EXHIBIT 99.1
             CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR"
            PROVISIONS OF THE PRIVATE SECURITIES REFORM ACT OF 1995


         We desire to take  advantage  of the "safe  harbor"  provisions  of the
Private  Securities  Litigation  Reform  Act of  1995.  Many  of  the  following
important factors discussed below have been discussed in our prior SEC filings.

You should be cautioned that the following important factors have affected,  and
in the future could  affect,  our actual  results.  There may also be additional
factors not  discussed  in this report  that could also affect  future  results.
These factors could cause our future financial results to differ materially from
those expressed in any  forward-looking  statements made by us.  Forward-looking
statements may relate to such matters as:

    - our ability to generate future revenues;
    - the potential  commercialization of our products; and
    - The optimization of production costs.

Forward-looking  statements may include words such as "will," "should," "could,"
"anticipate,"  "believe,"  "plan,"  "estimate,"  "expect,"  "intend,"  and other
similar expressions.  This list does not constitute all factors which you should
consider prior to making an investment  decision in our  securities.  You should
also not assume that the information contained herein is complete or accurate in
all respects  after the date of this filing.  We disclaim any duty to update the
statements contained herein.

         History of Operating Losses;  Uncertainty of Future Financial  Results.
We have  experienced  net operating  losses since our inception.  We expect such
losses to continue until  significant sales of our nutritional oils occur and/or
until significant royalties from sales of infant formula products containing our
oils are  recognized.  We expect  to have  quarter-to-quarter  and  year-to-year
fluctuations  in  revenues,   expenses  and  losses,  some  of  which  could  be
significant.  Future financial  results will be affected by, among other things,
the following factors:

    - our  ability  to  complete  successfully  the  commercialization  and cost
      optimization  of our  products;
    - the  willingness  and ability  of infant formula  licensees to incorporate
      our product into their infant formula products;
    - the willingness of potential  strategic  partners to market our products;
    - growth in revenues from our nutritional oils;
    - growth in revenues from sales of our  products for use in  molecular
      structure  research and structure-based  drug design;
    - the progress of our research and development programs;
    - the progress of our preclinical and clinical  product  studies;
    - the time,  costs and ability of obtaining  regulatory  approvals for those
      products subject to such approval;
    - our ability to protect our proprietary rights;
    - the costs of protecting our patent claims;
    - competing technological and market  developments;
    - manufacturing costs associated with our various products and
      potential  products;  and
    - the costs of  commercializing  and marketing our products.

         Early  Stage of the  Company  and its  Products.  Martek was founded in
1985.  Certain of our  products  require  substantial  additional  research  and
development.  Some  require  laboratory  and  clinical  testing  and  regulatory
approval.  In addition,  although we anticipate the introduction of new products
over the next several years, some of our potential  products,  especially in the
area of pharmaceuticals,  are not expected to become commercially  available for
many years, if at all. There is no assurance that:

    - we will successfully  complete our product  development  efforts;
    - we will obtain required regulatory  approvals on a timely basis or at all;
    - we will be capable of  manufacturing  our products in  commercial
      quantities at a reasonable cost; or
    - any new products,  if introduced,  will achieve market acceptance.

We expect to receive most of our future  revenues from direct sales of products,
royalty  income and  licensing  fees. A portion of our revenues to date has come
from research and development  contracts (primarily from the federal government)
and federal  government grants. We first realized revenues from our products for
use in molecular structure research and structure-based  drug design in 1989. We
recognized  revenues  from  license  fees and  sales  of  sample  quantities  of
nutritional  and  diagnostic  products in 1992. In 1995, we recognized our first
product and royalty revenues from sales of infant formula containing our DHA and
ARA. In 1996, we began to realize revenues from the sale of our Neuromins(R),  a
DHA dietary supplement.

Need for Additional Capital.  Additional funds will be required to:

    - enable us to continue  our research and  development  activities;
    - conduct preclinical and clinical studies; and
    - manufacture and market our products.

Management is likely to pursue various  financing  alternatives  to obtain these
funds, including:

    - asset-based borrowing;
    - equity issuances;
    - additional lease financing; and/or
    - collaborative arrangements with partners.

The level of expenditures  required for these  activities will depend in part on
the  extent  to  which  we  develop,   manufacture   and  market  our   products
independently or with other companies through  collaborative  arrangements.  Our
future capital requirements will also depend, among other things, on one or more
of the following factors:

    - growth in our infant formula and nutritional product sales;
    - the extent and progress  of our  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 our  manufacturing  facilities;
    - the  cost  of  acquiring additional  and/or  operating  existing
      manufacturing  facilities for our various products and potential
      products (depending on which products we decide to manufacture and
      continue to manufacture ourselves);
    - and the costs of marketing and commercializing our products.

 There is no  assurance  that  funding  to carry  on  these  activities  will be
available at all or on favorable terms to permit successful commercialization of
our  products.  We  have  only  limited  debt  financing   arrangements.   These
arrangements  require  us to meet  certain  financial  covenants  related to our
outstanding term loans. There is no assurance that we will be able to:

    - continue such arrangements;
    - continue to comply with bank covenants; and/or
    - establish additional debt financing arrangements on satisfactory terms,
      if at all.

If adequate funds are not available, we may be required to:

    - curtail one or more of our  research  and  development  programs;
    - curtail manufacturing and commercialization  programs; and/or
    - obtain funds through arrangements with collaborative partners or others.

 These  arrangements may require us to relinquish  certain technology or product
rights including patent and other intellectual property rights.

         Dependence on Third Parties; Reliance on Future Collaborations.  Future
revenues from our nutritional  oils are largely  dependent on factors over which
we will have no control.  To date, a portion of our  revenues  has  consisted of
license fees and anniversary payments received from infant formula manufacturers
which have  licensed  our  nutritional  oils.  Under  these  agreements,  we are
entitled to receive royalty  payments based on the licensees'  sales of products
including  our  nutritional  oils.  These  licensees  will  be  responsible  for
performing  all clinical  testing on,  obtaining  regulatory  approvals  for and
marketing  products  containing our  nutritional  oils.  These licensees are not
required to use our nutritional oils in any of their products. They are also not
restricted under the licensing  agreements from obtaining  docosahexaenoic  acid
("DHA") or  arachidonic  acid ("ARA") from other sources for use in their infant
formula products.  Although some of our licensees have introduced infant formula
products containing our nutritional oils overseas, we cannot predict whether any
licensee will broaden its use of our oils or whether they will be used by any of
our other licensees in their infant formula products.

     Our strategy  for the  development,  clinical  testing,  manufacturing  and
commercialization  of certain of our  products  includes  entering  into various
collaborations  with corporate  partners,  licensors,  licensees and others.  In
1997, we entered into a supply agreement with a third party manufacturer for its
ARA-containing  oil.  Although  we are able to produce  ARA oil in our  Kentucky
manufacturing plant, a halt in supply from this third party ARA oil manufacturer
could adversely  impact our ability to meet product demand in the short-run.  It
could also  adversely  impact our ability to meet product demand in the long-run
if this source of ARA oil could not be replaced.  There is no assurance  that we
will  negotiate  other  collaborative  arrangements  in the future on acceptable
terms, if at all, or that such collaborative  arrangements will be beneficial to
our operations. If we cannot establish such arrangements,  we may face increased
capital  requirements  to undertake  such  activities  at our own expense.  As a
result, we could encounter  significant  delays in introducing our products into
certain markets. This could also adversely affect the development,  manufacture,
marketing and sale of products in such markets.  In  particular,  our continuing
ability to generate  nutritional  oil-related revenues depends on our ability to
enter into  agreements with  additional  licensees.  Some of our nutritional oil
licensing  agreements  contain  provisions which will not allow us to enter into
future agreements  containing payment terms more favorable than those granted to
current  licensees.  Such  provisions may restrict our ability to negotiate with
potential infant formula licensees.

         Dependence on Major Customers. Our dependence on sizable product orders
from  infant  formula  licensees  and  other  marketing  partners  will make the
relationship with each customer critically  important to our business.  While we
have detailed  contracts  with each of our major  customers,  changes to product
pricing,  royalty  rates and delivery  timetables  may be required to meet their
demands and  expectations.  There is no assurance that we will be able to manage
our licensees and other customer relationships successfully. Our major customers
are large and complex and the launch cycles of new products are  typically  long
and  unpredictable.  This requires us to make considerable  early investments in
account  management and other efforts without the assurance of future  revenues.
There is no assurance  that we will be able to convert  these  investments  into
significant revenue generating relationships.

         Significant Technological Change and Competition. We operate in rapidly
evolving  fields.   Competition   from  larger,   more  experienced  and  better
capitalized  companies  has been and will  continue to be  intense.  There is no
assurance  that   developments  by  others  will  not  render  our  products  or
technologies  obsolete  or  noncompetitive,  or that we will  keep pace with new
technological   developments.   Currently,   DHA-containing  fish  oils  provide
alternative  sources of DHA, and we are aware of another  company which produces
DHA from fungal  sources.  In  addition,  DHA and ARA have been derived from egg
yolk lipids,  and we are  currently  aware of several  European  infant  formula
manufacturers  that are adding DHA derived from egg yolk lipids  and/or fish oil
to their infant  formula.  We have obtained  seven U.S.  patents and a number of
patents outside the U.S.  covering  certain  aspects of our nutritional  oils to
date. We have additional patent applications pending covering certain aspects of
these  DHA- and  ARA-containing  oils.  However,  we have not been  awarded  any
European patents relating to our ARA-containing  oil.  Accordingly,  competitors
may be able to produce,  sell and use ARA in Europe until  patents are issued or
have been invalidated using similar or identical  processes to those used by us.
Generally,  however,  they are prohibited from  manufacturing,  using or selling
materials  where patents have been issued.  Competitors  may be able to produce,
sell and use DHA-  and/or  ARA-containing  oils in  countries  where we have not
applied for patent protection. In addition, competitors may produce certain DHA-
and  ARA-containing  oils that are not covered by our  patents.  We are aware of
several  other  companies  offering  ARA-containing  oils for sale. In addition,
there  is no  assurance  that  other  sources  of DHA and ARA,  the two  primary
components of our nutritional oils, will not become commercially viable.

         Uncertainty Regarding Patents and Proprietary Technology.  Our success
depends on our ability to:

    - obtain patent protection for our products;
    - maintain trade secret protection; and
    - operate without infringing the proprietary rights of others.

Our policy is to aggressively protect our proprietary technology through patents
and, in some cases, trade secrets. Additionally, in certain cases we rely on the
licenses  of  patents  and  technology  of  third  parties.   We  have  obtained
approximately 25 U.S. patents covering various aspects of our technology.  These
patents will expire on various dates  between 2007 and 2015. We have filed,  and
intend to continue to file,  applications  for additional  patents covering both
products and processes as appropriate. There is no assurance that

    - the  relevant  authorities  will grant any patent  applications  filed by,
      assigned to, or licensed to, us;
    - we will develop additional  products that are  patentable;  and
    - any patents issued to or licensed by us will provide us with any
      competitive advantages or adequate protection for inventions.

Moreover,  there is no  assurance  that any patents  issued to or licensed by us
will not be challenged, invalidated or circumvented by others.

         There is no assurance that issued  patents,  or patents that may issue,
will  provide   protection   against   competitive   products  or  otherwise  be
commercially valuable.  Furthermore,  since patent laws relating to the scope of
claims in the fields of health  care and  biosciences  are still  evolving,  our
patent rights are subject to this uncertainty. Our patent rights on our products
therefore might conflict with the patent rights of others,  whether existing now
or in the future.  Alternatively,  the  products of others  could  infringe  our
patent rights.  The defense and  prosecution of patent claims is both costly and
time  consuming,  even if the outcome were  favorable to us. An adverse  outcome
could:

    - subject us to significant  liabilities to third parties;
    - require disputed  rights to be  licensed  from  third  parties;  and/or
    - require us to cease selling our products.

         We have obtained seven U.S. patents covering certain aspects of our DHA
and/or ARA oils. We have applied for other patents in the United States covering
certain  other  aspects  of our  nutritional  oils.  We have also  filed  patent
applications on a selective  basis in other  industrialized  countries,  some of
which are pending and some of which have been granted. We are unable to predict,
however,  whether these patents will be challenged,  invalidated or circumvented
by others. Failure to obtain adequate patent protection for our nutritional oils
would have a material  adverse affect on our results of  operations.  This could
particularly affect:

    - future sales of our nutritional oils;
    - future  royalties  on sales of infant  formula  containing  our oils;  and
    - future license fees related to our oils.

In  particular,   failure  to  maintain  patent   protection  could  permit  our
competitors  to  produce   products  which  could  directly   compete  with  our
nutritional oils using similar or identical processes.  It is also possible that
the infant  formula  manufacturers  currently  under  license by us or potential
future licensees may choose formula  ingredients from these  competitors if they
choose to include the ingredients in their formulas at all.

         Other patents that we have cover:

    - our  photobioreactor  system which is used for  culturing  microalgae  and
      certain aspects of our breath test  technology;
    - our Celtone and Celtone M technology; and
    - our combinatorial library technology.

         We also  rely on  trade  secrets  and  proprietary  know-how,  which we
protect in part by confidentiality agreements with our collaborators,  employees
and consultants. There is no assurance that:

    - other parties to these agreements will not breach them;
    - we will have adequate remedies for any such breach; or
    - competitors will not otherwise learn of or independently develop our
      trade secrets.

         Risks   Associated  with  Infant  Formula  and   Nutritional   Products
Industries.  To the extent  that our  nutritional  oils are  included  in infant
formula or in nutritional products for consumer use, we are subject to the risks
generally associated with these industries. These risks include, among others:

    - product tampering or production  defects which may require a recall or may
      reduce the demand for such products;
    - the risk that authorities may ban an ingredient used in such products,
      including our nutritional  oils,  limit its use or declare
      it unhealthful; and/or
    - sales  of  infant  formula  may  decline  or  authorities   may  limit  or
      discontinue use of our nutritional  oils due to perceived  health
      concerns, adverse publicity or other reasons beyond our control.

         Potential Difficulty in Obtaining FDA and other Government Approvals. A
number of  government  authorities  in the  United  States  and other  countries
regulate our  products  and our  manufacturing  and  research  activities.  This
includes the FDA pursuant to the Federal  Food,  Drug and Cosmetic Act (the "FDC
Act").  The FDA  regulates,  to varying  degrees and sometimes in very different
ways,  infant  formulas,   dietary  supplements,   medical  foods,  enteral  and
parenteral  nutritional  products and  diagnostic and  pharmaceutical  products.
Their  regulatory  authority  includes  the  manufacture  and  labeling  of such
products.  Generally,  authorities  regulate  prescription  pharmaceuticals  and
certain types of diagnostic products more rigorously than foods, such as dietary
supplements.  Infant  formulas are special types of food that are regulated more
rigorously than most other types of foods.  Federal and state laws,  regulations
and policies are always subject to change and depend  heavily on  administrative
policies and interpretations.  There is no assurance that any changes to federal
and state laws will not have a material adverse effect on the company.

         Our  infant  formula   licensees  are  responsible  for  obtaining  the
requisite regulatory clearances to market their products containing our oils. To
date, none of our infant formula licensees have obtained the necessary  approval
to sell an infant  formula  product  containing  our oils in the United  States.
Sales  of our  products  outside  the  United  States  are  subject  to  foreign
regulatory  requirements  that may vary  widely from  country to  country.  Term
infant formula  products  containing our  nutritional  oils are currently  being
marketed outside the U.S. in seven  countries.  Pre-term infant formula products
containing  our oils are currently  being  marketed  outside the U.S. in over 60
countries. We understand that our licensees have received appropriate regulatory
clearances as needed to market products containing our oils in those countries.

         The  time  required  to  obtain  clearances  from  additional   foreign
countries  may vary.  It may be longer or shorter than that required by the FDA.
There is no assurance that additional  foreign clearances can be obtained or met
on a timely basis, if at all.

                We are preparing,  with the help of our licensees, to respond to
certain  questions  raised by the FDA in connection with evaluating our oils for
inclusion in U.S.  infant  formula.  We feel that the process of  obtaining  FDA
approval will take at least another six to twelve months.  There is no assurance
that:

    - we will be able  to,  with the assistance  of our licensees, adequately
      respond to the FDA's  questions;
    - our  licensees  will  continue  to press forward;
    - the FDA will in fact  grant  clearances;
    - the  process  will not involve  significant  delays;
    - potential  delays will not  materially  and adversely affect the timing
      and extent of potential  future  introductions of our products; or
    - once and if approval is obtained, a licensee will actually market a U.S.
      infant formula product containing our oils.

         There is no  assurance  that the FDC Act will not impose food  additive
regulation  on DHA and ARA used in medical  foods,  infant  formulas  or enteral
nutritional  products.  Use of DHA and ARA in  medical  foods  may also  require
additional supportive data.

         The process of  obtaining  FDA  clearances  can be  time-consuming  and
expensive.  There is no assurance that the FDA will grant such  clearances.  The
FDA review process may involve  delays that may materially and adversely  affect
the testing, marketing and sale of our products. Moreover, regulatory clearances
for products such as medical devices, new drugs, or new food additives,  even if
granted, may include significant  limitations on their uses.  Additionally,  the
FDA could  withdraw  product  clearances  for failure to comply with  regulatory
standards.  There is no assurance  that any clearances  that are required,  once
obtained,  will  not be  withdrawn  or that  compliance  with  other  regulatory
requirements can be maintained.

         Many of our products are in research and development  phases. We cannot
predict  all  regulatory  requirements  or issues  that may apply to or arise in
connection with our products.  Changes in existing laws, regulations or policies
or the adoption of new laws,  regulations  or policies  could  prevent us or our
licensees  or   collaborators   from  achieving   compliance   with   regulatory
requirements.  Such  changes  could also  affect the  timing of  achieving  such
clearances.

         Since the FDA regulatory  process may be costly and time consuming,  we
will decide on a  product-by-product  basis whether to handle their requirements
independently  or to assign such  responsibilities  to our  licensees  or future
collaborative  partners.  There is no  assurance  that we will be able to obtain
such regulatory  clearances,  if required,  on a timely basis or at all. If such
clearances  are  delayed or not  achieved at all,  it may  adversely  effect our
business,  financial condition and results of operations.  If we lose previously
received  approvals  or  clearances,  or fail to comply with  existing or future
regulatory requirements, it would have a similar adverse effect.

             We are currently required to meet FDA Good Manufacturing  Practices
("GMP")  requirements  as applicable to infant formula and dietary  supplements.
GMP regulations specify component and product testing standards, control quality
assurance requirements,  and records and other documentation controls. Depending
upon the type of FDA application that is submitted, compliance with relevant GMP
requirements can be difficult and time consuming.  If we continue to manufacture
our own products we will continue to fall under the GMP requirements of the FDA.
It may  even  be  necessary  in the  future  to meet  more  stringent  drug  GMP
requirements.  There is no assurance that we can meet relevant FDA manufacturing
requirements,  particularly for scale-up operations  involving product marketing
applications. Further, we have only limited experience in the area of regulatory
compliance  with respect to our products.  There is no assurance that we will be
able to continue to manufacture our nutritional oils in accordance with relevant
infant formula and dietary supplement requirements for commercial use. State and
federal agencies,  including the FDA and comparable agencies in other countries,
conduct  periodic  inspections to monitor ongoing  compliance with GMP and other
applicable regulatory requirements.  A determination that we are in violation of
such GMP and other  regulations could lead to the imposition of civil penalties,
including  fines,  product  recalls or product  seizures.  In  situations  where
serious violations are noted, criminal sanctions may be imposed.

         Each  line  of  products  that  is or  may  be  marketed  by us or  our
collaborators can present unique regulatory problems and risks, depending on the
product type, uses and method of manufacture.

         The  Federal  Dietary  Supplement  Health  and  Education  Act of  1994
("DSHEA") regulates the use and marketing of dietary supplements. The DSHEA:

    - sets  forth  standards  for  adulteration   of  dietary   supplements  or
      ingredients;
    - prescribes detailed requirements for  labeling dietary supplements; and
    - establishes GMP requirements for dietary supplements.

We are currently marketing a line of DHA dietary  supplements,  Neuromins(R) and
Neuromins(R)PL.  In addition, we are researching and developing new applications
for our DHA and ARA oils.  There is no assurance  that we will be able to comply
with the  requirements  of the DSHEA or any other  regulations  that the FDA may
promulgate regarding DHA or ARA use as a dietary supplement.

         Our fluorescent pigments and other products derived from microalgae are
subject to potential  regulation  by the FDA as either  medical  devices or as a
combination  medical device/drug product to the extent that they are used in the
diagnosis,   mitigation,   treatment,  cure  or  prevention  of  diseases.  This
classification subjects these products to premarket clearances and/or regulatory
approvals. There is no assurances that:

    - we or our  collaborators will be able to develop the extensive safety and
      efficacy data needed to support FDA premarket clearances and/or
      regulatory approvals for these products; or
    - the FDA  ultimately would authorize the marketing of such products on a
      timely basis, if at all.

         For pharmaceutical  uses of products derived from microalgae,  there is
no assurance  that required  clinical  testing of our products will be completed
successfully within any specified time period, if at all. Additionally, there is
no assurance that:

    - we will be able to develop the extensive data needed to establish the
      safety and efficacy of our products for approval for drug uses.
    - authorities will not begin to regulate these drug products as biological
      products or as  controlled substances,  which would affect marketing and
      other requirements.

         Limited   Manufacturing   and  Sales  and  Marketing   Experience   and
Capabilities.  We have limited experience operating our manufacturing  facility.
In 1995, we acquired a fermentation plant in Winchester, Kentucky to manufacture
our  nutritional  oils.  During 1996,  we completed the  construction  of an oil
extraction  and refining  facility in this plant.  There is no assurance that we
will be able to scale-up or successfully  optimize production of our nutritional
oils.  There is also no  assurance  that  these  production  facilities  will be
sufficient to meet future demand for our products. If we do not develop adequate
manufacturing  capability or contract for  manufacturing on acceptable terms, we
may not be able to commercialize some of our current or planned products. Or, if
we are able to adequately  manufacture them,  commercialization  of the products
may be  significantly  delayed.  In addition,  we have only  limited  experience
managing  operations  at  a  remote  geographic  location.   Managing  a  remote
manufacturing plant may place a substantial strain on our managerial resources.

         We believe that our Winchester,  Kentucky plant will be able to produce
our  nutritional  DHA  oil in  sufficient  quantity  to meet  near-term  demand.
Nevertheless,  because  demand for our  nutritional  DHA oil is based on factors
beyond  our  control,  we are  unable  to  predict  whether  we have  sufficient
manufacturing  capacity to meet any such future demand.  During 1997, we entered
into a supply agreement with one of the world's largest  fermentation  companies
to provide ARA oil. In addition,  we have conducted DHA  production  trials with
third-party  manufacturers to prepare for future DHA oil demand in excess of our
current  plant  capacity.  Although we believe that we will be able to use third
party  manufacturing  for our DHA oil if demand requires,  there is no assurance
that we will be able to do so  successfully.  The failure to meet demand for our
nutritional  oils  could  encourage  our  infant  formula  licensees  and  other
nutritional product customers to look for alternative manufacturing sources.

         We currently do not have the capability to manufacture  therapeutic and
diagnostic  products in accordance  with GMP  requirements.  Should we decide to
manufacture and scale-up the production of future diagnostic and  pharmaceutical
products,  we would incur substantial start-up expenses, we would need to expand
our facilities, and we would have to hire additional personnel.

         We market infant  formula oils and  nutritional  supplements  primarily
through distributors,  and to a lesser extent,  directly to consumers. We market
our products for use in molecular  structure research and  structure-based  drug
design,  and  fluorescent  pigments  both  directly  to end  users  and  through
distributors.  Other  nutritional  products and products  that we develop in the
diagnostic and pharmaceutical  areas will require us to form corporate alliances
with companies  capable of marketing such products  and/or develop our own sales
and marketing force.  There is no assurance that we will be able to establish an
effective sales or marketing force or establish additional third-party sales and
marketing  arrangements.  Even if we are able to achieve the above, the cost may
be prohibitive.

         No Clinical and Limited  Regulatory  Compliance  Capabilities.  We have
limited  experience and capabilities in the area of product testing.  We have no
experience and limited  capabilities  in the area of regulatory  compliance with
respect to our  products.  We will have to expend  significant  sums of money to
acquire  and  expand  such  capabilities.  We may  need to  reach  collaborative
arrangements  with third parties to provide these  capabilities or contract with
third  parties  to  provide  these  capabilities.  These  capabilities  will  be
important  to us  for  the  successful  commercialization  of our  existing  and
potential future nutritional, human diagnostic and pharmaceutical products.

         We  will  depend  on our  current  licensees  to  obtain  any  required
regulatory  clearances  for our  nutritional  oils which they will use as infant
formula ingredients.  Although we believe that our infant formula licensees will
perform  required  testing and obtain any  required  regulatory  clearances,  we
cannot  control  the  timing or the  resources  that  they will  devote to these
activities.  We may, in the future,  decide to seek FDA clearances ourselves for
our  nutritional  oils or other  nutritional  products,  if such  clearances are
required.  In the area of human diagnostics,  we have not yet decided whether to
develop in-house  capability,  contract with third parties,  seek  collaborative
arrangements with partners or use a combination of the three to test our product
candidates  and  obtain  any  required  regulatory  clearances.  If we  were  to
manufacture  these diagnostic  products for certain uses, it would be subject to
applicable regulatory  requirements.  For potential  pharmaceutical products, we
will likely contract with third parties and seek collaborative arrangements.  In
any case, these activities may require the devotion of substantial resources and
a significant portion of our time. There is no assurance that we can effectively
test and obtain  regulatory  clearances  for our products.  Delays in testing or
obtaining such regulatory  clearances may result in delay in or the inability to
commercialize the affected product. See "--Dependence on Third Parties; Reliance
on Future Collaborations."

         Exposure to Product Liability Claims. We face an inherent business risk
of exposure to product  liability claims alleging that the use of our technology
or  products  resulted  in adverse  effects.  Such risk exists in the conduct of
clinical  studies and even with respect to those products,  if any, that receive
regulatory  clearances  for  commercial  sale.  There is no  assurance  that our
current level of product and clinical study  liability  insurance  together with
indemnification  rights under our infant  formula  license  agreements and other
collaborative arrangements will be adequate to protect us from this exposure. It
is uncertain  whether we will be able to obtain increased levels of insurance as
we  grow.  There  is  no  assurance  that  this  level  of  insurance  would  be
economically  practical  or that we would be able to renew our current or future
policies.  A product  liability  claim or recall in excess of insured amounts or
amounts  recoverable under applicable  contractual  arrangements could adversely
affect our business, financial condition and future prospects.

         Dependence Upon Key Personnel. We are highly dependent on the principal
members of our management, production, sales and marketing and scientific staff.
The loss of  certain  key  management  and  scientific  employees  could  have a
material  adverse  effect on our  operations.  In addition,  we believe that our
future  success will depend in large part upon our ability to attract and retain
highly  skilled  scientific,   managerial  and  marketing  personnel.   We  face
competition  for such  personnel  from other  companies,  research  and academic
institutions, government entities and other organizations. There is no assurance
that we will be  successful  in hiring or retaining the personnel we require for
continued growth.

         Limited Availability of Certain Supplies. The availability of carbon-13
and  nitrogen-15  is critical  for  production  of our  products for use in drug
design.  Although  the  current  supplies of these  items are  adequate  for our
near-term needs, they may not be adequate if the demand for our products for use
in drug design and/or breath test diagnosis were to grow significantly.

         Possible  Volatility  of Stock  Price;  Limited  Liquidity;  Absence of
Dividends.  The market price of our common stock may  experience a high level of
volatility,  as frequently occurs with publicly traded emerging growth companies
and biosciences  companies.  The market price of our stock may be  significantly
impacted, among other things, by:

    - announcements of technological innovations or new commercial products by
      us or our  competitors;
    - developments  or  disputes  concerning  patent or proprietary  rights;
    - publicity  regarding  actual  or  potential  medical results  relating to
      products under  development by us or our competitors;
    - general regulatory  developments affecting our products in both the
      United States and  foreign  countries;
    - market  conditions  for  emerging  growth companies and  biosciences
      companies and economic and other  internal and external factors;  and
    - period-to-period fluctuations in financial results.

Since our initial  public  offering of common stock on November  23,  1993,  the
average  daily  trading  volume in the common  stock as  reported  on the Nasdaq
National  Market has been  relatively  low.  There is no  assurance  that a more
active trading market will develop in the future. We have never declared or paid
any cash  dividends  on our  common  stock  and do not  intend  to do so for the
foreseeable future.

         Risks  Relative to  Anti-Takeover  Devices.  Our Board of  Directors is
divided  into  three  classes  with each  class of  directors  being  elected to
three-year  terms on a rotating basis. As such, only one-third of the members of
the  Board of  Directors  stand  for  election  every  year.  We have  adopted a
stockholder  rights  plan  which may have the  effect of  deterring  hostile  or
coercive  attempts  to  acquire  the  company.  The plan does this  through  the
distribution  of rights to stockholders  enabling those  stockholders to acquire
shares of our common stock, or that of an acquiror, at a substantial discount to
the public  market price should any person or group acquire more than 20% of the
common  stock  without   approval  of  the  Board  of  Directors  under  certain
circumstances.  We have reserved 300,000 shares of Series A Junior Participating
Preferred Stock for issuance in connection with the Stockholder  Rights Plan. We
are authorized to issue an additional 4,700,000 shares of preferred stock in one
or more  series,  having  terms  fixed by the  Board  of  Directors,  without  a
stockholder  vote.  While the Board of Directors  has no current  intentions  or
plans to issue any preferred stock,  issuance of these shares could also be used
as an anti-takeover device.

         Shares Eligible for Future Sale;  Registration  Rights.  (To the extent
that the outstanding  stock options and warrants  described below are exercised,
the percentage ownership of certain of our stockholders will be diluted).  As of
September  8,  1999,  we had  16,492,229  outstanding  shares of  common  stock,
substantially all of which are available for sale in the public marketplace.  As
of September 8, 1999, there were also  outstanding  stock options to purchase an
aggregate of 2,381,760 shares of common stock at various exercise prices ranging
from  $8.00 to  $34.25  per  share.  There  have also  been  warrants  issued in
connection with the Common Stock and Warrant Purchase Agreements dated April 27,
1998 and June 1, 1999 totalling  706,599 shares at exercise prices between $7.51
and  $18.76 per  share.  If we elect to sell all the shares of common  stock and
warrants  which  have not been sold  pursuant  to the April  27,  1998  purchase
agreement but which, under certain  circumstances,  the selling stockholders are
irrevocably  obligated  to  purchase,   there  would  be  up  to  an  additional
outstanding  819,454 shares of common stock and 245,836 warrants,  with exercise
prices ranging from $15.01 to $18.76 per share. Shares of common stock which may
be issued under  outstanding  options and warrants will be available for sale in
the public  markets.  In  addition,  certain  holders  of the common  stock have
certain  demand and piggyback  registration  rights  pursuant to a  registration
rights agreement between Martek and these holders.  No prediction can be made as
to the effect,  if any, that sales of shares of common stock or the availability
of such  shares  for sale will have on the  market  prices of the  common  stock
prevailing from time to time. The possibility that substantial amounts of common
stock may be sold in the public market may adversely  affect  prevailing  market
prices for the common  stock.  This could  impair our  ability to raise  capital
through the sale of equity securities.  Further,  if we were required to include
shares,  through exercise of the outstanding piggyback registration rights, in a
company-initiated  registration,  the sale of such shares  could have a material
adverse effect on our ability to raise additional capital.

         Risks  Relating  to Year 2000  Compliance.  We use a number of computer
software  programs  and  operating  systems in our  internal  operations.  These
include   applications   used  in   financial   business   systems  and  various
administrative  functions.  We believe that the business  risk  associated  with
these internal  information  systems is minimal. We have completed more than 95%
of our Year 2000 compliance  implementation work on them. We are also evaluating
our  non-information  technology  systems,  including  the various  equipment in
operation at our oil  production  facilities in  Winchester,  Kentucky.  We have
completed more than 95% of this  evaluation and subsequent  implementation,  and
believe that the business risk  associated  with this  equipment is minimal.  We
believe  that  the  compliance  work  on  our  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 our  operations  and  financial  condition  may be materially
adversely affected.

Additionally,  our third party  relationships are being reviewed to assess their
Year 2000  status and  potential  impact on our  operations.  We have  completed
approximately  95% of this review and,  where  potential  business risk has been
identified,  are requesting additional information from certain third parties to
obtain  assurance  that they are year 2000  compliant.  To date, our third party
suppliers  have  represented  that  they are Year 2000  compliant  or are in the
process of becoming compliant by December 31, 1999.  Although we have identified
multiple  suppliers  for most of the goods and  services  purchased  from  third
parties,  there is no assurance that the failure of any  individual  supplier to
adequately  address the Year 2000 issue for the  products or services  that they
provide  us will  not have a  material  adverse  impact  on our  operations  and
financial  results.  Contingency  plans will be developed if it appears that the
Company  or  our  suppliers   will  not  be  Year  2000   compliant,   and  such
non-compliance  is expected to have a material adverse impact on our operations.

The major risks to Martek  resulting from the failure of third parties to attain
Year  2000  readiness  could  include:

    - interruptions  or  disruptions  to  the manufacturing  process and
      facilities;
    - an interruption in the flow of goods or services  from  suppliers;  or
    - interruptions  or  disruptions  of business  and transaction processing
      such as customer billing,  payroll,  accounts payable and
      other operating and information  processes.

If these  disruptions  would occur, they could have a material adverse effect
on our operations.

Based on currently available information, we believe that total costs associated
with Year 2000  issues will be less than  $200,000,  and that we will be able to
manage the Year 2000  transition  without  any  material  adverse  effect on our
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.