# UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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, 2001          
Commission file 0-146-02

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

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:
NONESecurities 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.

At June 26, 2001, the aggregate market value of the registrant's Common Stock held by non-affiliates of the registrant
was approximately $20,403.550.

At June 26, 2001, the number of shares outstanding of registrant's Common Stock was 17,031,034.

# DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Annual Report to Stockholders for the fiscal year ended March 31, 2001 are incorporated by reference
into Part II of this Report.  Portions of the Registrant's Definitive Proxy Statement for its 2001 Annual Meeting of Stockholders,
to be filed with the Securities and Exchange Commission on or prior to July 29, 2001 and to be used in connection with the
Annual Meeting of Stockholders expected to be held on August 23, 2001, are incorporated by reference in Part III of this Form
10-K.

## 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 worldwide leader in the development and commercialization of high value
natural 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®, 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® to the worldwide aquaculture industry.  NatuRose is the brand
name of our natural astaxanthin (pronounced asta-zan-thin) product for the animal nutrition market which we
produce from the microalgae, 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 $200 million in annual sales.  NatuRose competes in this marketplace with astaxanthin synthesized from
petrochemicals and other sources.

In March of 1999, we announced the development of BioAstin®, 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, the United States Food and Drug Administration (FDA), completed its review of our
application to sell BioAstin without objection, allowing us to offer our new product for sale and use as a human
nutritional supplement in the United States.  The total market that human astaxanthin products potentially could
address is estimated to exceed $1.5 billion annually.

Cyanotech Corporation was incorporated in Nevada in 1983.  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 subsidiary, Nutrex
Hawaii, Inc., a Hawaii corporation.

## Industry Background

Microalgae are a diverse group of microscopic plants that have a wide range of physiological and
biochemical characteristics and contain, among other things, 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 nutraceuticals, polyunsaturated
fatty acids, and pharmaceuticals.  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.  Our proprietary production system is known as Integrated Culture
Biology Management (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.   To
date, this improved technology has resulted in reduced production costs, increased control of product purity and has
had a positive effect on production yield compared to other photobioreactor systems previously employed.

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 is 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 77% and 87% of net sales for the years ended March 31, 2001 and
2000, 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 nutritional supplement
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 2002.  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, 2001 was the fourth year of commercial production of NatuRose, our natural
astaxanthin product for the animal nutrition market, and the second year of commercial production of BioAstin, our
natural astaxanthin product for the human nutrition market.  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, Hoffmann­LaRoche, who produces synthetic astaxanthin
from petrochemicals.  Hoffmann-LaRoche currently sells synthetic astaxanthin to the aquaculture industry at
approximately $2,400 per pure kilogram on average.  We are aware that astaxanthin from natural sources other than microalgae are also being developed.  As
a result of continued growth in the world aquaculture industry, the world market for astaxanthin pigment is currently estimated to exceed $200 million per year.  We therefore believe that sales of
NatuRose may increase in future periods.

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, we
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 Hawaii, Inc.  We believe that sales of BioAstin, in bulk, packaged consumer form, or 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.

The Company's current research and development efforts are primarily directed at validating the anecdotal
indications of BioAstin through clinical evaluations and trials.  Furthermore, we are continuing to perform feeding
trials to further validate the efficacy of NatuRose as an alternative to synthetic pigments.  As a result of this strategic
shift, research and development expenses during fiscal 2001 decreased to $265,000, a decrease of 48% and 70%
from expenditures of $514,000 and $895,000 in the years 2000 and 1999, 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 57 large oval culture ponds and 15 smaller auxiliary culture ponds,
all of which are currently available for production.  Each of the large ponds has an average surface area of 23,700
square feet (2,200 square meters) and each 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.

Spirulina Pacifica is cultivated in a combination of fresh water and a measured amount of  nutrient-rich
deep ocean water (containing ninety-six trace elements), drawn from a depth of 2,000 feet below sea level.  This
water is supplemented with the other major required nutrients 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
are recycled.  Such recycled media are 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 low-oxygen Ocean-Chill Drying
process which preserves high levels of antioxidant carotenoids.  This provides 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 vacuum-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 a 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 a subcontractor in California.  This
subcontractor is a certified cGMP manufacturer, subject to regular government inspections.

Natural Astaxanthin

The Haematococcus microalgae which produce astaxanthin grow 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 or PhytoDome CCS.  Using this large-scale photobioreactor, we are able to consistently grow large volumes
of contaminant-free cultures of Haematococcus.

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 vacuum-
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 Hawaii 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 30 wholesale distributors.  In selected foreign markets, we have exclusive sales distributors for both
our bulk Spirulina and packaged consumer products.

NatuRose 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.

BioAstin is presently being sold to nutritional supplement manufacturers and health food formulators as well
as through our wholly-owned subsidiary, Nutrex Hawaii, Inc.  During fiscal 2001, BioAstin 1product 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.  Interest from wholesale distributors and retailers for
BioAstin is increasing and we expect that sales through retail channels will continue to grow as consumers become
more aware of the product and its benefits.

In the years ended March 31, 2001, 2000 and 1999, international sales accounted for approximately 54%,
46% and 40%, 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.

Approximately 19% of our net sales for the year ended March 31, 2001 was to a single customer, Spirulina
International B. V. (Spirulina International), a Spirulina marketing and distribution company based in the
Netherlands.  Sales to this customer were 23% for the year ended March 31, 2000 and 11% of net sales for the year
ended March 31, 1999.  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 Hawaii 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 Hawaii sales in the year ended March 31, 2001 were to 30 distributors.

Natural Products Distributors.  In the year ended March 31, 2001, 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

NatuRose 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.

BioAstin is presently being sold to nutritional supplement manufacturers and health food formulators as well
as through our wholly-owned subsidiary, Nutrex Hawaii, Inc.  During fiscal 2001, 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 Hawaii 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.

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.  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 a significant
international market for pen raised seafood whose diet consists of nutrients derived from natural sources.
Independent scientific analysis has shown that the molecular structure of the astaxanthin derived from
Haematococcus algae more closely resembles the astaxanthin obtained naturally by fish in the wild, than that of
synthetic astaxanthin produced by other manufacturers.  NatuRose received an additional affirmation in August 2000
when the FDA approved its use as a color additive in the feed of salmon and trout grown or sold in the United States.
This approval allows us to sell NatuRose to domestic salmon and trout producers as well as to foreign producers
whose products are destined for the US market.  During fiscal 2001, two additional producers, Archer Daniels
Midland (ADM) and Igene Biotechnology, Inc., entered the market with natural astaxanthin products derived from
Phaffia yeast.  Several other companies have announced plans to produce commercial quantities of natural
astaxanthin but we believe that these companies are presently producing only small quantities for test purposes.  We
believe there is commercial demand for a natural astaxanthin pigment for animal feed and that our NatuRose product
can compete against such other products 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 in the United States 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 certain portions of the European market, BioAstin competes directly with Astaxin, a
microalgae-based natural astaxanthin product produced by AstaCarotene AB 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 United States Food and Drug Administration 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.

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.

In August 2000, we received notice that our natural astaxanthin product for the animal nutrition market,
NatuRose, had been approved by the FDA for use as a color additive in the feed of salmon and trout.  The FDA
approval of NatuRose adds to the clearances we had already received in Japan and Canada and organic registration
for use in feed in New Zealand.   With FDA approval, we are able to sell NatuRose to US salmon and trout
producers as well as to foreign producers whose products are destined for the US market.  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 and a patent
pending on the PhytoDome CCS system.  In addition, Cyanotech has filed four patent applications for specific uses
of BioAstin, and has received a notice of allowance for the use of BioAstin in the treatment of carpal tunnel
syndrome (CTS). 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.

## Associates

Cyanotech employed 53 full-time associates as of March 31, 2001.  Approximately 35 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.

## 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:

|                                  | 2001    | 2000 | 1999   
|--------------------------------- | ------- | ---- | -------
|United States                     | $ 3,676 | 46%  | $ 3,992
|Canada/South America              | 509     | 6%   | 371    
|The Netherlands                   | 1,542   | 19%  | 1,715  
|Europe, excluding the Netherlands | 640     | 8%   | 613    
|China                             | 119     | 1%   | 73     
|Asia/Pacific, excluding China     | 1,557   | 20%  | 634    
|Total Product Sales Revenues      | $ 8,043 | 100% | $ 7,398

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.
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, 2001. 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,
seeking declaratory judgment of patent noninfringement, patent invalidity, and
non-misappropriation of trade secrets relating to closed culture production of
astaxanthin. Aquasearch answered the complaint and filed counter claims alleging
patent infringement, trade secret misappropriation, unfair competition and
breach of contract.

In
December 1999, the Court 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
the fourth quarter of fiscal 2001, Cyanotech and Aquasearch settled this
litigation without admission of liability by either party. Terms of the
agreement are confidential. Under this agreement, Cyanotech agreed to an
injunction that prevents it from using any tube system for microalgal production
that infringes Aquasearchs U.S. Patent No. 5,541,056. Aquasearch agreed
that Cyanotechs current proprietary process for producing microalgae,
known as the PhytoDome CCS system, does not infringe its aforementioned
patent. Both parties agreed to dismiss, with prejudice, all claims that the
parties asserted in the litigation. The Court entered an Order to that effect
and that Aquasearchs aforementioned patent is valid and enforceable.
Cyanotech further agreed to pay Aquasearch an undisclosed settlement, including
royalties, for a limited time, on future sales of BioAstin. Amounts due
at March 31, 2001 under this settlement have been fully accrued by the Company.
Cyanotech management does not expect that future royalty payments 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 2001.

## 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 24 in the Companys 2001 Annual Report to Stockholders,
attached as Exhibit 13.

## Item 6.
Selected Financial Data

`(in thousands, except per share data)                       Years ended March 31,
                                           2001        2000        1999        1998        1997
                                        ---------   ---------   ---------   ---------   ---------
Results of Operations
Net sales                               $  8,043    $  7,398    $  6,738    $  7,627    $ 11,399
Gross profit                               2,345       1,503         973       3,137       6,809
Impairment of long-lived assets               --       2,796          --          --          --
Income (loss) from operations (a)           (708)     (4,312)     (2,642)       (300)      3,751
Net income (loss) (a)                     (1,067)     (4,485)     (2,557)       (300)      4,159
Net income (loss) per common share
Basic (a)                               $  (0.07)   $  (0.34)   $  (0.21)   $  (0.05)   $   0.31
Diluted (a)                             $  (0.07)   $  (0.34)   $  (0.21)   $  (0.05)   $   0.25
Average Shares Outstanding
Basic                                     15,997      13,775      13,602      12,909      12,583
Diluted                                   15,997      13,775      13,602      12,909      16,598

Selected Balance Sheet Data
Cash and investment securities          $  2,269    $    405    $    323    $  1,397    $  6,729
Working capital                            4,177       2,094         917       2,596       9,065
Total assets                              21,423      19,689      23,621      25,667      26,015
Long-term debt and capital lease
obligations, excluding current
maturities                                 4,336       1,307          13         129         559
Stockholders' equity                      15,695      16,645      20,707      23,174      23,335`

(a)
Loss from operations, net loss and net loss per common share for the year ended
March 31, 2000 reflect the effect of an asset impairment charge of $2,796. For
further detail, see the sections Operating Expenses-Impairment of
Long-Lived Assets and Liquidity and Capital Resources in
Managements Discussion and Analysis of Financial Condition and Results of
Operations from the Companys fiscal 2000 Annual Report.

## 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 8 in the
Companys 2001 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, 2001
and 2000, 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, 2001, together with the accompanying notes and
the related Independent Auditors Report, all contained on pages 9 through
23 in the Companys 2001 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 2001 Proxy Statement.

## (b)
Identification of Executive Officers

The executive officers of
Cyanotech and their ages and positions as of March 31, 2001 are as follows:

`Name                       Age                       Position
                    ----                       ---                       --------

   Gerald R. Cysewski, Ph.D................52      Chairman of the Board, President and Chief
                                                   Executive Officer
   Ronald P. Scott.........................46      Executive Vice President - Finance and
                                                   Administration, Secretary, Treasurer
   Glenn D. Jensen.........................42      Vice President - Operations
   Kelly J. Moorhead.......................45      Vice President - Sales and Marketing
   R.  Shane Rohan.........................41      Vice President - Production`

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. 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.

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,
who joined the Company in 1984, has served as Vice President - Sales and
Marketing since September 1999; from June, 1998 to September 1999, he was Vice
President of New Product Development; from October 1997 to June 1998, he was
Vice President - Sales and Marketing; from August 1996 to October 1997 he
was Vice President - International Sales; from December 1991 to August 1996 he
was Vice President - Sales and Marketing and President of Nutrex, Inc; from
August 1987 to December 1991, he served as Vice President -
Production. 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. Rohan has served as Vice President - Production since July 2000.  From April 1994 to July 2000, he served as
Production Manager.  Mr. Rohan joined Cyanotech as a Culture Biologist in November 1992.  Prior to joining
Cyanotech, Mr. Rohan worked as a Senior Research Assistant in the Marine Biology Department at the Scripps
Institute of Oceanography.  Mr. Rohan holds a B. S. degree in Marine Natural Products Chemistry from the
University of California, San Diego.

## 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 2001 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 2001 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 2001
                                                                  Annual Report
                                                                 To Stockholders
                                                                 ---------------

Independent Auditors' Report..................................................23
Consolidated Balance Sheets as of March 31, 2001 and 2000......................9
Consolidated Statements of Operations for each of the years
     in the three-year period ended March 31, 2001............................10
Consolidated Statements of Stockholders' Equity for
     each of the years in the three-year period ended March 31, 2001..........11
Consolidated Statements of Cash Flows for each of the years
     in the three-year period ended March 31, 2001............................12
Notes to Consolidated Financial Statements.................................13-22`

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

`Schedule II Valuation and
Qualifying Accounts...........................................................17
Independent Auditors'7 Report on Schedule.....................................18`

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.

(a) (3).  Index to exhibits

## Exhibit Number
Document Description

`3.1                   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.)
 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                   Term Loan Agreement dated April 21, 2000 between the Company and B&I
                        Lending, LLC. (Incorporated by reference to Exhibit 10.11 to the Companys
                        Annual Report on Form 10-K for the year ended March 31, 2000, file no 014602.)
 11.1                   Statement re: Computation of Earnings per Share.
 13                     2001 Annual Report to Stockholders (portions only).
 21.1                   Subsidiaries of the Company.
 23.1                   Accountants' Consent.`

(b)     Reports on Form 8-K

The Registrant did not file
any reports on Form 8-K during the fourth quarter of the 2001 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.

## Schedule II

`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

2001                                   $       10             10              --             --    $      20
2000                                   $       12              7              --              9    $      10
1999                                   $       10              5              --              3    $      12`

# INDEPENDENT AUDITORS
REPORT ON SCHEDULE

The Board of Directors
Cyanotech Corporation:

Under date of April 27,
2001 we reported on the consolidated balance sheets of Cyanotech Corporation and
subsidiaries as of March 31, 2001 and 2000, 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, 2001, as contained in the
2001 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, 2001. 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
April 27, 2001

# 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 22nd day
of  June, 2001.

# CYANOTECH CORPORATION

>By:/s/ Gerald R. Cysewski, Ph. D.Gerald R. Cysewski, Ph.D.
Chairman of the Board,President and ChiefExecutive 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.

`Signatures                            Title                                Date
        ----------                            -----                                ----

/s/ Gerald R. Cysewski          Chairman of the Board, President and            June 22, 2001
-------------------------       Chief Executive Officer  (Principal             -------------
Gerald R. Cysewski, Ph.D.       Executive Officer and Director)

/s/ Ronald P. Scott             Executive Vice President - Finance and          June 22, 2001
-------------------------       Administration, Secretary and Treasurer         -------------
Ronald P. Scott                 (Principal Financial and Accounting
                                Officer and Director)

/s/ Eric H. Reichl              Director                                        June 22, 2001
-------------------------                                                       -------------
Eric H. Reichl

/s/ David I. Rosenthal          Director                                        June 22, 2001
-------------------------                                                       -------------
 David I. Rosenthal

/s/ John T. Waldron             Director                                        June 22, 2001
-------------------------                                                       -------------
John T. Waldron

/s/ Paul C. Yuen                Director                                        June 22, 2001
-------------------------                                                       -------------
Paul C. Yuen`