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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-K

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

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2002

OR

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


COMMISSION FILE NUMBER: 0-22354

MARTEK BIOSCIENCES CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


|                                                                        |  |                                                   
|----------------------------------------------------------------------- |  | --------------------------------------------------
|DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) |  | 52-1399362
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)

6480 DOBBIN ROAD, COLUMBIA, MARYLAND 21045
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

REGISTRANTS TELEPHONE NUMBER INCLUDING AREA CODE: (410) 740-0081

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

|                       |  |                                                  
|---------------------- |  | -------------------------------------------------
|NONE
(TITLE OF CLASS:) |  | NONE
(NAME OF EACH EXCHANGE ON WHICH REGISTERED:)

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMON STOCK, $.10 PAR VALUE
(TITLE OF CLASS)

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 last 90 days. [X] Yes [   ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [   ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). [   ] Yes [X] No

The aggregate market value of Common Stock held by non-affiliates of the
registrant is $456,828,258 (based upon a last sale price of $25.04 per share of
the Common Stock as reported on the NASDAQ National Market System on December
31, 2002. The number of shares of Common Stock outstanding as of December 31,
2002 was 23,345,331.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of Registrants Annual Report to Stockholders for the fiscal
year ended October 31, 2002 are incorporated by reference into Part II of this
Report. Certain portions of the Registrants Definitive Proxy Statement for its
2003 Annual Meeting of Stockholders (which will be filed with the Commission
within 120 days after the end of the Registrants 2002 fiscal year) are
incorporated by reference into Part III of this Report.





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PART I

The information in this Form 10-K contains certain forward-looking
statements, including statements related to markets for the Companys products
and trends in its business that involve risks and uncertainties. The Companys
actual results may differ materially from the results discussed in the
forward-looking statements. Factors that might cause such a difference include
those discussed in Managements Discussion and Analysis of Financial Condition
and Results of Operations,Risk Factors and Business as well as those
discussed elsewhere in this Form 10-K.

ITEM 1. BUSINESS.

OVERVIEW

Martek Biosciences Corporation (Martek, We, or the Company) develops and
sells products from microalgae. Microalgae are microplants. We have pioneered
the commercial development of microalgae into a portfolio of high value
products and product candidates consisting of the following:

NUTRITIONAL PRODUCTS

Over the past nine years, we have developed production methods and intellectual
property for two important fatty acids. These fatty acids are docosahexaenoic
acid, commonly known as DHA, and arachidonic acid, commonly known as ARA. We
market blends of oils containing these fatty acids as DHASCO® and ARASCO®. We
derive DHA from microalgae and ARA from fungi, using proprietary processes.
Cell membranes throughout the body, especially in the brain, central nervous
system, retina and heart, contain these fatty acids. DHA and ARA may help
develop the eyes and central nervous systems of newborns and promote adult
mental and cardiovascular health. An adult may obtain DHA via foods such as
fish or organ meats and ARA via foods such as red meats, fish and eggs. A
pregnant mother passes DHA and ARA through the placenta to a fetus and a
lactating mother passes DHA and ARA to an infant through breast milk.. While
there are currently no universally recognized guidelines for daily consumption
of DHA, a workshop sponsored by various groups, including the National
Institutes of Health, recommended that adults consume at least 220 mgs. of DHA
daily. The World Health Organization has issued similar guidelines for infant
nutrition. The U.S. Department of Agriculture and other organizations in Europe
and Asia have compiled data showing dietary intake in Western-developed
societies is less than one-half of this level. We believe that this possible
dietary deficiency will result in an increase in demand for DHA-supplemented
products. The importance of ARA in the adult diet is not yet known.

Investigators at the National Institutes of Health and other research centers
have observed a relationship between low levels of DHA and a variety of health
risks, including increased cardiovascular problems, cancer, as well as
neurological and visual disorders. We have recently begun sponsoring studies to
further investigate the potential benefit of DHA supplementation on
cardiovascular health, breast cancer and pregnancy and nursing health.
Additionally, we, as well as others, are conducting research regarding the
impact of DHA supplementation on certain visual and neurological disorders.
Additional research is needed to assess the impact, if any, that DHA
supplementation will have on these health risks. We are targeting both the
infant formula market and the adult nutritional market for our nutritional
oils.

On May 17, 2001, we received notice from the Food and Drug Administration
(FDA) that after completing its review of our generally recognized as safe
(GRAS) notification, the agency had no further questions regarding our
conclusion that our DHASCO® and ARASCO® oil blend is GRAS when used in
specified ratios in infant formulas. In 2002, supplemented term infant formulas
manufactured by three of our licensees began being marketed in the United
States: Mead Johnson Nutritionals, under the Enfamil®LIPIL® brand of products
including term, preterm, lactose-free and soy based products; the Ross Products
Division of Abbott Laboratories under its Similac®, Isomil®, and NeoSure®
brands of products including term, preterm, lactose-free and soy based
products; and Wyeth Nutritionals under the private label brand for Wal-Mart,
Parents Choice.

Seven infant formula manufacturers, representing approximately 60% of the
estimated $7.5  $8 billion dollar worldwide infant formula market, have
licensed from us the right to include our nutritional oils in their products.
Five of these licensees are currently marketing term infant formula products
containing our oils in twenty-five countries and pre-term infant formula
products containing our oils in over sixty countries around the world. Adult
supplements containing our nutritional oils are being marketed in the United
States and to a lesser degree in certain European markets.

In April 2002, we purchased OmegaTech, Inc. (OmegaTech or Martek Boulder) a
low-cost algal DHA producer located in Boulder, Colorado. OmegaTech had been in
the fermentable DHA business since 1987, and had accumulated over 100 issued
and pending patents protecting its DHA technology. Its products consist of
sales of DHA into the dietary supplement, food, beverage, and animal feed
markets under the DHA Gold® brand. We currently sell nutritional supplements
under the Neuromins® and DHA Gold brand names. We anticipate increased sales of
our oils in 2003 into markets for pregnant and nursing mothers and food and
beverages.

OTHER PRODUCTS

We have also developed new fluorescent detection products from microalgae that
connect fluorescent algal proteins to antibodies. The connected antibodies
(with their algal fluors) then attach to compounds of interest to tag or mark
that compound. Compound detection is then made or not made, on whether the
fluor is seen or not seen, since the compound itself cannot be seen. These
products have

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potential applications in automated biological screening to find new compounds
or reduce drug discovery time. Our products bring greater speed, sensitivity
and simplicity to existing tests and applications.

Our genomics group has developed key intellectual property that some day may
allow us to transfer the DHA producing genetic material of microalgae into
agricultural products such as corn or soybean plants for the purpose of
developing healthier seed oils and an inexpensive source of DHA oil.

PRODUCTS AND PRODUCT CANDIDATES

NUTRITIONAL OILS

Infant Formula Applications

Certain microalgae and fungi produce large quantities of oils and fats
containing long-chain, polyunsaturated fatty acids, known as PUFAs, that are
important to human nutrition and health. We have identified a strain of
microalgae which produces an oil rich in DHA and have developed the means to
grow it by fermentation, with a relatively high oil and DHA content. In
addition, we have isolated and cultured a strain of fungus that produces large
amounts of ARA.

DHA is the predominant structural fatty acid in the grey matter of the
brain and retinal tissues and is a key component of heart tissue in humans and
other mammals. Children and adults obtain DHA primarily from their diets,
particularly from fish and organ meats, since humans synthesize only small
amounts of DHA from dietary precursors. ARA is an omega-6 fatty acid and is the
principal omega-6 fatty acid found in the brain. ARA is also important
in the brain development of infants and is a precursor to a group of
hormone-like substances important in several vital functions of the body. ARA
is found in common foods such as meat, eggs and milk. Brain development in
humans takes place primarily in the last trimester in utero and in the first 12
months of postnatal life. For a fetus, DHA and ARA are provided through its
mothers bloodstream via the placenta. For a nursing infant, they are provided
via breast milk. DHA is generally the most abundant omega-3 long-chain PUFA in
human milk. Our DHA and ARA oils are blended in a ratio equivalent to the ratio
found in breast milk. DHA and ARA dietary supplementation may be particularly
important for premature and low birth weight infants who may not get their full
in-utero allotment. Although these fatty acids are naturally present in breast
milk, they are not added to most infant formulas today. When added to infant
formula, our blended oils containing DHA and ARA provide the closest available
match, with regard to the molecular form of these fatty acids, to the DHA and
ARA in human milk.

Our DHA oils are more desirable for infant formula applications than fish oil
because they are derived from a vegetarian source, free of undesirable fatty
acids such as eicosapentaenoic acid (EPA), which is found in fish oil and
contaminants such as methylmercury, polychlorinated biphenyls (PCBs), dioxins
also found in fish oil. Our DHA and ARA oils are in an easily digestible
triglyceride form similar to that found in breast milk, but different from that
in fish oil or egg yolk lipids. They also have higher oxidative stability and
longer shelf life than fish oil.

Independent studies have indicated that the mental development and visual
acuity of infants are positively affected by breast feeding and that breast-fed
infants have higher levels of DHA in their brain tissue and enhanced mental
acuity later in life when compared to those fed infant formula not containing
DHA. This evidence is from retrospective studies comparing intelligence in
breast-fed versus formula-fed infants and from intervention studies in infants
using DHA and ARA supplemented infant formula. Other studies have failed to
report beneficial effects with DHA and ARA supplemented infant formulas. In
general, these studies tested levels of DHA and ARA lower than levels
recommended by authoritative bodies.

Although not all experts agree on the importance of DHA and ARA oils in
the infant diet, the following are examples of some of the studies that have
found benefits from DHA and ARA supplementation in the infant diet:



| |  |  | In November 2001, results were presented from a multi-center European
study which showed sustained advantages for infants fed formula
supplemented with DHA and ARA. At 6 years of age, children who had
received a DHA and ARA supplemented formula for the first 4 months of
life had significantly lower diastolic blood pressure, were
significantly faster at making correct choices, and showed more
efficient information processing than un-supplemented children.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | A study reported by investigators at Baylor College of Medicine in
November, 2000, supported the importance of DHA supplementation during
breast-feeding by showing that breast-fed, 30 month-old children whose
mothers took a DHA supplement for four months after delivery scored a
mean of eight points higher on a standard test of psychomotor
development than infants whose mothers received a placebo.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  |  | Research published from a National Institutes of Health (NIH)
sponsored study in the March 2000 issue of Developmental Medicine and
Child Neurologyshowed a significant improvement in mental development
in term infants given a commercially available infant formula
supplemented with our DHA and ARA compared to infants fed the same
non-supplemented formula. In the double-blind study, infants fed the
diet supplemented with our oils showed, at 18 months of age, a mean
increase of 7 points on the Mental Development Index (MDI) of the
Bayley Scales of Infant Development II. Researchers reported that these
data support a long-term cognitive advantage of infant dietary DHA
supply during the first 4 months of life. The significant
correlations...support the hypothesis that early dietary supply of DHA
was a significant determinant of improved performance on the MDI.
Although there are different sources of DHA and ARA, these findings re-

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| |   |  | affirmed the beneficial effects of adding Marteks pure source of
pre-formed DHA and ARA to infant formulas at the levels evaluated by the
researchers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In 1999, a meta-analysis of over 20 published reports concluded that
infants deprived of the nutrients in breast milk are likely to have a
lower IQ, lower educational achievement, and poorer social adjustment
than breast-fed infants. The nutritional benefits of breast-feeding were
associated with at least a 3.2 point difference in cognitive development
compared to formula feeding, and the longer the baby was breast fed, the
greater the increase in cognitive developmental benefit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  |  | A NIH sponsored study published in the August 1998 edition of
Pediatric Researchconcluded that early dietary intake of preformed DHA
and ARA appears necessary for optimal development of the brain and eye.
The study reported that healthy, full-term infants fed formula
supplemented with our oils had visual development results consistent
with breast-fed infants, but those fed a standard formula without DHA
and ARA had a deficiency of about one line on an eye chart. The study
also indicated that infant formula without preformed DHA and ARA may put
infants at risk for DHA deficiency, and suggested that the availability
of dietary DHA during the critical developmental period may lead to
persistent changes in the underlying neural structure and/or function of
infants.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | The January 1998 issue of Pediatrics, in an article entitled
Breastfeeding and Later Cognitive and Academic Outcomes by Horwood and
Fergusson (New Zealand), reported that, in an 18-year longitudinal study
of over 1,000 children, those who were breast-fed as infants had both
better intelligence and greater academic achievement than those who were
infant-formula fed children. The authors cited the importance of DHA in
the neurological development of children and recommended the need to
develop improved infant formulas with properties more similar to those
of human breast milk that may lead to improved developmental outcomes in
children. The study indicated that breast-fed babies have a 38% greater
likelihood of completing their high school matriculation than
formula-fed babies even after allowances were made for confounding
social, familial and perinatal factors. Although the study did not
conclude that DHA provided to the breast-fed infants from their mothers
milk was the sole cause of the improved achievement scores, the authors
pointed out recent controlled intervention studies demonstrating similar
outcomes in infants with DHA-supplemented formulas and concluded that:



| |                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | . . . the weight of evidence clearly favors the view that exposure
to breast-feeding is associated with small but detectable increases
in childhood cognitive ability and educational achievement, with it
being likely that these increases reflect the effects of long chain
polyunsaturated fatty acid levels and, particularly, DHA levels on
early neurodevelopment.



| |  |  | Data presented in July 1995 at the Second International Congress of
the International Society for the Study of Fatty Acids and Lipids,
showed that low birth weight infants fed formula supplemented with
Marteks nutritional oils have blood lipid levels of DHA and ARA
comparable to those of breast-fed, low birth weight infants.                                                                          
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In the November 12, 1994 edition of The Lancet, a scientific journal
published in the United Kingdom, scientists concluded that some
components of breast-milk may have a beneficial effect on brain
development. . . . arachidonic acid [ARA]and docosahexaenoic acid [DHA]
should be considered as essential nutrients for infants because they are
present in structural lipids in brain and nervous tissue.

In addition, DHA and ARA have been recognized as important in the infant
diet and recommended for inclusion in infant formula by an expert panel of the
United Nations Food and Agricultural Organization and The World Health
Organization (FAO/WHO), a NIH and International
Society for the Study of Fats and Lipids sponsored workshop, a panel sponsored
by the Child Health Foundation, and the British Nutrition Foundation (BNF).

Five of our infant formula licensees have obtained the regulatory approval,
where required, to sell term infant formula products containing our
oils in a total of 25 countries and pre-term infant formula products containing our oils in a total of over 60
countries around the world. Supplemented term infant formulas manufactured by
three of our licensees are currently being marketed in the United States. Our
sales and royalties on nutritional oils for infant formula were approximately
$40.8 million in 2002, $16 million in 2001 and $5 million in 2000.

Applications for Pregnant and Lactating Women

In addition to recommending the inclusion of DHA and ARA in infant formula, the
BNF and FAO/WHO Committees have recognized the importance of DHA and ARA in
pregnancy and lactation.

A study published in the January 2003 edition of Pediatricsfound that mothers
who supplemented their diet with fatty acids rich in docosahexaenoic acid (DHA)
during pregnancy and lactation gave birth to children who scored higher on
standardized intelligence and achievement tests at four years of age than those
whose mothers supplemented with fatty acids that do not contain DHA. Study data
demonstrated that children born to mothers who had taken cod liver oil, which
is rich in DHA and other omega-3 fatty acids, during pregnancy and lactation
scored significantly higher (approximately 4.1 points) on the Mental Processing
Composite of the K-ABC test as compared to children whose mothers had received
corn oil.

To address these markets, we produce Neuromins PL, which is a DHA dietary
supplement specifically designed for pregnant and

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lactating women. We are in discussions with companies in the nutritional
market to sell additional products containing our DHA oil for pregnant and lactating women.

Cardiovascular Health and Other Human Applications

Investigators at universities around the world 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, cancer, and various neurological and visual
disorders. We are currently trying to establish what contribution, if any,
supplementation with our oils will make in addressing these problems. We are
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
certain visual and neurological disorders.

The findings of two recently published studies discussed below, highlighted the
benefits of DHA on cardiovascular health while cautioning on the intake of DHA
from fish sources.

In November 2002, the American Heart Association (AHA) issued a Scientific
Statement entitled Fish Consumption, Fish Oil, Omega-3 Fatty Acids, and
Cardiovascular Disease, published in the November 19, 2002 edition of
Circulation: Journal of the American Heart Association. The Scientific
Statement outlines the findings of a comprehensive report that examined the
cardiovascular health benefit of omega-3 fatty acids from fish
sources, specifically DHA and eicosapentaenoic acid (EPA). The report concluded
that consumption of such omega-3 fatty acids, either through diet or
supplements, reduces the incidence of cardiovascular disease. The statement
refers to studies that have indicated the following to be associated with the
intake of omega-3 fatty acids:



| |  |  | decreased risk of sudden death and arrhythmia,
| | - |  | ----------------------------------------------
|
| |  |  | decreased thrombosis (blood clot),            
|
| |  |  | decreased triglyceride levels,                
|
| |  |  | decreased growth of atherosclerotic plaque,   
|
| |  |  | improved arterial health, and                 
|
| |  |  | lower blood pressure.                         

The Scientific Statement concludes that omega-3 fatty acids have been shown in
epidemiological and clinical trials to reduce the incidence of heart disease
and recommends that healthy individuals eat a variety of fish (preferably oily)
at least twice a week. The statement cautioned, however, that fish intake must
be balanced with concerns about environmental pollutants because some species
of fish may contain significant levels of methylmercury, polychlorinated
biphenyls (PCBs), dioxins, and other contaminants. Both the FDA and the
Environmental Protection Agency have advised that children, pregnant women,
women who may become pregnant and nursing mothers limit their intake of certain
fish. In consideration of the health risks posed by such contaminants, the
authors of the statement conclude by stating, The availability of high-quality
omega-3 fatty acid supplements, free of contaminants, is an important
prerequisite to their extensive use. Marteks DHA oil is derived from a
vegetarian source and is free of contaminants found in fish oil.

Also, the November 28, 2002 edition of the New England Journal of Medicine
published the results of a study directed by a team of researchers at The Johns
Hopkins University. This study weighed the cardiovascular benefit of DHA
derived from fish consumption, as compared to the cardiovascular health risk
posed by the mercury content in certain fish. Researchers found that, while
high DHA levels were directly correlated with a lower risk for cardiovascular
disease, high mercury levels were directly correlated with the risk of heart
attack. Based on these findings, researchers concluded that, High mercury
content may diminish the cardioprotective effect of fish intake.

On November 18, 2002 the findings of a study were presented at the Scientific
Sessions of the American Heart Association relating to the effects of Marteks
DHA oil on endothelial function in children with elevated blood lipid levels
(hyperlipidemia). Hyperlipidemia in children is a risk factor for early
coronary heart disease. Clinical data demonstrated that when patients
supplemented a specialized diet with DHA, they showed improved endothelial
function as compared to the specialized diet alone. Researchers found that,
when patients received DHA, they experienced significant improvements in their
arterial flow, indicating that their arteries had become more flexible.

The findings of an animal study on the effects of DHA on human colon cancer
cell growth were recently released by the University of Nevada, Reno and
published in the December 10, 2002 edition of Cancer Letters.The study
concluded that our DHA oil significantly inhibited the growth of human colon
cancer cells in mice. The study found that while both Marteks DHA oil and fish
oil, which contains both DHA and EPA, inhibited colon cancer cell growth,
Marteks DHA had a greater effect. At the studys completion, the mice
receiving a diet supplemented with Marteks plant-derived DHA had tumors that
were smaller than those of mice receiving diets supplemented with omega-3 from
fish oil as well as those fed both a high and low fat corn oil diet.

The potential role of Marteks DHA in cancer treatment has been the subject of
previous preclinical investigations. Researchers from the American Health
Foundation (since renamed The Institute for Cancer Prevention) announced
clinical data demonstrating that Marteks DHA suppressed human breast cancer
metastasis in mice at the 21st Annual Breast Cancer Symposium in December 1998.

We have entered into agreements with Natrol, Inc., Leiner Health Products,
General Nutrition Company (GNC) and Kroger for the distribution of our DHA
supplements to mass market retail outlets. Nutraceuticals Corporation, Solgar
Vitamin and Herb Company,

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Source Naturals®, and Natures Way, Inc. privately label and distribute
Neuromins DHA supplements to natural foods markets.

In 1999, we began selling bulk DHA oil and powder for additional
applications, including inclusion in childrens chewables and nutritional
drinks. We are continuing to explore additional applications for DHA, including
use in pharmaceuticals and functional foods. In April 2002, we purchased
OmegaTech, a low-cost algal DHA producer located in Boulder, Colorado. Its
products consisted of sales of DHA into the dietary supplement, food, beverage,
and animal feed markets. We are in discussions with several companies in the
nutritional and food and beverage markets to sell products containing our DHA
oil for pregnancy and lactation, and cardiovascular applications. We are also,
along with our customers, developing other DHA delivery methods to address
these potential new markets, including powders, an emulsion, use as a food
ingredient, and use as a pharmaceutical.

Our sales of nutritional oils for adult supplements and food additives totaled
approximately $1.6 million in 2002, $1.0 million in 2001 and $2.0 million in
2000.

Animal Feed Applications

We also sell products used in  the animal feed market. These products
consist of a DHA-rich algal product that we sell to egg producers and
aquaculture companies. Egg producers fortify their chicken feed with our
product for the purpose of increasing the DHA levels in eggs that may then be
passed on to humans though consumption. Aquaculture companies use our algal
product to improve the survivability of fish larvae. Our sales of products for
animal feed applications totaled $1.6 million in 2002.

ADVANCED DETECTION SYSTEMS

We have identified, isolated and now sell powerful fluorescent dyes from
various microalgae for use in life science applications for detection of
certain biological processes. Our fluorescence technology is a sensitive and
direct method for detection of a specific binding event. That event could be a
receptor mediated binding, cell based binding, antibody driven binding or
essentially any event where one entity recognizes another. Because of
environmental concerns with the use of radioactivity as a sensitive method of
detection, higher sensitivity detection technologies are in demand. The main
advantages of fluorescence as a method of detection is that it is direct, fast,
and relatively simple in that it does not require enzymatic steps for signal
amplification or prolonged development times for signal measurement.

Our fluorescent detection products include the following:

Phycobiliproteins Classical direct fluorescent detection dyes, which we
have produced for several years and fill an existing market in protein
detection and flow cytometry. In 1999, we introduced our own brand of improved
fluorescent dyes (SureLight-APC) to be used for time resolved fluorescence
applications in the high throughput screening market.

CryptoLight dyes A product line of small molecular weight, yet high
intensity phycobiliproteins isolated from an unusual group of microalgae. These
dyes are capable of entering permeabilized cells and are used for internal
detection of markers in cells which could be used for discovering diseases, and
in flow cytometry and Fluorescence In Situ Hybridization (FISH). Different
CryptoLight dyes have different fluorescence emission wavelengths and,
therefore, provide the possibility of multi-colored assays. They have also been
used in fluorescence microscopy and fluorescence energy transfer applications.

SensiLight dyes Our Sensilight dye technology was developed to match
the sensitivity of chemiluminescent methods. Sensilight dyes are large,
intensely fluorescent combinations of phycobiliproteins that provide extreme
sensitivity with ease of use that is unmatched by other common dyes or
detection systems. A 100-fold improvement in sensitivity has been demonstrated
with the Sensilight dyes over existing direct fluorescent dyes, and multiple
new applications are now accessible by simple, direct fluorescence. Such
increased sensitivity allows:



| |  |  | detection of receptors or small molecules at 100-fold lower concentrations;      
| | - |  | ---------------------------------------------------------------------------------
|
| |  |  | detection with the same level of sensitivity but in 100-fold smaller volumes; and
|
| |  |  | detection with the same level of sensitivity but using much lower cost equipment.

Our Sensilight dyes have demonstrated an increased sensitivity compared to
other direct detection dyes in all applications evaluated thus far. They
provide sensitivity similar to enzymatically amplified or radioactive detection
systems but with fewer steps, generating more rapid results at lower costs. Our
dyes have been used in immunodiagnostic detection, microarrays, flow cytometry,
western blotting and other applications.

Our sales of advanced detection system products were $787,000 in 2002,
$280,000 in 2001 and less than $200,000 in 2000.

ALGAL GENOMICS

Our collection of microalgae provide a rich source of novel genetic material
enabling the production of a variety of valuable nutritional and pharmaceutical
ingredients. Microalgae biochemical pathways and genes have much in common
with higher plants; therefore, microalgal genes will provide a good source of
genes for engineering valuable output traits in higher plants. We have
discovered and

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isolated a novel biochemical pathway for the production of DHA in microalgae,
which was described in the journal Science. We believe that these genes will
be a preferred source of genes for developing healthier plant seed oils, such
as soybean or canola, which are enriched in DHA. The development of
DHA-enriched plant seed oils would significantly expand the overall market
opportunity for DHA as a result of the dramatically improved economics of
production. Our proprietary approach enables the direct production of DHA from
simple precursors, avoiding the accumulation of other non-essential fatty
acids. Our novel genes may also enable the production of other valuable
bioactive lipids in fermentation microorganisms and plants.

We have combined our understanding of heterotrophic (i.e. without light)
and photoautotrophic (i.e. with light) growth of microalgae with our
proprietary technology in microalgal transformation to develop a unique
technology capable of converting an otherwise autotrophic species of microalgae
into one capable of growing heterotrophically, utilizing sugars for its energy.
We believe that this represents the first time such a transformation has ever
been made. Our Trophic Conversion technology was selected as the feature cover
story in the June 15, 2001 issue of the Science,and is the subject of several
patent applications. The technology opens the door to the commercial
heterotrophic production (growth via fermentation) of algal species that could
only be grown previously using a photobioreactor system. The favorable
production economics associated with fermentation compared to those of the
photobioreactor will allow us to pursue new algal products not previously
believed to be economically feasible and potentially represents a means to
commercially exploit a greater portion of the kingdom of microalgae.

To date, we have received no revenues from our algal genomics technology.

TECHNOLOGY

We apply our microalgal expertise and culturing technology to our
expanding library of over 3,500 live microalgal species and related database to
achieve technical and commercial advantages. Certain fundamental and unique
attributes of microalgae allow for the development and production of our
products:



| |  |  | microalgae are a genetically diverse kingdom of organisms that have a
range of physiological and biochemical characteristics; thus, they
naturally produce many different and unusual fats, sugars, proteins and
bioactive compounds that may have commercial applications, such as the
fatty acids that are the principal ingredients in our oils, and highly
sensitive fluorescent diagnostic products; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | microalgae comprise a large, substantially unexplored group of
organisms, and thus provide a virtually untapped genetic resource that
can be screened for a variety of new products, including
pharmaceuticals.                                                                                                                                                                                              

Our scientists have discovered microalgal strains which selectively produce DHA
in large amounts and are amenable to large-scale, heterotrophic culture using
common commercial fermentation equipment used in the pharmaceutical, food and
biotechnology industries under cGMP(Current Good Manufacturing Practices)
conditions. These microalgal strains and the conditions applied to achieve
economical production of DHA form an important basis of our intellectual
property. Our scientists also have developed and patented novel microalgal
culturing systems which allow for the commercial production of other high-value
compounds, such as fluorescent pigments, and for the rapid evaluation and
scale-up of other microalgae of potential interest. Proprietary closed-system,
light-drive photobioreactors (i.e. with light) and numerous techniques for
maintaining microalgal monocultures form the basis of this technology.

Our product development process involves the following primary steps:

Identification of Appropriate Microalgae.We select specific microalgae to
produce potentially marketable compounds through a comprehensive process, which
involves developing a search and screening strategy based upon our extensive
knowledge of microalgal physiology and the unique role played by the target
compound in the survival of selected microalgal species, searching scientific
literature and our proprietary microalgal database, and performing biochemical
analyses, and product-yield experiments on candidate strains. We currently
maintain an increasing in-house collection of over 3,500 strains of microalgae,
which includes representatives of virtually all of the significant taxonomic
microalgal groups. Equally important is our proprietary microalgal database,
which contains biochemical and physiological data on the strains in the
collection. We believe that our microalgal collection and associated database
are among the largest such resources available in the world. Coupled with our
extensive microalgal expertise, these resources are used to identify organisms
for initial testing. Further testing ultimately results in the selection of
production strains.

Optimization of Microalgae and Growth Conditions.We apply standard
industrial microbiological techniques to microalgae and manipulate culturing
conditions (growth medium composition, temperature, pH and light intensity) to
optimize product yield and productivity. After selecting strains with the best
yields and growth characteristics, we enhance their production through
conventional and commonly employed strain improvement methodologies. We have
not used genetic engineering techniques to develop any of our existing
products, but may use these methods for certain products currently in
development.

Scale-up and Commercial Production.Successful exploitation of the unique
characteristics of microalgae is in large measure dependent upon the
availability of large-scale culturing technology. We have successfully
scaled-up a microalga capable of producing large amounts of DHA
heterotrophically using common organic nutrients and salts. Heterotrophic
culturing of this DHA-producing microalga at commercially viable levels enables
significantly lower production costs to be achieved, which were not possible
prior to

7



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our achievements. Aspects of our technology for the heterotrophic growth of
DHA-producing microalgae are the subject of several U.S. patents. Similar
patents have issued in certain countries and are pending in certain other
countries around the world.

For many other product applications, we use our proprietary light-driven,
closed-culture system photobioreactors for microalgal production.
Photobioreactors are closed to the atmosphere and designed to make the most
efficient use of light while keeping contaminating microbes out of the culture.
Using our photobioreactors, we are able to culture isolated microalgal strains
without contamination and to manipulate such strains to influence growth and
biochemical makeup, thus efficiently generating products of interest, including
the culturing of various algae for the production of powerful fluorescent dyes
used in our advanced detection systems. We use a series of photobioreactors of
varying sizes, controls and methods of operation to achieve culturing
consistency. Certain aspects of these photobioreactors are the subject of U.S.
patents.

COLLABORATIVE AND LICENSING AGREEMENTS

We have entered into licensing agreements with seven infant formula
manufacturers, including Mead Johnson & Company (a subsidiary of Bristol-Myers
Squibb Company), Wyeth (formerly American Home Products), Abbott Laboratories,
Numico, Maabarot and Novartis, that together comprise over 60% of the worldwide
infant formula market. We have one additional licensing agreement with an
infant formula manufacturer and have contractually agreed not to disclose the
licensees name. The undisclosed infant formula manufacturer has less than 3%
of the world-wide market for infant formula and has not purchased products from
us to date. Under these agreements, we received up-front licensing fees and are
entitled to royalties based on sales of infant formula containing our
nutritional oils. These licensees are not required to include our oils in their
formulas under the terms of these agreements, and there can be no assurance
that such infant formula manufacturers will include our oils in all or any of
their product lines. Each of these royalty-bearing license agreements calls for
us to provide to the licensee our nutritional oils at a transfer price and
receive a royalty from the licensee upon the final sale of infant formula
containing the oils. Licensees have the right to buy other sources of DHA and
ARA oils provided they still make royalty payments to us upon the sale of the
final infant formula product containing the oils if they are covered by our patents.

We currently sell most of our oils to several of our licensees under
all-inclusive pricing, which combines the transfer payment and royalty into a
flat price with a slight discount. Since December 2000, over 95% of all sales
to our licensees have been made under all-inclusive pricing arrangements, and
we anticipate that this trend will continue in the future. Our license
agreements have terms exceeding 20 years, contain no future funding commitments
on our part or the part of our licensees, and may be terminated by our
licensees upon proper notification. The most significant of these agreements
have remaining terms ranging from 16 to 22 years. Under the terms of these
licensing agreements, our licensees are responsible for obtaining Food and Drug
Administration (FDA) and all other necessary regulatory approvals with
respect to these nutritional oils. Under each of our current license
agreements, our licensees generally are obligated to indemnify us against
product liability claims relating to our nutritional oils unless they are
related to manufacturing impurities in the oils.

The infant formula industry represents over $3.5 billion in annual
wholesale sales in the United States and approximately $7.5  $8 billion
worldwide. Our current licensees cover over 60% of the worldwide infant formula
market. To date their introductions of products containing our oils have
penetrated less than 10% into this market. We are actively pursuing licenses
with other infant formula producers throughout the world to continue
penetrating these markets. Our sales and royalties from infant formula
licensees were approximately $40.8 million in 2002, $16 million in 2001 and $5
million in 2000. Mead Johnson Nutritionals, an infant formula licensee,
accounted for approximately 54% of our total product sales and royalties in
2002, 30% in 2001 and 1% in 2000. Wyeth, an infant formula licensee, accounted
for approximately 25% of our total product sales and royalties in in 2002, 42%
in 2001 and 33% in 2000.

Under the terms of several of our current license agreements, we are
prohibited from granting a license to any party for the inclusion of our
nutritional oils in infant formula with payment terms or royalty rates that are
more favorable to such licensee than those provided in our agreements with our
current licensees without either the prior written consent of the current
licensees or prospectively offering such new favorable terms to these
licensees. This restriction does not apply to any lump sum payments to us
pursuant to a territorially restricted license under which the reduced payment
is reasonably related to the reduced marketing opportunities available under
such a restricted license.

In January 1997, we entered into an agreement with DSM Gist B.V. (DSM,
formerly Royal Gist-Brocades B.V.) under which they became our exclusive
contract supplier for nutritional oils containing ARA. DSM is a multi-billion
dollar international group of companies that is active worldwide in the fields
of life science, product performance materials and chemicals. At October 31,
2002 we had outstanding inventory purchase commitments to DSM totaling
approximately $3.9 million.

We market certain of our fluorescent detection products under a
royalty-bearing license from Stanford University and certain fluorescent
detection products under an exclusive royalty-bearing license from a private
inventor.

On November 1, 2001 we sold the assets, consisting primarily of inventory,
and technology surrounding our former stable isotope product line to Spectra
Gases, Inc., a privately held New Jersey company. As part of the agreement, we
received approximately $800,000 for the assets of the group. We also retained
an ongoing royalty from future reagent sales for five years up to a maximum of
$500,000, and also received a 9% equity position and royalty interest in a new
company that was formed to pursue the high-end protein labeling technology. As
of October 31, 2002, the value of the investment in the new company was fully
reserved. During 2002, we

8



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recognized approximately $106,000 in royalties as revenue in connection with
this arrangement.

In March 2002 we signed a five-year DHA production agreement with FermPro
Manufacturing L.P. (FermPro), a contract fermentation company in South
Carolina. We began receiving DHA under this agreement with FermPro in late June
of 2002.

We also
have a production agreement with C.P. Kelco U.S. Inc. (C.P.
Kelco) that we
assumed with the purchase of OmegaTech for the production of DHA-rich algal
biomass, an intermediate form of our DHA oil that we sell to animal feed
companies or process further for use in the adult supplement and food and
beverage markets. The agreement requires us to purchase approximately $2.4
million of inventory per year through December 31, 2004. At October 31, 2002 we
had outstanding inventory purchase commitments to C.P. Kelco totaling
approximately $1.2 million.

In October 2001 we licensed certain technology surrounding our nutritional
products for animal feed uses to Advance Bionutrition (ABN), a start-up company
founded by a former officer of Martek. Under the agreement, ABN has a
first right of refusal to market DHA for animal feed applications in exchange for
minimum inventory purchases from Martek. In 2002, we also licensed all
animal feed applications of the former OmegaTech strain of algae to ABN under
which ABN retains exclusive rights to market DHA in aquaculture
application in exchange for minimum inventory purchases from Martek. For the year ended October 31, 2002, we recognized
$500,000 in revenues from sales of products under these agreements.

In connection with the purchase of OmegaTech we assumed an obligation to
pay a minimum of $7 million over the next eight years associated
with an agreement with a third party relating to human and animal applications for
OmegaTechs DHA. Subsequent to October 31, 2002 we signed an amendment to this
agreement, under which we paid $500,000 and signed a promissory note for $3.3
million in exchange for the discharge of all future obligations under the
agreement. The first payment under the note of $1.0 million is payable in
August of 2003 with the remainder due in December of 2003.

The products that we sell that were developed by the former OmegaTech fall
under a royalty agreement with the University of Denver that requires us to pay
the University of Denver royalties equal to 0.6% of certain eligible revenues.
The term of the royalty agreement is indefinite. During 2002, we incurred
approximately $10,000 in royalty expense in connection with this arrangement.

We have also entered into various additional collaborative research and
license agreements. Under these agreements, we are required to fund research or
to collaborate on the development of potential products. As of October 31,
2002, we are not committed to fund any future development activities under
these arrangements. Certain of these agreements also commit us to make payments
upon the occurrence of certain milestones and pay royalties upon the sale of
certain products resulting from such collaborations.

COMMERCIAL AND U.S. GOVERNMENT RESEARCH AND DEVELOPMENT CONTRACTS

Our technology development has been funded in part by commercial and
federal government contracts. While not expected to be a primary source of
revenue in the future, we plan to continue applying for government contracts
and soliciting commercial research and development contracts on a selective
basis when such contracts involve research that may bring us future commercial
benefit.

As a result of us receiving Small Business Innovation Research grants, the
U.S. Government will have certain rights (the Government Rights) in the
technology that we developed with the funding. These rights include a
non-exclusive, paid-up, worldwide license to practice or have practiced such
inventions for any governmental purpose. In addition, the government has the
right to require us to grant licenses which may be exclusive under any of such
inventions to a third-party if the government determines that:



| |  |  | adequate steps have not been taken to commercialize such inventions;                   
| | - |  | ---------------------------------------------------------------------------------------
|
| |  |  | such action is necessary to meet public health or safety needs; or                     
|
| |  |  | such action is necessary to meet requirements for public use under federal regulations.

The government also has the right to take title to a subject invention if
we fail to disclose the invention and elect title within specified time limits.
In addition, the government may acquire title in any country in which we fail
to file a patent application within specified time limits. Federal law requires
any licensor of an invention that was partially funded by federal grants to
obtain a covenant from any exclusive licensee to manufacture products using the
invention substantially in the United States. In addition, our licenses from
third parties may also relate to technology developed with federal funding and
therefore may also be subject to Government Rights.

Costs under U.S. government contracts are subject to audit by the U.S.
government. We believe that cost disallowances, if any, arising from such
audits of costs charged to government contracts through October 31, 2002 will
not be material. At October 31, 2002 we have one grant outstanding totaling
approximately $103,000.

MANUFACTURING

We manufacture oils rich in DHA at our fermentation and oil processing
facility located in Winchester, Kentucky, by conventional fermentation
processes. We acquired the Winchester facility in 1995. The oils that we
produce in this facility have been certified kosher by the Orthodox Union and
certified Halal by the Islamic Food and Nutrition Council of America. We are
currently in the start-up phase of expanding the production capacity for DHA
oil at our Winchester plant. We believe that initial fermentation expansion at
our

9



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Winchester, KY plant should be up to full production by the second quarter of
2003 and should more than double our production capacity at our plant. We also
believe that production optimization efforts will continue at our plant for the
next several years as new technologies and additional algal strains are tested
to further increase output and reduce costs. In addition, we began receiving
DHA from FermPro in June of 2002, under a 5-year manufacturing agreement which
was signed in March of 2002. The output under this agreement should increase
our annual DHA production capacity by approximately 10% of 2003 estimated
output. As a result of the acquisition of OmegaTech, we also have several
contractual agreements with third party manufacturers to produce our DHA for
use in nutritional supplements and foods, including an agreement with C.P.
Kelco. We have also entered into an agreement with DSM, to
produce our ARA oil. We believe that, along with DSM, we can increase our
production to meet approximately 30% to 40% of the world-wide infant formula
market demand for DHA and ARA-rich oils. To meet demand in excess of these
levels, we will need to:



| |  |  | further expand our production facility in Winchester, KY; and/or                                    
| | - |  | ----------------------------------------------------------------------------------------------------
|
| |  |  | acquire another fermentation facility with the infrastructure to handle our nutritional oils; and/or
|
| |  |  | build another production facility to manufacture our oils; and/or                                   
|
| |  |  | enter into additional agreements with third party processors to produce our oils.                   

The commercial success of our nutritional oils will depend, in part, on our
ability to manufacture these oils or have them manufactured at large scale at a
commercially acceptable cost. There can be no assurance that we will be able to
successfully optimize production of our nutritional oils, or continue to comply
with applicable regulatory requirements (including Good Manufacturing Practices
(GMP) requirements) or that we will be able to successfully obtain sufficient
facilities to meet the future demand for our oils. Under the terms of several
of our infant formula licenses, our licensees may elect to manufacture these
oils themselves. We are currently unaware of any of our licensees producing our
oils or preparing to produce our oils, and estimate that it would take a
licensee at least one year or more to develop their own process of making our
oils.

SOURCES OF SUPPLY

Our raw material suppliers for production of DHA oil includes major
chemical companies and food ingredient suppliers. We have identified and
validated several sources for each of our major ingredients and have not had
problems obtaining adequate quantities of any of these materials. Crude ARA oil
is provided to us by DSM, a third-party processor. DSM, through a fermentation
process, produces a fungal biomass rich in ARA oil, which is then sent to a
sub-contractor for extraction of the oil. After extraction, the crude ARA oil
is sent to our Winchester, Ky, production facility for final processing. 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 either have to
manufacture the ARA containing oil at our plant, which would reduce our DHA
containing oil production capacity, or enter into other third party
manufacturer supply agreements. Although we feel that DSM can fill our ARA
needs for at least the next several years, there is no guarantee that DSM will
be able to adequately supply all of our ARA needs over the long-term.
Additional capacity may need to be obtained, either within DSM or at another
facility.

RESEARCH AND DEVELOPMENT

The primary focus of our research and development activities has been the
development and optimization of our nutritional oils. Approximately 40% of the
research and development costs of our nutritional oils have been incurred at
our Winchester, KY plant. We purchased this plant in 1995, and since that time
have continued an ongoing program to develop and refine processes for
manufacturing our DHA and ARA oils at large scale. We currently have numerous
development projects underway at our plant aimed at increasing our production
yields, reducing waste and improving the quality of our nutritional oils. We
also have ongoing research being conducted at our labs in Columbia, MD and
Boulder, CO. Research conducted at our lab in Columbia, MD is directed toward
improving the quality, sensory properties and stability of our nutritional
oils, optimizing production characteristics of microalgal strains,
investigating the clinical health benefits of DHA and ARA fatty acids, and
exploring the biochemical pathways utilized by microalgae to produce DHA.
Research conducted at our lab in Boulder, CO is focused on developing feasible
approaches to the expression of nutritional fatty acids, especially DHA, in
plant oilseeds and developing new ingredient forms for DHA-enriched food
products. Less than 5% of our current research and development efforts relate
to our advanced detection technology. We incurred research and development
expenses of $11.6 million in 2002, $12.7 million in 2001 and $7.1 million in
2000.

SALES AND MARKETING

Our nutritional oils are marketed and sold primarily to the infant formula
and natural products industries. To use our DHA or ARA in infant formula,
manufacturers must enter into a license agreement with us. Currently, seven
major infant formula manufacturers have entered into such an agreement. These
licensees market their DHA and ARA supplemented infant formulas to the end
users. Neuromins® and DHA Gold®, DHA dietary supplements, are sold through
private-label distributors, mass market retail outlets, mail order distributors
and directly to consumers and health care professionals through our toll-free
call center. Our nutritional supplements are currently sold in over 15,000
retail stores nationwide, including Safeway, GNC, Vitamin World, and Vitamin
Shoppe.

Most of the marketing for infant formula products containing our DHA and ARA is
performed by our licensees. We support their sales efforts through a
coordinated marketing campaign, including, but not limited to, national
advertising, trade-show participation, and targeted public relations and
educational efforts. However, there can be no assurances that we or our
licensees will be able to successfully

10



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market our nutritional products for use in infant formula or as a dietary
supplement.

Our
diagnostic products are marketed directly to large pharmaceutical
research institutions through distribution agreements with Intergen
Company, Perkin Elmer Life Sciences Products and Kirkegaard & Perry
Laboratories.

COMPETITION

The health care and biological sciences industries are characterized by
rapidly evolving technology and intense competition. Our competitors include
major pharmaceutical, chemical and specialized biotechnology companies, many of
whom have financial, technical and marketing resources significantly greater
than us. In addition, many specialized biotechnology companies have formed
collaborations with large, established companies to support research,
development and commercialization of products and technologies that may be
competitive with our products and technologies. Academic institutions,
governmental agencies and other public and private research organizations are
also conducting research and development activities. These organizations are
seeking patent protection, and may commercialize products and technologies on
their own or through joint ventures that are competitive with our products and
technologies. The existence of products and technologies of which we are not
aware, or those that may be developed in the future, may adversely affect the
marketability of the products and technologies that we have developed.

The development of a DHA-containing fish oil for infant formula
applications provides an alternative to our DHA nutritional oil. Fish oil is
significantly less costly than our DHA oil, and therefore presents a
substantial competitive threat to our DHA product line. Although fish oil is a
lower cost product relative to our DHA, it has odor, stability and taste
characteristics that may limit its usefulness in food products. Several large
companies, including BASF and F. Hoffman-LaRoche Ltd., have developed
microencapsulated fish oil products. Though microencapsulation of the oil
resolves much of the odor, stability and taste issues associated with fish oil,
it also considerably increases the cost of the product.

Published reports, however, have cited a number of fish oils as containing
chemical toxins not present in our oils. In addition, the combination of either
fish oil or microencapsulated fish oil with a microbial source of ARA for use
in infant formula would likely infringe upon our
patent position in several countries. Several large companies are promoting ARA oil, but we are
currently unable to evaluate whether any of these companies have the ability to
produce ARA oil, or whether these companies will present a competitive threat
to our ARA sales in the future.

The Ross Products Division of Abbott Laboratories submitted a GRAS notification
on January 2, 2002 seeking FDA concurrence that its fish oil source of DHA and
its fungal source of ARA are GRAS when used as ingredients in infant formula.
At this time, the notification continues to be under consideration by the FDA.

Celanese Ventures recently announced that one of its operating units,
Nutrinova, plans to market a DHA-rich microalgal oil to the food and beverage
and dietary supplement markets in the U.S. The microalgae are fermented and the
oil extracted to produce a product containing DHA. Evaluation is ongoing to
determine the competitiveness of their product with our DHA and when the
product is available, we will determine whether there are any issues relating
to our patents.

Small amounts of DHA and ARA can be derived from egg yolk lipids, but this
DHA and ARA are not in the same molecular form as that found in breast-milk
(i.e., phospholipid vs. triglyceride). DHA and ARA derived from egg yolks are
currently being added to infant formula by Milupa, which was acquired by Numico
in 1995 and DHA from egg yolks is also being added to baby food by Beechnut. We
believe that the processes to produce DHA and ARA from egg lipids are more
costly than the processes that we use for producing DHA and ARA from microbial
sources. Furthermore, the addition of DHA and ARA from egg yolks at levels
equivalent to those found in human milk will result in dietary levels of
lecithin and cholesterol far in excess of those found in human milk.

We believe that our nutritional oils have the following advantages over
fish oil and other currently available sources of DHA and ARA for use in infant
formula, as food ingredients, or as nutritional supplements:



| |  |  | our oils do not have the odor, stability, taste characteristics, or
impurities that may limit the usefulness of DHA derived from fish oil;                                                      
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our oils can be blended in a variety of mixtures in precise ratios
for specific applications;                                                                                                   
|
| |  |  | each of our oils is comprised of a fatty acid blend that has no
undesirable fatty acids in significant quantities such as EPA, which is
found in fish oil;                                      
|
| |  |  | our DHA and ARA-enriched oils are in an easily digestible
triglyceride form similar to that found in breast milk, but different
from that in fish oils, fish eye-socket oils or egg yolk lipids;
|
| |  |  | our oils do not contain substances found in fish oil such as
methylmercury, polychlorinated biphenyls (PCBs), dioxins, and other
contaminants;                                                  

11



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| |  |  | our oils have a higher oxidative stability and longer shelf life than
fish oil and are, therefore, amenable to the spray drying process
required for powdered formula; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our oils can be produced in large quantities under controlled
conditions satisfying strict regulatory scrutiny.                                                           

Furthermore, our oils are the only DHA and ARA oils cleared by the FDA for
inclusion in infant formula in the U.S.

There may be other competitive sources of DHA and ARA of which we are not
aware. The fact that many of the companies mentioned above are larger, more
experienced and better capitalized than us raises the significant risk that
these companies may be able to use their resources to develop less costly
sources of DHA and ARA than our current technology permits.

In the area of advanced detection, our major competitors consist of life
science reagent suppliers such as Amersham Pharmacia, Molecular Probes, Prozyme
and Cyanotech. Our diagnostic products compete primarily on the basis of
product efficacy, safety, patient convenience, reliability, price and
proprietary position.

Our competitive position will also depend on our ability to attract and
retain qualified scientific and other personnel, develop effective proprietary
products, implement production and marketing plans, obtain patent protection
and secure adequate capital resources.

PATENTS, LICENSES AND PROPRIETARY TECHNOLOGY

We have received numerous patents protecting our nutritional products
technology, including the fermentation methods of producing our DHA and ARA
oils, as well as the blending of DHA and ARA oils for use in infant formula. In
1994, we received a U.S. patent covering certain blends of a microbial oil
enriched with DHA and a microbial oil enriched with ARA, as well as the use of
such blends in infant formulas. In 1995, we received a U.S. patent covering a
process for making an edible oil containing DHA and the edible oil made by such
process as well as a U.S. patent covering an infant formula comprising a
specified edible oil containing DHA. In 1996 we received two additional U.S.
patents covering our nutritional oils technology. The first patent protects
pharmaceutical compositions and dietary supplements comprising a single cell
oil in concentrations of at least 20% DHA in a triglyceride form made using our
method of producing DHA oil. The second patent clarifies that our patent
coverage includes the blending, in infant formula and nutritional supplements,
of microbially derived ARA oil with low EPA fish oils. Fish oil is a potential
competitive source of DHA to Marteks algal-derived DHA oil. This patent will
make it more difficult for low EPA fish oils to be combined with microbial
sources of ARA oils without violating our patents. A U.S. patent was granted in
1997, which protects the production, use and sale of oils rich in ARA (30% or
greater concentration). In 1998, a U.S. patent was issued protecting our
DHA-rich algal biomass. DHA-rich algal biomass is the raw product of the DHA
fermentation process and represents an inexpensive source of DHA that may
potentially be a low cost product itself. We also have been awarded a number of
foreign patents covering various aspects of our nutritional oils, including
European patents covering our DHA and ARA-rich oils, as well as the blending of
these oils for use in infant formula.

As a result of the purchase of OmegaTech, we now own the former OmegaTech
patents and applications. These patents and applications cover algae
fermentation processes, lipid extraction/purification, genomic-based approaches
to lipid production, arachidonic acid production and use, animal feeding
protocols, and food applications for PUFAs. From 1992 to 2001, six U.S.
patents were issued covering the use of algae in the production of omega-3
PUFAs (e.g., DHA), and the use of such PUFAs in such products as human food,
animal feed, aquaculture and the resulting fortified meat, seafood, milk and
eggs. Additional patent applications directed to this technology are still
pending. From 1994 to 2002, seven U.S. patents were issued covering the
fermentation of microorganisms in low chloride fermentation medium. Small
microorganisms, the use of such microorganisms in aquaculture, and the
resulting products are also claimed. Additional patent applications covering
this technology are still pending. From 1996 to 2001, four U.S. patents issued
covering the use and production of ARA using a variety of fungi.Additional
patent applications covering this technology are still pending. Other U.S.
patents have issued and a number of patents are pending worldwide.

Our success is dependent in part on our ability to obtain and maintain
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, where
appropriate, and in other cases, through trade secrets. Additionally, in
certain cases, we rely on the licenses of patents and technology of third
parties. We hold approximately 47 U.S. patents, covering various aspects of our
technology, which will expire on various dates between 2007 and 2021. We have
filed, and intend to file, applications for additional patents covering both
our products and processes as appropriate. Currently, we have approximately 384
issued patents and pending applications worldwide. There can be no assurance
that:



| |  |  | any patent applications filed by, assigned to, or licensed to us will be granted;                                             
| | - |  | ------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | we will develop additional products that are patentable;                                                                      
|
| |  |  | any patents issued to or licensed by us will provide us with any
competitive advantages or adequate protection for inventions;
|
| |  |  | any patents issued to or licensed by us will not be challenged,
invalidated or circumvented by others; or                     

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| |  |  | issued patents, or patents that may be issued, will provide protection
against competitive products or otherwise be commercially valuable.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------

Furthermore, patent law relating to the scope of claims in the fields of
health care and biosciences is still evolving, and 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 are both costly and time
consuming, even if the outcome is ultimately in our favor. An adverse outcome
could subject us to significant liabilities to third parties, require disputed
rights to be licensed from third parties or require us to cease selling the
affected products.

We are the exclusive licensee of two U.S. patents and numerous foreign
patent applications covering production, sale and use of our Sensilight dyes.

We currently have several challenges to our European patents covering our DHA
oils, ARA oils and DHA and ARA blended oils and these challenges are described in Item 3
of Part I.

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 believe that additional challenges to our
suite of U.S. patents may arise in the future. We will likely incur substantial
costs in the future defending our patents.

If we fail to maintain patent protection for our nutritional oils, it
would have a material adverse effect on our ability to gain a competitive
advantage for these oils and may have a material adverse effect on our results
of operations, particularly future sales of our nutritional oils, future
royalties on sales of infant formula containing these oils or license fees
related thereto. In particular, if we fail to maintain patent protection, it
would permit our competitors to produce products that would be directly
competitive with our nutritional oils using similar or identical processes, and
it is possible that our current infant formula manufacturers under license or
those which may be under license in the future may choose formula ingredients
from these competitors if they choose to include the ingredients in their
formulas at all.

We also rely on trade secrets and proprietary know-how, which we seek to
protect in part by confidentiality agreements with our collaborators, employees
and consultants. There can be no assurance that these agreements will not be
breached, that we will have adequate remedies for any such breach or that our
trade secrets will not otherwise become known or be independently developed by
competitors.

GOVERNMENT REGULATION AND PRODUCT TESTING

Our products and our manufacturing and research activities are subject to
varying degrees of regulation by a number of state and federal regulatory
authorities in the United States, including the Food and Drug Administration
(FDA) pursuant to the Federal Food, Drug and Cosmetic Act (the FDC Act).
The products developed by us are subject to potential regulation by FDA as food
ingredients, dietary supplements, drugs and/or medical devices. The regulatory
status of the product is largely determined by its intended use.

Drugs and medical devices generally may not be marketed without first
obtaining FDA authorization to do so. New infant formulas also are subject to
premarket notification requirements. Although there are no premarket
authorization requirements for whole foods per se, there are premarket approval
requirements for food additives. Specifically exempt from the food additive
definition and, therefore, the premarket approval requirements, are generally
recognized as safe (GRAS) food ingredients. Dietary supplements for the most
part are not subject to premarket authorization requirements, although there is
a premarket notification requirement for certain new dietary ingredients that
were not marketed as dietary supplements prior to October 1994. The FDA has
established detailed good manufacturing practice (GMP), labeling and other
requirements for drugs, medical devices, infant formulas, foods and dietary
supplements. The requirements for drugs, medical devices and infant formulas
generally are much more stringent than the requirements for foods and dietary
supplements.

Our infant formula licensees are responsible for obtaining the requisite
regulatory clearances to market their products containing our oils. Sales of
our products outside the United States are subject to foreign regulatory
requirements that may vary widely from country to country. Five of our infant
formula licensees have obtained the regulatory approval, where required, to
sell term or pre-term infant formula supplemented with our oils in over 60
countries.

On May 17, 2001, we received notice from the FDA that after completing its
review of our generally recognized as safe (GRAS) notification, the agency
had no further questions regarding our conclusion that our DHASCO® and ARASCO®
oil blend is GRAS when used in specified ratios in infant formulas. In 2002,
three of our infant formula licensees; Mead Johnson Nutritionals, the Ross
Products Division of Abbott Laboratories and Wyeth Nutritionals, received
clearance from the FDA to sell term infant formulas supplemented with our oils
in the United States. Mead Johnson Nutritionals, and the Ross Products Division
of Abbott Laboratories also received clearance for pre-term supplemented infant
formulas. Accordingly, U.S. sales of supplemented infant formulas manufactured
by these licensees commenced in 2002.

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The Federal Dietary Supplement Health and Education Act of 1994 (DSHEA)
regulates the use and marketing of dietary supplements. We are currently
marketing several lines of DHA dietary supplements; Neuromins®, Neuromins® PL
and DHAGold®. In addition, we are researching and developing new applications
for our DHA and ARA oils. We believe that our DHA and ARA are not subject to
premarket notification requirements when marketed for use as dietary
supplements. There can be no assurance that the FDA would agree that a
premarket notification is not required or that we will be able to comply with
the requirements of DSHEA or any regulations that the FDA may promulgate
thereunder.

Our fluorescent detection and other products derived from microalgae are
subject to potential regulation by 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. Such
classification would subject the products to premarket clearances and/or
regulatory approvals. There can be no assurances that Martek or our licensees
or collaborators would be able to develop the extensive safety and efficacy
data needed to support such FDA premarket authorizations or that FDA ultimately
would authorize the marketing of such products on a timely basis, if at all.

For potential pharmaceutical uses of products derived from microalgae,
there can be no assurance that required clinical testing will be completed
successfully within any specified time period, if at all, with respect to our
products. Additionally, there is no assurance that Martek or our licensees or
collaborators will be able to develop the extensive data needed to establish
the safety and efficacy of these products for approval for drug uses, or that
such drug products will not be subject to regulation as biological products or
as controlled substances, which would affect marketing and other requirements.

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

Due to the cost and time commitment associated with the FDA regulatory
process, as well as our lack of experience in obtaining FDA regulatory
clearances, we will decide on a product-by-product basis whether to handle
relevant clearance and other requirements independently or to assign such
responsibilities to our licensees or future collaborative partners. There can
be no assurance that Martek or our licensees or collaborators will be able to
obtain such regulatory clearances, if required, on a timely basis or at all.
Delays in receipt of, or failure to receive, such clearances, the loss of
previously received approvals or clearances, or failure to comply with existing
or future regulatory requirements would have a material adverse effect on our
business, financial condition and results of operations.

In connection with the manufacture of certain of our products, we are
required to adhere to applicable current GMP requirements as required by the
FDA. GMP regulations specify component and product testing standards, control
quality assurance requirements, and records and other documentation controls.
The GMP requirements for foods, infant formulas, drugs and medical devices vary
widely. As the manufacturer of DHA and ARA that are marketed as dietary
supplements and used as ingredients in infant formulas sold in the United
States, we are subject to GMP and various other requirements applicable to
infant formulas and dietary supplements. There can be 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.
Ongoing compliance with GMP and other applicable regulatory requirements is
monitored through periodic inspections by state and federal agencies, including
the FDA and comparable agencies in other countries. 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, and, in
the most egregious cases, criminal sanctions.

As a large scale manufacturing facility, our plant in Winchester, KY is
required to abide by all state and federal regulations established by the
Environmental Protection Agency (EPA) as well as all safety regulations
prescribed by the Occupational Safety and Health Administration (OSHA). In
addition to the normal standards for heavy industrial manufacturing facilities,
our solvent extraction process includes the use of hexane, which is extremely
flammable and subject to emission restrictions. Ongoing compliance with
these regulations is monitored by periodic inspections by the EPA and OSHA. If
we fail to abide by regulations we could receive fines, or if
the violations were serious enough, our operations could be shut down until the
problems are fixed. Such penalties could have a material adverse effect on our
ability to manufacture our nutritional oils, and our financial results could be
negatively impacted.

The
Federal Trade Commission (FTC) regulates certain aspects of the advertising and marketing of our products.
Under the Federal Trade Commission Act, a company must be able to
substantiate both the express and implied claims that are conveyed by an
advertisement. It is not uncommon for the FTC to conduct an investigation of
the claims that are made about products in new and emerging areas of science
that involve a potentially vulnerable population such as infants. In May 2002, we received
a letter from the FTC notifying us that they were conducting a non-public
inquiry into the advertising and promotional activities surrounding our DHA and
ARA products. While we have no reason to believe that their inquiry will have
an adverse effect on us, we could be required to alter our advertising claims
or take other remedial steps if the FTC does not find our advertising claims to
be adequately substantiated.

EMPLOYEES

As of October 31, 2002, we had 198 full-time employees, of whom one has an
M.D. and 20 have Ph.D.s. Approximately 60

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employees are engaged in research and development and contract related research
and development activities, 96 are engaged in production or production
development related activities and 42 are in administrative, business
development, and sales and marketing positions. We consider relations with our
employees to be good. None of our employees are covered by a collective
bargaining agreement.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Our Directors are as follows:

Jules Blake, Ph.D.Member  Audit Committee.
Age 78         Dr. Blake served as Vice President of Research and Development, and
later Vice President, Corporate Scientific Affairs, for Colgate-Palmolive from
1973 until 1989. Following his retirement in 1989, Dr. Blake accepted an
appointment as Industrial Research Institute Fellow at the Office of Science
and Technology Policy, Executive Office of the President, where he served until
1991. Dr. Blake also serves as a director for Gene Logic, Inc. (biotechnology).
Dr. Blake has been a director of the Company since 1990. His term expires in
2005.

Ann L. Johnson, M.D.Member  Compensation Committee.
Age 66          Dr. Johnson has served as a physician on the neonatology staff of
Mills Peninsula Hospital since 1992. Dr. Johnson has a private practice in
psychiatry and psychopharmacology. Dr. Johnson has been a director of the
Company since March 1995. Her term expires in 2005.

Sandra Panem, Ph.D.Member  Audit Committee.
Age 56          Dr. Panem is a partner in Cross Atlantic Partners, an investment
company specializing in biotechnology and healthcare. Prior to 1999, Dr. Panem
was President of Vector Fund Management, L.P. (VFM), which focused on
later-stage companies. Prior to joining VFM, she served as Vice President and
Portfolio Manager for the Oppenheimer Global BioTech Fund, a mutual fund that
invested in public and private biotechnology companies. Prior to joining
Oppenheimer, Dr. Panem was a Vice President at Salomon Brothers Venture
Capital, a fund focused on early and later-stage life sciences and technology
investments. Dr. Panem has been a director of the Company since May 1995. Prior
to that time, she served as a director from June 1990 until February 1993. Dr.
Panem also serves as a director for Bioject, Inc. (healthcare equipment
manufacturer). Her term expires in 2005.

Henry Linsert, JrChairman, Chief Executive Officer and Director
Age 62          Mr. Linsert joined Martek as Chairman of the Board in 1988 and
became Chief Executive Officer in 1989. From 1987 to 1988 he was primarily
engaged as President of American Technology Investments Corp., a consulting
company specializing in the development and financing of early stage companies
in the Mid-Atlantic area. He was President and Chief Executive Officer of
Suburban Capital Corporation, a venture capital subsidiary of Sovran Financial
Corporation (now Bank of America), from 1983 to 1987. Prior to 1983, Mr.
Linsert was Vice President of Inverness Capital Corporation, a small business
investment company, and Vice President of First Virginia Bank. He also served
as a Captain in the U.S. Marine Corps and as an artillery officer in Vietnam.
He received an M.A. in economics from George Washington University and a B.A.
from Duke University. His term expires in 2005.

Douglas J. MacMaster, Jr.Member  Compensation Committee, Nominating and
Governance Committee.
Age 72          Mr. MacMaster served in various management positions at Merck &
Co., Inc. (Merck) from 1961 to 1988, at which time he was appointed Senior
Vice President responsible for ten divisions, including Manufacturing and
Technology, and Pharmaceutical Manufacturing. Mr. MacMaster retired from Merck
in 1991 and currently serves as a director for Neose Technologies, Inc.
(biotechnology) and Stratton Mutual Funds. Mr. MacMaster has been a director of
the Company since 1993. His term expires in 2004.

John H. MaharMember  Compensation Committee.
Age 68          Mr. Mahar has served as President of Hillside Management, a
consulting firm, since 1992. From 1991 to 1992, Mr. Mahar was a Vice President
at Salomon Brothers Inc., serving as a principal for the Venture Capital Fund.
From 1985 to 1991, Mr. Mahar was Executive Vice President and Chief Operating
Officer of Elf Technologies, Inc., a venture capital firm. Mr. Mahar was
reelected as a director of the Corporation in February 1993. Prior to that
time, he served as a director of the Company from 1988 until 1991. His term
expires in 2004.

Eugene H. RotbergMember  Audit Committee, Nominating and Governance
Committee.
Age 73          Since 1990, Mr. Rotberg has been an independent advisor to
international development and financial institutions. From 1987 to 1990, Mr.
Rotberg was Executive Vice President and a member of the Executive Committee at
Merrill Lynch & Co., Inc. From 1969 to 1987, Mr. Rotberg was Vice President and
Treasurer of the World Bank. Mr. Rotberg has been a director of the Company
since 1992. His term expires in 2004.

Gordon S. MacklinMember  Audit Committee, Nominating and Governance
Committee.
Age 74          Mr. Macklin serves as Deputy Chairman for White Mountains Insurance
Group, Ltd, and is a director of MedImmune, Inc. (biotechnology), Overstock.com
(internet sales), Spacehab, Inc. (aerospace technology) and director, trustee,
or managing general partner, as the case may be, for 48 of the investment
companies in the Franklin Templeton Group of Funds. Mr. Macklin was formerly
the Chairman of White River Corporation (financial services), the President of
the National Association of Securities Dealers, Inc. (1970  1987) and the
Chairman of Hambrecht and Quist Group. Mr. Macklin has been a director of the
Company since November

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1998. His term expires in 2003.

William D. SmartMember  Compensation Committee, Nominating and Governance
Committee.
Age 76          From 1955 until his retirement in 1987, Mr. Smart served in a
variety of capacities for Abbott Laboratories, a pharmaceutical and healthcare
company, most recently as President of Ross Laboratories, the nutritional
products division of Abbott Laboratories, and Corporate Vice President of
Abbott Laboratories. Mr. Smart has been a director of the Company since 1991.
His term expires in 2003.

Robert J. Flanagan
Age 47         Mr. Flanagan is Executive Vice President of Clark Enterprises, Inc.
(Clark), one of the largest privately-held construction companies in the
country. Prior to joining Clark, Mr. Flanagan was the treasurer, secretary and
member of the board of directors of the Baltimore Orioles, Inc. and was also
employed as a member of Arthur Andersens audit division in the Washington, D.
C. office. Certified as a public accountant in Washington, D. C., Mr. Flanagan
received a bachelors degree in business administration from Georgetown
University and a masters degree in taxation from the American University
School of Business. Mr. Flanagan has been a director of the Company since April
2002. His term expires in 2003.

Dr. Richard J. RadmerPresident, Chief Scientific Officer and Director
Age 60         Dr. Radmer, a founder of Martek, has served since 1985 as a
director and as President and Chief Scientific Officer of the Company. Prior to
1985, he worked for 17 years at Martin Marietta Corp. where he headed the
Biosciences Department which performed research to develop new products from
microalgae, among other activities. He has served as an Adjunct Associate
Professor and Associate Member of the Graduate Faculty at the University of
Maryland. Dr. Radmer received a Ph.D. in biology, an M.S. in botany and a B.S.
in biochemistry from the University of Chicago. He completed his Ph.D. studies
while in residence at Harvard University. His term expires in 2003.

Executive Officers (in addition to Messrs. Linsert & Radmer):

Thomas C. FisherSenior Vice President, Operations
Age 56         Mr. Fisher joined Martek in 1991 and was named Senior Vice
President of Operations in 1992 after 18 years with Merck and Dupont-Merck. Mr.
Fishers last position was Vice President for Technical Operations at
Dupont-Merck, and in that capacity he was responsible for world-wide
pharmaceutical production, quality control and engineering. During his tenure
at Merck, Mr. Fisher was Director of Biological Manufacturing and held
management positions in sterile operations, development and quality control.
Mr. Fisher received an M.S. in genetics from West Virginia University and a
B.S. in biology from Waynesburg College.

Jerome C. KellerSenior Vice President, Sales & Marketing
Age 60         Mr. Keller joined Martek in September 1997 as Senior Vice President
of Sales and Marketing. Prior to joining Martek, Mr. Keller had been consulting
after spending a 25-year career at Merck, most recently as Vice President of
Sales from 1986 to 1993. In this position, he was responsible for all U.S.
sales operations, including the direction of a support staff of 4,500 personnel
and a sales volume of $4.2 billion. Some of the products introduced under Mr.
Keller included Pepcid, Mefoxin, Primaxin, Vasotec, Mevocor, Zocor, Proscor and
Prilosec. Mr. Keller has a M.S. degree from the University of Pittsburgh and a
B.S. degree from Duquesne University.

George P. BarkerSenior Vice President, General Counsel and Secretary
Age 63         Mr. Barker joined Martek in June 2000 as Senior Vice President,
General Counsel and Secretary. Prior to joining Martek, Mr. Barker was Senior
Vice President of Howard County General Hospital, Inc: A Member of Johns
Hopkins Medicine and its affiliate Howard County Health Services, Inc. In this position, Mr. Barker had both legal and business responsibilities. From 1982
to 1991, Mr. Barker was Senior Vice President for Development, General Counsel
and Secretary of The Enterprise Development Company, a real estate development
company located in Columbia, Maryland. Prior to 1982, Mr. Barker held positions
as a partner of a Baltimore, Maryland, law firm and Associate General Counsel
and Assistant Secretary of The Rouse Company, a real estate development company
also located in Columbia, Maryland. Mr. Barker has an A.B. degree from
Princeton University and a LL.B. degree from Columbia University.

Peter L. BuzyChief Financial Officer and Treasurer
Age 43         Mr. Buzy joined Martek in March 1998 as Chief Financial Officer.
Prior to joining Martek, Mr. Buzy spent 13 years with the accounting firm of
Ernst & Young LLP, most recently as an audit partner in the Northern Virginia
High Technology/Life Sciences Practice. Mr. Buzy is a Certified Public
Accountant and a member of the American Institute of Certified Public
Accountants. He received his B.S. in accounting from Salisbury State
University.

James H. Flatt Ph.D.
Age 43         Dr. Flatt joined Martek in April 2002 as Senior Vice President,
Research and Development. Prior to joining Martek, Dr. Flatt was the Vice
President of Research and Development for OmegaTech, Inc., a DHA producer in
Boulder, Colorado that was acquired by Martek in April 2002. In his position
with OmegaTech, Dr. Flatt managed all corporate research and development,
including discovery, ingredient technology, food and analytical sciences and
process development. Prior to joining OmegaTech, Dr. Flatt held a position at
Proctor and Gamble and, most recently, was Vice President of Fermentation and
Process Research for the Kelco division of Merck, where he led the development
and commercialization of several major new products and processing
technologies.

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Dr. Flatt is the author of six patents and numerous professional papers. He
received his B.S. in chemical engineering from the Massachusetts Institute of
Technology, his M.S. in chemical engineering from the University of California
 Berkeley, and his Ph.D. in chemical and biochemical engineering from the
University of Wisconsin  Madison.

COMPANY

Martek was incorporated in Delaware in 1985. Marteks principal executive
offices are located at 6480 Dobbin Road, Columbia, MD 21045. Our telephone
number is (410) 740-0081 and out website address is http://www.martekbio.com .
We make our annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to these reports available on our
website free of charge as soon as practicable after we file with the SEC.

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ITEM 2. PROPERTIES.

We lease an aggregate of approximately 43,000 square feet of laboratory,
manufacturing, technical and administrative space in Columbia, Maryland,
approximately 17,000 square feet of which is currently being subleased. Our
lease expires in 2004, but we have an option to extend the lease through 2009
at the expiration of the initial lease.

We also lease an aggregate of approximately 14,000 square feet of laboratory,
technical and administrative space in Boulder Colorado. The lease expires in
May 2005.

We own a fermentation and oil processing facility in Winchester, KY where
we produce oils rich in DHA and ARA using our proprietary technology. The
facility is located on eight acres and occupies approximately 78,000 square
feet holding three 267,000 liter, two 140,000 liter and one 90,000 liter
production fermentation vessels and supporting equipment.

ITEM 3. LEGAL PROCEEDINGS.

Aventis S.A. and Nagase & Co. Ltd. are challenging our European patent
covering our DHA-containing oils. At a hearing in October, 2000, the Opposition
Division of the EPO revoked our patent on the grounds that it is not novel. We
immediately appealed this ruling, and in July 2002 we received a positive
ruling from an Appeal Board of the EPO, setting aside the prior decision to
revoke this patent. Consistent with the request, the patent will now be
returned to the Opposition Division for a determination as to whether it has
met the legal requirement of inventive step. During this process the patent
will remain in full force and effect. The appeal process may not be completed
until some time in 2004, at the earliest.

With respect to our ARA patent issued by the EPO, BASF A.G., F. Hoffman 
LaRoche A.G., Societe des Produits Nestle S.A., and Suntory Limited have filed
their grounds for opposing this patent with the Opposition Division of the EPO.
The validity of the patent is unaffected by these filings. The opposition
process is not expected to be completed until sometime in 2005, at the
earliest.

With respect to our blended-oil (blend of DHA and ARA oils for use in
various applications, including infant formula) patent issued by the EPO, BASF
A.G., F. Hoffman  LaRoche A.G., Friesland Brands B.V., Societe des Produits
Nestle S.A., and Suntory Limited have filed their grounds for opposing this
patent with the Opposition Division of the EPO. The validity of the patent is
unaffected by these filings. The opposition process is not expected to be
completed until sometime in 2006, at the earliest.

Prior to our purchase of OmegaTech, Aventis Research and Technologies GmbH
& Co. KG, and Nagase Biochemicals challenged OmegaTechss European patent
covering its DHAcontaining oils. At a hearing in December,
2000, the Opposition
Division of the EPO upheld some of the claims and revoked other claims.
OmegaTech immediately appealed this ruling, as did Aventis. During the appeal
process the patent will remain in full force and effect. The appeal process may
not be completed until sometime in 2004, at the earliest.

We are not a party to any other material legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were voted upon during the fourth quarter of 2002.

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PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The information set forth under the caption Price Range of Common Stock
and Stock Description and Form 10-K on page 28 of our Annual Report to
Stockholders for the fiscal year ended October 31, 2002, is included herein as
Exhibit 13.01, and those portions are incorporated by reference into Part II of
this report. We have not declared any cash dividends during the two-year
period ending October 31, 2002.

ITEM 6. SELECTED FINANCIAL DATA.

The information set forth under the caption Selected Financial Data on
page 6 of our Annual Report to Stockholders for the fiscal year ended October
31, 2002, is included herein as Exhibit 13.01, and that portion of the annual
report is incorporated by reference into Part II of this Report.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The information set forth under the caption Managements Discussion and
Analysis of Financial Condition and Results of Operations on pages 7 through
13 of our Annual Report to Stockholders for the fiscal year ended October 31,
2002, is included herein as Exhibit 13.01, and that portion is incorporated by
reference into Part II of this Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information set forth under the caption Managements Discussion and
Analysis of Financial Condition and Results of Operations  Quantitative and
Qualitative Disclosures About Market Risk on page 13 of our Annual Report to
Stockholders for the fiscal year ended October 31, 2002, is included herein as
Exhibit 13.01, and that portion is incorporated by reference into Part II of
this Report.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our 2002 Audited Financial Statements and Report of Independent Auditors
by Ernst & Young LLP set forth on pages 14 through 27 of our Annual Report to
Stockholders for the fiscal year ended October 31, 2002, is included herein as
Exhibit 13.01, and those portions are incorporated by reference into Part II of
this Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Information relating to our Directors and Executive Officers is set forth
in Part I of this report under the caption Item 1  Business Directors and
Executive Officers of the Registrant. The additional
information required by this item is hereby incorporated by reference
from the information to be contained in our 2003 Definitive Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this item is hereby incorporated by reference
from the information to be contained in our 2003 Definitive Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by this item is hereby incorporated by reference
from the information to be contained in our 2003 Definitive Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this item is hereby incorporated by reference
from the information to be contained in our 2003 Definitive Proxy Statement.

ITEM 14. CONTROLS AND PROCEDURES.

a) Evaluation of Disclosure Controls and Procedures.The Chief Executive
Officer and the Chief Financial Officer have reviewed our disclosure controls
and procedures as of a date within the 90-day period prior to the filing of
this annual report (the Evaluation Date). Based on that review, they have
concluded that, as of the Evaluation Date, these controls and procedures were,
in design and operation, effective to assure that the information required to
be included in this report has been properly collected, processed, and timely
communicated to those responsible in order that it may be included in this
report.

b) Changes in Internal Controls.Subsequent to the Evaluation Date, there
have been no significant changes, including corrective actions, in our internal
controls or in other factors that could significantly affect the disclosure
controls and procedures.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)(1) Financial Statements

The following Financial Statements and Report of Independent Auditors set
forth on the pages indicated in our Annual Report to Stockholders for the year
ended October 31, 2002 are included in Exhibit 13.01 to this report and are
incorporated into Item 8 of Part II of this Report:

|                                                                                                    |  |                            |    | 
|--------------------------------------------------------------------------------------------------- |  | -------------------------- | -- | 
|                                                                                                    |  | Page(s)in Company's Annual
|                                                                                                    |  | Report to Stockholders    
|                                                                                                    |  |                           
|Consolidated Balance Sheets as of October 31, 2002 and 2001                                         |  |                            | 14 | 
|Consolidated Statements of Operations for the Years Ended
October 31, 2002, 2001 and 2000           |  |                            | 15 | 
|Consolidated Statements of Stockholders Equity for the
Years Ended October 31, 2002, 2001 and 2000 |  |                            | 16 | 
|Consolidated Statements of Cash Flows for the Years Ended
October 31, 2002, 2001 and 2000           |  |                            | 17 | 
|Notes to Consolidated Financial Statements                                                          |  |                            | 18 | 
|Report of Independent Auditors                                                                      |  |                            | 27 | 

(a)(2) Financial Statement Schedules



| |  | Financial statement schedules have been omitted since they are either not
required, not applicable, or the information is otherwise included in the
financial statements.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(a)(3) Exhibits



| |  | See Index to Exhibits on pages 26 through 28. The Exhibits listed in the
accompanying Index to Exhibits are filed or incorporated by reference as
part of this report.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

b) Reports on Form 8-K

Form 8-K (Item 9 reported) filed on September 16, 2002.

Separately, the Chief Executive Officer and the Chief Financial Officer have
submitted certifications to the SEC required by Section 906 of the Sarbanes -
Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized on January 29 , 2003.

| |  |                                                         |  |                        | 
| |  | ------------------------------------------------------- |  | ---------------------- | 
| |  | MARTEK BIOSCIENCES CORPORATION                         
| |  |                                                         |  |                       
| |  | By                                                      |  | /s/ Henry Linsert, Jr.
| |  |                                                         |  |                       
| |  | Henry Linsert, Jr.
Chief Executive Officer
and Director

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Henry Linsert, Jr. and Peter L. Buzy, and each of them
individually, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and his name, place and stead
in any and all capacities, to sign the report and any and all amendments to
this report, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, full power and authority to
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or their substitutes, may lawfully do or cause to be done by virtue
thereof.

Pursuant to the requirement of the Securities Exchange Act of 1934, this Report
has been signed by the following persons in the capacities and on the date
indicated.

|                                                        |  |                                                                    |  |                 
|------------------------------------------------------- |  | ------------------------------------------------------------------ |  | ----------------
|Signatures                                              |  | Title                                                              |  | Date            
|                                                        |  |                                                                    |  |                 
|/s/ Henry Linsert, Jr.

Henry Linsert, Jr.              |  | Chief Executive Officer
and Director (Principal
Executive Officer) |  | January 29, 2003
|                                                        |  |                                                                    |  |                 
|/s/ Peter L. Buzy

Peter L. Buzy                        |  | Principal Financial and
Accounting Officer                         |  | January 29, 2003
|                                                        |  |                                                                    |  |                 
|/s/ Jules Blake

Jules Blake                            |  | Director                                                           |  | January 29, 2003
|                                                        |  |                                                                    |  |                 
|/s/ Robert J. Flanagan

Robert J. Flanagan              |  | Director                                                           |  | January 29, 2003
|                                                        |  |                                                                    |  |                 
|/s/ Ann L. Johnson

Ann L. Johnson                      |  | Director                                                           |  | January 29, 2003
|                                                        |  |                                                                    |  |                 
|/s/ Gordon S. Macklin

Gordon S. Macklin                |  | Director                                                           |  | January 29, 2003
|                                                        |  |                                                                    |  |                 
|/s/ Douglas J. MacMaster, Jr.

Douglas J. MacMaster, Jr |  | Director                                                           |  | January 29, 2003

22



---



##### 



|                                         |  |                        |  |                 
|---------------------------------------- |  | ---------------------- |  | ----------------
|Signatures                               |  | Title                  |  | Date            
|                                         |  |                        |  |                 
|/s/ John H. Mahar

John H. Mahar         |  | Director               |  | January 29, 2003
|                                         |  |                        |  |                 
|/s/ Sandra Panem

Sandra Panem           |  | Director               |  | January 29, 2003
|                                         |  |                        |  |                 
|/s/ Richard J. Radmer

Richard J. Radmer |  | President and Director |  | January 29, 2003
|                                         |  |                        |  |                 
|/s/ Eugene J. Rotberg

Eugene H. Rotberg |  | Director               |  | January 29, 2003
|                                         |  |                        |  |                 
|/s/ William D. Smart

William D. Smart   |  | Director               |  | January 29, 2003

23



---



##### 



CERTIFICATIONS

I, Henry Linsert, Jr., certify that:

1.     I have reviewed this annual report on Form 10-K of Martek Biosciences
Corporation;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: January 29, 2003

/s/ Henry Linsert,
Jr.
Henry Linsert, Jr.
Chief Executive Officer and Director

24



---



##### 



I, Peter L. Buzy, certify that:

1.     I have reviewed this annual report on Form 10-K of Martek Biosciences
Corporation;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: January 29, 2003

/s/ Peter L. Buzy
Peter L. Buzy
Chief Financial Officer

25



---



##### 



EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                                              
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                                                                                                                                                                                              
|NUMBER  |  | DESCRIPTION                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                              
|3.01    |  | Revised Restated Certificate of Incorporation of Registrant.                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                              
|3.02    |  | Amendment to the Restated Certificate of Incorporation, effective March
14, 1995 (filed as Exhibit 3.1 to the Companys Registration Statement on
Form S-3, File No. 33-89760, filed March 15, 1995, and incorporated by
reference herein).                                                                  
|        |  |                                                                                                                                                                                                                                                                                                              
|3.03    |  | Certificate of Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock (filed as Exhibit 4 to the Companys Form
8-K, File No. 0-22354, filed January 29, 1996, and incorporated by
reference herein).                                                                          
|        |  |                                                                                                                                                                                                                                                                                                              
|3.04    |  | Amended By-Laws of Registrant.                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                              
|3.05    |  | Amendment to By-Laws, effective March 14, 1995 (filed as Exhibit 3.2 to
the Companys Registration Statement on Form S-3, File No. 33-89760, filed
March 15, 1995, and incorporated by reference herein).                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                              
|3.06    |  | Amendment to Bylaws effective March 2, 2001 (filed as exhibit 3.06 to the
Companys 2001 Form 10-K, File No. 22354, and Incorporated by reference
herein).                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                              
|3.07    |  | Certificate of Amendment to the Restated Certificate of Incorporation of
Martek Biosciences Corporation (filed as exhibit 3.07 to the Companys
quarterly report on Form 10-Q, File No. 22354, for the quarter ended
January 31, 2002, and incorporated by reference herein).                                
|        |  |                                                                                                                                                                                                                                                                                                              
|3.08    |  | Martek Biosciences Corporation Amendment to By-laws effective April 25,
2002 (filed as exhibit 3.08 to the Companys quarterly report on Form
10-Q, File No. 22354, for the quarter ended April 30, 2002, and
incorporated by reference herein).                                                             
|        |  |                                                                                                                                                                                                                                                                                                              
|4.01    |  | Specimen Stock Certificate for Common Stock.                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                              
|4.02    |  | Common Stock and Warrant Purchase Agreements, dated May 19, June 1, June
6, and June 8, 1995, by and among the Company and the Selling Stockholders
(filed as Exhibit 4.2 to the Companys Registration Statement on Form S-3,
File No. 33-93580, filed June 16, 1995, and incorporated by reference
herein).
|        |  |                                                                                                                                                                                                                                                                                                              
|4.03    |  | Warrant No. 1 issued pursuant to Common Stock and Warrant Purchase
Agreements and Schedule of Warrants (filed as Exhibit 4.3 to the Companys
Registration Statement on Form S-3, File No. 33-93580, filed June 16,
1995, and incorporated by reference herein).                                             
|        |  |                                                                                                                                                                                                                                                                                                              
|4.04    |  | Form of Rights Agreement dated as of January 24, 1996 between the Company
and Registrar and Transfer Company, as Rights Agent (filed as Exhibit 1 to
the Companys Form 8-K, File No. 0-22354, filed January 29, 1996, and
incorporated by reference herein).                                                
|        |  |                                                                                                                                                                                                                                                                                                              
|4.05    |  | Form of First Amendment to Rights Agreement between the Company and
Registrar and Transfer Company, as Rights Agent (filed as Exhibit 99.1 to
the Companys Form 8-K, File No. 0-22354, filed November 9, 1998 and
incorporated by reference herein).                                                        
|        |  |                                                                                                                                                                                                                                                                                                              
|10.01   |  | Form Indemnification Agreement for directors.                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                              
|10.02   |  | 1986 Stock Option Plan, as amended.                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                              
|10.03   |  | 1992 Registration Rights Agreement between the Company and Preferred Stockholders.                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                              
|10.04   |  | Employment Agreement, dated May 4, 1990, between the Company and Henry Linsert, Jr.                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                              
|10.05   |  | Employment Agreement, dated May 7, 1990, between the Company and Richard J. Radmer.                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                              
|10.06   |  | Employment Agreement, dated May 7, 1990, between the Company and David J. Kyle.                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                              
|10.07   |  | Employment Agreement, dated May 7, 1990, between the Company and Paul W. Behrens.                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                              
|10.08   |  | Form of Proprietary Information, Inventions and Non-Solicitation Agreement.                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                              
|10.12   |  | Collaborative Research and License Agreement, dated April 30, 1993, as
amended June 11, 1993, between the Company and the Trustees of Columbia
University.                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                              
|10.13   |  | Lease, commencement date October 15, 1992, between the Company and Aetna
Life Insurance Company, as modified on August 5, 1993.                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                              
|10.14   |  | License Agreement, dated September 10, 1992, between the Company and
Bestuurcentrum Der Verenigde Bedrijven Nutricia B.V.*                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                              
|10.14A  |  | Exhibits to September 10, 1992 License Agreement between the Company and
Bestuurcentrum Der Verenigde Bedrijven Nutricia B.V.*                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                              
|10.15   |  | License Agreement, dated October 28, 1992, between the Company and Mead
Johnson & Company.*                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                              
|10.15A  |  | Exhibits to October 28, 1992 License Agreement between the Company and
Mead Johnson & Company.*                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                              
|10.16   |  | License Agreement, dated January 28, 1993 between the Company and
American Home Products Corporation represented by the Wyeth-Ayerst
Division (Domestic Version) and American Home Products Corporation
represented by its agent Wyeth-Ayerst International (International
Version).*                        
|        |  |                                                                                                                                                                                                                                                                                                              
|10.16A  |  | Exhibits to January 28, 1993 License Agreements between the Company and
American Home Products Corporation represented by the Wyeth-Ayerst
Division (Domestic Version) and American Home Products Corporation
represented by its agent Wyeth-Ayerst International (International
Version).*                  
|        |  |                                                                                                                                                                                                                                                                                                              
|10.17   |  | Management Cash Bonus Incentive Plan, dated June 10, 1993.                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                              
|10.18   |  | Lease Modification Agreement, dated October 14, 1993 between the Company
and Aetna Life Insurance Company.                                                                                                                                                                                                   

26



---



##### 



|        |  |                                                                                                                                                                                                                                                                                                                                                   
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                                                                                                                                                                                                                                   
|NUMBER  |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.19   |  | Letter of Intent, dated January 13, 1995, between the Company and Golden
Technologies Corporation (filed as Exhibit 10.19 to the Companys 1994
Form 10-K, File No. 0-22354, and incorporated by reference herein).                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.20   |  | Second Lease Modification Agreement, dated September 27, 1994, between
the Company and Aetna Life Insurance Company (filed as Exhibit 10.20 to
the Companys 1995 Form 10-K, File No. 0-22354, and incorporated by
reference herein).                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.21   |  | Purchase and Sale Agreement, dated February 16, 1995, between the
Company and Zeagan, Inc. filed as Exhibit 4.3 to the Companys
Registration Statement on Form S-3, File No. 33-89760, filed March 15,
1995, and incorporated by reference herein).                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.22   |  | Directors Stock Option Plan (filed as Exhibit 4.1(b) to the Companys
Registration Statement on Form S-8, File No. 33-79222, filed May 23, 1994,
and incorporated by reference herein).                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.23   |  | Manufacturing Agreement, dated December 31, 1996, between the Company
and DSM Food Specialties (formerly Royal Gist-Brocades B.V.)* (filed as
exhibit 10.23 to the Companys Annual Report on Form 10-K for the fiscal
year ended October 31, 1996).                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.24   |  | Martek Biosciences Corporation 1997 Stock Option Plan (filed as Exhibit
4.1(e) to the Companys Registration Statement on Form S-8, File No.
333-27671, filed May 22, 1997, and incorporated by reference herein).                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.25   |  | Third Amendment of Lease, dated August 1, 1997 between the Company and
M.O.R Columbia Limited Partnership (filed as exhibit 10.25 to the
Companys 1997 10-K, File No. 000-22354, and incorporated by reference
herein).                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.26   |  | Fourth Amendment of Lease, dated August 5, 1998 between the and M.O.R
Columbia Limited Partnership (filed as exhibit 10.26 to the Companys 1998
Form 10-K, File No. 22354, and incorporated by reference herein).                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.27   |  | Employment Agreement, dated January 16, 1998, between the Company and
Peter L. Buzy (filed as exhibit 10.27 to the Companys 1998 Form 10-K,
File No. 22354, and Incorporated by reference herein).                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.28   |  | Common Stock and Warrant Purchase Agreement, dated April 27, 1998, by
and among the Company and the Selling Stockholders (filed as exhibit 99.2
to the Companys Form 8-K, File No. 22354, dated April 27, 1998 and
incorporated by reference herein).                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.29   |  | Common Stock and Warrant Purchase Agreement, dated May 28, 1999, by and
among The Company and the Selling Stockholders (filed as exhibit 99.2 to
the Companys Form 8-K, File No. 22354, dated June 9, 1999 and
incorporated by reference herein).                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.30   |  | License Agreement, dated March 31, 2000 between the Company and Abbott
Laboratories * (filed as exhibit 10.30 to the Companys quarterly report
on Form 10-Q for the quarter ended April 30, 2000, and incorporated by
reference herein).                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.31   |  | Employment Agreement, dated June 1, 2000 between the Company and George
P. Barker. (filed as exhibit 10.31 to the Companys 2000 Form 10-K, File
No. 22354, and Incorporated by reference herein).                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.32   |  | Martek Biosciences Corporation 2001 Stock Option Plan (filed as Exhibit
10.01 to the Companys Registration Statement on Form S-8, filed on
November 16, 2001, and incorporated by reference herein).                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.33   |  | Common Stock and Warrant Purchase Agreement, dated February 28, 2001 by
and among the Company and the Selling Stockholders (filed as exhibit 99.2
to the Companys Form 8-K, File No. 22354, dated March 2, 2001 and
incorporated by reference herein).                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.34   |  | Common Stock Purchase Agreement, dated December 17, 2001 by and among
the Company and The Gordon S. Macklin Family Trust (filed as exhibit 10.34
to the Companys 2001 Form 10-K, File No. 22354, and Incorporated by
reference herein).                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.35   |  | Form of Common Stock Purchase Agreement, dated December 17, 2001 by and
among the Company and the Selling Stockholders Trust (filed as exhibit
10.35 to the Companys 2001 Form 10-K, File No. 22354, and Incorporated by
reference herein).                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.36   |  | Martek Biosciences Corporation Amended And Restated Management Cash
Bonus Incentive Plan effective April 25, 2002 (filed as exhibit 10.36 to
the Companys quarterly report on Form 10-Q, File No. 22354, for the
quarter ended April 30, 2002, and incorporated by reference herein).                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.37   |  | OmegaTech, Inc. 1996 Stock Option Plan, as amended on April 26, 2001
(filed as exhibit 10.37 to the Companys quarterly report on Form 10-Q,
File No. 22354, for the quarter ended April 30, 2002, and incorporated by
reference herein).                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.38   |  | Employment Agreement dated April 25, 2002 between the Company and Mark
A. Braman (filed as exhibit 10.38 to the Companys quarterly report on
Form 10-Q, File No. 22354, for the quarter ended April 30, 2002, and
incorporated by reference herein).                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.39   |  | Employment Agreement dated April 25, 2002 between the Company and James
Flatt (filed as exhibit 10.39 to the Companys quarterly report on Form
10-Q, File No. 22354, for the quarter ended April 30, 2002, and
incorporated by reference herein).                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.40   |  | Non-Statutory Stock Option Agreement Exercisable Only On Special Event
For Common Stock dated June 14, 1997 between OmegaTech, Inc. and Mark A.
Braman (filed as exhibit 10.40 to the Companys quarterly report on Form
10-Q, File No. 22354, for the quarter ended April 30, 2002, and
incorporated by reference herein).                       
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.41   |  | Settlement Terms Related to Arbitration of License Agreement Dated
September 15, 1993 between Pharmacia Corporation, on behalf of Monsanto,
and OmegaTech dated May 10, 2000 (filed as exhibit 10.41 to the Companys
quarterly report on Form 10-Q, File No. 22354, for the quarter ended April
30, 2002, and incorporated by reference herein).*
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.42   |  | Manufacturing Agreement between C.P. Kelco U.S. Inc. and OmegaTech, Inc.
dated October 19, 2001 (filed as exhibit 10.42 to the Companys quarterly
report on Form 10-Q, File No. 22354, for the quarter ended April 30, 2002,
and incorporated by reference herein).                                                                              

27



---



##### 



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|NUMBER  |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.43   |  | Agreement and Plan of Merger, dated March 25, 2002, by and among Martek
Biosciences Corporation, OmegaTech, Inc. and OGTAQ Corp. (filed as Exhibit
99.2 to the Companys Current Report on Form 8-K, File No. 22354, filed on
May 3, 2002 and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.44   |  | First Amendment to the Agreement and Plan of Merger dated as of March
25, 2002 by and among OmegaTech, Inc., Martek Biosciences Corporation, and
OGTAQ Corp., dated April 24, 2002 by and among Martek Biosciences
Corporation, OmegaTech, Inc., OGTAQ Corp. and Robert Zuccaro, in his
capacity as the Stockholders Representative (filed as Exhibit 99.3 to
the Companys Current Report on Form 8-K, File No. 22354, filed on May 3,
2002 and incorporated by reference herein).                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.45   |  | Martek Biosciences Corporation 2002 Stock Incentive Plan (filed as
Exhibit 1 to the Companys Definitive Proxy, Schedule 14A, filed on
February 8, 2002 and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.46   |  | Addendum 3 to Martek Biosciences Corporation/Gist-Brocades S.p.A. ARA
Purchase and Production Agreement dated June 14, 2002 (filed as exhibit
10.46 to the Companys quarterly report on Form 10-Q, File No. 22354, for
the quarter ended July 31, 2002, and incorporated by reference herein).*                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.47   |  | Second Amendment to the Agreement and Plan of Merger dated as of March
25, 2002, as amended on April 24, 2002, by and among OmegaTech, Inc., a
Delaware corporation, Martek Biosciences Corporation, a Delaware
corporation (Martek), and OGTAQ Corp., a Delaware corporation, entered
into as of July 27, 2002 by and among Martek, Martek Biosciences Boulder
Corporation (formerly called OmegaTech, Inc.) and Robert Zuccaro, in his
capacity as the Stockholders Representative. (filed as Exhibit 99.2 to
the Companys Current Report on Form 8-K, File No. 22354, filed on July
31, 2002 and incorporated by reference herein).
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.48   |  | Amendment No. 3 to Settlement Terms Related to Arbitration of License Agreement dated as of December 20, 2002 by and among Monsato Company and Martek Biosciences Boulder Corporation.**                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|13.01   |  | Portions of the Annual Report to Stockholders of the Company for the year ended October 31, 2002.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|21.01   |  | Subsidiaries of the Registrant. **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|23.01   |  | Consent of Ernst & Young LLP, Independent Auditors.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|24.01   |  | Power of Attorney of the Board of Directors (included on signature page of this report).**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|99.01   |  | Cautionary Statements for purposes of the safe harbor provisions of
the private securities litigation reform act of 1995.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



---

|*  |  | Confidential treatment was granted by the Securities and Exchange
Commission for certain portions of these agreements. The confidential
portions were filed separately with the Commission.                                                                                                                                                                                  
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|** |  | Filed herewith. Exhibit 10.48
contains a list briefly identifying the contents of all omitted
schedules and Martek will furnish supplementally a copy of any
omitted schedule to the Commission at its request. Unless otherwise noted, all other Exhibits are
incorporated by reference as an Exhibit to the Registrants Registration
Statement on Form S-1 (No. 33-68522).

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