (Principal Financial and Accounting
                                             Officer)


                                             Director                                          -------------
--------------------------
Julian C. Baker

                                             Director                                          -------------
--------------------------
Eva R. Reichl

/s/John T. Ushijima                          Director                                          June 23, 1998
--------------------------
John T. Ushijima

/s/Paul C. Yuen                              Director                                          June 23, 1998
--------------------------
Paul C. Yuen
</TABLE>
                                       18