BIOSYNERGY INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

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

For the fiscal year ended 4/30/97
_______

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from to
___________ __________

Commission file number 0-12459
_______

Biosynergy, Inc.
__________________________________________________________________
(Exact name of registrant as specified in its charter)

Illinois 36-2880990
__________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1940 East Devon Avenue, Elk Grove Village, Illinois 60007
___________________________________________________________________
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (847) 956-0471
______________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which
registrant
NONE NONE
____________________________ ____________________________

Securities registered pursuant to section 12(g) of the Act:

Common Stock, No 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 past 90 days. Yes X
_______
No _______

Page One of 52 pages contained in the sequential number system. The
Exhibit Index may be found on page E-i of the sequential numbering system.

1

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 [X]

The aggregate market value of the voting stock held by non-affiliates of
the registrant on April 30, 1997 was approximately $75,126.

The number of shares of common stock outstanding on April 30, 1997 was
13,806,511.

No documents have been incorporated by reference in this report except for
certain exhibits and schedules listed in Item 14.

Part I
______

Item 1. Description of Business
_______________________

General Development of Business
_______________________________

Biosynergy, Inc. (the "Company") was incorporated as an Illinois corpora-
tion on February 9, 1976. The Company was formed primarily for the purpose
of developing, manufacturing, and marketing products utilizing cholesteric
liquid crystals. The Company presently manufactures and markets disposable
medical, laboratory and industrial thermometric and thermographic choles-
teric liquid crystal devices.

Although the Company did not enter into any agreements materially affecting
its operations during Fiscal 1997, the Company experienced an increase in
sales. The Company's sales of $502,560 were the highest since fiscal 1982.
The Company realized a profit of $88,963 for the fiscal year ending April
30, 1997 compared to a profit of $92,197 for fiscal 1996. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

The Company continued to introduce its products directly to industrial
customers during Fiscal 1997. Although the Company did not make any
material sales to customers in the industrial markets, the Company submit-
ted various proposals to potential customers for use of its
time/temperature technology. Although the ultimate results of these
activities are not known, Management believes there is a need for its
products and technology in the industrial markets. Except as stated above,
there were no other significant contracts or developments with regard to
the Company's business during the past fiscal year.

2

Financial Information About Industry Segments
_____________________________________________

The Company generated revenues from sales of eleven medical and laboratory
products in the medical and laboratory industry segment during the fiscal
years ended April 30, 1995, 1996 and 1997. For a description of these
products, see "Narrative Description of Business" below.

Below is a schedule which presents the sales for each product and the
percentage of the Company's total sales attributable to each product for
the fiscal years ending April 30, 1997, 1996 and 1995.

Fiscal Year Ending
April 30, 1997
_____________________________
Medical and Percentage
Laboratory Sales of of Total
Products Product Sales
_________________________ ______________ _____________
HemoTempR II BMD $415,616.20 82.7%
TempTrendR TI 29,215.50 5.8%
TempTrendR II TTD 15,708.00 3.1%
HemoTempR BMD 14,496.00 2.9%
LabTempR 20 ST 9,042.50 1.8%
HemoTempR II Activator 6,164.00 1.3%
LabTempR 40 ST 5,589.50 1.1%
Vena-VueR VAD 2,635.00 .5%
Miscellaneous (1) 1,517.00 .5%
StaFreezR FTI 2,576.35 .3%
_____________ _____________
$502,560.05(2) 100.0%

Fiscal Year Ending
April 30, 1996
_____________________________
Medical and Percentage
Laboratory Sales of of Total
Products Product Sales
_________________________ ______________ _____________
HemoTempR II BMD $365,243.30 80.3%
TempTrendR TI 34,174.90 7.6%
TempTrendR II TTD 18,422.50 4.1%
HemoTempR BMD 13,329.00 2.9%
LabTempR 20 ST 7,884.50 1.7%
HemoTempR II Activator 6,423.00 1.4%
LabTempR 40 ST 4,587.00 1.0%
Vena-VueR VAD 2,000.00 0.4%
Miscellaneous (1) 1,487.45 0.3%
StaFreezR FTI 1,232.00 0.3%
______________ _____________
$454,783.65(2) 100.0%

3

Fiscal Year Ending
April 30, 1995
______________________________
Medical and Percentage
Laboratory Sales of of Total
Products Product Sales
_________________________ ______________ _____________
HemoTempR II BMD $354,572.32 80.0%
TempTrendR TI 30,733.00 6.9%
HemoTempR BMD 18,266.00 4.1%
TempTrendR II TTD 18,165.00 4.1%
LabTempR 20 ST 6,870.50 1.5%
LabTempR 40 ST 6,815.50 1.5%
Vena-VueR VAD 5,110.00 1.2%
StaFreezR FTI 2,087.00 .5%
Miscellaneous (1) 717.50 .2%
______________ _____________
$443,337.32(2) 100.0%
[FN]
_______________

(1) Includes sales of LabTempR 60, L.C. Sheets, Tempa.SlideTM, and special
order thermometric and thermographic consumer and laboratory products.

(2) Includes discounts and returns.

See "Information About Foreign and Domestic Operations and Export Sales".
See also "Selected Financial Data" and "Financial Statements and Supplemen-
tary Data" for the operating profit and loss and identifiable assets
related to the Company's operations in its industry segment.

Narrative Description of Business.
_________________________________

As described in "General Development of Business", the Company is presently
engaged in the business of developing, manufacturing, and marketing
disposable thermometric and thermographic temperature indicators for the
medical and laboratory and industrial markets. Further information about
this business segment and proposed products of the Company are described
below.

Thermographic and Thermometric Devices and Accessories.
______________________________________________________

During the fiscal year ending April 30, 1997 the Company manufactured and
marketed various medical, laboratory and consumer thermometric and thermo-
graphic devices. These products were sold to hospitals, clinical end-
users, laboratories and product dealers.

1. The HemoTempR Blood Monitoring Device ("BMD") is designed to be a human
blood bag temperature indicator. Human blood must be maintained, optimal-
ly, at 1-6o C., and not allowed to exceed 10o C. Since human blood is
always in short supply, it is critical that blood be maintained within
these specifications to avoid loss. HemoTempR BMD monitors the core
temperature of a blood bag from 1-12o C., and replaces the impractical

4

mercury thermometer susceptible to breakage. HemoTempR BMD once attached
to the blood bag is usable throughout the life of the blood.

2. HemoTempR II BMD (patented 1989) is designed to warn blood bank
personnel whenever the internal temperature of the blood bag has exceeded
10-11o C. HemoTempR II BMD has an irreversible indicator that is activated
when the tag is applied to the blood bag at approximately 4o C. After
being activated, the irreversible indicator remains blue colored for 72
hours unless the blood is warmed to a temperature of 10-11o C. or above, in
which case the indicator loses its blue color. The irreversible indicator
will not return to blue even if the blood is subsequently recooled,
indicating that the blood has been warmed. The reversible portion of the
indicator reversibly monitors temperatures from 1-9o C. HemoTempR II BMD
is non-reusable and must be replaced each time the blood bag is returned to
the blood bank and reissued.

3. HemoTempR II Activator, introduced during Fiscal 1995, is an electron-
ic, portable block model heater developed to provide a reliable source of
heat necessary to activate the Company's HemoTempR II BMD. The HemoTempR
II Activator has a thermostatic control to permit precise setting and
continuous control of temperatures in the range for activation of the
Company's HemoTempR II BMD. This device is intended by the Company to be
used with HemoTempR II BMD as a system for blood monitoring. This device
is the only product sold by the Company during Fiscal 1997 which is not
manufactured by the Company.

4. TempTrendR Temperature Indicator ("TI") is primarily used to monitor
the temperature of urine specimens collected for drug testing to detect
fraudulent urine specimens. Most common forms of drug testing require a
urine specimen. However, the test is valid only if a legitimate urine
specimen is collected which has not been altered by the subject to mask a
drug abuse problem. In order to eliminate altered or fraudulent urine
specimens in tests on federal employees, federal government guidelines
require that urine temperature be measured within four minutes of sample
collection, and that the temperature be 90.5-98.9o F. Temperature
measurements taken with TempTrendR TI are simply a matter of observing the
color illuminated number and recording the temperature. TempTrendR TI also
provides a non-invasive method of monitoring the actual surface temperature
trends of any body surface where temperature measurement is important, such
as near joints in rheumatoid arthritis and to assess blood circulation.

5. TempTrendR II Temperature Trend Device ("TTD") is a second generation
temperature trend device which is correlated to internal body temperature
and provides a non-invasive, readily visible means of monitoring changes in
body temperature. TempTrendR II TTD will reflect oral temperatures such as
those taken by glass thermometers. TempTrendR II TTD is used intraopera-
tively to warn of developing hyper or hypothermic conditions. The
indicator is also excellent for monitoring a patient's temperature during
any type of transfusion procedure.

6. LabTempR 20, LabTempR 40 and LabTempR 60 Surface Temperature Indicators
("STI") are designed to reversibly indicate the temperature of laboratory

5

materials which require specific storage or use temperatures. LabTempR 20
STI indicates temperatures between 0-21o C., LabTempR 40 STI monitors
temperatures between 19-21 and 24-41o C., while LabTempR 60 STI measures
temperatures between 40-60o C. These thermometers are designed to monitor
the temperature and changes in temperature of hundreds of laboratory
chemicals and supplies which require specific temperature conditions;
however, these thermometers are suitable for temperature measurement of
any surface.

7. Tempa.SlideTM Temperature Indicator ("SLTI") is amicroscope glass slide
temperature indicator. The SLTI helps the viewer read the optimum tempera-
ture of a slide by indicating in large visible colors when the desired
slide temperature is reached. Tempa.SlideTM can be mounted on a glass
microscope slide and can be used continuously for over one year. These
thermometers are suitable for temperature monitoring of glass slides during
antibody/antigen tests when an optimum temperature of the cells and protein
must be maintained for accurate test results.

8. StaFreezR Freeze-Thaw Indicator ("FTI") is a freeze-thaw indicator
which will irreversibly indicate whether frozen material is warmed to
greater than -20o C. Once the frozen product exceeds -20o C., the liquid
crystal film will turn from blue to gray to black, and refreezing the
product at a lower temperature will not bring back the original frozen
state color.

9. The Vena-VueR Vein Assessment Device ("VAD") is designed to locate
good veins by assessing blood flow, and to assess vein depth, and size.
It is used primarily to minimize complications and reduce dis-
comfort for geriatric patients, obese patients, diabetic patients,
burn patients, drug addicts with sclerosed veins, shock patients with
collapsed veins and long-term hospitalized or cancer chemotherapy
patients with severely damaged and traumatized veins. However,
Vena-VueR VAD is also useful in helping to select the most patent and
least traumatized veins for the purpose of any venipuncture. Three
efficacy medical publications have been written about Vena-VueR VAD.

10. Specialty products include devices manufactured to the specification
and design of the customer, such as time/ temperature shipping labels for
food products under the tradename FoodGardeTM Time/Temperature Indicators
and liquid crystal thermometers for general purpose thermometry. The
Company anticipates continued manufacturing of these and additional
specialty products in the future.

The Company is also developing other devices. These include:

1. The Company intends to market new irreversible time/ temperature
indicators which will be used as shipping labels, and in other forms, for
the frozen food packaging industry (under the tradename FoodGardeTM), the
pharmaceutical industry, and for other industries requiring careful
monitoring of refrigerated or frozen materials. The devices will have
irreversible color changes at various temperatures determined to be
critical by the end-user. Therefore, a purchaser, whether an individual

6

consumer or a merchant, will be able to instantaneously determine the
temperature history of the material. Although the liquid crystal formula-
tions are substantially completed, the Company is uncertain at this time
when these products will be sold.

2. The Company has recognized a need exists for a simple, inexpensive
indicator to determine if sensitive materials have been subjected to
freezing temperatures. The Company is continuing its investigation of the
feasibility of such an indicator.

3. The Company has become aware that a need exists for products to augment
its current product line, such as the HemoTempR II Activator. The Company
is investigating the feasibility of additional products to systematize the
use of its thermometric and thermographic liquid crystal devices as well
as alternative technologies to supplement its current product line. The
results of such investigations are not predictable at this time.

The Company is currently investigating alternative thermometric and
thermographic technologies for use in applications where the Company's
current products are unsuitable. Since the investigation of these alterna-
tive technologies is not complete, there can be no assurance the Company
will be able to develop any commercial products as a result of this
activity.

Manufacturing. Except for the HemoTempR II Activator, the Company
manufactures all of its products. The HemoTempR II Activator is
manufactured exclusively for the Company by an unrelated company on an
as needed basis. Raw materials for the Company's other products are
purchased, and assembly of the products is performed at the Company's
production facility. Some chemical converting and coating, plus die
cutting, which are capital intensive, are done by outside manufacturers.
All outside manufacturing is done to specifications set by the Company.
There are, however, no commitments or firm agreements for such outside
manufacturers to provide services for the Company, and the Company does
not anticipate it will enter into any such agreements in the foreseeable
future.

The Company has twenty-one years of experience working with various liquid
crystal formulations and thermometric and thermographic application
methods. The Company maintains complete records of manufacturing and
quality assurance testing of all of its products in compliance with Food
and Drug Administration ("FDA") regulations. All products are manufactured
according to "good manufacturing practices" (GMP) for medical devices.

Marketing and Distribution. The Company has traditionally targeted
the medical and laboratory markets. While novel products, such
as the Company's products, enjoy the advantage of no initial
competition, they also initially lack a demonstrated market and
acceptance by medical and laboratory personnel. Furthermore, cost
savings programs and awareness have slowed down the introduction
of new products, particularly in the medical market. As a result,
the time required to achieve acceptance of the Company's medical
products is significantly increased, in Management's opinion.

7

Because of these conditions, the Company has been forced to rely heavily on
its own marketing and distribution efforts in the medical market, rather
than the use of the traditional medical product distributors, for a large
portion of its sales. Nevertheless, the Company's primary distributor in
the United States, Fisher Scientific Company ("Fisher"), previously Curtin
Matheson Scientific, Inc., and the Company's other product distributors
have increased their sales of the Company's products throughout the United
States during the past few years. During Fiscal 1997, Fisher accounted for
29.9% of the Company's sales. Although it is difficult to predict the
ultimate success of Fisher and other distributors in selling the Company's
products, management believes this trend will continue.

Effective March 31, 1996, the Company renewed its contract with the
American Association of Blood Banks ("AABB") Group Purchasing Program for
two-years. This amendment allows approximately 2,500 AABB Member Institu-
tions throughout the United States to purchase HemoTempR II blood bag
temperature indicators and HemoTempR II Activator at a discount. The
Company is required to pay a commission of 2% of all sales under this
contract to the AABB.

The Company continues to negotiate with various medical and laboratory
product companies for the distribution of its products under private labels
and to introduce its products in the industrial, pharmaceutical and
laboratory markets, the success of which cannot be assured. See "Thermo-
metric and Thermographic Devices."

At the present time, two employees are engaged on a part-time basis in
marketing the Company's products. Since Fiscal 1994, the Company has also
used the services of an in-house sales representative for telemarketing on
a commission only basis. The Company does not have an outside sales force.
Since the Company markets its products to approximately 7,000 hospitals in
the United States, hundreds of laboratories and industrial end-users in the
United States, and thousands of hospitals and laboratories in foreign
countries, it will continue to rely upon the marketing efforts of indepen-
dent dealers and sales representatives, and is therefore aggressively
seeking distributors for its products throughout the world. The effect
these independent dealers will have on revenues has not yet been deter-
mined.

The Company is unaware of its current market share for its medical and
laboratory products, although the Company is currently collecting data to
be used in marketing studies in the future.

Sources and Availability of Raw Materials. In general, the Company
believes its sources and availability of raw materials to be satisfactory.
Presently, there are a limited number of domestic manufacturers of liquid
crystal chemicals. Although it is expected that these domestic manufactur-
ers will continue to supply the raw liquid crystals needed for the produc-
tion of the Company's products, which cannot be assured, if industrial

8

quantities of raw liquid crystals are unavailable from domestic sources,
the Company will need to import these materials from foreign suppliers, or,
as an alternative, manufacture such materials itself.

Patents and Trademarks. The Company has been granted or assigned
five United States and four foreign patents relating to liquid crystal
technology. These patents generally relate to liquid crystals or
liquid crystal dispersion processes. Specifically, these patents
pertain to the venipuncture method utilized by the Company's vein
assessment device products (No. 4,175,543, which expired on November
27, 1996), the film application of those products (No. 4,161,557,
which expired on July 17, 1996), the material and die composition
of those products (No. 4,015,591, which expired on April 5, 1994), a
liquid crystal film laminate (No. 4,015,591, which expired on April
5, 1994), a liquid crystal film laminate (No. 4,310,577, which
expired on July 17, 1996), and a cholesteric liquid crystal
formulations and temperature monitoring means relating to the
Company's irreversible liquid crystal products (No. 4,859,360, which
expires on August 22, 2006). Although several of the Company's patents
have expired, management does not believe this will have an adverse
material impact on the Company's operations, revenues or properties.

The Company has received registered trademark protection on all product
names to date, excepting Temp-D-TekTM, Tempa.SlideTM, FoodGardeTM and
LaproVueTM. The Company has retained, however, all the rights to the Temp-
D-TekTM, Temp.SlideTM, FoodGardeTM and LaproVueTM common law trademark.
Additional trademark registrations will be applied for as needed.

Although patent and trademark protection is important, the Company believes
that no material adverse effects to the Company's operations will result in
the event that additional patents and/or trademarks are not obtained, or,
if attained, such patents and/or trademarks are held to be invalid.
Certain processes and chemical formulas will be maintained only as trade
secrets. Management feels that it will be difficult for potential competi-
tion to analyze or reproduce the secret processes and formulas without
substantial expenditures of capital and resources.

Seasonal Aspect of Business. The business of the Company is not
seasonal.

Working Capital Items. The Company has attempted to conserve
working capital whenever possible. To this end, the Company
attempts to keep inventory at minimum levels. The Company believes
that it will be able to maintain adequate inventory to supply its
customers on a timely basis by careful planning and forecasting
demand for its products. However, the Company is nevertheless
required, as is customary in the medical and laboratory markets, to
carry inventory to meet the delivery requirements of customers and thus,
inventory represents a substantial portion of the Company's current
assets.

The Company presently grants payment terms to customers and dealers of 30
days. The Company will not accept returns of products from its dealers
except for exchange, but does guarantee the quality of its products to the
end user.

9

As of April 30, 1997, the Company had $121,674 of current assets available.
Of this amount, $45,956 was inventory and $61,468 was net trade receiv-
ables. Management of the Company believes that it has sufficient working
capital to continue operations for the fiscal year ending April 30, 1998
provided the Company's sales and ability to collect accounts receivable are
not adversely affected. In the event the Company's sales decrease or the
receivables of the Company are impaired for any reason, it will be neces-
sary to obtain additional financing to cover working capital items and keep
current trade accounts payable, of which there can be no assurance. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Major Customers. Fisher, the Company's primary independent product
distributor, was directly responsible for 10% or more of the Company's net
sales during the fiscal year ending April 30, 1997. At April 30, 1997,
Fisher owed the Company $19,520. Management believes the loss of this
customer would materially reduce the revenues of the Company until the
Company could retain the services of another major product distributor.

Backlogs. The Company did not have any material backlog of orders as
of April 30, 1997.

Government Contracts. The Company does not have a material portion of
its business that may be subject to renegotiation of profits or
termination of contracts or subcontracts at the election of any
government entity.

Competition. The Company has no known commercial competitors of its
disposable vein assessment device or blood monitoring devices using liquid
crystal technology. Because of the Company's patent position, employment
agreements with former employees, and processing trade secrets, it does not
anticipate competition in these areas in the near future. In the area of
laboratory temperature monitoring, there are no other competitors who
market an infinitely thin liquid crystal temperature indicator. In the
area of a frozen food or drink safety indicator, there is no competition
known to the Company that utilizes liquid crystal technology. The Company
believes that the frozen food industry presently uses primarily physical
and organoleptic evaluation (e.g., evaluation of softness, texture, aroma,
taste and the like), as well as mercury thermometers and temperature
sensitive inks to monitor freshness. Labels containing wax encapsulated
dyes with specific low melting points and capillary action products
produced by 3M under the tradename MonitorMarkR and polymer/monomer
indicators from Lifeline are also available.

The Company's HEMOTEMPR II BMD (blood bag temperature monitor) competes in
the medical market against Safe-T-Vue (MonoTech) and MonitorMark (3M).
Management of the Company believes that the MonoTech and 3M products are
technically inferior to HEMOTEMPR II BMD in that they provide only an
irreversible monitor with nothing to warn the user that blood is approach-
ing an unsafe temperature. In addition, the MonoTech product must be
refrigerated prior to use, and, because of their design, both products can
readily be dislodged from the blood bag. There is no known commercial
competitors of the Company's HemoTempR II Activator.

10

The Company's TempTrendR II competes in the medical market against Temp-A-
Strip (Johnson & Johnson), Stick-Temp (Trademark Sales) and Temp-A-Dot
(PyMaH Corp). Stick-Temp is distributed on a limited basis and there is
little information available concerning it. Management of the Company
believes that the Johnson & Johnson product is less technically advanced
than the Company's TempTrendR TTD and is primarily distributed in the
Consumer market. Temp-A-Dot is a wax impregnated strip of paper inserted
into the mouth to monitor core temperature. Although it is reported to
cost less than TempTrendR II thermometers, it has the disadvantage of
single reading, invasive methodology and cannot be used to monitor tempera-
ture trends. Recently, a few private label indicators have been introduced
to the market. These are manufactured by Dijinni Industries, PyMaH
Corporation, Hallcrest Products and American Thermometer, who compete with
the Company in the consumer market for forehead temperature indicators and
in the drug testing market for urine thermometers.

Other companies, such as Eurand American, are only involved in the manufac-
ture of liquid crystal raw materials and do not directly compete with the
Company for sale of medical, industrial or consumer products. Mercury and
electronic thermometers are used in several competitive applications. They
are generally more costly, non-disposable or not usable in most applica-
tions where liquid crystal thermometry and temperature indicators are
utilized.

Research and Development. During Fiscal 1997, 1996 and 1995, the
Company spent $32,265, $27,995 and $27,179, respectively, on Company-
sponsored research and development activities. All expenditures for
research and development are expensed currently with the exception
of significant equipment and set-up charges which are capitalized
and depreciated or amortized over their estimated useful life.

The Company is conducting research and development of products, which are
discussed under "Thermographic and Thermometric Devices." In this regard,
the Company may require financing to complete the development of these
products. The success of the Company in obtaining financing for research
and development will largely determine whether the Company will continue
the research and development for such products or expand its research and
development to other products.

Government Regulations. The Company does not currently plan to
market diagnostic or therapeutic products which are subject to
stringent United States Food and Drug Administration (FDA) review and
pre-market approval in the near future. Present commercial products of
the Company are classified by the FDA as Class I or Class II. These
are subject only to general regulations requiring that manufacturers
adhere to certain guidelines to provide reasonable assurance of utility,
safety, and effectiveness. These guidelines include labeling
requirements, registration with the FDA as a manufacturer, listing of
devices in commercial distribution with the FDA, notification to FDA
of devices proposed to be marketed, conformance to specified current
good manufacturing practices in the manufacture of the devices,
conformance to certain record-keeping requirements, and, in the
case of Class II devices, conformance to certain performance standards. At

11

the present time, the Company believes that it is in compliance with
regulations set forth by the FDA.

Information About Foreign and Domestic Operations and Export Sales. The
Company had export sales of $22,145 during the last fiscal year, and export
sales of $16,956 and $13,115 during the fiscal years ending in 1996 and
1995, respectively. The Company also believes that some of its medical
devices were sold to distributors within the United States who resold the
devices in foreign markets. However, the Company does not have any
information regarding such sales, and such sales are not considered to be
material.

The Company does not rely on any foreign operations other than its dealers
and marketing representatives in their respective marketing areas. See
"Marketing and Distribution." It is anticipated export sales will continue
to be important to the Company although not material to operating revenues
or income of the Company. Foreign sales are contingent upon, among other
factors, foreign trade regulations, value of the United States Dollar and,
where required, government approval of the Company's products.

Environmental Protection Expenditures. The Company's operations are not
subject to any federal, state or local laws regulating the discharge of
materials into the environment which materially affect earnings or the
competitive position of the Company, although the Company is subject to
such laws. There were no material capital expenditures made during the
last fiscal year to comply with such laws, nor are any such expenditures
anticipated for Fiscal 1998.

Employees. The Company presently has five full-time employees comprised
of the President (who also presently serves as the Director of Marketing
and Technical Operations), two Vice Presidents and a manufacturing/
packaging employee. The Company also employs a secretary/receptionist.
Certain employees of the Company provide limited services, primarily
bookkeeping and clerical, for Stevia Company, Inc., an affiliate of the
Company, on an "as needed" basis, which is not expected to be a material
portion of their time.

Item 2. Properties
__________

The Company's production facilities, research facilities, and administra-
tive offices are located at 1940 East Devon, Elk Grove Village, Illinois
60007, in a 10,400 square foot facility leased from an unaffiliated third
party. The Company sub-leases 1,560 square feet to Stevia Company, Inc.,
an affiliate. The lease for these facilities expires on January 31, 2001.
See footnote 9 of the "Financial Statements."

A majority of the Company's Elk Grove Village facility is currently in use;
however, Management believes this facility is adequate for its needs in the
foreseeable future. Located at the Company's facility is equipment
utilized for research, development, and manufacturing of the Company's
products.

12

Item 3. Legal Proceedings
_________________

There is no material litigation threatened or pending against the Company
or any of its properties.

Item 4. Submission of Matters to a Vote of Security Holders.
___________________________________________________

None

13

PART II
_______

Item 5. Market for Registrant's Common Stock and Related
Shareholder Matters.

Market Information. Although the common stock of the Company is traded
in the over-the-counter market, there is no established public trading
market due to limited and sporadic trades. Information regarding these
trades is compiled by the Stock Section of the National Daily
Quotation Service ("Pink Sheets") and selected broker-dealers
trading such common stock. These quotations do not necessarily
reflect actual transactions nor represent the actual value or
trading price of the Company's common stock. Such over-the-counter
quotations reflect inter-dealer prices, without retail markup,
markdown, or commission. Trading and pricing information
for Fiscal 1995, 1996 and 1997 was not available to the Company, although
the management of the Company does not believe there were sufficient trades
to establish a market for its common stock.

Holders. As of April 30, 1997, there were approximately 863
shareholders of record of the Company's common stock.

Dividends. The Company has never declared any dividends and does
not intend to do so until such time as the Company sustains a profitable
status and has provided for all of its capital requirements.

Item 6. Selected Financial Data
_______________________

Fiscal Years Ending
______________________
1997 1996 1995 1994 1993
________ _______ ______ ________ ________
Operating Revenues $502,560 $454,784 $443,337 $403,963 $362,536
Other Revenues 8,104 5,677 6,863 4,445 5,701
Net Income/(Loss) 88,963 92,197 47,824 24,513 17,691
after Taxes

Net Income/(Loss) .0064 .0066 .0035 .002 .001
per Share After
Taxes

Total Assets 455,579 428,331 409,320 395,722 354,836
Long Term Debt - - - - -

Stockholder Equity/
(Deficit) 368,435 279,472 187,275 139,451 114,938

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations

Net Sales. Net sales for the fiscal year ending April 30, 1997
were $47,776, or 10.5%, higher than the previous fiscal year, and
$59,223, or 13.36%, higher than the fiscal year ending in 1995. The
increase in sales during Fiscal 1997 was due to the growing acceptance
of the Company's HemoTempR II blood temperature indicators. The Company
experienced an increase of $50,373, or 14%, in sales of its HemoTempR
II product in Fiscal 1997 as compared to Fiscal 1996, and an increase
of $10,671, or 3.01%, in Fiscal 1996 as compared to Fiscal 1995.

14

Other Revenues. During Fiscal 1997, the Company realized $8,104
of miscellaneous income. This income was related to contract printing
for a non-affiliate, leasing a portion of its computer time to Stevia
Company, Inc., an affiliate, sub-leasing a portion of the Company's
storage space to a non-affiliate, and interest.

Costs and Expenses. Costs and expenses for the fiscal year ending
April 30, 1997 increased by $40,657 compared to the fiscal year ending
in 1996, and increased by $19,324 as compared to the fiscal year
ending in 1995. The increased costs and expenses for Fiscal 1997 was
generally related to a company wide increase in salaries and wages,
increased production costs related to increased sales, and an
increase in rent expense. Generally, with the exception of the
increase in employee salary and related expenses, the overhead expenses
of the Company have remained substantially constant. In order for the
Company to continue without materially altering its present
operations, the overall operating costs and expenses for the
ensuing fiscal year are expected to be similar to or slightly higher than
36.94% those of the last fiscal year.

Cost of Sales. As a percentage of net sales, the cost of sales was 36.94%
for the fiscal year ending April 30, 1997, 35.81% for the fiscal year
ending in 1996 and 39.98% for the fiscal year ending in 1996. The Company
expects that the cost of sales as a percentage of net sales will remain
substantially the same over the next fiscal year in the absence of a
material decrease in sales.

Research and Development Expenses. Research and development expenses
increased during the fiscal year ending in 1997 by $4,270, or 15.25%, as
compared to the fiscal year ending in 1996, and increased by $5,086, or
18.71%, as compared to the fiscal year ending in 1995. For the past
several years, the Company's research and development activities were
limited to improvement of the current product line and development of
products which were natural extensions thereof. Recently, however, the
Company has noted there appears to be a need for other products and
accessories complimentary to its current product line. These products
would also help systematize the use of the Company's current products. As
an example, the Company developed the HemoTempR II Activator. See "Narra-
tive Description of Business - Thermographic and Thermometric Devices and
Accessories." Although the Company intends to continue to improve its
current product line, the Company is also investigating the possibility of
developing other products using technologies other than liquid crystal
technology to augment its current product line. Although it is not
anticipated that the development of such products will materially increase
the Company's research and development expenses, there is insufficient
information available to determine the extent the Company will be required
to allocate its resources to develop these products. In addition, the
Company will continue to develop products

15

pursuant to contracts with unrelated entities. The increase in research
and development costs as a result of such development contracts will be
directly related to the revenues derived therefrom.

Marketing Expenses. The Company's marketing expenses were $54,075 in
1997 and $45,685 in 1996, as compared to $35,854 for the fiscal year
ending in 1995. The Company continued to increase its marketing
activities during Fiscal 1997 which management believes is necessary
to continue the Company's growth. Also, included in marketing
expenses for Fiscal 1997 is an increase in commissions related to
sales by an unsalaried salesperson. Subject to availability of
resources, the Company intends to further expand its marketing activities.

General and Administrative Expenses. The Company's general and admini-
strative costs increased by $5,924 as compared to the 1996 fiscal
year, and decreased by $7,027 as compared to the fiscal year ending
in 1995. The primary reason for the decrease as compared to fiscal
1995 is due to the resignation of the Company's bookkeeper in May,
1995 and the resulting decrease in employee expenses. The increase
in Fiscal 1997 was primarily the result of a company wide increase in
salaries and wages. See "Cost and Expenses" above. Management of
the Company has generally stabilized general and administrative
expenses over the past three years. Except for extraordinary items,
and salary and related employee expenses, it is unlikely general
and administrative expenses will materially change in the near future.

Net Income/Loss. The Company experienced a net income of $89,086,
a decrease of $3,111 over Fiscal 1996, and an improvement of $41,262 over
Fiscal 1995. The decrease in net income as compared to Fiscal 1996 is due
to extraordinary income in Fiscal 1996 of $12,770 due to the write off of
certain payables. Net Income, however, exclusive of the extraordinary
item, was $9,546 more in Fiscal 1997 than Fiscal 1996. The overall
increase in net operating income is primarily due to an increase in net
sales. See "Net Sales", "Other Revenues", and "Costs and Expenses" above.
Management realizes that the profitability of the Company depends upon
achieving and maintaining sales of the Company's products. To this extent,
the Company has continued its efforts to improve sales. However, there can
be no assurance the Company will be able to continue to increase or
maintain the current level of net sales.

As of April 30, 1997, the Company had net operating loss carryovers
aggregating $2,062,922. Therefore, no income taxes are due for Fiscal
1997. See "Financial Statements," for the effect of the net operating loss
carryforwards on the Company's income tax position. The Tax Reform Act of
1986 did not alter the Company's net operating loss carryforward position,
and the net operating loss carryforwards will be available and expire, if
not used, as set forth in Footnote 8 to the Financial Statements for the
year ending April 30, 1997. See "Financial Statements."

16

Assets. Since April 30, 1996, the Company's assets have increased by
$27,248. This is primarily due to increases in amounts Due From Affiliates
(see below). Other changes in specific items do not reflect changes
outside the ordinary course of business.

The Company was owed $278,874 by Stevia Company, Inc. ("Stevia"), an
affiliate, and $12,921 by F.K. Suzuki International, Inc. ("FKSI"), an
affiliate, at April 30, 1997. These affiliates owed $258,360 and $12,660
at April 30, 1996, respectively. These accounts primarily represent common
expenses which are charged by one company to the other for reimbursement.
These expenses include certain rent, salaries for common employees,
insurance and employee benefits, and legal fees. See "Financial State-
ments." These expenses are incurred in the ordinary course of business.
As a result of the increase in amounts due from affiliates, the Company has
reduced its owns liquid resources. Although management believes it is cost
effective to share common expenses with its affiliates, the Company has
reduced the amount of advances and common expenses charged to Stevia and
FKSI until these affiliates are in a position to reimburse the Company.
Collectibility of the amounts due from the affiliates cannot be assured
without the liquidation of all or a portion of their assets, and thus such
receivables have been classified as non-current assets.

Liabilities. The Company's overall liabilities have decreased by $62,782
since April 30, 1996. This is primarily due to improved cash flow from
operations which has been used for payment of liabilities. See also
"Assets" and "Liquidity and Capital Resources."

Current Assets/Liabilities Ration. The ratio of current assets to current
liabilities, 1.40 to 1, has increased from .79 to 1 at April 30, 1996.
Although the Company realized income in Fiscal 1997, the Company used
$20,774 of its cash to pay expenses incurred by the Company on behalf of
Stevia and FKSI, which were not reimbursed. Thus, the Company's current
assets were converted to long-term receivables thereby reducing its current
assets/liabilities ratio. In order to continue to improve the current
asset/liability ratio, the Company's operations must remain profitable and
the Company must curtail the use of its current assets for the benefit of
Stevia and FKSI. Although Management of the Company believes this is
possible, there is a risk the Company's current asset/liability ratio may
not be adequate for the Company's future needs.

Liquidity and Capital Resources. During the fiscal year ending April 30,
1997, the Company had an increase in net working capital of $66,340. The
increase in net working capital is primarily due to improved cash flow from
operations which was used to retire company debt.

In view of the fact that the Company has incurred substantial losses in
prior years, Management of the Company recognizes the Company's ability to
continue as a going concern is subject to maintaining and improving sales,
profitable operations, the collection of accounts receivable and the
ability of the company to raise money, when needed, of which there is no
assurance. Management intends to continue introducing the Company's
products in markets not previously recognized as viable markets. Finally,

17

Management intends to seek financing opportunities, including sale of its
common stock if necessary. There can be no assurance the Company will be
able to find any financing or a working line of credit on acceptable terms.
Irrespective of the Company's working capital deficit in the past, the
Company has not been refused goods or services from any of its vendors.

Due to the limited availability of cash to the Company during the fiscal
years ending April 30, 1995, 1996 and 1997 and the inability of the company
to borrow the funds required, the Company chose not to have its financial
statements audited. The cost of such an audit would be approximately
$15,000 per year.

Except for its operating capital needs, the Company does not have any other
material contingencies for which it must provide.

Item 8. Financial Statements and Supplementary Data.
___________________________________________

The information required by this item is set forth in pages F-1 to F-12.

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.

None.

Part III
________

The information contained in items 10, 11, 12, and 13 is the same informa-
tion to be included in the Registrant's definitive proxy statement, if any,
to be filed with the Commission, and is included herein for convenience
only.

Item 10. Directors and Executive Officers of the Registrant.
__________________________________________________

The executive officers and directors of the Company are:

Positions Served in
Name Age with Company Office Since
_____ ___ _____________ ____________

Fred K. Suzuki 67 President, Treasurer, February, 1976 (1)
Director of Research
and Development,
Director of Marketing
and Sales, and Chairman
of the Board of Directors

Mary K. Friske 37 Vice President - September, 1993
Administration,
Manager of Sales

18

Laurence Mead 35 Vice President - April, 1994
Manufacturing,
Manager of Financial
and Product Development

Lauane C. Addis 41 Corporate Counsel, February, 1984
Secretary and December, 1985
Director February, 1987

James F. Schembri 62 Director November, 1990

[FN]
_______________

(1) Mr. Suzuki did not serve as President from August 1982 through February
1983. Prior to October, 1984, Mr. Suzuki served as Treasurer of the
Company, and was once again appointed Treasurer on June 30, 1991.

As an incentive for his investment in the Company, the Board of Directors
agreed to nominate James F. Schembri as a candidate for election to the
Board of Directors of the Company. Other than the foregoing, there are no
arrangements or understandings between any of the directors or officers of
the Company and any other person pursuant to which any director or officer
was or is to be selected as a director or officer.

The term of office for the members of the Board of Directors extends to the
next regular meeting of shareholders or until they resign, and until their
successors are duly elected. The term of office for the officers of the
Company extends until they resign, are not re-elected by the Board of
Directors, or are otherwise replaced by the Board of Directors of the
Company.

Family Relationships.
____________________

Lauane C. Addis is the son-in-law of Fred K. Suzuki. Otherwise, there is
no family relationship between any director, executive officer, or person
nominated or chosen by the Company to become a director or executive
officer.

Involvement in Certain Legal Proceedings.
________________________________________

None of the officers or directors are or have been involved in any legal
proceedings which are material to an evaluation of the ability or integrity
of same.

Business Experience.
___________________

Certain information regarding the business experience of the directors,
officers, significant employees and consultants of the Company are set
forth below:

FRED K. SUZUKI, Jr., Chairman of the Board, President, Treasurer, Director
of Research and Development and Director of Marketing and Sales. Mr.
Suzuki is founder of the Company and has served as President of the Company

19

since its inception in 1976 to August 1982 and from February 1983 to the
present. He has served as Chairman of the Board of Directors of the
Company since its inception to the present, and as Treasurer from its
inception to October, 1984 and from July, 1991 to the present. Mr. Suzuki
is also President and Chairman of the Board of Directors of F.K. Suzuki
International, Inc. ("FKSI"), President and Chairman of the Board of
Directors of Stevia Company, Inc. ("Stevia"), President and Chairman of the
Board of Directors of Medlab Products, Inc. ("Medlab"), affiliates of the
Company. Mr. Suzuki is the sole owner, President and Director of Suzuki
International, Inc. ("SI"). FKSI is a holding company of Medlab, Stevia,
and the Company. As such, it has no other business operations. See
"Security Ownership of Certain Beneficial Owners and Management." Medlab
is a dormant company, organized to develop, manufacture, and market
scientific products. Stevia is in the business of developing, manufactur-
ing, and marketing natural sweeteners and other products derived from
Stevia rebaudiana plant. SI is in the business of marketing various
products. Mr. Suzuki has developed several patents or patents pending for
clinical instruments and has licensed them to unaffiliated corporations.
These patents do not inure to the benefit of the Company. Mr. Suzuki has
developed several patents in the area of Diterpene glycosides, chemistry
derived from the Stevia rebaudiana plant. Mr. Suzuki also holds patents in
the area of liquid crystal chemistry. Mr. Suzuki attended Roosevelt
University from 1951 to 1954, where he studied Chemistry and Biology.

MARY K. FRISKE, Vice President - Administration and Manager of Sales. Ms.
Friske joined the office staff in July, 1983. Ms. Friske served as an
Executive Secretary for several years and was promoted to Office Manager in
1989. In September, 1993, Ms. Friske was appointed Vice President -
Administration and Manager of Sales. Ms. Friske also provides services on
an as-needed basis for an affiliate of the Company, Stevia Company, Inc.
Ms. Friske received her Bachelor of Science degree in May, 1981 from
Eastern Illinois University where she majored in Personnel Management.

LAURENCE MEAD, Vice President - Manufacturing and Manager of Financial and
Product Development. Mr. Mead joined the production department of the
Company in 1980, and has served as the Company's Production Manager since
1984. In April, 1994, Mr. Mead was appointed Vice President - Manufactur-
ing and Manager of Financial and Product Development. Mr. Mead received
his Bachelor of Science degree in August, 1992 from Roosevelt University
where he majored in Accounting.

LAUANE C. ADDIS, Secretary, Corporate Counsel, and Director. Mr. Addis
joined the Company in February, 1984 as its Vice President - Finance and
Chief Financial Officer on a part-time basis and was employed in the
equivalent capacity on a part-time basis by Stevia Company, Inc., an
affiliate of the Company, and as a self-employed attorney. From December,
1985 thru June, 1991, Mr. Addis served as Executive Vice President, Chief
Operating Officer, Chief Financial Officer, and Treasurer of the Company.
In July, 1991, Mr. Addis resigned from these positions to return to the
full-time private practice of law. Mr. Addis is also the Secretary and a
director of Stevia Company, Inc. and an officer and director of FKSI, an
affiliate of the Company. Mr. Addis is currently a member of the law firm,

20

Katz, Karacic, Helmin & Addis, P.C., Chicago, Illinois. Mr. Addis graduat-
ed from Andrews University with a B.A. in History and Business Administra-
tion in June, 1978.
He received his Doctor of Jurisprudence from Baylor University in 1981 and
his Master of Laws in taxation from the University of Denver in 1982. Mr.
Addis is a member of the Colorado, Illinois and Texas Bar Associations.

JAMES F. SCHEMBRI, Director. Mr. Schembri was elected to the Board of
Directors on November 15, 1990. Mr. Schembri is the founder and President
of Schembri & Associates (formerly Automatic Controls Company). This
company was a manufacturer's representative with offices in Michigan, Ohio
and Kentucky. It currently is involved in specialized lending situations
with Equity Funding, Inc. of West Bloomfield, Michigan. Mr. Schembri is
one of the founders and President of Fenton Systems, Inc., Burton, Michi-
gan. In addition to these activities, Mr. Schembri is founder and Presi-
dent of Wickfield Leasing Company, which leases automobiles and office
equipment. Mr. Schembri is a director of Stevia Company, Inc., an affili-
ate. Mr. Schembri received his Bachelor of Science Degree in Mechanical
Engineering from the University of Detroit in June, 1957.

Item 11. Executive Compensation.
______________________

The following summary compensation table sets forth a summary of compensa-
tion for services in all capacities to the Company during the fiscal years
ended April 30, 1997, 1996 and 1995 paid to the Chief Executive Officer.
None of the Company's other executive officers received annual salaries and
bonuses for such fiscal years exceeding $100,000.

Summary Compensation Table
__________________________
Annual Compensation Long Term Compensation/Awards
___________________ _____________________________
Name and Other
Principal Annual All Other
Position Year Salary Bonus Compensation (1) Options (#) Compensa-
tion
___________ ____ ______ _____ ____________ ___________ _________
Fred K. Suzuki 1997 $56,827 - - - -
President, 1996 $47,525 - (2) - $1,342 (3)
Chairman of 1995 $44,196 - (2) - $2,140 (3)
the Board and
Chief Executive
Officer

[FN]
_______________

(1) No executive officer received perquisites in excess of the lesser of
$50,000 or 10% of the aggregate of such officer's salary and bonus.

(2) In addition, salary of $6,970 and $5,000 was accrued but not paid
during Fiscal 1995 and 1996 respectively.

21

(3) Interest on loans made by Mr. Suzuki to the Company, aggregating $2,140
and $1,342 was paid or accrued in 1995 and 1996 respectively. See "Certain
Relationships and Related Party Transactions."

All officers and directors are reimbursed for out-of-pocket expenses
incurred in connection with the Company's business. Messrs. Suzuki, Addis
and Schembri are not remunerated in their capacities as directors. See,
however, "Certain Relationships and Related Party Transactions."

The Company does not have any pension or profit sharing plans in effect for
the benefit of its employees, including its officers and directors. Such
plans may be adopted in the future if deemed in the best interests of the
Company by its Board of Directors.

Stock Options
_____________

During the fiscal year ended in 1983, the Company adopted a special
incentive plan for personnel of the Company pursuant to which certain key
individual employees, consultants, officers and directors of the Company
could be granted stock options and/or stock appreciation rights pursuant to
the option agreements. The period for granting options under the stock
incentive plan expired on May 19, 1989. An aggregate of 350,000 shares
were reserved for issuance under the stock incentive plan. All options,
for an aggregate of 131,500 shares, expired on October 14, 1996.

During Fiscal 1997, no stock options were granted to the Chief Executive
Officer or the Company's four other most highly compensated executive
officers (other than the Chief Executive Officer) whose total annual salary
and bonus for fiscal year 1997 exceeded $100,000, and such officers did not
exercise any options during fiscal year 1997. The following table sets
forth the aggregate value as of April 30, 1997 of unexercised options held
by such individuals.

Aggregated Option Exercises in Last Fiscal Year
_______________________________________________
and Fiscal Year-End Option Values
_________________________________

Number of Value of
Unexercised Unexercised
Options at in-the-Money
Shares Fiscal Year Options at
Acquired End (#) Fiscal Year-End
on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
____ ____________ ____________ _____________ _____________
Fred K.
Suzuki - - - -
President
and - - 670,000/0 (1) $0/0
Chairman of
the Board - - 3,000,000/0 (2) $0/0

[FN]
__________________

(1) Effective January 31, 1990, the Company entered into an agreement with
Fred K. Suzuki pursuant to which the Company granted an option to convert
all or a portion of Mr. Suzuki's accrued but unpaid compensation into
shares of the Company's no par value common stock at a conversion rate of
$0.05 per share. At April 30, 1997, the total deferred compensation
payable to Mr. Suzuki was $33,500, thereby entitling Mr. Suzuki to convert
such deferred compensation into 670,000 shares of the Company's common
stock. This option has no value in excess of the fair market value of the
Company's Common Stock. This option is conditioned upon the Company having
sufficient liquid assets to pay all employee taxes due at the time the
conversion. This option may be exercised until the optionee is no longer
owed accrued but unpaid salary. The accrued but unpaid salary arose as a
result of Mr. Suzuki's agreement to defer salary when the Company was not
financially able to pay salaries on a regular basis. This option contains
non-dilutive provisions in the event of corporate capital reorganizations.

22

(2) On August 1, 1993, the Company entered into a Stock Option Agreement
with Fred K. Suzuki, President, granting Mr. Suzuki an option to purchase
3,000,000 shares of Company's common stock at an option price of $0.025 per
share. This Stock Option Agreement was granted to Mr. Suzuki in consider-
ation of his loaning money to the Company on an unsecured basis from time
to time. This option has no value in excess of the fair market value of
the Company's common stock. The option contains anti-dilutive provisions
in the event of corporate capital reorganizations. As of April 30, 1997,
no portion of this Option has been exercised.

Compensation Committee. The Company does not have a Compensation Committee
of its Board of Directors. The Board of Directors makes all decisions
concerning the President's compensation including, but not limited to, the
granting of options to acquire common stock of the Company. The President
of the Company, Fred K. Suzuki, has the sole authority, as granted by the
Board of Directors, to make compensation decisions for other employees
of the Company other than the granting of Options to acquire the common
stock of the Company.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
______________________________________________________________

The following table sets forth information as of April 30, 1997, as to the
voting securities of the Company owned by the officers and directors of the
Company and by each person who owns of record, or is known by the Company
to own beneficially, more than 5% of any class of voting securities.

Amount and Nature
Name and Address of Beneficial Percent of
Title of Class of Beneficial Owner Ownership Class
______________ ___________________ _________________ __________

Common Stock Fred K. Suzuki 4,497,146 shares 32.57%
710 S. Kennicott of record and
Arlington Heights, beneficial (1)
Illinois 60005

23

Common Stock F.K. Suzuki Inter- 2,597,146 shares 18.81%
national, Inc. record and bene-
1940 E. Devon Ave. ficial
Elk Grove Village, IL
60007

Common Stock Stevia Company, Inc. 1,900,000 shares 13.76%
1940 E. Devon Ave. of record and
Elk Grove Village, IL beneficial (1,2)
60007

Common Stock Lauane C. Addis 4,506,146 shares 32.64%
1819 Orleans Circle record and bene-
Elk Grove Village, IL ficial (3)
60007

Common Stock James F. Schembri 1,785,500 shares 12.93%
19115 W. Eight Mile Rd. of record and
Detroit, MI 48219 beneficial (3)

Common Stock Mary K. Friske (4) 1,000 shares of .01%
940 Bradley Court record and
Palatine, IL 60074 beneficial

Common Stock Laurence C. Mead (5) 1,250 shares of .01%
7820 Northway Drive record and
Hanover Park, IL 60103 beneficial

Common Stock All directors and 6,293,896 45.59%
officers as a
group (5 members)
[FN]
_______________

(1) Fred K. Suzuki is President of F.K. Suzuki International, Inc.
("FKSI") and owns 35.6% of the outstanding common stock of FKSI. Mr.
Suzuki is also President and Chairman of the Board of Stevia Company,
Inc. ("Stevia") of which FKSI owns 55.84% of its outstanding common
stock. Mr. Suzuki does not personally hold of record any shares of
the company's common stock; however he is deemed to be beneficial
owner by reason of voting and disposition control 4,497,146 shares
which includes 2,597,146 shares which are owned by FKSI and 1,900,000
shares owned by Stevia. The above table does not include an option
granted to Mr. Suzuki to convert all or a portion of his deferred
salary into shares of the Company's common stock at a conversion rate
of $.05 per share, or an option to acquire 3,000,000 shares of the

24

Company's common stock at $0.025 per share. See "Executive Compensa-
tion" and "Certain Relationships and Related Party Transactions."

(2) Mr. Addis personally owns 9,000 shares of the outstanding Common Stock
of the Company. In addition, Mr. Addis owns 32.7% of the outstanding
Common Stock of FKSI, which owns 55.84% of the outstanding Common
Stock of Stevia and 18.95% of the Common Stock of the Company. Mr.
Addis is also an officer and director of Stevia which owns 1,900,000
shares of the Company's Common Stock. Mr. Addis is therefore deemed
to be beneficial owner by reason of voting and disposition control of
2,597,146 shares owned by FKSI, and is deemed to be the beneficial
owner by reason of voting and disposition control over 1,900,000
shares owned by Stevia.

(3) Included in the shares owned beneficially by Mr. Schembri are 91,000
shares held in trust for the benefit of Mr. Schembri, 31,000 shares
held in Individual Retirement Accounts for the benefit of Mr.
Schembri, 8,000 shares owned by Midwest Valve Services, of which Mr.
Schembri has sole dispositive and voting control, and 500,000 shares
owned in joint tenancy with Mr. Schembri's son.

(4) In addition to the Shares of outstanding common stock of the Company
owned by Mary K. Friske, she also owns 200 shares, or approximately
.2%, of the outstanding common stock of FKSI, which owns 55.84% of the
outstanding common stock of Stevia and 18.95% of the common stock of
the Company.

(5) In addition to the common stock of the Company owned by Laurence C.
Mead, he also owns 2,900 shares, or approximately 2.9%, of the out-
standing common stock of FKSI, which owns 55.84% of the outstanding
common stock of Stevia and 18.95% of the common stock of the Company.

Changes in Control
__________________

The Company does not know of any arrangements, the operation of which may
at a subsequent date result in a change in control in the Company nor has a
change in the control of the Company occurred during the last fiscal year.

Item 13. Certain Relationships and Related Party Transactions.
____________________________________________________

During the fiscal year ending April 30, 1997, the Company shared common
areas and office space with an affiliate, Stevia Company, Inc. ("Stevia").
It is believed by management that by sharing common areas and office space
with Stevia, expenses will be reduced and kept at minimum levels. It is
anticipated by the Company that they will continue to share common areas
and office space with Stevia in the future. The Company and Stevia
reimburse each other for such common area expenses as appropriate. As of
April 30, 1997, Stevia owed $278,874 to the Company in connection with the
shared common area expenses. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

25

On September 20, 1996, the Company loaned Stevia $3,000 for payment of real
estate taxes on Stevia's Pueblo, Colorado facility. The loan was evidenced
by an Installment Promissory Note providing for two monthly payments of
principal and interest, with interest computed at 11.5%. The loan was
repaid on December 12, 1996.

Effective January 31, 1990, the Company entered into an agreement with Fred
K. Suzuki, President, pursuant to which the Company granted an option to
convert all or a portion of Mr. Suzuki's accrued but unpaid compensation
into shares of the Company's no par value common stock at a conversion rate
of $0.05 per share. At April 30, 1997, the total deferred compensation
payable to Mr. Suzuki was $33,500, thereby entitling Mr. Suzuki to convert
such deferred compensation into 670,000 shares of the Company's common
stock. The option is conditioned upon the Company having sufficient liquid
assets to pay all employee taxes due at the time of conversion. The option
is exercisable until Mr. Suzuki's is no longer owed accrued salary. The
accrued but unpaid salary arose as a result of Mr. Suzuki's agreement to
defer salary when the Company was not financially able to pay salaries on a
regular basis. The option contains non-dilutive provisions in the event of
corporate capital reorganizations.

On August 1, 1993, the Company entered into a Stock Option Agreement with
Fred K. Suzuki, President, granting Mr. Suzuki an option to purchase
3,000,000 shares of the Company's common stock at an option price of $0.025
per share. This Stock Option Agreement was granted to Mr. Suzuki in
consideration of his loaning money to the Company on an unsecured basis
from time to time. The option contains anti-dilutive provisions in the
event of corporate capital reorganizations. As of April 30, 1997, no
portion of this option has been exercised.

Lauane C. Addis, Secretary and Director, as a member of the law firm of
Katz, Karacic, Helmin & Addis, P.C., has represented the Company with
respect to the preparation and filing of this Report. Mr. Addis, and other
members of Katz, Karacic, Helmin & Addis, P.C., perform other legal
services for the Company from time to time, and it is anticipated such
services will be performed by Mr. Addis and other members of Katz, Karacic,
Helmin & Addis, P.C., in the future. During Fiscal 1997, the Company paid
$4,472.97 in legal fees to Katz, Karacic, Helmin & Addis, P.C., some of
which inured to the benefit of Mr. Addis in the form of salary and bonuses.
Mr. Addis is an officer, director and major shareholder of the Company, and
is also the son-in-law of Fred K. Suzuki, President and Chairman of the
Board of Directors. See "Directors and Executive Officers of the Regis-
trant" and "Security Ownership of Certain Beneficial Owners and Manage-
ment."

Except with regard to the above, there were no other material transactions
involving management of the Company or any third party during the last
fiscal year which accrued to the benefit of officers or directors of the
Company.

26

PART IV
_______

Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K
________________________________________________________________

The following financial statements, schedules and exhibits are filed as a
part of this report:

(a) (1) Financial statements.
____________________

Balance sheet for the fiscal years ending April 30, 1996 and 1997.

Statements of operations for the fiscal years ending April 30,
1995, 1996 and 1997.

Statements of Shareholders' Equity (Deficit) for the fiscal years
ended April 30, 1995, 1996 and 1997.

Statements of Cash Flows of the Company for fiscal years ending
April 30, 1995, 1996 and 1997.

Notes to financial statements.

(a) (2) List of Financial Statement Schedules:
_____________________________________

The following financial schedules for the fiscal years ending April
30, 1997, 1996 and 1995 are submitted herewith:

Schedule I - Marketable Securities - Other Investments - P. S-1.

Schedule V - Property, Plant and Equipment - P. S-2.

Schedule VI - Accumulated Depreciation, Depletion and Amortization
of Property, Plant and Equipment - P. S-3.

Schedule VIII - Valuation and Qualifying Accounts - P. S-4.

Schedule X - Supplementary Income Statement
Information - P. S-5.

Except as listed above, there are no financial statement schedules
required to be filed by Item 8 of this Form 10-K except for those otherwise
shown on the financial statements or notes thereto contained in this
report.

(b) Reports on Form 8K. No current reports on Form 8K were filed
during the last quarter covered by this report.

(c) The Following Exhibits are Filed as a Part of this Report:
__________________________________________________________

3. a. Articles of Incorporation and By-Laws (1)

4. Instruments Defining the Rights of Security Holders, Including
Indentures - none.

27

9. Voting Trust Agreements - none.

10. Material Contracts

(a) Deferred Compensation Option Agreement, dated January 31,
1990, between the Company and Fred K. Suzuki (2)

(b) Stock Option Agreement, dated August 1, 1993, between the
Company and Fred K. Suzuki (3)

(c) Installment Promissory Note, dated September 20, 1996, in the
amount of $3,000 payable by Stevia Company, Inc. to the Company. P. E-1.

11. Statement Regarding Computation of Earnings Per Share - none.

12. Statements Regarding Computation of Ratios - none.

13. Annual Report to Security Holders - none.

16. Letter Regarding Change in Certifying Accountants - none.

18. Letter Regarding Change in Accounting Principles - none.

19. Previously Unfiled Documents - none.

22. Subsidiaries of Registrant - none.

23. Published Report Regarding Matters Submitted to Vote of Security
Holders - none.

24. Consent of Experts and Counsel - none.

25. Power of Attorney - none.

27. Financial Data Schedule - P. E-3.

28. Additional Exhibits - none.

29. Information From Reports Furnished to State Insurance Regulatory
Agencies. N/A

[FN]
_______________

(1) Incorporated by reference to a Registration Statement filed on Form S-
18 with the Securities and Exchange Commission, 1933 Act Registration
Number 2-83015C, under the Securities Act of 1933, as amended, and Incorpo-
rated by reference, with regard to Amended By-Laws, to the Company's Annual
Report on Form 10K for fiscal year ending April 30, 1986 filed with the
Securities and Exchange Commission.

(2) Incorporated by reference to the Company's Annual Report on Form 10K
for fiscal year ending April 30, 1990 filed with the Securities and
Exchange Commission.

28

(3) Incorporated by reference to the Company's Annual Report on Form 10K
for fiscal year ending April 30, 1994 filed with the Securities and
Exchange Commission.

29

SIGNATURES
__________

Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, duly authorized.

REGISTRANT: BIOSYNERGY, INC.

________________________________ _________________
Fred K. Suzuki, Chairman of the Date
Board of Directors and President

Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant in the capacities on the dates indicated.

________________________________ _________________
Fred K. Suzuki, Chairman of the Date
Board of Directors, President,
Treasurer and Chief Accounting
Officer

________________________________ _________________
Lauane C. Addis, Corporate Date
Counsel, Secretary and Director

30

SIGNATURES
__________

Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, duly authorized.

REGISTRANT: BIOSYNERGY, INC.

/s/ FRED K. SUZUKI JULY 25, 1997
________________________________ _________________
Fred K. Suzuki, Chairman of the Date
Board of Directors and President

Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant in the capacities on the dates indicated.

/s/ FRED K. SUZUKI JULY 25, 1997
________________________________ _________________
Fred K. Suzuki, Chairman of the Date
Board of Directors, President,
Treasurer and Chief Accounting
Officer

/s/ LAUANE C. ADDIS JULY 25, 1997
________________________________ _________________
Lauane C. Addis, Corporate Date
Counsel, Secretary and Director

30

BIOSYNERGY, INC.

FINANCIAL STATEMENTS

FOR THE YEARS ENDED APRIL 30, 1997, 1996 AND 1995

Board of Directors and Shareholders
Biosynergy, Inc.
Elk Grove Village, Illinois

The accompanying balance sheet of BIOSYNERGY, INC. at April 30, 1997
and 1996, and the related statements of operations, shareholders' equity
and cash flows for the fiscal years ending April 30, 1997, 1996 and 1995
were not audited due to the Company's lack of available cash to pay for
such audit; however, the financial statements for the fiscal years ending
April 30, 1997, 1996 and 1995 reflect all adjustments (consisting only of
normal reoccurring adjustments) which are, in opinion of management,
necessary to provide a fair statement of the results of operations for the
period presented.

The financial statements for the fiscal year ending April 30, 1991
were examined by the Company's accountants, KPMG Peat Marwick, and they
expressed a qualified opinion on them in their report dated June 7, 1991.
These opinions were qualified as to the Company's ability to continue as a
going concern. The Company's accountants have not performed any auditing
procedures since June 7, 1991.

BIOSYNERGY, INC.

July 1, 1997

BIOSYNERGY, INC.

BALANCE SHEET

April 30,
________________________
1997 1996
_________ _________
Unaudited Unaudited
_________ _________

ASSETS
______

CURRENT ASSETS
Cash 12,420 9,733
Accounts Receivable, Trade, Net of
Allowance for Doubtful Accounts of
$500 in 1997 and 1996 61,030 56,750
Inventories 45,956 47,894
Prepaid Expenses 2,268 2,795
_________ _________
Total Current Assets 121,674 111,752
_________ _________
Due From Affiliates (Note 3) 291,795 271,020

Equipment and Leasehold Improvements:
Equipment 161,320 154,036
Leasehold Improvements 12,216 12,216
_________ _________
173,536 166,252

Less: Accumulated Depreciation and
Amortization 163,010 162,063
_________ _________

10,526 4,189
_________ _________

OTHER ASSETS
Patents, Net of Accumulated Amortization 25,533 29,805
Deposits 6,051 6,145
Investment in Affiliated Company (Note 3) - -
_________ __________
31,584 35,950
_________ __________
455,579 428,331
========= ==========

The accompanying notes are an integral part of the financial statements.

F-2

April 30,
________________________
1997 1996
_________ _________
Unaudited Unaudited
_________ _________

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts Payable 12,873 46,422
Accrued Executive Compensation 67,856 99,435
Other Accrued Compensation 2,137 1,102
Accrued Payroll Taxes 791 -
Deferred Rent 1,751 317
Other Accrued Expenses 1,736 1,583
_________ _______
Total Current Liabilities 87,144 148,859

COMMITMENTS AND CONTINGENCIES (Note 7) - -

SHAREHOLDERS' EQUITY (DEFICIT) (Notes 3 and 5)
Common Stock, No Par Value, 20,000,000
Shares Authorized as of April 30, 1996
and 1997;
13,806,511 Issued and Outstanding
as of April 30, 1996 and 1997 632,663 632,663
Additional Paid in Capital 100 100
(264,328) (353,291)
__________ __________
368,435 279,472
455,579 428,331
__________ __________
---------- ----------

The accompanying notes are an integral part of the financial statements.

F-3

BIOSYNERGY, INC.

STATEMENT OF OPERATIONS

YEAR ENDED APRIL 30,
______________________________________
1997 1996 1995
_____________ _____________ _________
Unaudited Unaudited Unaudited
_____________ _____________ __________

REVENUES
Net Sales 502,560 454,784 443,337
Interest Income 54 1,453 41
Computer Rentals and Services 600 600 600
Other Income 7,450 3,624 6,222
_____________ _____________ _________
510,664 460,461 450,200
_____________ _____________ _________
COST AND EXPENSES
Cost of sales and other
operating charges 185,667 162,864 177,262
Research and Development 32,265 27,995 27,179
Marketing 54,075 45,685 35,854
General and Administrative 149,217 143,293 156,244
Interest Expense 477 2,206 5,837
___________ _____________ _________
421,701 381,044 402,377
___________ _____________ _________

INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY ITEMS 88,963 79,417 47,824
INCOME TAXES 25,104 26,438 11,218
___________ _____________ _________
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS 63,859 52,979 36,606
___________ _____________ _________
EXTRAORDINARY ITEMS
Reduction of Income Taxes arising from
Utilization of prior years'- Net
Operating Losses (Note 8) 25,104 26,438 11,218
Write Off Accounts Payable - 12,770 -
___________ _____________ _________
25,104 39,718 11,218
___________ _____________ _________
NET INCOME (LOSS) 88,963 92,197 47,824
___________ _____________ _________
----------- ------------- ---------
INCOME (LOSS) PER COMMON SHARE
(Note 6):
Before Extraordinary Items .0050 .0038 .0027
___________ _____________ _________
Extraordinary Items .0014 .0028 .0008
___________ _____________ _________
NET INCOME (LOSS) .0064 .0066 .0035
___________ _____________ _________
----------- ------------- ---------
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 13,806,511 13,806,511 13,806,511
_____________ ___________ ____________
------------- ----------- ------------

The accompanying notes are an integral part of the financial statements.

F-4

BIOSYNERGY, INC.

STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)

YEARS ENDED APRIL 30, 1997, 1996 AND 1995

Common Stock Additional
____________________
Paid-In
Shares Amount Capital Deficit Total
__________ ________ ___________ _________ _____

BALANCE,
May 1, 1995
(Unaudited) 13,806,511 632,663 100 ( 445,488) 187,275
__________ ________ ___________ __________ _______
---------- -------- ----------- ---------- -------
NET INCOME - - - 92,197 92,197
__________ ________ ___________ __________ _______

BALANCE,
April 30, 1996 13,806,511 632,663 100 ( 353,291) 279,472
__________ ________ ___________ __________ _______
(Unaudited) ---------- -------- ----------- ---------- -------

NET INCOME - - - 88,963 88,963
__________ ________ ___________ __________ _______

BALANCE,
April 30, 1997 13,806,511 632,663 100 ( 264,328) 368,435
__________ ________ ___________ __________ _______
(Unaudited) ---------- -------- ----------- ---------- -------

The accompanying notes are an integral part of the financial statements.

F-5

BIOSYNERGY, INC.

STATEMENTS OF CASH FLOW

YEAR ENDED APRIL 30,
_____________________________
1997 1996 1995
_________ _________ _________
Unaudited Unaudited Unaudited
_________ _________ _________

OPERATING ACTIVITIES:
Net Income (Loss)
Adjustments to Reconcile Net Cash Provided 88,963 92,197 47,824
By (Used In) Operating Activities:
Depreciation and Amortization 5,219 7,063 9,330
Changes in Assets and Liabilities:
Accounts Receivable, Net (4,280) 1,402 (17,403)
Inventories and Prepaid Expenses 2,465 ( 1,609) 12,115
Accounts Payable and Accrued Expenses (61,715) (56,898) (22,112)
_________ _________ _________
Net Cash Provided By (Used In) Operating
Activities 30,652 42,155 29,754

INVESTING ACTIVITIES:
Advances to Affiliated Companies (Note 3) (20,775) (21,014) (18,245)
Purchase of Equipment (7,284) - ( 1,049)
Deposits 94 360 -
_________ ________ _________
Net Cash Provided By (Used In) Investing
Activities (27,965) (20,654) (19,294)

FINANCING ACTIVITIES:
Net Proceeds from Borrowing (Repayments) - (16,288) (12,114)
_________ _________ _________
Net Cash Provided By (Used In) Financing
Activities - (16,228) (12,114)
Increase (Decrease) in Cash and Cash
Equivalents 2,687 5,213 ( 1,654)
_________ _________ _________
Cash and Cash Equivalents at Beginning
of Year 9,733 4,520 6,174
Cash and Cash Equivalents at End of Year 12,420 9,733 4,520
_________ __________ ________

SUPPLEMENTAL DISCLOSURE:

Cash Paid for Interest 2,687 5,231 1,547
_________ _________ __________
--------- --------- ----------

The accompanying notes are an integral part of the financial statements.

F-6

BIOSYNERGY, INC.

NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies:

Inventories - Inventories are valued at the lower of cost using the FIFO
(first-in, first-out) method or market (using net realizable value).

Equipment and Leasehold Improvements - Equipment and leasehold improvements
are stated at cost. Depreciation is computed primarily on the straight-
line method over the estimated useful lives of the respective assets.
Repairs and maintenance are charged to expense as incurred; renewals and
betterments which significantly extend the useful lives of existing
equipment are capitalized. Significant leasehold improvements are capital-
ized and amortized over the term of the lease.

Research and Development, and Patents - Research and development expendi-
tures are charged to operations as incurred. The cost of obtaining
patents, primarily legal fees, are capitalized and amortized over the life
of the respective patent on the straight-line method.

2. Company Organization and Description:

Biosynergy, Inc. (Company) was incorporated under the laws of the State of
Illinois on February 9, 1976. It is primarily engaged in the development
and marketing of medical, consumer and industrial thermometric and thermo-
graphic products that utilize cholesteric liquid crystals.

3. Related Party Transactions:

The Company and its affiliates are related through common stock ownership
as follows as of April 30, 1997:

F-7

BIOSYNERGY, INC.

NOTES TO FINANCIAL STATEMENTS

S T O C K O F A F F I L I A T E S
___________________________________________
F.K. Suzuki
Stevia Biosynergy International Medlab
Stock Owner Company Inc. Inc. Inc.
_____________________ _________ __________ _____________ ______

Stevia Company, Inc. - 13.8% - -
Biosynergy, Inc. .4% - - -
F.K. Suzuki
International, Inc. 55.8% 18.8% - 100.0%
Fred K. Suzuki, Officer - - 35.6% -
Lauane C. Addis,
Officer .1% .1% 32.7% -
James F. Schembri, - 12.9% - -
Director
Mary K. Friske, Officer - .1% .2% -
Laurence C. Mead, Officer .1% .1% 2.9% -

Upon the completion of the Company's public offering on July 7, 1983, the
Company issued 2,000,000 shares of its no par value common stock, repre-
senting 19% of the outstanding common stock of the Company, in exchange for
1,058,181 shares of the common stock of Stevia Company, Inc., which was
approximately 4.4% of the then outstanding common stock of Stevia Company,
Inc. The common stock of Stevia Company, Inc. had no book value at the
time of the exchange and, as a consequence, the Company recorded the
exchange at zero dollar value.

Biosynergy owned 130,403 shares of Stevia Company, Inc. Common Stock at
April 30, 1997, representing a .4% interest in Stevia. Although the Common
Stock of Stevia Company, Inc. is traded in the over-the-counter market,
there is no established public trading market for such Common Stock due to
limited and sporadic trades. As of April 30, 1997, the bid price of the
common stock of Stevia Company, Inc. was approximately $.001 per share.

Common offices are shared with Stevia Company, Inc. Intercompany charges
for shared expenses are made by whichever company incurs such changes.
Such intercompany charges, together with funds advanced by Stevia in prior
years, have resulted in the following balances at April 30:

April 30, 1996 - $258,360
April 30, 1997 - $278,874

At April 30, 1997, the financial condition of Stevia Company, Inc. was such
that it is unlikely to be able to repay Biosynergy during the next year
without liquidating a portion of its assets.

F-8

BIOSYNERGY, INC.

NOTES TO FINANCIAL STATEMENTS

The following balances were due from F.K. Suzuki International, Inc. at
April 30:

April 30, 1996 - $12,660
April 30, 1997 - $12,921

The balances result for an allocation of common expenses offset by advances
received from time to time. At April 30, 1997, the financial condition of
F.K. Suzuki International, Inc. was such that it unlikely to be able to
repay Biosynergy during the next year without liquidating a portion of its
assets.

During the fiscal year ending April 30, 1994, Fred K. Suzuki, President of
the Company, made several loans to the Company. These loans were repaid
during Fiscal 1996. See Note 5 for a description of such loans.

See also Note 6.

4. Inventories:

Components of inventories are as follows:

April 30, 1996 April 30, 1997
______________ ______________

Raw Materials $30,015 $30,583
Work-in process 16,161 10,257
Finished Goods 1,718 5,116
_____________ ______________
------------- --------------
$47,894 $45,956
_____________ ______________
------------- --------------

F-9

BIOSYNERGY, INC.

NOTES TO FINANCIAL STATEMENTS

5. Common Stock:

The Company's stock is traded in the Over-The-Counter market. However,
there is no established public trading market due to limited and sporadic
trades. The Company's common stock is not listed on a recognized market or
stock exchange.

All of the stock options and stock appreciation rights for 131,500 shares
of stock granted to four advisors, directors, officers, consultants, and
employees of the Company under the Company's employee stock incentive plan
expired on October 14, 1996. The Company had reserved 350,000 shares of
its common stock for this plan.

As of April 30, 1996, under an employee stock incentive plan, stock options
and stock appreciation rights which are exercisable for 131,500 shares of
stock were granted to five advisors, directors, officers, consultants,
and/or employees of the Company. The exercise price is $.05 per share for
these shares. The Company has reserved 350,000 shares of its common stock
for this plan. The period for granting options under this plan expired May
19, 1989.

Effective January 31, 1990, the Company entered into an agreement with its
President, Fred K. Suzuki, pursuant to which the Company granted an option
to convert all or a portion of his accrued but unpaid compensation into
shares of the Company's no par value common stock at a conversion rate of
$.05 per share. The option is conditioned upon the Company having suffi-
cient liquid assets to pay all employee taxes due at the time of the
conversion. The option may be exercised until the optionee is no longer
owed accrued but unpaid salary. The accrued but unpaid salary arose as a
result of the individual agreeing to defer salaries when the Company was
not financially able to pay salaries on a regular basis. The options
contain non-dilutive provisions in the event of corporate capital reorgani-
zations. At April 30, 1997, an aggregate of 670,000 shares of the Company-
's common stock was subject to Mr. Suzuki's option.

On August 1, 1993, the Company entered into a Stock Option Agreement with
Fred K. Suzuki, President, granting Mr. Suzuki an option to purchase
3,000,000 shares of the Company's common stock at an option price of $0.025
per share. This Stock Option Agreement was granted to Mr. Suzuki in
consideration of his loaning money to the Company on an unsecured basis
from time to time. The option contains anti-dilutive provisions in the
event of corporate capital reorganizations. As of April 30, 1997, no
portion of this Option has been exercised.

F-10

BIOSYNERGY, INC.

NOTES TO FINANCIAL STATEMENTS

6. Income or (Loss) Per Shares:

Net income or (loss) per common share is computed using the weighted
average number of common shares outstanding during the period, after giving
effect to stock splits. The weighted average number of common shares
outstanding were 13,806,511 at April 30, 1997, 1996 and 1995. The affect
of conversion of stock options has not been presented as conversion would
be anti-dilutive.

7. Lease Commitments:

In 1996 the Company entered a new lease agreement for its current facili-
ties which expires January 31, 2001. The base rent under the lease, of
which 15% is allocated to Stevia Company, Inc., escalates over the life of
the lease. Total rent payments for each fiscal year are as follows:

Year ending April 30 Total Base Rent
____________________ _______________

1996 11,000
1997 66,733
1998 68,200
1999 68,567
2000 69,300
2001 51,975

Also included in the lease agreement are escalation clauses for the
lessor's increases in property taxes and other operating expenses. Rent
expense was $58,002, $46,784, and $49,490 for the fiscal years ending on
April 30, 1997, 1996 and 1995, respectively. The lease can be extended for
an additional five year term.

8. Income Taxes:

At April 30, 1997, net operating loss carryforwards were available and
expire, if not used, as follows:

Year Ending Net Operating
April 30, Losses
____________ ______________
1998 $193,062
1999 677,671
2000 455,166
2001 449,142
2002 132,470
2003 85,822
2004 41,176
2006 160
2007 28,253
____________ _____________
$2,062,922
_____________
-------------

F-11

BIOSYNERGY, INC.

NOTES TO FINANCIAL STATEMENTS

The Company has adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes" as required by SFAS No. 109. The
effect, if any, of adopting Statement No. 109 on pretax income from
continuing operations is not material. The Company has elected not to
retroactively adopt the provisions allowed in SFAS No. 109, however all
provisions of the document have been applied since the beginning of fiscal
year 1994.

9. Major Customers:

Shipments to one customer amounted to approximately 29.9% of sales in
Fiscal 1997. At April 30, 1997 there was an outstanding accounts receiv-
able from this customer of approximately $19,520.

10. Management's Plans:

In view of the fact the Company has incurred substantial losses in prior
years, management of the Company recognizes the Company's ability to
continue as a going concern is subject to continuing sales performance and
the ability of the Company to raise money, when needed. To this extent,
management has endeavored to introduce the Company's products to new
markets and expand its marketing efforts in the traditional medical market.
Finally, management intends to continue pursuing financing opportunities,
including selling its common stock to private investors, if necessary.

F-12

BIOSYNERGY, INC.

SCHEDULE I

Marketable Securities - Other Investments

Amount at
which each
Portfolio
of Equity
Number of Security
Shares or Issues and
Units - Market Each Other
Name of Principal Value of Security
Issuer and Amount of Each Issue Issue Carried
Title of Bonds and Cost of at Balance in the
each Issue Notes Each Issue Sheet Date Balance Sheet (1)
____________ __________ __________ __________ _________________

Stevia Co., 130,403 --- 130 ---
April 30, Inc., Common
1996 Stock
_________

Stevia Co., 130,403 --- 130 ---
April 30, Inc., Common
1997 Stock
_________

_______________

(1) Balance Sheet caption - Investment in Affiliated Company.

S-1

BIOSYNERGY, INC.

SCHEDULE V

Property, Plant and Equipment

Additions Other
Balance at to Cost Retirements Charges Balance
_________ ___________ _______ at end
Classifi- Beginning of
cation of Year Amount Amount Amount Year
___________ __________ ______ ______ ______ _______

Year
Ending
April 30,
1996
___________

Equipment 154,036 --- --- --- 154,036
Leasehold
Improve-
ments 12,216 --- --- --- 12,216
_________
TOTAL 165,252 --- --- --- 166,252
_________ _______
--------- ------- ------- ------- -------

Year
Ending
April 30,
1997
___________

Equipment 154,036 7,284 --- --- 161,320
Leasehold
Improve-
ments 12,216 --- --- --- 12,216
_________
TOTAL 166,252 7,284 --- --- 173,536
_________ _______
--------- ------- ------- ------- -------

S-2

BIOSYNERGY, INC.

SCHEDULE VI

Accumulated Depreciation, Depletion and
Amortization of Property, Plant and Equipment

Additions
Balance at Charged to Balance
Beginning Costs and Other Changes at End
Description of Year Expenses Retirements Description Amount of Year
___________ __________ __________ ___________ ___________ ______ _______

Year Ending
April 30,
1996
___________

Equipment 149,578 269 --- --- 149,847
Leasehold
Improve-
ments 10,341 1,875 --- --- 12,216
________ ________ _______

TOTAL 159,919 2,144 --- --- 162,063
________ ________ _______
-------- -------- ------------ ------ -------

Year Ending
April 30,
1997
___________

Equipment 149,847 947 --- --- 150,794
Leasehold
Improve-
ments 12,216 --- --- --- 12,216
________ ________ _______
TOTAL 162,063 947 --- --- 163,010
________ ________ _______
-------- -------- ------------ ------ -------

S-3

BIOSYNERGY, INC.

SCHEDULE VIII

Valuation and Qualifying Accounts

Additions Deductions
_____________________ _________________
Balance
Year at Begin- Charged to Balance
Ending ning of Costs and Descrip- at End
April 30, Description Year Expenses Other tion Amount Year
_________ ___________ _________ ___________ ________ _________ _______ _______

Uncollect-
1997 Allowance
For Un-
collectible
Accounts 500 123 --- --- 123 500

1996 Allowance
For Un-
collectible
Accounts 500 --- --- --- --- 500

S-4

BIOSYNERGY, INC.

SCHEDULE X

Supplementary Income Statement Information

Charged to Costs
Item and Expenses
____ ________________

Year Ending
April 30, 1995 1. Maintenance and Repairs $4,012
______________

2. Depreciation and Amortization

Depreciation of Equipment 1,348
Amortization of Patent Expense 5,476
Amortization of Leasehold Improvements 2,506

5. Advertising Costs 2,490

Year Ending
April 30, 1996 1. Maintenance and Repairs $4,371
______________

2. Depreciation and Amortization

Depreciation of Equipment 269
Amortization of Patent Expense 4,919
Amortization of Leasehold Improvements 1,875

5. Advertising Costs 3,568

Year Ending
April 30, 1997 1. Maintenance and Repairs 4,886
______________

2. Depreciation and Amortization

Depreciation of Equipment 947
Amortization of Patent Expense 4,272

5. Advertising Costs 3,890

S-5

____________________________________________________________________________
____________________________________________________________________________

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10K

Annual Report Pursuant to Section 13 or 15(d)

of

THE SECURITIES AND EXCHANGE ACT OF 1934

For the period ending April 30, 1997
Commission File Number - 0-12459

BIOSYNERGY, INC.
________________________________________________
(Exact name of registrant as specified in charter)

1940 East Devon Avenue
Elk Grove Village, IL 60007
(847) 956-0471

(Address and telephone number of registrant's
principal executive office on a principal place
of business)

________________________________________________

EXHIBITS

____________________________________________________________________________
____________________________________________________________________________

EXHIBIT INDEX
_____________

Page Number
Pursuant to
Sequential
Exhibit Numbering
Number Exhibit System
_______ __________ ____________

10(c) Installment Promissory Note, dated
September 20, 1996, payable by Stevia
Company, Inc. to the Company. E-1

27 Financial Data Schedule E-3