# EXHIBIT 99.1

CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION 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:
o        our ability to generate future revenues;
o        the potential commercialization of our products;
o        the optimization of production costs; and
o        our ability to enter into future business collaborations and marketing partnerships.

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.

WE HAVE EXPERIENCED NET OPERATING LOSSES SINCE OUR INCEPTION, ARE LIKELY TO CONTINUE TO EXPERIENCE NET OPERATING LOSSES IN THE SHORT
TERM, AND MAY NEVER BECOME PROFITABLE.

We have experienced net
operating losses since our inception. As of July 31, 2001, we have an
accumulated deficit of $99,752,000. Until we realize significant revenues from
sales of our nutritional products, we expect to continue to experience net
operating losses. Our balance of cash and cash equivalents at July 31, 2001 was
$26,476,000 and as of July 31, 2001, we had $4,001,000 in short term investments
and marketable securities. Although this cash should meet our operating needs
for at least the next 18 months, we must achieve sustained profitability to
generate the cash necessary to be a viable business in the long term, and at
this time we have not yet generated a sustained source of revenues to achieve
this.

IF OUR INFANT FORMULA
LICENSEES DO NOT INTRODUCE PRODUCTS CONTAINING OUR NUTRITIONAL OILS IN THE
UNITED STATES OR BROADEN THEIR USE OF OUR NUTRITIONAL OILS IN THEIR PRODUCTS
OVERSEAS, WE MAY NOT BE ABLE TO REACH REVENUE LEVELS THAT WOULD MAKE US
PROFITABLE.

Nutritional product sales
and royalties are likely to be our main source of revenues in the future.
Although we sell some of our nutritional oils into the adult nutritional
products market, over 90% of our current nutritional product revenues come from
our license agreements with infant formula manufacturers. As such, we depend on
the licensees sales of products that include our nutritional oils.
Although some of our licensees have included our nutritional oils in some of
their products outside the United States, we cannot predict whether any licensee
will introduce infant formula products containing our nutritional oils in the
United States, broaden their use of our nutritional oils overseas, or whether
any of our other licensees will incorporate our nutritional oils into their
products. Until these events occur and we recognize significant revenues as a
result of increased product introductions, we do not expect to be profitable
from the sale of nutritional oils to our licensees.

Ultimately our success in
the infant formula industry depends on growing acceptance of our nutritional
oils as necessary or beneficial additives to infant formulas. Notwithstanding
existing clinical results that have demonstrated the beneficial effects of
adding our nutritional oils to infant formula, some experts in the field of
infant nutrition do not believe that our nutritional oils are necessary or that
they provide any long-term beneficial effects. Many of these experts recommend
that mothers breastfeed rather than use infant formulas whether or not they
contain our nutritional oils. Some experts also believe that infant formula
without our oils contains sufficient precursor fats that infants can convert
into DHA and AA as needed. In addition, some physicians are unimpressed by
studies showing that infant formulas fortified with our oils improve
infants cognitive ability at early ages, suggesting that these results may
not carryover to improved results later in life. Due to these differences in
opinion, we are subject to the risk that the use of DHA and AA in infant formula
may never gain widespread acceptance.

IF ADDITIONAL POSITIVE CLINICAL RESULTS ARE NOT OBTAINED, WE MAY NOT BE ABLE TO DEVELOP A PROFITABLE MARKET FOR OUR NUTRITIONAL OILS
OUTSIDE OF THE INFANT FORMULA MARKET.

Approximately 10% of our
current nutritional product revenues come from sales of our nutritional oils to
distributors and directly to consumers in the adult supplement market.
Investigators at universities and at other research centers, such as the
National Institutes of Health, have observed a relationship between low levels
of DHA and a variety of health risks, including increased cardiovascular
problems, cystic fibrosis, cancer, and neurological and visual disorders. We are
currently trying to establish what contribution, if any, supplementation with
our oils will make in addressing these problems. Although clinical data is not
required to market nutritional supplements to consumers or distributors outside
of the infant formula market, we believe that further clinical studies are
needed to validate the benefits of DHA supplementation. Accordingly, we have
recently begun sponsoring studies to further investigate the potential benefit
of DHA supplementation on cardiovascular health and breast cancer, and we, as
well as others, are conducting research regarding the impact of DHA
supplementation on cystic fibrosis and visual and neurological disorders. Until
these studies, which are more extensive than earlier pilot studies, establish
the positive impact of DHA supplementation, we may only have a limited adult
nutritional supplement market opportunity.

EVEN IF OUR PRODUCTS DO
OBTAIN WIDESPREAD ACCEPTANCE, WE MAY NOT BE ABLE TO PRICE THE PRODUCTS AT A
LEVEL THAT WOULD ALLOW US TO BE PROFITABLE.

Infant formula pricing is
very competitive and the market is very sensitive to product price changes.
Because the inclusion of our oils into infant formula may add 10% to 20% to the
retail cost of standard infant formula, there is the risk that our licensees may
never be able to sell supplemented products at a price that will allow them to
gain broad market acceptance while at the same time be profitable. Although our
current contracts with licensees outline product pricing and royalty rates, we
cannot predict whether these pricing structures will allow our licensees to be
competitive in the future. If we have to reduce our prices, we may not be able
to sell products at a price that would enable us to be profitable. Since
December 2000, over 95% of our sales to infant formula licensees have been made
under all-inclusive pricing, and we anticipate that this trend will continue for
future sales to infant formula licensees. We do not believe that this change is
material to investors as the economics of all-inclusive pricing is similar to
the royalty bearing arrangements, with the current transfer price and royalty
combined into one price with a slight discount. Although either our
all-inclusive pricing structure or the royalty bearing arrangements will enable
us to achieve profitability if our products receive widespread acceptance, we
cannot predict whether either of these pricing structures will enable our
licensees to achieve success marketing these products. None of our license
agreements requires our licensees to purchase any minimum amount of products
from us now or in the future and all of our license agreements allow our
licensees to manufacture our products themselves or purchase nutritional oils
from other sources.

IF WE ARE UNABLE TO
INCREASE OUR PRODUCTION CAPACITY OR ENTER INTO FAVORABLE AGREEMENTS WITH THIRD
PARTIES TO PRODUCE OUR OILS, OUR CUSTOMERS MAY NOT BE ABLE TO OBTAIN A
SUFFICIENT SUPPLY OF DHA AND AA AT A COMMERCIALLY REASONABLE PRICE TO GAIN A
BROAD ACCEPTANCE OF THESE PRODUCTS AND OUR FUTURE REVENUES FROM THESE PRODUCTS
MAY BE LIMITED.

To meet our customers
projected demand for our nutritional oils, we have developed a process for the
large-scale production of our oils at our Winchester, Kentucky manufacturing
plant. We estimate the worldwide infant formula market to be approximately $6 to
$8 billion. If our licensees were to penetrate 100% of this market with DHA and
AA supplemented formulas, we estimate that we would receive approximately $350 to
$400 million in revenues annually from these sales. To date, our licensees have
penetrated less than 5% of the worldwide infant formula market. While our
current production level in our plant is sufficient to meet this current demand,
if demand increases beyond our current production capabilities, we may be unable
to produce the required quantities of oil cost effectively. Although our
licensees have a right to manufacture DHA and AA, we are not aware of any of our
licensees doing so or preparing to do so. We estimate that it may take a
licensee approximately one year or more to develop their process of making our
oils. Accordingly, if we are unable to meet demand, our licensees may not be
able to manufacture product themselves for at least one year. We believe that we
can increase production to supply approximately 20% to 30% of the worldwide
infant formula market with additional capital expenditures. However, our ability
to maintain commercial production at those levels at our plant has not been
successfully tested. As a precaution, we have initiated plans to expand our
existing facilities to accommodate increased production. In order to double our
capacity at our current facility, it could cost as much as $20 million, which
would require us to raise significant amounts of capital. We have also conducted
DHA production trials with third party manufacturers. However, we do not
currently have a third party manufacturing agreement in place to supply us with
DHA-containing oil. If we are unable to cost effectively manufacture our
DHA-containing oils at our plant, unable to enter into a favorable third party
manufacturing agreement, or our licensees are unable to find alternative sources
for our DHA-containing oils, our licensees may not be able to meet future demand
and our revenues may be limited in the future.

Although we are able to
produce AA-containing oil at our Winchester plant, we have entered into an
agreement with a third party manufacturer, DSM Food Specialties, to supply our
AA-containing oil. We believe that DSM can provide us with sufficient quantities
of AA oil to supply approximately 20  30% of the worldwide infant formula
market. If DSM fails to supply us with required amounts under the contract, we
would not be able to meet our customers demands. In this case, we would
have to either manufacture the AA-containing oil at our plant, which would
reduce our DHA-containing oil production capacity, or enter into other third
party manufacturer supply agreements. If we are unable to find alternative
supply sources or are unable to cost effectively manufacture the AA-containing
oil in our Winchester plant, our licensees may not be able to meet future
product demand and our future revenues from sales of AA-containing oils may be
limited.

BECAUSE WE ARE STILL IN
THE EARLY STAGES OF PRODUCT DEVELOPMENT, WE WILL NEED SIGNIFICANT ADDITIONAL
CAPITAL TO EXPAND OUR PRODUCTION CAPABILITY, CONTINUE OUR RESEARCH AND
DEVELOPMENT EFFORTS, CONDUCT PRODUCT TESTING, INCLUDING PRECLINICAL AND CLINICAL
TRIALS, AND MARKET OUR PRODUCTS.

We have a number of
products that are in the early stages of research and development, product
testing, manufacturing or marketing. Our nutritional oils sales are increasing,
and meeting future demand will require expanding our production capability for
DHA oil. We estimate that our initial expansion plan will cost approximately $8 to $10 million.
Although at July 31, 2001 we had approximately $30 million in cash and cash
equivalents available to meet these capital requirements, we believe that
additional funds of $10 to $20 million may be needed in the longer-term to fund
additional expansion of our production capacity (either at our Winchester, KY
facility or at other third party manufacturing facilities), our research and
development, product testing, and marketing activities.

To continue to fund our
growth, we will pursue various sources of funding, which may include equity
issuances, debt financing, asset based borrowing, lease financing, and
collaborative arrangements with partners. Because debt financing arrangements
may require us to comply with financial covenants, we may not be able to secure
debt financing on terms acceptable to us. Additionally, funding from other
sources may not be available, or may not be available on terms that would be
commercially acceptable or permit us to continue the planned commercialization
of our products or expansion of our production capacity. If we obtain funds
through collaborative or strategic partners, these partners may require us to
give them technology or product rights, including patents, that could ultimately
diminish our value. If we cannot secure adequate funding, we may need to scale
back our research, development, manufacturing, and commercialization programs
which may have a materially adverse affect on our future business.

THE MARKET PRICE OF OUR
COMMON STOCK MAY EXPERIENCE A HIGH LEVEL OF VOLATILITY DUE TO FACTORS SUCH AS
ITS RELATIVE ILLIQUIDITY, THE VOLATILITY IN THE MARKET FOR BIOTECHNOLOGY STOCKS
GENERALLY, AND THE EFFECT OF SHORT TERM EVENTS LIKE PRODUCT LAUNCHES AND LICENSE
ANNOUNCEMENTS.

We are a public emerging
growth company in the biosciences sector. As frequently occurs among these
companies, the market price for our common stock may experience a high level of
volatility. During the fifty-two week period ending July 31, 2001, our common
stock price has traded between $28.50 and $12.00. During the fifty-two week
period ending July 31, 2000, our common stock price ranged from $5.25 to $32.00.
The following are examples of items that may significantly impact the market
price for our common stock:
          -announcements of technical innovations, new commercial products, new license arrangements or
            strategic partnerships by us or our competitors;
          -patent or other intellectual property disputes;
          -quarterly fluctuations in our results of operations;
          -regulatory developments concerning our products and our competitors' products; and
          -general market conditions for emerging growth companies and bioscience companies.

Because we may experience a
high level of volatility in our common stock, you should not invest in our stock
unless you are prepared to handle a significant loss of your capital. At any
given time, you may not be able to sell your shares at a price that you think is
acceptable.

The market liquidity for
our stock is very low. As of September 7, 2001, we had 19,548,806 shares of
common stock outstanding. Since our initial public offering of common stock on
November 23, 1993, the average daily trading volume in our common stock as
reported on the NASDAQ National market has been 74,444 shares. The average
trading volume in our common stock during the fifty-two week period ending July
31, 2001 was 68,584 shares. Although a more active trading market may develop in
the future, the limited market liquidity for our stock may affect your ability
to sell and the price at which you are able to sell your shares of common stock.

IF SIGNIFICANT SHARES
ELIGIBLE FOR FUTURE SALE ARE SOLD OR REGISTRATION RIGHTS ARE EXERCISED, THE
RESULT MAY DEPRESS OUR STOCK PRICE BY INCREASING THE SUPPLY OF OUR SHARES IN THE
MARKET AT A TIME WHEN DEMAND MAY BE LIMITED.

Because we continue to
require additional outside sources of capital to finance, among other things,
our research and development, product testing, and the manufacturing or
marketing of our products, we may need to raise additional capital through the
sale of equity securities. As of September 7, 2001, we had 19,548,806 shares of
common stock outstanding, stock options outstanding to purchase an aggregate of
3,534,140 shares of common stock at various exercise prices ranging from $6.25
to $34.25 per share, and warrants outstanding to purchase up to 664,072 shares
of common stock at exercise prices between $7.51 and $19.05. To the extent that
these options and warrants for our common stock are exercised, the increase in
the number of our outstanding shares of common stock may adversely affect the
price for our common stock. This could hurt our ability to raise capital through
the sale of equity securities. Additionally, some of our stockholders who bought
shares or warrants from us in private placements have registration rights. If
the stockholders were to exercise their registration rights when we are seeking
to raise capital by selling stock in a registered offering, the result could
effectively prevent us from doing so.

IF OUR LICENSEES DO NOT
SATISFY RELEVANT REGULATORY REQUIREMENTS FOR THE USE OF OUR NUTRITIONAL
SUPPLEMENTS IN INFANT FORMULAS, THEY WILL NOT BE ABLE TO MARKET FORMULA
CONTAINING OUR PRODUCTS.

Many of our products and
the manufacturing and marketing of these products are subject to extensive
regulation by the FDA and similar regulatory authorities in other countries
depending on the product type and method of manufacture. For example, the FDA
regulates, to varying degrees and sometimes in very different ways, infant
formulas, dietary supplements, foods, medical foods, animal feed and
pharmaceutical products.

In May 2001, the FDA
completed its review of our generally recognized as safe (GRAS)
notification. The agency issued a letter notifying us that the FDA has no
further questions regarding our conclusion that our DHASCO® and
ARASCO® oil blend is GRAS when used in specific rations in infant formula.
Each of our infant formula licensees will now need to satisfy the FDAs
premarket notification procedures before marketing an infant formula with our
sources of DHA and AA in the United States.

While we believe that infant
 formula supplemented with our oils will be available in the United States by the end of 2001, there can be no
assurance that:
-a licensee will pursue the necessary regulatory steps to market an infant
formula containing our DHA and AA in the United States;
-a licensees infant formula premarket notification will provide sufficient
data to support the marketing of an infant formula containing our DHA and AA; or
-the regulatory process will not involve significantly longer delays that may
materially and adversely affect the timing of the introduction of infant
formulas containing our products in the United States.

OUR CURRENT PATENTS MAY NOT BE ABLE TO PROVIDE PROTECTION AGAINST COMPETITIVE PRODUCTS AND WE MAY BE UNABLE TO PROTECT OUR
INTELLECTUAL PROPERTY PORTFOLIO IN THE FUTURE.

European and United States patent
authorities have not adopted a consistent policy regarding the breadth of claims
allowed for health and bioscience patents. Our issued patents, or patents that
we may obtain in the future, may not afford adequate protection against
competitors with competing technology because governmental agencies may revoke
our patents for being too broad or may limit the scope of our patents. If this
happens, companies may be able to produce products using our previously patented
technology.

OmegaTech, Inc., Monsanto
Corporation, Aventis S.A. and Nagase & Co. Ltd. are challenging our European
patent covering our DHA-containing oils. At a hearing in October 2000, a
division of the European Patent Office revoked our patent on the grounds that it
is too broad. We immediately appealed this ruling, and as a result, our patent
was reinstated so that it will remain in effect during the appeal process, which
may take up to two years. If the revocation is upheld upon our appeal, or any
other challenges to our patents are successful, our competitors may be able to
produce our products and, as a result, we may experience decreases in the future
sales of our nutritional oils, decreases in the revenues on sales of infant
formula containing our oils and decreases in license fees related to our oils.
Although our revenues may decrease under our license agreements, the revocation
of our European DHA patent would not terminate any of our license agreements.

We expect that in the
future, as our nutritional oils continue to be commercialized, opposition to our
intellectual property by our competitors will continue and most likely increase.
We anticipate challenges to our European AA patent and our European patent
covering our blend of DHA and AA, and challenges to our U.S. suite of patents
may arise in the future. We may also incur substantial costs in the future
defending our patents.

WE ARE AWARE OF SEVERAL PRODUCTS THAT ARE CURRENTLY AVAILABLE, AND PRODUCTS UNDER DEVELOPMENT, THAT MAY PRESENT A SERIOUS COMPETITIVE
THREAT TO OUR PRODUCTS.

Our success depends upon achieving and maintaining a superior competitive position in infant formula and adult nutritional product
markets.  Many of our competitors, which include BASF, F. Hoffman-LaRoche Ltd., OmegaTech, Inc., Monsanto Corporation, Aventis S.A.
and Nagase & Co. Ltd., have substantially greater research and development capabilities, marketing, financial and managerial
resources and experience in the industry. If a competitor develops a better product or technology, our products or technologies may
be rendered obsolete.

We believe that, to date,
we have developed the most efficient production method and purest forms of DHA
and AA oils; however, we are aware that other methods of producing DHA and AA
are available. Although no company has yet received approval to market these
products in infant formula in the United States, some infant formulas and other
products now on the market outside the United States use oils derived from other
sources, such as fish or eggs. We are aware of the development of a
DHA-containing fish oil which provides an alternative to our DHA oil for infant
formula applications. Although it is a lower cost product relative to our DHA,
fish oil has odor, stability and taste characteristics that may limit its
usefulness. Only a very small percentage of currently marketed supplemented
infant formulas contain DHA and AA that have not been produced by us. Currently,
fish oil based products dominate the adult DHA supplement market. We are aware
of the development of microencapsulated fish oil products by several large
companies, including BASF and F. Hoffman-LaRoche Ltd. Although
microencapsulation of the oil resolves much of the odor, stability and taste
issues found with fish oil, a microencapsulated product is significantly more
costly than regular fish oil. Because fish oil is significantly less costly than
our DHA oil, fish oil presents a substantial competitive threat to our
Neuromins® DHA. None of these companies has yet received approval to
include DHA derived from fish oil or eggs in infant formula within the United
States; however, some of these companies have received approval to include DHA
derived from fish oil in infant formula in Asia and DHA and AA derived from eggs
in infant formula in Europe.

We are also aware that
OmegaTech, Inc., an early stage company, is able to produce DHA from a strain of
fungus and is presently marketing this product in animal feeds as well as in
adult nutritional supplements. OmegaTech, Inc. is currently challenging our
European DHA patent and, if their challenge is upheld on appeal, a barrier to
their ability to compete with us would be eliminated. Although, based on the
strength of our intellectual property, we do not believe that OmegaTechs
source of DHA will present a significant threat in infant formula
supplementation, we are currently unable to predict the future degree of
competitive threat that OmegaTechs DHA may present to us in the areas of
adult nutrition and animal feeds.