UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                    FORM 10-Q

         [ X ]             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the Quarterly Period Ended January 31, 1999

                                       or

         [     ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                        For the Transition Period From to


                        Commission File Number 000-22354

                         MARTEK BIOSCIENCES CORPORATION
             (Exact name of registrant as specified in its charter)



                              Delaware 52-1399362
           (State of Incorporation) (IRS Employer Identification No.)

                   6480 Dobbin Road, Columbia, Maryland 21045
                    (Address of principal executive offices)

        Registrant's telephone number including area code: (410)740-0081

                                      None
   (Former name, former address and former fiscal year, if changed since last
                                    report)




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. X Yes No


          Common stock, par value $.10 per share: 14,934,594 shares outstanding
                              as of March 10, 1999

                                  Page 1 of 14
<PAGE>

                               PART I - FINANCIAL
                                 INFORMATION

Item 1. Financial Statements

MARTEK BIOSCIENCES CORPORATION
Balance Sheets
($ in thousands)

--------------------------------------------------------------------------------
                                                 January 31,        October 31,
                                                    1999                1998
--------------------------------------------------------------------------------
                                                 (Unaudited)
Assets:
Current assets
     Cash and cash equivalents                        $2,523            $4,498
     Short-term investments and 
        marketable securities                         11,218            13,147
     Accounts receivable                               1,603             1,336
     Inventories  (Note 3)                             5,039             5,002
     Prepaid expenses                                    605               424
     Other current assets                                 93                96
                                                  ------------------------------
Total current assets                                  21,081            24,503
Property, plant and equipment, net                    15,962            16,233
                                                  ------------------------------
Total assets                                         $37,043           $40,736
                                                  ==============================


Liabilities and stockholders' equity:
Current liabilities
     Accounts payable                                   $697              $596
     Accrued liabilities                               1,277             1,566
     Current portion of notes payable                  1,371             1,341
                                                   -----------------------------
Total current liabilities                              3,345             3,503
Long-term portion of notes payable (Note 2)            1,597             1,951
Commitments and contingencies (Note 2)
Stockholders' equity
     Preferred stock, $.01 par value, 
        4,700,000 shares authorized;
        none issued or outstanding.                     ---               ---
     Series A junior participating preferred 
        stock, $.01 par value, 300,000 shares 
        authorized; none issued or outstanding.         ---               ---
     Common stock, $.10 par value; 30,000,000  
        shares authorized; 14,934,594 
        and 14,879,434 shares issued and
        outstanding at January 31, 1999 
        and October 31, 1998, respectively.            1,493             1,488
     Additional paid-in capital                       93,280            92,843
     Accumulated deficit                             (62,672)          (59,049)
                                                 -------------------------------
Total stockholders' equity                            32,101            35,282
                                                 -------------------------------
Total liabilities and stockholders' equity           $37,043           $40,736
                                                 ===============================


See accompanying notes.






                                  Page 2 of 14

<PAGE>




MARTEK BIOSCIENCES CORPORATION
Statements of Operations
(Unaudited - $ in thousands, except share and per share data)

                                                 Three months ended January 31,
--------------------------------------------------------------------------------
                                                     1999              1998
--------------------------------------------------------------------------------

Revenues:
    Product sales:
       Nutritional product sales                      $675              $545
       Stable isotope and other product sales          724               461
                                                --------------------------------
    Total product sales                              1,399             1,006
   License fees and related revenues                     0             1,165
    Royalties                                           87                58
    Research and development contracts and grants       67                58
                                                --------------------------------
Total revenues                                       1,553             2,287
Costs and expenses:
    Cost of product sales                              981               834
    Research and development                         2,563             2,641
    Selling, general and administrative              1,715             1,961
                                                --------------------------------
Total costs and expenses                             5,259             5,436
                                                --------------------------------
Loss from operations                                (3,706)           (3,149)
Other income (expense)
    Miscellaneous income                                31                21
    Interest income                                    208               264
    Interest expense                                  (156)              (97)
                                                --------------------------------
Total other income                                      83               188
                                                --------------------------------
Net loss                                           $(3,623)          $(2,961)

Net loss per share                                  $(0.24)           $(0.22)
--------------------------------------------------------------------------------
Weighted average common shares outstanding      14,904,250        13,726,917
--------------------------------------------------------------------------------



See accompanying notes.
















                                  Page 3 of 14
<PAGE>








MARTEK BIOSCIENCES CORPORATION
Statements of Cash Flows
(Unaudited - $ in thousands)

                                                Three Months  ended January 31,
--------------------------------------------------------------------------------
                                                      1999              1998
--------------------------------------------------------------------------------

Operating activities:
  Net loss                                          $(3,623)          $(2,961)
  Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization                      361               333
     Changes in assets and liabilities:
        Accounts receivable                            (267)             (988)
        Inventories                                     (37)             (867)
        Prepaid expenses                               (181)             (254)
        Other current assets                              3                55
        Accounts payable                                101                73
        Accrued liabilities                            (289)              468
                                                 -------------------------------
  Net cash used in operating activities              (3,932)           (4,141)

Investing activities:
     Change in short-term investments 
        and marketable securities                     1,929             5,509
     Purchase of property, plant and equipment          (90)             (383)
                                                 -------------------------------
  Net cash provided by investing activities           1,839             5,126

Financing activities:
     Repayment of notes payable                        (324)             (320)
     Proceeds from the exercise of options              442               283
                                                  ------------------------------
  Net cash provided by (used in) 
       financing activities                             118               (37)
                                                  ------------------------------

  Net (decrease) increase in cash 
       and cash equivalents                          (1,975)              948
  Cash and cash equivalents at beginning of year      4,498             1,977
                                                  ------------------------------
  Cash and cash equivalents at end of period         $2,523            $2,925
--------------------------------------------------------------------------------





See accompanying notes.







                                  Page 4 of 14

<PAGE>



MARTEK BIOSCIENCES CORPORATION
Statements of Stockholder's Equity
(Unaudited - $ in thousands)




                                                
                                Common         Additional   
                                Stock           Paid-in     Accumulated
                         Shares      Amount     Capital       Deficit     Total 
                    ------------------------------------------------------------

Balance at
October 31, 1998       14,879,434    $1,488     $92,843     $(59,049)   $35,282
--------------------------------------------------------------------------------
Exercise of stock options  55,160         5         437        ---          442
                                                                                
Net loss                     ---        ---         ---       (3,623)    (3,623)
--------------------------------------------------------------------------------
Balance at
January 31, 1999       14,934,594     $1,493    $93,280     $(62,672)   $32,101
                                                                                
--------------------------------------------------------------------------------





See accompanying notes.










































                                  Page 5 of 14
<PAGE>


Notes to Financial Statements (Unaudited)


1.  Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting  principles for interim financial information
and  with the  instructions  to Form  10-Q and  Article  10 of  Regulation  S-X.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
In the opinion of management,  all adjustments  (consisting of normal  recurring
accruals)  considered  necessary  for a fair  presentation  have been  included.
Operating  results for the quarter  ended  January 31, 1999 are not  necessarily
indicative  of the results that may be expected  for the year ended  October 31,
1999. For further  information,  refer to the financial statements and footnotes
thereto included in Martek Biosciences  Corporation's annual report on Form 10-K
for the year ended October 31, 1998.

2.  Notes Payable and Commitment and Contingencies

The Company had  commitments  at January 31, 1999 to fund up to $1.5  million of
Phase   III   Small   Business    Innovation    Research   ("SBIR")   technology
commercialization expenses, provided the technology under existing Phase II SBIR
grants yields commercial opportunities favorable to the Company.

Costs under U.S.  Government  contracts are subject to audit by the  appropriate
U.S. Government agency.  Management  believes that cost  disallowances,  if any,
arising  from such  audits of costs  charged  to  government  contracts  through
January 31, 1999, would not have a material effect on the financial statements.

The Company has licensed certain technologies and recognized license fee revenue
under  various  agreements.  License fees are not recorded as revenue  until the
earnings  process is complete and amounts are not subject to refund.  In January
1998,  a  license  fee  of  $1,125,000  associated  with  a  pre-1998  licensing
arrangement was recognized.

The  Company  has  entered  into  various  collaborative  research  and  license
agreements. Under the agreements, the Company is required to fund research or to
collaborate  on  the  development  of  potential  products.   Certain  of  these
agreements  also  commit the Company to pay  royalties  upon the sale of certain
products resulting from such collaborations.

The Company is required to meet certain covenants in relation to its outstanding
term loans.  These covenants,  which outline minimum cash, current ratio and net
worth requirements, have been met by the Company at January 31, 1999.

3.  Inventories

Inventories consist of the following:
                                                   January 31,    October 31,
                                                      1999           1998   
                                                   ----------     ----------
                           Finished products       $1,323,002     $1,406,053
                           Work in process          3,367,834      3,343,911
                           Raw materials              348,154        252,026
                                                   ----------     ----------
                                                   $5,038,990     $5,001,990
                                                   ==========     ==========



                                  Page 6 of 14
<PAGE>

Inventories include products and materials held for sale as well as products and
materials  that  could  alternatively  be used  in the  Company's  research  and
development activities.

4.  Income Taxes

At January 31,  1999,  the  Company  has net  operating  loss  carryforwards  of
approximately  $77,494,000  for income tax  purposes  that  expire in years 2000
through 2019.

Section 382 of the Internal Revenue Code limits the utilization of net operating
losses when ownership changes,  as defined by that section,  are greater than 50
percent. The Company has had significant
ownership changes over the past five years, including an initial public offering
of its common  stock in  December  1993 and a follow-on  public  offering of its
common stock in October 1995, which may have caused these limitations to apply.

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes.  The Company's  total net
deferred tax assets,  which resulted  primarily from net operating losses,  were
$31,339,000 and $25,015,000 at January 31, 1999 and 1998, respectively.  Because
of the  uncertainty  with the  ultimate  realization  of these net  deferred tax
assets,  they were fully  reserved  for by a valuation  allowance at January 31,
1999 and 1998.

5.  Private Placement of Common Stock

On April 21, 1998,  655,563 shares of the Company's common stock and warrants to
purchase  196,670  shares of common  stock  were  issued in a private  placement
resulting  in net  proceeds to the Company of  approximately  $10  million.  The
warrants are  exercisable for a period of three years from date of issuance at a
price of $18.76. The investors have also agreed to a two-year funding commitment
to provide up to an additional $10.25 million in financing in the form of common
stock and  warrants,  at the  discretion  of the  Company,  subject  to  certain
conditions,  which  include the stock price being within  twenty  percent of the
initial  issuance price of $15.63.  In consideration  for the additional  $10.25
million  two-year  funding  commitment,  the Company is  obligated  to issue the
investors additional warrants to purchase up to 51,250 shares of common stock at
the end of each of year one and year two if the  Company  does not  utilize  the
additional  funding  by such  dates.  The cost  associated  with the  additional
warrants has been calculated using the Black-Scholes option pricing model and is
included in iterest expense for the quarter ended January 31, 1999.


















                                  Page 7 of 14
<PAGE>

Item 2.  Management's  Discussion  and Analysis of Financial  Condition and
         Results of Operations
   
General

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements concerning the Company's business
and operations,  including  statements  concerning:  (1) expectations  regarding
future product introductions,  distribution,  sales,  applications and potential
marketing  partnerships;  (2) expectations  regarding sales and royalties by and
from formula licensees; (3) expectations regarding FDA approval of the Company's
oils for inclusion in U.S. infant formula;  (4)  expectations  regarding  future
efficiencies  in  manufacturing  processes  and the  cost of  production  of the
Company's  nutritional oils; (5) future research and development costs; (6) Year
2000  business  risks;  and  (7)  expectations   regarding   additional  capital
expenditures  needed in relation to fermentation and oil processing  activities.
Forward-looking  statements  include those  statements  containing such words as
"will,"  "should,"  "could,"   "anticipate,"   "believe,"  "plan,"   "estimate,"
"expect," "intend," and other similar expressions. Such statements involve risks
and  uncertainties  and actual results may differ materially due to a variety of
risk  factors  set forth  from time to time in the  Company's  filings  with the
Securities and Exchange Commission.

Martek, founded in 1985, is a leader in the development and commercialization of
high value products derived from  microalgae,  including  nutritional  products,
pharmaceutical research and development tools and diagnostics.  Martek develops,
manufactures and sells products from microalgae. The Company's products include:
(1) specialty,  nutritional oils for infant formula, nutritional supplements and
food  ingredients  which play a central role in the  development of the eyes and
central nervous system; (2) high value stable isotope products used to visualize
molecular interactions for drug discovery and development; and (3) new, powerful
fluorescent markers for diagnostics,  rapid miniaturized  screening and gene and
protein  detection.  In 1989, Martek began to realize revenues from sales of its
stable isotope products.  In 1992, Martek began to realize revenues from license
fees related to its nutritional oils containing docosahexaenoic acid ("DHA") and
arachidonic acid ("ARA") and sales of sample  quantities of these oils. In 1995,
Martek  recognized  its first product and royalty  revenues from sales of infant
formula  containing  these oils, and in 1996,  Martek began to realize  revenues
from the sale of Neuromins(R),  a DHA dietary supplement.  In 1998, Martek first
realized revenues from the sale of its new phycobilisome pigment products.

Martek has  incurred  losses in each year since its  inception.  At January  31,
1999, the Company's accumulated deficit was $62,672,000.  The Company expects to
continue  its  development,   production   optimization  and  product  marketing
activities  and as a result,  expects  losses to continue  for at least the next
year, or until  significant  sales of its nutritional  oils and Neuromins(R) DHA
products occur and/or until  significant  royalties from sales of infant formula
products containing its oils are recognized. In addition, the Company expects to
continue to  experience  quarter-to-quarter  and  year-to-year  fluctuations  in
revenues, expenses and losses, some of which may be significant.  The timing and
extent of such  fluctuations  will depend, in part, on the timing and receipt of
oils-related  revenues.  Because  the extent  and timing of future  oils-related
revenues  are largely  dependent  upon the  Company's  licensees,  the timing or
likelihood of future  profitability  is largely  dependent on factors over which
the Company has no control.

Management Outlook and Regulatory Issues

Management  believes  that while  quarterly  results  may show  fluctuations  in
product sales,  the outlook for future revenue growth remains  positive and that
fiscal  1999 sales will  surpass  prior year  levels.  Specifically,  management
believes that for fiscal 1999 as a whole: (1) Infant formula containing Martek's
oils will

                                  Page 8 of 14
<PAGE>

be  introduced  in  additional  countries;  (2)  sales  and  royalties  from the
Company's  infant formula  licensees will continue to grow; (3)  distribution of
the Company's Neuromins(R) DHA products will expand; (4) sales of new high value
products  from the  Company's  stable  isotope  group  will  increase  and;  (5)
distribution and sales of diagnostic products will grow.

Management believes that recent scientific evidence supports the contention that
humans  throughout  life  will  benefit  from DHA  supplementation.  This  could
represent a far larger  market for DHA than the market for  infants.  To realize
this market,  the Company is pursuing a long-term  marketing  partnership with a
large  nutritional  products and/or  pharmaceutical  company to promote Martek's
non-infant formula nutritional oil products. Because of this objective,  certain
shorter-term  marketing  arrangements  of lesser scope have been  avoided,  thus
modestly  sacrificing  short-term product sales.  Management believes that broad
introductions of infant formula  containing  Martek's  nutritional oils and/or a
strategic alliance with a large scale nutritional products and/or pharmaceutical
company will occur in the future.  However,  management  is unable to accurately
predict when, or if, such events will occur.

Four of the Company's  infant  formula  licensees  have obtained the  regulatory
approval, where required, to sell infant formula supplemented with Martek's oils
in over 50 countries for term or pre-term infant formula  products.  The Company
and its  licensees  are in the  process  of  preparing  to  respond  to  certain
questions  raised by the FDA in  connection  with  evaluating  Martek's oils for
inclusion in U.S. infant formula. While management believes that approval should
ultimately be obtained, there is no assurance that the Company and its licensees
will be able to adequately  respond to the FDA's  questions,  that the licensees
will continue to press forward,  that clearances  will in fact be granted,  that
the  process  will  not  involve  significant  delays  that may  materially  and
adversely affect the timing and extent of potential future  introductions of the
Company's  products,  or that once and if approval is obtained,  a licensee will
actually  market a U.S.  infant formula  product  containing the Company's oils.
Nevertheless,  management  anticipates  that for fiscal year 1999 infant formula
products  containing  Martek's oils will continue to be introduced in additional
countries  around the world and  overall  product  sales,  including  sales from
infant formula related products, will increase over the prior year.

Results of Operations

Revenues for the quarter ended January 31, 1999 were $1,553,000,  a 32% decrease
from  revenues of  $2,287,000  for same  period in 1998,  due  primarily  to the
recognition  in 1998 of a  non-recurring  $1,125,000  license fee. Total product
sales during the first  quarter of 1999  increased by $393,000,  or 39% over the
first quarter of 1998. Sales of nutritional  products increased by $130,000,  or
24%, in the first  quarter of 1999 when  compared to the first  quarter of 1998,
due mainly to increased sales of  Neuromins(R)  capsules into mass market retail
outlets.  First quarter sales of stable isotopes and other  commercial  products
increased by $263,000, or 57% from the same period in 1998, primarily due to the
introduction of new high-value stable isotope products. During the first quarter
of 1999 royalty revenue increased by $29,000,  or 50% when compared to the first
quarter  of  1998  due to the  increased  volume  of  infant  formula  sales  by
licensees. Revenues from research and development contracts and grants increased
16% in the first quarter of 1999 over the first quarter of 1998.

Cost of product sales  decreased to 70% for the first quarter of 1999, down from
83% for the first quarter of 1998,  due mainly to the product mix,  which in the
first quarter of 1999 included  greater  sales of high margin  Neuromins(R)  and
high value,  high margin stable isotope  products.  In addition,  oil production
costs at the  Company's  plant in  Winchester,  Kentucky  decreased  as gains in
manufacturing efficiencies were realized.

Research and development costs decreased by $78,000, or 3%, in the first quarter
of 1999 when compared to the first quarter of 1998.  Over 75% of these R&D costs
relate to continued refinement of the

                                  Page 9 of 14
<PAGE>

Company's  fermentation  and oil  extraction  processes  and other  R&D  efforts
related to the  Company's  oil  products.  Research  and  development  costs may
increase in the future as the Company  evaluates new  technologies and continues
efforts to  optimize  the  efficiency  of its  Winchester,  Kentucky  production
facility.

Selling,  general and  administrative  expenses  decreased by $246,000  over the
first quarter of 1998, primarily the result of lower advertising expenses due to
the timing of print and other advertising campaigns.

As a  result  of the  foregoing,  net  loss for the  first  quarter  of 1999 was
$3,623,000, or $.24 per share, compared to a net loss of $2,961,000, or $.22 per
share for the first quarter of 1998.

Recent Accounting Pronouncements

In June 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive  Income,"
which requires  companies to report by major components and in total, the change
in its net assets during the period from  non-owner  sources.  This Statement is
effective  for the annual  reporting  of companies  with fiscal years  beginning
after December 15, 1997.  Adoption of SFAS No. 130 will not impact the reporting
of the Company.

The FASB also recently  issued SFAS No. 131,  "Disclosures  about Segments of an
Enterprise  and  Related  Information,"  which  establishes  annual and  interim
reporting  standards for a company's  operating segments and related disclosures
about  its  products,  services,  geographic  areas and  major  customers.  This
Statement  must be adopted in the annual  reporting  for  companies  with fiscal
years  beginning  after  December  15,  1997.  Adoption of this  standard is not
expected  to have a  significant  impact on the  Company's  financial  position,
results of operations, cash flows, or the presentation of its disclosures.

Impact of Year 2000

The Company uses a number of computer software programs and operating systems in
its internal  operations,  including  applications  used in  financial  business
systems and  various  administrative  functions.  Management  believes  that the
business risk associated with these internal  information systems is minimal and
has completed more than 95% of its Year 2000 compliance  implementation  work on
them. The Company is also  evaluating its  non-information  technology  systems,
including the various equipment in operation at the oil production facilities in
Winchester,  Kentucky. Management has completed more than 90% of this evaluation
and subsequent  implementation,  and believes that the business risk  associated
with this equipment is minimal. Management believes that its compliance  work on
the  Company's  information  and  non-information   technology  systems will  be
completed by the third quarter of fiscal year 1999.  However, if significant new
non-compliance issues  are  identified, the  process  may  be  delayed  and  the
Company's  operations  and  financial  condition  may  be  materially  adversely
affected.

Additionally,  Martek's third party  relationships  are being reviewed to assess
their Year 2000  status and  potential  impact on the  Company.  The Company has
completed  approximately  90% of this review and, where potential  business risk
has been  identified,  is requesting  additional  information from certain third
parties to obtain  assurance  that they are year 2000  compliant.  To date,  the
Company's  third  party  suppliers  have  represented  that  they are Year  2000
compliant  or are in the process of becoming  compliant  by December  31,  1999.
Although  Management has identified multiple suppliers for most of the goods and
services purchased from third parties, there can be no guaranty that the failure
of any  individual  supplier to  adequately  address the Year 2000 issue for the
products and services  that they provide to the Company will not have a material
adverse impact on the Company's  operations and financial  results.  Contingency
plans will be developed if it appears that the Company or its suppliers will not
be Year 2000 compliant, and such non-

                           Page 10 of 14
<PAGE>


compliance is expected to have  a  material  adverse  impact  on  the  Company's
operations.

Based on currently available  information,  Management believes that total costs
associated with Year 2000 issues will be less than $200,000, and that it will be
able to manage the Year 2000 transition  without any material  adverse effect on
the Company's operations,  liquidity or capital resources. However, there can be
no assurance that Year 2000 issues will not require a significant  commitment of
resources to resolve potential problems.                           

Liquidity and Capital Resources

Martek has  financed  its  operations  primarily  from the  issuance and sale of
equity  securities,  debt  financing,   revenues  received  under  research  and
development  contracts  and grants,  product  sales and receipt of license fees.
Since its  inception,  the Company  has raised  approximately  $84 million  from
public and private sales of its equity securities,  including  approximately $10
million from a private placement in 1998. The 1998 private  placement  investors
also  agreed to a two-year  funding  commitment  to provide up to an  additional
$10.25  million in  financing  in the form of common  stock and  warrants at the
discretion  of the Company,  subject to certain  conditions,  which  include the
stock price being within twenty percent of the initial issuance price of $15.63.

Through  January  31,  1999  Martek  has  incurred  an  accumulated  deficit  of
$62,672,000.  The Company's  balance of cash and cash equivalents at January 31,
1999 was $2,523,000. In addition, at January 31, 1999, Martek had $11,218,000 in
short-term  investments  and  marketable   securities.   These  investments  and
securities consist of U.S.  government  securities and are available to meet the
future cash needs of the Company. Cash, cash equivalents, short-term investments
and  marketable  securities  decreased  $3,904,000 in the first quarter of 1999,
primarily due to the Company's continued operating losses.

Martek may require  substantial  additional  funds to continue  its research and
development  programs,  to  conduct  preclinical  and  clinical  studies  and to
commercialize its nutritional oils,  Neuromins(R),  and its other products under
development.  The ultimate levels of these expenditures will depend, in part, on
whether  the  Company  seeks  independently,   or  with  other  parties  through
collaborative agreements, to develop, manufacture and market its
products. The capital requirements of Martek will depend, among other things, on
one or more of the following factors: growth in the Company's infant formula and
nutritional  product  sales;  the  extent  and  progress  of  its  research  and
development programs; the progress of preclinical and clinical studies; the time
and costs of obtaining regulatory  clearances for those products subject to such
clearances;  the costs  involved  in filing,  protecting  and  enforcing  patent
claims;  competing  technological and market  developments;  the cost of capital
expenditures at the Company's  manufacturing  facilities;  the cost of acquiring
additional and/or operating  existing  manufacturing  facilities for its various
products and potential products (depending on which products the Company decides
to manufacture and continues to manufacture  itself); and the costs of marketing
and  commercializing  the  Company's  products.  The continued  development  and
optimization of the Company's  production facility has had, and will continue to
have,  a  material  effect  upon  Martek's   liquidity  and  capital  resources.
Additional plant modifications costing at least $1,000,000 are expected in 1999.
Expenditures  beyond 1999 will depend in part on production  capacity needs, and
the extent of development and implementation of process improvements.

Management  believes its existing  capital  resources,  consisting  primarily of
cash,  short-term  investments and marketable  securities will provide  adequate
capital  for at least  the  next 12 months.  However,  Management  believes that
additional funds will be needed  in the longer  term to continue  the  Company's
research  and   development, manufacturing  and  marketing  efforts.  Management
intends to seek additional  funding through  commercial and government  research
and   development   contracts   and  grants,   product  sales  and  license  fee


                                 Page 11 of 14

<PAGE>


arrangements,   asset-based  borrowing,   equity  issuances,   additional  lease
financing and/or  collaborative  arrangements  with partners if such methods are
available to the Company and on favorable terms.  There can be no assurance that
such funds will be available to the Company on acceptable terms, if at all.






                                  
                                 Page 12 of 14

<PAGE>



                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

The Company is not a party to any material legal proceedings.

Item 2.  Changes in Securities.

None

Item 3.  Defaults Upon Senior Securities.

Not Applicable

Item 4.  Submission of Matters to a vote of Security Holders.

None

Item 5.  Other Information.

None

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibit 27: Financial Data Schedule

(b) Exhibit  99.1:  Cautionary  Statements  for  Purposes  of the "Safe  Harbor"
Provisions of the Private Securities Litigation Reform Act of 1995.

(c) Reports on Form 8-K: First  Amendment of Rights  Agreement dated November 5,
1998 by and among the Company and  Registrar  and  Transfer  Company,  as Rights
Agent  (filed as exhibit 99.1 to the  Company's  form 8-K,  File No.  000-22354,
filed November 9, 1998, and incorporated by reference herein).




















                                  Page 13 of 14



<PAGE>



                                   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 thereunto duly authorized.



                         MARTEK BIOSCIENCES CORPORATION
                                  (Registrant)






Date:  March 17, 1999          /s/Peter L. Buzy
       ---------------        ------------------
                               Peter L. Buzy, Chief Financial and 
                               Accounting Officer































                                  Page 14 of 14