8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

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

August 15, 2007

Date of report (Date of earliest event reported)

Cyanotech Corporation

(Exact name of registrant as specified in its charter)

NEVADA	000-14602	91-1206026
(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification
incorporation)		Number)

73-4460 Queen Kaahumanu Highway, Suite #102, Kailua Kona, HI 96740

(Address of principal executive offices)

(808) 326-1353

(Registrant’s telephone number)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 3.01 — Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

(a)  On August 20, 2007 the Company issued a news release announcing that on August 15, 2007, Cyanotech Corporation received notification from the Nasdaq Stock Market that the Company is not in compliance with the requirements for continued listing of Nasdaq Marketplace Rule 4310(c)(14), because of its failure to file its report on Form 10-Q for the quarter ended June 30, 2007. The Company has been informed that the August 15, 2007 notice constitutes an additional basis for delisting the Company’s securities from The Nasdaq Stock Market, and that this additional basis for delisting will be considered when the Company appears before the Nasdaq Listing Qualifications Panel on August 30, 2007, as discussed below.

Previously, on July 16, 2007 the Company filed a Form 8-K stating that it had issued a news release announcing notification on July 17, 2007 from the Nasdaq Stock Market that the Company is not in compliance with the requirements for continued listing of Nasdaq Marketplace Rule 4310(c)(14), because of its failure to file its report on Form 10-K for the fiscal year ended March 31, 2007.  As a result of this failure, the Company’s common stock was subject to suspension of trading on July 26, 2007, however the Company filed an appeal of that decision with the Nasdaq Listing Qualifications Panel on July 20, 2007 requesting continued listing of its common stock until the Panel’s review and determination.

The suspension of trading and delisting is stayed pending the appeal of both of the foregoing notifications. The combined appeal is to be heard August 30, 2007.  The suspension of trading and delisting is stayed pending the appeal.The news release is attached hereto as Exhibit 99.1.

The Company believes it is now in compliance with Nasdaq Marketplace Rule 4310(c)(14) with respect to the first deficiency (Item 8.01 below), and the Company also expects that it will be in compliance with such Rule when it files its Form 10-Q.  The Company expects such filing to be made on or before September 20, 2007 subject to the review of such Form 10-Q by its independent registered public accountants.

Item 8.01 — Other Events

On August 16, 2007, the Company issued a news release announcing that it had filed on August 16, 2007 its Form 10-K for the fiscal year ended March 31, 2007. The news release is attached hereto as Exhibit 99.2.

(d) Exhibits:

Exhibit Number
99.1	News Release Headed: Cyanotech Receives Notice of Delisting by Nasdaq, Appeal to Be Heard by Nasdaq
99.2	News Release Headed: Cyanotech Files Form 10-K Financial Report for Fiscal 2007

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CYANOTECH
	CORPORATION (Registrant)
August 20, 2007	By:	/s/ William R. Maris
		William R. Maris
		Chief Financial Officer
		and VP of Finance and Administration

2

EX-99.1

Exhibit 99.1

News Release	Contact: Bruce Russell
	Russell Communications
	Group
	310-559-4955 x101
	brucerussell@ruscom.com

Cyanotech Receives Notice of Delisting by Nasdaq, Appeal to Be Heard by Nasdaq

KAILUA KONA, Hawaii (August 20, 2007) – Cyanotech Corporation (Nasdaq: CYAN) announced that on August 15, 2007, Cyanotech Corporation received notification from the Nasdaq Stock Market that the Company is not in compliance with the requirements for continued listing of Nasdaq Marketplace Rule 4310(c)(14), because of its failure to file its report on Form 10-Q for the quarter ended June 30, 2007. The Company has been informed that the August 15, 2007 notice constitutes an additional basis for delisting the Company’s securities from The Nasdaq Stock Market, and that this additional basis for delisting will be considered when the Company appears before the Nasdaq Listing Qualifications Panel on August 30, 2007, as discussed below.

Previously, on July 16, 2007 the Company filed a Form 8-K stating that it had issued a news release announcing notification on July 17, 2007 from the Nasdaq Stock Market that the Company is not in compliance with the requirements for continued listing of Nasdaq Marketplace Rule 4310(c)(14), because of its failure to file its report on Form 10-K for the fiscal year ended March 31, 2007.  As a result of this failure, the Company’s common stock was subject to suspension of trading on July 26, 2007, however the Company filed an appeal of that decision with the Nasdaq Listing Qualifications Panel on July 20, 2007 requesting continued listing of its common stock until the Panel’s review and determination.

The suspension of trading and delisting is stayed pending the appeal of both of the foregoing notifications . The combined appeal is to be heard August 30, 2007.  The suspension of trading and delisting is stayed pending the appeal.

The Company believes it is now in compliance with Nasdaq Marketplace Rule 4310(c)(14) with respect to the first deficiency (Item 8.01 below), and the Company also expects that it will be in compliance with such Rule when it files its Form 10-Q.  The Company expects such filing to be made on or before September 20, 2007 subject to the review of such Form 10-Q by its independent registered public accountants.

#     #     #

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

Except for statements of historical fact, the statements in this news release are forward-looking.  Such statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made.  These factors include, but are not limited to, general economic conditions, forecasts of sales in future periods, changes in sales levels to our largest customers, weather patterns, production problems caused by contamination, risks associated with the acceptance of new products, competition, foreign exchange fluctuations, government regulation, and other factors more fully detailed in the Company’s recent Form 10-Q and annual form 10-K filings with the Securities and Exchange Commission.

73-4460 Queen Kaahumanu Highway, #102  ~  Kailua-Kona, Hawaii 96740

(808) 326-1353  fax (808) 329-3597  ~ www.cyanotech.com

EX-99.2

Exhibit 99.2

News Release	Contact: Bruce Russell
	Russell Communications
	Group
	310-559-4955 x101
	brucerussell@ruscom.com

Cyanotech Files Form 10-K Financial Report for Fiscal 2007

KAILUA-KONA, Hawaii (August 16, 2007) - Cyanotech Corporation (Nasdaq: CYAN) has filed its Form 10-K Annual Report for fiscal 2007, ended March 31, 2007.  The entire financial report is available for viewing or downloading at Securities and Exchange Commission website at www.sec.gov.

The Company reported a net loss of $7,425,000, which included a non-cash impairment loss on equipment and leasehold improvements of $4,487,000, or ($1.42) per diluted share for fiscal 2007, compared to a net loss of $391,000, or ($0.07) per diluted share for fiscal 2006.  Net sales for fiscal 2007 totaled $9,683,000, a 13% decrease from net sales of $11,131,000 in fiscal 2006.

“In operations, sales were mixed across our product lines with reduced demand for some products and production issues involving what has become our flagship product, natural astaxanthin,” said Gerald R. Cysewski, PhD, chairman, president and CEO.  “During the last three quarters of the fiscal year, we experienced decreased astaxanthin production due to an imbalance in the critical factors, some beyond our control, which are involved in the production of microalgae.  That led, in turn, to constrained supply of finished product and the inability to provide astaxanthin for some customers.  The issue has been resolved and astaxanthin production is again approaching traditional yield levels.

“As previously announced, in preparing the Form 10-Q for the first quarter of fiscal 2007, an accounting review was initiated to address a matter involving the Company’s historical treatment of certain inventory related costs.  As a result of this review, errors were identified in the application of certain accounting practices and procedures related to accounting for certain fixed costs such as portions of depreciation, general insurance, and minor compensation costs which should have been included in the carrying value of inventory.  This review resulted in an extensive restatement process and required inordinate management attention for the better part of the last 12 months and cost Cyanotech in excess of $700,000 in fees and expenses.”

“In addition, for fiscal year 2007, accounting rules required that we substantially decrease the value of our fixed assets by $4,487,000.  This is a non-cash event, but it significantly affects both our balance sheet and statement of operations for fiscal 2007.  Going forward, the required decrease in fixed asset value will decrease depreciation expenses.  With these issues resolved, we can now look forward to focusing on our core operations without the diverting burdens of the past year hindering our progress.”

Dr. Cysewski noted that “With all that has happened, Cyanotech remains one of the leading microalgae producers in the world.  Our products are acknowledged as best-of-class and totally safe for human use.  This is a critical distinction in today’s world where many products for

human consumption, food and supplements, have been found to be contaminated.  Our Hawaiian Spirulina has GRAS status (Generally Recognized As Safe for use in all food, beverage and supplement applications) with the Food and Drug Administration (FDA).  Spirulina is produced in many other countries, but none has achieved the safety and quality standards to attain GRAS status.  Our natural astaxanthin also is approved by the FDA for human consumption.  No herbicides or pesticides are used in our microalgae cultivation and processing operation.  Only the highest purity nutrients and other production materials sourced from manufacturers in either the US or Canada are used and all are tested prior to use, and all are non-GMO (non-genetically modified organism).”

“Going forward,” Dr. Cysewski concluded, “we see higher margin natural astaxanthin for human use as our prime product for growth and will work to shift our sales mix and productivity to this end by continuing to vigorously pursue the wholesale market opportunities for bulk sales that arise as astaxanthin grows in demand.  Concurrently, we will reinforce old and add new direct marketing channels for the sale of both our natural astaxanthin and spirulina products in retail markets.  We also are planning new approaches to our traditional health-oriented consumers as well as branded outreach through online sales to new market segments, such as the large, mainstream ‘Boomer’ population seeking to age well by using our products.”

Cyanotech Corporation, a world leader in microalgae technology, produces BioAstin® Natural Astaxanthin and Hawaiian Spirulina Pacifica®–all natural, functional nutrients that enhance human health and nutrition. Cyanotech’s spirulina, FDA reviewed and accepted as Generally Recognized as Safe (GRAS) for use as a food ingredient, augments energy and immune response. BioAstin’s benefits derive from its superior antioxidant activity and from its ability to support and maintain natural inflammatory response, enhancing skin, muscle and joint health. NatuRose® Natural Astaxanthin is a natural pigment source that also promotes animal health and nutrition, primarily in aquaculture. Phycobiliproteins are fluorescent pigments used in medical diagnostic testing and research. Cyanotech produces these products from microalgae grown at its 90-acre facility in Hawaii using patented and proprietary technology and distributes them to nutritional supplement, nutraceutical, cosmeceutical, and animal feed makers and marketers in more than 40 countries worldwide.  Information at:  www.cyanotech.com

#     #     #

 “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

Except for statements of historical fact, the statements in this news release are forward-looking.  Such statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made.  These factors include, but are not limited to, general economic conditions, forecasts of sales in future periods, changes in sales levels to our largest customers, weather patterns, production problems caused by contamination, risks associated with the acceptance of new products, competition, foreign exchange fluctuations, government regulation, and other factors more fully detailed in the Company’s recent Form 10-Q and annual Form 10-K filings with the Securities and Exchange Commission.

(Financial Highlights follow)

CYANOTECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

March 31, 2007 and 2006

(in thousands, except share data)	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	1,444		$	1,835
Short-term investments	—			700
Accounts receivable, net of allowance for doubtful accounts of $23 and $25 in 2007 and 2006, respectively	1,587			2,209
Inventories	1,593			2,056
Prepaid expenses and other current assets	141			116
Total current assets	4,765			6,916
Equipment and leasehold improvements, net	4,701			10,164
Other assets	440			515
Total assets	$	9,906		$	17,595
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	398		$	364
Accounts payable	616			485
Accrued expenses	390			420
Total current liabilities	1,404			1,269
Long-term debt, excluding current maturities	992			1,387
Total liabilities	2,396			2,656
Stockholders’ equity:
Common stock of $.02 par value, authorized 7,500,000 shares; issued and outstanding 5,233,520 shares for 2007 and 5,224,066 shares for 2006	105			105
Additional paid-in capital	27,333			27,330
Accumulated other comprehensive loss	(8		)	(1		)
Accumulated deficit	(19,920		)	(12,495		)
Total stockholders’ equity	7,510			14,939
Total liabilities and stockholders’ equity	$	9,906		$	17,595

CYANOTECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended March 31, 2007, 2006 and 2005

(in thousands, except per share data)	2007			2006			2005
Net sales	$	9,683		$	11,131		$	11,445
Cost of sales	8,552			8,071			7,553
Gross profit	1,131			3,060			3,892
Operating expenses:
Research and development	203			187			251
Sales and marketing	1,297			1,312			1,189
General and administrative	2,448			1,814			1,728
Impairment loss on equipment and leasehold improvements	4,487			—			—
Total operating expense	8,435			3,313			3,168
Income (loss) from operations	(7,304		)	(253		)	724
Other income (expense):
Interest income	59			46			31
Interest expense	(186		)	(180		)	(163		)
Other income (expense), net	(3		)	(10		)	15
Total other expense, net	(130		)	(144		)	(117		)
Income (loss) before income taxes	(7,434		)	(397		)	607
Income tax expense (benefit)	(9		)	(6		)	6
Net income (loss)	$	(7,425	)	$	(391	)	$	601
Net income (loss) per share:
Basic	$	(1.42	)	$	(0.07	)	$	0.12
Diluted	$	(1.42	)	$	(0.07	)	$	0.11
Shares used in calculation of net income (loss) per share:
Basic	5,234			5,226			5,196
Diluted	5,234			5,226			5,245