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 April 30, 1998

                                  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 0-22354

                    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: 14,863,749 shares outstanding
                           as of June 9, 1998



                                  Page 1 of 14
 


















<PAGE>

                              PART I - FINANCIAL
                                 INFORMATION

Item 1. Financial Statements

MARTEK BIOSCIENCES CORPORATION
Balance Sheets
($ in thousands)

--------------------------------------------------------------------------------
                                               April 30,          October 31,
                                                 1998                1997
--------------------------------------------------------------------------------
                                              (Unaudited)
Assets:
Current assets:
     Cash and cash equivalents                  $11,349            $1,977
     Short-term investments and
        marketable securities                    12,106            18,698
     Accounts receivable                            968             1,181
     Inventories  (Note 3)                        4,014             2,906
     Prepaid expenses                               230               318
     Other current assets                            70               273
                                              ----------------------------------
Total current assets                             28,737            25,353
Property, plant and equipment, net               16,133            15,989
                                              ----------------------------------

                                                $44,870           $41,342
                                              ==================================


Liabilities and stockholders' equity:
Current liabilities:
     Accounts payable                           $   548            $1,008
     Accrued liabilities                          1,292             1,041

     Current portion of notes payable             1,323             1,314
                                              ----------------------------------
Total current liabilities                         3,163             3,363
Long-term portion of notes payable                2,636             3,292
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; 14,577,987 
        and 13,673,659 shares issued and 
        outstanding at April 30, 1998 
        and October 31, 1997, respectively.       1,458             1,367
     Additional paid-in capital                  89,996            78,908
     Accumulated deficit                        (52,383)          (45,588)
                                              ----------------------------------
Total stockholders' equity                       39,071            34,687
                                              ----------------------------------

                                                $44,870           $41,342
                                              ==================================

See accompanying notes.





                                 Page 2 of 14

<PAGE>

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

                                      Three months               Six months
                                    ended April 30,            ended April 30,  
                                     1998      1997           1998       1997
--------------------------------------------------------------------------------

Revenues:
     Product Sales:
        Nutritional product sales   $763        $510        $1,308        $653
        Other product sales          643         414         1,104         793
                                 ---------------------     ---------------------
     Total Product Sales           1,406         924         2,412       1,446
     License fees and related 
       revenues                      ---         ---         1,143         293
     Royalties                        62           5           120           9
     Research and development 
       contracts and grants          128         136           186         274
     Third party contract 
       revenue                       ---         ---            22         ---
                                 ---------------------     ---------------------
Total revenues                     1,596       1,065         3,883       2,022
Costs and expenses:
     Cost of product sales         1,104         782         1,938       1,152
     Research and development      2,259       2,798         4,900       5,681
     Selling, general and
       administrative              2,193       2,224         4,154       3,802
                                 ---------------------     ---------------------
Total costs and expenses           5,556       5,804        10,992      10,635
                                 ---------------------     ---------------------
Loss from operations              (3,960)     (4,739)       (7,109)     (8,613)
Other income (expense):
     Miscellaneous income             21          19            42          27
     Interest income                 196         437           460         954
     Interest expense                (91)       (109)         (188)       (212)
                                 ---------------------     ---------------------
Total other income                   126         347           314         769
                                 ---------------------     ---------------------

Net loss                         ($3,834)    ($4,392)      ($6,795)    ($7,844)
--------------------------------------------------------------------------------

Net loss per share (Note 5)       ($0.28)     ($0.32)       ($0.49)     ($0.58)
--------------------------------------------------------------------------------

Weighted average common 
shares outstanding            13,865,986  13,556,755    13,795,299  13,490,618
--------------------------------------------------------------------------------


See accompanying notes.












                              Page 3  of  14



<PAGE>

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

                                                    Six Months ended April 30,
--------------------------------------------------------------------------------
                                                       1998            1997
--------------------------------------------------------------------------------

Operating activities:
  Net loss                                           ($6,795)        ($7,844)
  Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization                       663             531
     Changes in assets and liabilities:
        Accounts receivable                              213            (475)
        Inventories                                   (1,108)           (222)
        Prepaid expenses                                  88            (227)
        Other current assets                             203            (103)
        Accounts payable                                (460)             37
        Accrued liabilities                              251            (144)
                                                 -------------------------------
  Net cash used in operating activities               (6,945)         (8,447)

Investing activities:
     Change in short-term investments 
       and marketable securities                       6,592           2,652
     Purchase of property, plant and equipment          (807)         (1,061)
                                                 -------------------------------
  Net cash provided by investing activities            5,785           1,591

Financing activities:
     Proceeds from issuance of common stock 
       in private placement                           10,010             ---
     Proceeds from the exercise of warrants
       and options                                     1,169             421
     Borrowings on notes payable                         ---           4,000
     Repayment of notes payable                         (647)         (4,346)
                                                 -------------------------------
  Net cash provided by financing activities           10,532              75
                                                 -------------------------------

  Net increase (decrease) in cash and 
     cash equivalents                                  9,372          (6,781)
  Cash and cash equivalents at beginning of year       1,977           8,633
                                                 -------------------------------

  Cash and cash equivalents at end of period         $11,349          $1,852
                                                 ===============================





See accompanying notes.












                               Page 4 of 14

<PAGE>

MARTEK BIOSCIENCES CORPORATION
Statement of Stockholders' Equity
(Unaudited - $ in thousands)


                                                Additional
                                                 Paid-In   Accumulated
                                 Common Stock     Capital     Deficit     Total
                          ------------------------------------------------------
                              Shares    Amounts

Balance at
October 31, 1997          13,673,659    $1,367    $78,908   ($45,588)   $34,687
--------------------------------------------------------------------------------

Issuance of common stock
in private placement         655,563        66      9,944        ---     10,010
                                                                      
Exercise of stock options 
and warrants                 248,765        25      1,144        ---      1,169
                                                                       
Net loss                         ---       ---        ---     (6,795)    (6,795)
--------------------------------------------------------------------------------


Balance at
April 30, 1998            14,577,987    $1,458    $89,996   ($52,383)   $39,071
--------------------------------------------------------------------------------


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 and six months  ended April 30, 1998 are not
necessarily  indicative  of the results  that may be expected for the year ended
October 31, 1998. 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, 1997.

2.  Commitment and Contingencies

The Company  had  commitments  at April 30,  1998 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 April
30, 1998, 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.

3.  Inventories

Inventories consist of the following:

                                                   April 30,      October 31,
                                                     1998           1997   
                                                  ----------     ----------
                           Finished products      $2,074,714     $1,661,439
                           Work in process         1,623,549        909,932
                           Raw materials             315,546        334,081
                                                  ----------     ----------
                                                  $4,013,809     $2,905,452
                                                  ==========     ==========

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.





                                  Page 6 of 14
<PAGE>

4.  Income Taxes

At  April  30,  1998,  the  Company  had net  operating  loss  carryforwards  of
approximately  $65,442,000  for income tax  purposes  that  expire in years 2000
through 2012.

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  in the  past,
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. Significant components of
the Company's  deferred tax assets as of April 30, 1998 and October 31, 1997 are
as follows:

                                                      April 30,      October 31,
                                                        1998            1997
                                                    ----------      ----------
       Deferred tax assets:
          Write-off of patent                      $   403,000     $   328,000
          Other Deferred Tax Assets                     44,000          44,000
          Net operating loss carryforwards          26,177,000      23,459,000
                                                    ----------      ----------
               Total deferred tax assets           $26,624,000     $23,831,000
                                                   ===========     ===========
                 Valuation allowance for net
                  deferred tax assets             ($26,624,000)   ($23,831,000)
                                                  ============     ============
            Net deferred tax assets                $       ---     $        ---
                                                  ============     ============


5.  Net loss per share

In 1997, the Financial  Accounting  Standards  Board (FASB) issued  Statement of
Financial  Accounting Standards (SFAS) No. 128, Earnings Per Share. SFAS No. 128
replaced the previously  reported  primary and fully diluted  earnings per share
with basic and diluted  earnings per share.  Unlike primary  earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants, and
convertible  securities.  Diluted  earnings  per  share is very  similar  to the
previously  reported fully diluted  earnings per share.  The Company's per share
amounts for all periods presented conform to SFAS No. 128 requirements.

6.  Private Placement of Common Stock

On April 27, 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.



                                  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  future  efficiencies  in
manufacturing  processes  and the cost of production of  nutritional  oils;  (4)
future research and development costs and; (5) expectations regarding additional
capital  expenditures  needed in relation  to  fermentation  and oil  processing
activities.  Such statements  involve risks and  uncertainties  that could cause
actual  results to 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,  including  but not  limited  to its report on Form 10-K and its S-3
filed on May 29, 1998.

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  reagents  to  visualize   molecular
interactions  for  drug  discovery  and  development;  and (3) new and  powerful
fluorescent markers for diagnostics,  rapid miniaturized  screening and gene and
protein  detection.  In 1989, Martek began to realize revenues from sales of its
reagent  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(TM),  a DHA dietary  supplement.  In 1998,  Martek  first
realized revenues from the sale of its new fluorescent pigments.

Martek has incurred losses in each year since its inception.  At April 30, 1998,
the  Company's  accumulated  deficit was  $52,383,000.  The  Company  expects to
continue to expand its research and development effort,  optimize oil production
and increase its product  marketing  activities.  As a result,  Martek,s  losses
could increase for at least the next six months,  or until  significant sales of
its  nutritional  oils and Neuromins (TM) DHA products occur and/or  significant
royalties  from  sales  of  infant  formula  products  containing  its  oils are
recognized.  In addition,  the Company expects 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.

Management  believes  that while  quarterly  results  may show  fluctuations  in
product  sales,  the outlook for future  revenue  growth remains strong and that
sales in 1998 and 1999 will surpass prior year levels. Specifically,  management
believes  that for the balance of the fiscal year and 1999:  (1) Infant  formula
containing Martek's oils will 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  capsules will expand; (4) sales of
high value  products from the Company's  stable isotope group will increase and;
(5) diagnostic products will contribute to product sales.

Management   believes  that  humans   throughout  life  will  benefit  from  DHA
supplementation.  This  should  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



                                  Page 8 of 14
<PAGE>

company to promote Martek's non-infant formula nutritional oil products. Because
of this objective, shorter-term marketing arrangements of lesser scope have been
avoided, thus modestly sacrificing some short-term product sales.

Four of the Company's  licensees have  introduced  term infant formula  products
containing  Martek's  oils in  Spain,  Israel,  and  Australia  and three of the
Company's  licensees have introduced preterm infant formula products  containing
Martek's  DHA  and ARA in  thirty  countries.  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,  significantly higher revenue related
to infant  formula sales prior to fiscal 1999 may not be achieved and management
is  unable  to  predict   accurately   when  such  events   will   occur.   That
notwithstanding, management anticipates that product sales, including sales from
infant formula related  products,  will overall increase in both fiscal 1998 and
fiscal 1999.

Results of  Operations -  Comparison  of Quarters and Six Months Ended April 30,
1998 and 1997

Revenues for the quarter  ended April 30, 1998 were  $1,596,000,  a 50% increase
from  revenues  of  $1,065,000  for the same  period in 1997,  primarily  due to
increased product sales.  Revenues for the six-month period ended April 30, 1998
were $3,883,000, an increase of $1,861,000 or 92%, from the same period in 1997.
Total  product  sales  during the second  quarter and six months ended April 30,
1998, increased by $482,000 and $966,000 or 52% and 67%, respectively,  from the
same periods in 1997.  Sales of  nutritional  products  including  Neuromins(TM)
capsules,  increased  nearly  50% for the second  quarter  and over 100% for the
first six months of 1998,  when compared to the same periods in 1997,  primarily
due to increased sales of Martek's oils to infant formula  manufacturers.  Sales
of products for drug  discovery  and  diagnostics  increased  55% for the second
quarter  and 39% for the first six  months of 1998,  when  compared  to the same
periods in 1997.

Royalty  revenues  increased  over  twelve-fold  in the  second  quarter of 1998
compared to the second quarter of 1997 and over  thirteen-fold for the first six
months of 1998  compared to the same period in 1997.  Revenues from research and
development  contracts and grants  decreased by 6% in the second quarter of 1998
when compared to the second quarter of 1997 and decreased 32% for the six months
ended April 30, 1998 from the same period in 1997.

Cost of product  sales  decreased to 79% of revenues  from product sales for the
second  quarter  of 1998  from  85% for the  second  quarter  of  1997.  For the
six-month  period ended April 30, 1998 cost of product sales  remained at 80% of
revenues from product sales,  consistent  with the same period in 1997.  Cost of
oil sales to infant  formula  manufacturers  will remain a high percent  because
infant  formula  royalties,  which are almost equal to the sales price,  are not
included  in product  sales and  therefore  understate  the true sales  price by
almost 50%. There is an approximately nine month delay after the initial sale of
oil until these  royalties are received and  recognized  as revenue,  creating a
significantly  higher cost of goods sold as a percentage  of revenues than would
be the case if royalties were incorporated into the product price and recognized
at the same time as the product sale. In addition,  oil production  costs remain
high due to the current  low volume of  production  and  because the  production
process  requires  further   optimization.   As  sales  volume  increases,   and
manufacturing efficiencies and optimization occurs, Management believes that the
cost of production of the nutritional oils products will continue to decrease.

Research and  development  costs  decreased  by $539,000,  or 19%, in the second
quarter of 1998 as compared  to the second  quarter of 1997.  For the  six-month
period ended April 30, 1998,  research and development costs decreased  $781,000
or 14% when compared to the same period in 1997.  These decreases  resulted from
the conversion of certain development efforts to production efforts. Consistent


                                 Page 9 of 14
<PAGE>

with the Company's plans,  nutritional oils development costs accounted for over
75% of all research and development costs as a result of the Company's continued
development efforts to refine its production  process.  Research and development
costs may increase in the future as the Company  evaluates new  technologies and
continues efforts to optimize the efficiency of its large-scale fermentation and
oil extraction processes.

Selling, general and administrative expenses decreased by $31,000, or 1%, during
the second  quarter of 1998 and  increased  by $352,000 or 9%, in the six months
ended  April 30,  1998 over the second  quarter  and six months  ended April 30,
1997, respectively. These costs increased for the six month period primarily due
to  marketing,  advertising  and  public  awareness  costs  resulting  from  the
commercialization  of the  Company's  Neuromins(TM)  products.  Other income was
$221,000  lower during the second  quarter of 1998 than in the second quarter of
1997 and  $455,000  lower in the first six  months of 1998 than in the first six
months of 1997. These decreases are due primarily to a decrease in the amount of
interest earned on the investment of funds received in the Company's 1995 public
offering as funds are being used to support Company operations.

As a  result  of the  foregoing,  net loss for the  second  quarter  of 1998 was
$3,834,000, or $.28 per share, compared to a net loss of $4,392,000, or $.32 per
share for the second quarter of 1997. A net loss of $6,795,000 or $.49 per share
for the six months  ended  April 30,  1998,  was a  decrease  from a net loss of
$7,844,000 or $.58 per share for the same period in 1997.

Recent Accounting Pronouncements

In 1997, the FASB issued SFAS No. 128, Earnings Per Share. SFAS No. 128 replaced
the previously  reported primary and fully diluted earnings per share with basic
and  diluted  earnings  per share.  Unlike  primary  earnings  per share,  basic
earnings  per share  excludes  any dilutive  effects of options,  warrants,  and
convertible  securities.  Diluted  earnings  per  share is very  similar  to the
previously  reported fully diluted  earnings per share.  The Company's per share
amounts for all periods presented conform to SFAS No. 128 requirements.

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. The FASB also 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.  Both Statements are effective
for fiscal years beginning after December 15, 1997.  Adoption of these standards
will not impact the Company's financial position,  results of operations or cash
flows, and any effect, while not yet determined by the Company,  will be limited
to 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 is in the process of
evaluating the business risk associated with the Company's  information systems.
Based  upon the  information  known at this  time  about the  Company's  current
systems,  management  does not anticipate that the "Year 2000" issue will have a
significant  impact  on  its  information  systems.  However,  there  can  be no
assurance  that "Year 2000" issues will not require a significant  commitment of
resources to resolve potential problems.




                                Page 10 of 14
<PAGE>

Liquidity and Capital Resources

Cash,  cash  equivalents,   short-term  investments  and  marketable  securities
increased by  $2,780,000  in the first six months of 1998,  primarily due to the
funds raised in the private placement of common stock in April discussed in Note
6 above, resulting in a cash balance of $11,349,000 and a balance of $12,106,000
in short-term  investments and marketable  securities at April 30, 1998. Capital
expenditures  of $415,000 and $807,000  were made in the second  quarter and the
six month period ending April 30, 1998,  respectively,  a significant portion of
which  represents  upgrades to the  Company's  fermentation  and oil  processing
facilities  in  Winchester,  Kentucky.  Management  expects  additional  capital
expenditures  of  at  least  $1,200,000  in  1998  as  a  result  of  escalating
fermentation and oil processing activities at the facility.

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(TM),  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 $1,200,000 are expected in 1998.
Expenditures  beyond 1998 will depend in part on production  capacity needs, the
extent of development and implementation of process improvements and the success
of previously implemented 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  18  months.  However,  due  to the  Company's
expectations  of growth and the rapidly  changing nature of the markets in which
it competes,  no prediction can be made with certainty of the Company's need for
additional  capital or its liquidity  position  over the long term.  The Company
intends to seek additional  funding through  commercial and government  research
and   development   contracts   and  grants,   product  sales  and  license  fee
arrangements.  Should the Company need to raise addtional funds, there can be no
assurance that such funds will be available to the Company on acceptable  terms,
if at all.


Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable













                                  Page 11 of 14
<PAGE>

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

None

Item 2.  Changes in Securities.

The following  information  relates to the issuance of Martek securities as part
of the Common Stock and Warrant Purchase Agreement dated April 27, 1998:

       Name of                                     Number of warrants to 
                             Shares of Martek    purchase shares of Martek
    Shareholder            common stock received   common stock received

Vector Later-Stage
Equity Fund II, L.P.              79,947                   23,984

Vector Later-Stage
Equity Fund II, (QP), L.P.       239,840                   71,952

Moore Global
Investments, Ltd.                236,003                   70,801

Remington Investment
Strategies, L.P.                  51,805                   15,542

J.N. Whipple, III                 31,979                    9,594

Buena Vista Partners, LLC         15,989                    4,797
                               ----------               ----------
                                 655,563                  196,670


The  warrants  are  exercisable  for a period  of three  years  from the date of
initial issuance at $18.76/share.

Item 3.  Defaults Upon Senior Securities.

Not Applicable














                                  Page 12 of 14
<PAGE>

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

The Company's  Annual  Meeting of  Stockholders  was held on March 5, 1998.  The
following items were voted on at the Annual Meeting:

         The following  members were elected to the Company's Board of Directors
to hold office for the periods indicated below:

                                    Elected Until
                                    Annual Meeting
         Nominee                     To Be Held      In Favor      Withheld

         Douglas J. MacMaster Jr.      2001         12,680,636      20,358
         John H. Mahar                 2001         12,680,636      20,358
         Eugene H. Rotberg             2001         12,680,436      20,558

Directors Continuing in Office:

         Bruce E. Elmblad
         Richard J. Radmer
         William D. Smart
         Jules Blake
         Ann L. Johnson
         Henry Linsert Jr
         Sandra Panem

Item 5.  Other Information.

None

Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits:  4.2 Common Stock and Warrant Purchase  Agreement dated April
27, 1998 by and among the Company  and  Purchasers  (Filed as Exhibit 4.2 to the
Registrants  Registration Statement on Form S-3, (File No. 333-53803),  filed on
May 28, 1998, and incorporated herein by reference.)

                      99.1  Cautionary  Statements  for  Purposes  of the  "Safe
Harbor" Provisions of the Private Securities Litigation
Reform Act of 1995.

     (b) Reports on Form 8-K:  Form 8-K dated  April 27, 1998 (and  incorporated
herein by reference.)










                                  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:  June 15, 1998                         /s/ Peter L. Buzy
       -------------                         ------------------------------    
                                             Peter L. Buzy, Chief Financial 
                                             Officer (Principal Financial
                                             and Accounting Officer)































                                  Page 14 of 14