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                                  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, 2000 Commission file 0-146-02

                              CYANOTECH CORPORATION
             (Exact name of Registrant as specified in its charter)


<S>                                                      <C>
               Nevada                                             91-1206026
    (State or other jurisdiction                               (I.R.S. Employer
                 of                                          Identification No.)
          incorporation or
           organization)

         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
</TABLE>

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.

         At June 26, 2000, the aggregate market value of the registrant's Common
Stock held by non-affiliates of the registrant was approximately $19,267,000.

         At June 26,  2000,  the number of shares  outstanding  of  registrant's
Common Stock was 15,087,297.


                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  Annual Report to Stockholders for the fiscal year
ended March 31, 2000 are  incorporated  by reference into Part II and Part IV of
this Report.  Portions of the  Registrant's  Definitive  Proxy Statement for its
2000  Annual  Meeting  of  Stockholders,  to be filed  with the  Securities  and
Exchange  Commission  on or prior to July 29, 2000 and to be used in  connection
with the Annual Meeting of Stockholders expected to be held August 24, 2000, are
incorporated by reference in Part III of this Form 10-K.

                                        1

<PAGE>

                                     PART I

ITEM 1. 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,   animal   nutrition,   and
immunological diagnostics markets.

        Since  1985, Cyanotech has been producing  microalgae-based  "Spirulina"
products for the vitamin and supplement market. Spirulina Pacifica(R),  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 over thirty other countries through
a combination of retail, wholesale, and private label channels.

        In  early 1997,  we introduced  NatuRose(R) to the worldwide aquaculture
industry.  NatuRose  is the brand name of our  natural  astaxanthin  (pronounced
"as-ta-zan-thin")  product for the animal nutrition market which we produce from
the microalge,  Haematococcus.  Astaxanthin is a red pigment used in aquaculture
to impart a pink to red  color to  pen-raised  fish and  shrimp.  The  worldwide
astaxanthin  market  for  animal  pigmentation  is  estimated  at more than $150
million in annual sales.  NatuRose competes in this marketplace with astaxanthin
synthesized from petrochemicals.

        In  March of 1999, we announced the  development  of  BioAstin(TM),  our
natural  astaxanthin  product for the human nutrition  market. A growing body of
scientific  literature  is  demonstrating  that the  antioxidant  properties  of
natural  astaxanthin  surpass  many of the  antioxidant  benefits  of vitamin C,
vitamin E, beta-carotene and other carotenoids. In August 1999, we were notified
by the United States Food and Drug Administration  ("FDA"), that our application
to sell BioAstin had been reviewed without  objection,  allowing us to offer our
new product  for  sale and use as a human  nutritional  supplement in the United
States.  The  worldwide  astaxanthin  market for human nutrition is estimated at
more than $1.5 billion in annual sales.

        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,""us,""our,"  and  "Cyanotech"  refer  to  Cyanotech  Corporation,  a Nevada
corporation,  and  its  wholly  owned  subsidiaries,   Nutrex,  Inc.,  a  Hawaii
corporation, and Cyanotech International FSC, Inc., a Barbados corporation.

                                        2
<PAGE>

INDUSTRY BACKGROUND

        Microalgae  are a diverse group of  microscopic  plants that have a wide
range of physiological and biochemical  characteristics and contain, high levels
of natural 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,  permitting  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) microalgae 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.  We believe 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,"  when 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, our scientists  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.  We believe  we were  the  first  Spirulina
producer  to have its  products  and  processes  certified  organic  and we were
the first  microalgae  producer to  have its quality system registered under the
ISO 9002-94   standards.   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.   We
believe  that  such  an accomplishment remains unique to Cyanotech.

        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 from the drying system 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.

        Our  efforts  in  commercial  production   of  our  natural  astaxanthin
products  have  resulted in  an  improved,  large-scale  photobioreactor  system
referred to as the PhytoDome  Closed Culture System,  or PhytoDome  CCS(TM).  To
date,  this  improved  technology  has  resulted  in reduced  production  costs,
increased  control of product  purity  and has a positive  effect on  production
yield compared to other photobioreactor systems previously employed.

                                       3
<PAGE>

        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  regions of the world
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 first natural astaxanthin product,  NatuRose,
during  the  fourth  quarter  of fiscal  1997.  By the end of fiscal  1999,  our
experience with NatuRose processing resulted in the development of its companion
product, BioAstin.

        Our  primary  business  objective  is  to be the leading  developer  and
producer of high-value  microalgal  products in our existing and future markets.
We believe  that the  combination  of our ICBM  technology,  our  PhytoDome  CCS
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 87% and 91% of net sales for the
years ended March 31, 2000 and 1999,  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.

        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 as a daily  dietary  supplement.  We also  produce and market a blended
product under the Hawaiian  Energizer name.  Hawaiian  Energizer tablets contain
Spirulina Pacifica, Bee Pollen and Siberian Ginseng.

        We  anticipate  that  sales  of our  Spirulina  Pacifica  products  will
continue to  constitute a  substantial  portion of net sales during fiscal 2001.
Any material  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 other factors beyond
our control,  would have a material  adverse  effect on our business,  financial
condition and results of operations.

  Natural Astaxanthin

        The  year ended  March 31,  2000 was the third  full year of  commercial
production of NatuRose, our natural astaxanthin product for the animal nutrition
market, and the first year of commercial  production for our natural astaxanthin
product for the human nutrition market,  BioAstin.  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 animal  nutrition  market for  astaxanthin  is
currently  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  pigment is currently  estimated to
exceed $150 million per year.  We believe that sales of NatuRose may increase in
future periods.

                                       4
<PAGE>

        In  March  1999,  we  announced  development  of  BioAstin,  a companion
natural astaxanthin  product targeted at the human nutrition  market.  A growing
body of scientific  literature is demonstrating that the antioxidant  properties
of natural  astaxanthin  surpass many of the antioxidant  benefits of vitamin C,
vitamin E, beta-carotene and other carotenoids.  Independent  scientific studies
have shown that natural astaxanthin has up to 550 times the antioxidant activity
of vitamin E and 10 times the antioxidant  activity of beta-carotene.  In August
1999,  we were notified by the FDA,  that our  application  to sell BioAstin had
been reviewed without  objection,  allowing us to offer our new product for sale
and use in the United States as a human dietary supplement.  Upon receiving this
notice,  the Company began shipping BioAstin powder to various  manufacturers of
nutritional  supplements while concurrently developing our own consumer product.
In January  2000,  sales of packaged  BioAstin  gelcaps  were  initiated  by our
wholly-owned  subsidiary,  Nutrex, Inc.  We believe that sales of  BioAstin,  in
bulk,  packaged  consumer form,  and as a component of a formulated  product may
increase and may ultimately  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 do not anticipate that
phycobiliproteins  will  represent  a  significant  component  of total sales in
future periods.

        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.

RESEARCH & DEVELOPMENT EXPENSES

        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 strive to develop the  technology  to
grow such microalgae on a commercial scale.

        Because  of  fiscal  restraints,   the  Company  reduced  research   and
development  expenses during fiscal 2000 to $514,000,  a decrease of 43% and 24%
from  expenditures  of  $895,000  and  $677,000  in the  years  1999  and  1998,
respectively.  The Company continues to investigate new products and prioritizes
its research and  development  activities  to focus on projects  that we believe
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.

MANUFACTURING

        Cyanotech  cultivates and processes its microalgae products at a 90-acre
production  facility on the Kona Coast of the Island of Hawaii.  We have a total
of 67 large oval culture ponds and 15 smaller  auxiliary  culture ponds,  all of
which  are  currently  in  production.  Each of the large  ponds has an  average
surface  area  of  23,700  square  feet  (2,200   square   meters)  and  contain
approximately 132,000 gallons (500,000 liters) of culture media.  In addition we
have in production  six  large-scale  photobioreactors,  each with a capacity of
approximately 12,000 gallons (45,000 liters).  Also located at this facility are
two processing plants, our Spirulina  tableting plant,  our research and quality
control laboratories and three administration buildings.

Spirulina Pacifica

        Cyanotech  began  culturing  Spirulina  Pacifica  in 1985 at its present
facility at the HOST Park.  Since 1994, we have produced two grades of Spirulina
Pacifica;  an all-natural  grade  cultivated by using  non-organic  agricultural
fertilizers  and  an  organic  grade  that  is  cultivated  using  only  organic
fertilizers. Our organic Spirulina Pacifica is grown and processed in accordance
with  the  California  Organic  Food act of 1990 and is  certified  annually  by
Quality Assurance International, a leading  third-party  agency.  Both grades of
Spirulina Pacifica are cultivated without the use of herbicides or pesticides.

                                       5
<PAGE>

        Spirulina  Pacifica is cultivated in a combination of fresbh water and a
measured  amount  of  nutrient-rich  (with ninety-six trace elements) deep ocean
water, drawn  from  a  depth  of  2,000  feet  below sea level.  This  water  is
supplemented  with  the other major nutrients required such as food-grade sodium
bicarbonate (baking soda) and infused with carbon dioxide. The Spirulina crop in
each pond is circulated by  paddlewheels to  keep an  even blend of nutrients in
suspension  and  a  uniform  exposure of  the algae to sunlight, the other major
component of cultivation.  Our ponds are engineered to maintain the right  media
depth for sunlight to permeate each crop completely,  facilitating rapid growth.
Our  system  promotes  efficient  growing  conditions,  allowing  the  Spirulina
Pacifica algae to reproduce rapidly.  Each pond can be harvested, on average, in
six days.

        Once ready for harvest,  70% of the Spirulina Pacifica culture is pumped
from a pond through underground pipes to our Spirulina processing building where
the crop is separated  from the culture medium by stainless  steel screens.  The
remaining  30%  serves  as an innoculum  for the  next growth  cycle.  Harvested
Spirulina  is washed with fresh water  three  times and vacuum  filtered  before
moving to  the  drying  stage.  Culture media removed in processing is recycled.
This recycled media is treated, tested  for  nutrient content and, if necessary,
fortified with nutrients before being returned to the culture  ponds for another
cycle of cultivation.  Our ICBM technology for microalgae cultivation has proven
to  be a  reliable  and  stable  operating environment,  allowing us to grow and
harvest  Spirulina  without  significant  contamination  by  unwanted  algae and
associated loss of productivity.  We believe that such an accomplishment remains
unique to Cyanotech.

        Spirulina  Pacifica  for  use  in  powder  and  tablets  is dried by our
patented  Ocean-Chill Drying low-oxygen  process which preserves high levels  of
antioxidant  carotenoids.   This is a  significant  quality  edge over competing
products. The drying process takes about six seconds and results in a dark green
powder  similar to flour.  We also employ an alternate proprietary drying method
to produce Spirulina Pacifica in the flake form. Bulk Spirulina Pacifica powder,
tablets and flakes are heat-sealed in foil laminate bags along  with a packet of
oxygen absorbent. This packaging ensures product freshness and extends the shelf
life of bulk  Spirulina  Pacifica  products to three years.  Another significant
benefit of the Ocean-Chill Drying system  is our  ability to  recover the carbon
dioxide produced in the drying process.  The recovered  carbon  dioxide  is  the
major required nutrient for algae culture growth.

        Each  lot of  Spirulina  Pacifica is sampled and  subjected  to thorough
quality assurance which includes testing for bulk density, moisture, particulate
matter,  color and taste,  among  others.  In  addition,  each lot of  Spirulina
Pacifica  undergoes a prescribed  set of  microbiological  food  product  tests,
including total aerobic  bacteria,  coliform  bacteria  and  E. coli.  Spirulina
Pacifica powder  is  certified free of pesticides and herbicides,  and certified
Kosher. The Company's Spirulina production process has also been certified under
the ISO 9002-94 international quality standard since 1996.

        Spirulina  powder  is  difficult to  form  into  tablets.   Most  tablet
manufacturers  either add high amounts (from 10% to 30%) of inert  substances to
"glue" the tablet  together  or use a heat  granulation  process  that  destroys
nutrients.  In contrast,  our Spirulina Pacifica tablets contain a maximum of 2%
of such  substances  and are  produced in cold press  compression  tablet-making
machines.  Our  Spirulina  Pacifica  flakes are  produced by  combining  freshly
harvested Spirulina Pacifica with food-grade lecithin and drying this blend in a
proprietary  system.  The Company's  packaged  consumer products are bottled and
labeled by one of two subcontractors in California,  both of which are certified
cGMP manufacturers subject to regular government inspections.

Natural Astaxanthin

        The  Haematococcus microalgae which produce  astaxanthin, grows in fresh
water supplemented with  nutrients.  As  such, it is  extremely  susceptible  to
contamination by unwanted algae, protozoa, and amoeba. Cyanotech has developed a
proprietary  system to  overcome  this  problem  known as our  PhytoDome  Closed
Culture System.  Using this  large-scale  photobioreactor,  we  are able to grow
large volumes of contaminant-free cultures of Haematococcus.

                                       6
<PAGE>

        For  the final stage of culture, the Haematococcus algae is  transferred
to open ponds.  There, an environmental stress is applied causing spores to form
which accumulate high levels of astaxanthin.  The media containing  these spores
are transported through underground pipes to our astaxanthin processing building
where the culture media and algal spores are separated.  Fresh  water  recovered
from this stage of  processing  is tested and treated using a proprietary  water
treatment system.  It is then recycled for use in the next production cycle. The
algal spores are dried to a fine powder using the low-oxygen  Ocean-Chill Drying
system.  During processing, the spores are  cracked in a  proprietary  system to
assure high bioavailability of astaxanthin.  Finally  the  bulk  powder is heat-
sealed in foil laminate bags along with a packet of oxygen absorbent.

        Unlike  Spirulina,  astaxanthin  is  produced in a  batch-mode  and each
cultivation  pond must be thoroughly  cleaned between  cycles.  While the entire
astaxanthin  production  cycle  takes a total of four  weeks,  each stage of the
four-step  process  is  staggered  and  continuously  feeds  the  next  stage of
cultivation.  As a result, we are able to produce a new crop of astaxanthin from
each of our fifteen 500,000 liter culture ponds approximately once a week.

        Each  lot of  astaxanthin  products  for human  consumption  undergoes a
prescribed set of  microbiological  food product tests,  including total aerobic
bacteria, coliform bacteria and E. coli.

DISTRIBUTION AND INTERNATIONAL SALES

        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.  Our packaged
consumer  products sell under the Nutrex label in the domestic market through an
established  health food  distribution  network.  Orders for  packaged  consumer
products  are  taken  at  the  retail  level  by  one  of  45  regional   broker
representatives  and  shipped  through  one  of 24  wholesale  distributors.  In
selected foreign markets, we have exclusive sales distributors for both our bulk
Spirulina and packaged consumer products.

        Our  NatuRose  product  is  presently  being  sold  through a network of
agents and  distributors  directly  to  aquaculture  farmers,  aquaculture  feed
manufacturers,  poultry feed formulators,  vitamin suppliers and other end users
in 18  countries  for  use in  aquaculture  feed,  poultry  feed  and  pet  feed
industries.  As our product is a natural  astaxanthin  derived from  microalgae,
many of these formulators  identify NatuRose and Cyanotech as the source of this
component in their feed.

        For  the year ended March 31,  2000,  BioAstin  was sold to  nutritional
supplement  manufacturers  and health  food  formulators  as well as through our
wholly-owned  subsidiary,  Nutrex, Inc.  Packaged consumer product revenues were
derived  primarily from sales made directly to retailers and consumers using our
toll-free  order  line (1-888-922-2107)  and  our internet  e-commerce  website,
www.nutrex-hawaii.com.  While interest from broker representatives and wholesale
distributors  is  increasing  and may grow to become a  significant  portion  of
sales,  we believe that direct sales will continue to constitute a large portion
of total sales of the packaged BioAstin consumer product in fiscal 2001.

        In  the years ended March 31, 2000, 1999 and 1998,  international  sales
accounted for approximately 46%, 40% and 44%, respectively, of our net sales. We
expect that international sales will continue to represent a significant portion
of our net  sales in future  periods.  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

        We  market and sell our  Spirulina  products to a variety of  customers,
which range in size from $500 million in annual  sales to small  retail  stores.
Several of our major customers are businesses that were established  exclusively
to market and sell Spirulina products.

                                       7
<PAGE>

        Approximately  23%  of our net sales for the year ended  March 31,  2000
was to a single customer,  Spirulina  International B. V., a Spirulina marketing
and distribution  company based in the Netherlands.  Sales to this customer were
11% for the year  ended  March  31,  1999 and less than 10% of net sales for the
year ended March 31, 1998.  We believe that sales to this customer will continue
to represent a  significant  portion of total net sales in future  periods.  Any
changes in demand from this customer could have a material adverse effect on our
business, financial condition and results of operations.

        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.

          Private Label  Customers.  We currently  provide  private label retail
consumer products to six  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, 2000 were to 26 distributors.

          Natural Products  Distributors.  In the year ended March 31, 2000,  we
sold bulk  Spirulina  products  to twelve  domestic  and six  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  presently  being  sold  through  a network of
agents and  distributors  directly to aquaculture  farmers,  vitamin  suppliers,
aquaculture  feed  manufacturers  and other end users in 18 countries for use in
aquaculture  feed,  poultry feed and pet feed.  As  our  product  is  a  natural
astaxanthin derived from microalgae, many of these formulators identify NatuRose
and Cyanotech as the source of this component in their feed.

        During  the year ended March 31, 2000,  BioAstin was sold to nutritional
supplement  manufacturers  and health  food  formulators  as well as through our
wholly-owned  subsidiary,   Nutrex,  Inc.  Packaged  BioAstin  consumer  product
revenues  were  derived  primarily  from sales made  directly to  retailers  and
consumers  using our  toll-free  order line  (1-888-922-2107)  and our  internet
e-commerce website, www.nutrex-hawaii.com.

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  is  currently  from  Dainippon  Ink  and  Chemical  Company's
Earthrise facility in California and several farms in China. To a lesser extent,
we compete with numerous smaller farms in China, India,  Thailand,  Taiwan, Cuba
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 us.

                                       8
<PAGE>

Natural Astaxanthin

        Our  natural  astaxanthin  product  for  the  animal  nutrition  market,
NatuRose, competes directly with the synthetic astaxanthin products produced and
marketed  for  the  commercial  feed  and  aquaculture   industry  worldwide  by
Hoffmann-LaRoche and BASF.  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 presently producing only
small  quantities  for test  purposes.  Although  we are  unaware  of any animal
nutrition  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.

        BioAstin,  our  natural  astaxanthin  product  for  the human  nutrition
market,  was the first natural  astaxanthin  product for human consumption to be
reviewed without  exception by the FDA.  Presently,  BioAstin  competes directly
with  "Asta-Factor",  a natural  astaxanthin  product  produced  and marketed by
Aquasearch,  Inc.  ("Aquasearch"),  as well as a variety  of  vitamins,  dietary
supplements  and other  antioxidant  products  available  to  consumers.  In the
European market,  BioAstin competes directly with "AstaZan",  a microalgae-based
natural astaxanthin product produced by AstaCarotene of Sweden.  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.

Phycobiliproteins

        Three  major competitors manufacture phycobiliprotein products for sale,
including  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  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.  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.

        Cyanotech  is also  subject to other  federal,  state and foreign  laws,
regulations  and policies with respect to labeling of its products,  importation
of organisms,  environmental  protection,  and  occupational  safety laws, 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 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 and BioAstin, marketed as
dietary supplements, are exempt from FDA regulation of food additives.

                                       9
<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  Organized  Kashrus  Laboratories.  The use of
Spirulina as a food  additive for seasoning on salads or pasta or for other food
uses has not been cleared by the FDA.  However,  the FDA has listed Spirulina in
the category of Generally  Recognized As Safe ("GRAS") dietary  supplements.  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  for  the  animal  nutrition  market,
NatuRose,  has received  clearance for use as a feed and food color  additive in
Japan and Canada and has received  organic  registration  for use in feed in New
Zealand,  but needs  clearance  for use as a feed color  additive  in the United
States.  We are actively pursuing  clearance for use in the U.S. markets and are
presently in process with a Color Additive Petition to the FDA. The FDA codified
regulation has been written and approved with publication scheduled for the June
2000  Federal  Register.   Formal  approval  becomes  effective  31  days  after
publication, provided there are no objections presented to the FDA.  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 feed additives will
be approved on a timely  basis for use in countries  other than those  mentioned
above, 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.

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 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,  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.

        For  a  description  of  ongoing  patent  litigation  with  one  of  our
competitors in astaxanthin production, see Item 3, Legal Proceedings.

ASSOCIATES

        Cyanotech  employed  59 associates as of March 31, 2000, of which 58 are
full-time.  Approximately  43  associates  are  involved in the  harvesting  and
production process, 4 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.

                                       10
<PAGE>

INDUSTRY SEGMENTS AND EXPORT SALES

        The  Company has no assets outside of the United  States.  The Company's
business  consists of one industry  segment and is grouped  into six  geographic
areas: United States,  Canada/South America, the Netherlands,  Europe, excluding
the Netherlands,  China, and Asia/Pacific, excluding China.  The following table
(dollars in thousands)  summarizes the product sales revenues from  unaffiliated
customers in each of the six geographic regions:


<TABLE>
<CAPTION>
                                                    2000                        1999                        1998
                                         -----------------------     -----------------------     -----------------------

<S>                                        <C>             <C>        <C>              <C>        <C>              <C>
United States                              $ 3,992         54%        $  4,075         60%        $  4,297         56%
Canada/South America                           371          5%             426          6%             404          5%
The Netherlands                              1,715         23%             717         11%             496          7%
Europe, excluding the Netherlands              613          8%             498          7%             788         10%
China                                           73          1%              50          1%             358          5%
Asia/Pacific, excluding China                  634          9%             972         15%           1,284         17%
                                         -----------  ----------     -----------  ----------     -----------  ----------
Total Product Sales Revenues               $ 7,398        100%        $  6,738        100%        $  7,627        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.

        For the years ended March 31, 2000 and 1999,  the Company  incurred  net
losses of $4,485,000 and $2,557,000, respectively.  For the year ended March 31,
2000, the loss of $4,485,000  includes an asset impairment  charge of $2,796,000
related to the Company's  strategic  decision to  discontinue  its joint venture
negotiations with Norsk Hydro ASA.  For specific details, see Note 3, "Equipment
and Leasehold Improvements,  Net" in the section entitled "Notes to Consolidated
Financial  Statements"  appearing on pages 15 through 26 in the  Company's  2000
Annual Report to Stockholders.  If the effect of this asset impairment charge is
omitted for comparison  purposes,  the Company incurred a net loss of $1,689,000
for fiscal  year  2000,  an  improvement  in results of 34% over the net loss of
$2,557,000  recorded for fiscal 1999.  This  improvement in results is primarily
attributable to increased sales of bulk Spirulina powder and tablets,  decreased
cost of product sales and decreased research and development expenses, offset by
higher interest expense.

        During the third and fourth quarters  of the fiscal year ended March 31,
2000, demand for the Company's products increased over what had been experienced
during  the prior six  quarters.  To meet this  increased  demand,  the  Company
increased  production  levels and by December 1999, the Company was operating at
full capacity.  The increased  demand  contrasts to the fiscal years ended March
31, 1999 and 1998,  when the Company  experienced  declining  sales which can be
attributed to increased  competition  for sales of Spirulina  products in all of
its major markets.

        The most significant  decline in  sales revenue  occurred in fiscal 1998
and  resulted from the loss of what was then our largest customer,  a Hong Kong-
based network  marketing  company.  The major  effect of the  decrease  in sales
was a  significant  decrease  in  liquidity.  Due to the significant decrease in
sales and  the decline in working capital,  the  Company  took  action to reduce
expenditures  and  obtain  additional   sources  of  external   financing  while
concurrently   continuing  to  diversify   its  product  offerings  and  explore
opportunities for expanding the markets for its products.  This plan is still in
effect  and management  believes that the  Company is  beginning to benefit from
this effort in the form of increased sales and reduced  production costs.  Sales
for  fiscal  2000  increased  by  approximately  10%  over  fiscal  1999 and the
Company's  overall  gross  profit  increased  by  54%.  Management  continues to
concentrate  its efforts on business development  in order to  further  increase
revenues  and  return the Company to profitability.

        The Company's  improvement  in results 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  current  term  loan   agreement,   to  attain
profitability,  or a combination  thereof.  There can be no assurance that these
efforts will be successful or that the Company will return to generating  profit
on either a quarterly or annual basis.

                                       11
<PAGE>

ITEM 2. PROPERTIES

        Cyanotech  Corporation  is  located in  Kailua-Kona, Hawaii, at the HOST
Park and also rents 2,500 square feet of warehouse  space 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 at the HOST Park,  which  increased  the total
acreage  under  lease to 183 acres.  The State of Hawaii has agreed to allow the
Company to lease this  additional 93 acres on a year-to-year  basis,  until such
time  that  the  Company  determines  the  need for a  longer  lease  term.  The
construction  work  performed on this  expansion  acreage was the subject of the
asset impairment  charge of $2,796,000  recorded during fiscal 2000.  Management
has  decided  to  continue  to lease  this  parcel  in  anticipation  of  future
expansion.  Our current lease agreement is effective  through December 31, 2000.
Subject to  available  funds,  we  ultimately  plan to use this new  property to
construct a larger astaxanthin  production facility and additional culture ponds
that would use the PhytoDome CCS technology. We believe that there is sufficient
available land at the HOST Park to meet our currently planned future needs.

ITEM 3. LEGAL PROCEEDINGS

        On July 13, 1998, the Company filed a complaint (Case No. CV98-00600) in
United  States  District  Court for the  District  of Hawaii  ("Court")  against
Aquasearch,   Inc.  ("Aquasearch"),   seeking  declaratory  judgment  of  patent
noninfringement,  patent invalidity,  and  non-misappropriation of trade secrets
relating to closed culture production of astaxanthin. The complaint was filed in
response to assertions by Aquasearch,  a competitor in the  astaxanthin  market,
regarding its alleged intellectual property rights.  Aquasearch has answered the
complaint and filed counter claims  alleging patent  infringement,  trade secret
misappropriation,  unfair  competition  and breach of contract.  The Court later
granted  Cyanotech's  motion to amend its  complaint  against  Aquasearch to add
claims of  misappropriation  of trade secrets  regarding  open pond  technology,
unfair competition and breach of contract.

On December 30, 1999, the Court denied  Cyanotech's  motion for summary judgment
of  non-infringement  and patent  invalidity as to Aquasearch's  U.S. Patent No.
5,541,056 and granted  Aquasearch's  related motion that Cyanotech infringes its
patent.  The Court also granted  Aquasearch's  partial  summary  judgment motion
finding that Cyanotech misappropriated  Aquasearch trade secrets and committed a
breach of contract. In response, Cyanotech filed a motion for reconsideration on
January 14, 2000, with the Court. On March 3, 2000, United States District Court
Judge Alan C. Kay denied  Cyanotech's motion for  reconsideration.  Although the
outcome of this  litigation  cannot be assured,  management does not expect that
damages,  if any,  against  Cyanotech will have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.

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 2000.


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  on  page  28  in the  Company's 2000 Annual  Report to  Stockholders,
attached as exhibit 13.

ITEM 6. SELECTED FINANCIAL DATA

        The  information required  by this Item is  incorporated by reference to
the  Section  labeled  "Selected  Financial  Data"  appearing  on  page 2 in the
Company's 2000 Annual Report to Stockholders, attached as exhibit 13.

                                       12
<PAGE>

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 on pages 4 through 10 in the Company's 2000
Annual Report to Stockholders, attached as exhibit 13.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        We have not entered into any  transactions  using  derivative  financial
instruments or derivative commodity instruments and believe that our exposure to
market risk associated with other financial instruments is not material.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The consolidated  balance sheets of the Company and  subsidiaries  as of
March 31, 2000 and 1999, 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,  2000,  together  with the  accompanying  notes and the
related  Independent  Auditors' Report,  all contained on pages 11 through 27 in
the  Company's  2000 Annual Report to  Stockholders  attached as exhibit 13, 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 2000 Proxy Statement.

(b)  IDENTIFICATION OF EXECUTIVE OFFICERS
The executive officers of Cyanotech and their ages and positions as of March 31,
2000 are as follows:


<TABLE>
<CAPTION>
                    Name                       Age                       Position
                    ----                       ---                       --------
<S>                                           <C>       <C>
Gerald R. Cysewski, Ph.D. .....................51       Chairman of the Board, President
                                                        and Chief Executive Officer
Glenn D. Jensen ...............................41       Vice President - Operations
Kelly J. Moorhead..............................44       Vice President - Sales and Marketing
Ronald P. Scott ...............................45       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.

                                       13
<PAGE>

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.  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 since September
1999.  From June,  1998 to September  1999,  he served as Vice  President of New
Product Development. From October 1997 to June 1998, he served as Vice President
- Sales and Marketing of the Company  and President of Nutrex, Inc.  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  waste.  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 1990.  From 1990
until  August  1995,   Mr.  Scott  served  as  Vice   President  -  Finance  and
Administration.   Prior  to  1990,  he  was  Assistant   Controller   for  PRIAM
Corporation,  a  manufacturer  of  Winchester  disk drives and 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 2000 Proxy Statement.

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 2000 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Not applicable.

                                       14
<PAGE>

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:
<TABLE>
<CAPTION>
<S>                                                                                     <C>
                                                                                        Page in 2000
                                                                                        Annual Report
                                                                                        To Stockholders

Independent Auditors' Report.....................................................................27
Consolidated Balance Sheets as of March 31, 2000 and 1999........................................11
Consolidated Statements of Operations for each of the years
     in the three-year period ended March 31, 2000...............................................12
Consolidated Statements of Stockholders' Equity for
     each of the years in the three-year period ended March 31, 2000.............................13
Consolidated Statements of Cash Flows for each of the years
     in the three-year period ended March 31, 2000...............................................14
Notes to Consolidated Financial Statements......................................................15-26

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

Schedule II Valuation and Qualifying Accounts....................................................18
Independent Auditors' Report on Schedule.........................................................19

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 by reference.
</TABLE>
                                       15
<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.)
  4.3                   Amendment to certification of designation of Series C Preferred Stock filed
                        February 4, 2000.
 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                   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.)
 10.5                   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.)
 10.6                   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.)
 10.7                   Registration Rights Agreement by and between the Company and American
                        Cyanamid 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.)
 10.8                   License Agreement between The Scripps Research Institute and the Company dated
                        April 14, 1998.  (Incorporated by reference to Exhibit 10.14 to the Company's
                        Annual Report on Form 10-K for the fiscal year ended March 31, 1998, file no. 0-
                        14602.)
 10.9                   Workout/suspension Agreement between the Company and Kiewit Pacific Co.
                        Dated March 30, 1998.  (Incorporated by reference to Exhibit 10.15 to the
                        Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1998,
                        file no. 0-14602.)
 10.10                  Security Agreement between the Company and Kiewit Pacific Co. dated January 1,
                        1998.  (Incorporated by reference to Exhibit 10.16 to the Company's Annual Report
                        on Form 10-K for the fiscal year ended March 31, 1998, file no. 0-14602.)


                                       16
<PAGE>

 10.11                  Term Loan Agreement dated April 21,  2000  between the Company and B&I Lending, LLC.
                        Confidential portions of this exhibit have been omitted and filed separately with the
                        Commission.
 10.12                  Workout/suspension Agreement between the Company and Kiewit Pacific Co. dated
                        April 28, 2000.
 11.1                   Statement re: Computation of Earnings per Share.
 13                     2000 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 2000 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.

                                       17
<PAGE>
<TABLE>
<CAPTION>
                                                  Schedule II
                                     Cyanotech Corporation and Subsidiaries
                                Valuation and Qualifying Accounts (in thousands)
                                   Years Ended March 31, 2000, 1999 and 1998

<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
2000                                            $     12               7              --              9         $      10
1999                                            $     10               5              --              3         $      12
1998                                            $     --              10              --             --         $      10
</TABLE>

                                       18
<PAGE>


                    INDEPENDENT AUDITORS' REPORT ON SCHEDULE




The Board of Directors
Cyanotech Corporation:

Under date of May 5, 2000,  we reported on the  consolidated  balance  sheets of
Cyanotech  Corporation  and  subsidiaries as of March 31, 2000 and 1999, 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, 2000,  as
contained  in  the  2000  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, 2000. In connection with
our audits of the  aforementioned  consolidated  financial  statements,  we also
audited the related financial statement schedule as listed in Item 14(a)(2). 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 LLP
Honolulu, Hawaii
May 5, 2000

                                       19
<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, 2000.
                              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>

          SIGNATURES                                            TITLE                                DATE

<S>                                             <C>                                             <C>
/s/ Gerald R. Cysewski                          Chairman of the Board, President and               June 23, 2000
-----------------------------                   Chief Executive Officer  (Principal             --------------------
Gerald R. Cysewski, Ph.D.                       Executive Officer and Director)


/s/ Ronald P. Scott                             Executive Vice President - Finance and             June 23, 2000
-----------------------------                   Administration, Secretary and Treasurer         --------------------
Ronald P. Scott                                 (Principal Financial and Accounting
                                                Officer and Director)


/s/ Eric H. Reichl                              Director                                           June 23, 2000
-----------------------------                                                                   --------------------
Eric H. Reichl

/s/ John T. Waldron                             Director                                           June 23, 2000
-----------------------------                                                                   --------------------
John T. Waldron

/s/ Paul C. Yuen                                Director                                           June 23, 2000
-----------------------------                                                                   --------------------
Paul C. Yuen
</TABLE>

                                       20