U.S. SECURITIES AND EXCHANGE COMMISSION
                           Washington, DC 20549
                              FORM 10-KSB

OMB Approval                  Expires:  Approval Pending
OMB Number: xxxx-xxxx         Estimated Average Burden Hours Per Response: 1.0

      (Mark One)
X  Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934 (Fee required)
       For the fiscal year ended January 31, 1997

   Transition report under Section 13 or 15(d) of the Securities Exchange Act of
1934 (No fee required)
       For the transition period from             to

       Commission file number 0-23356                                           


                   AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.

                 (Name of Small Business Issuer in Its Charter)

                        Utah                         87-0421089                 

(State or Other Jurisdiction of
 Incorporation or Organization)             IRS Employer Identification


3800 Hudson Bend Road, Suite #300, Austin, Texas               78734
     (Address of Principal Executive Offices)                (Zip Code)

                                   512-266-2481
               (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:

Title of Each Class                  Name of Each Exchange on Which Registered
       NONE                                           NONE


Securities registered under Section 12(g) of the Exchange Act:

                          COMMON STOCK (.001 par value)

                                (Title of Class)

Check whether the issuer: (1) filed all reports required to be filed by  Section
13 or 15(d) of the Exchange Act during the  past 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 past 90 days.
Yes        X             No


Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B  contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. XX


Issuer's revenues for the fiscal year ended January 31, 1997.    $69,293.00     


Aggregate market value of common stock (.001 par value) held by non-affiliates
at March 31, 1997. $1,772,936.00   

Common stock (.001 par value) shares outstanding at March 31, 1997. 5,499,300  .


This Form 10-KSB document contains 46 pages.


                                     PART I




ITEM I.  DESCRIPTION OF BUSINESS:


AMERICAN ABSORBENTS NATURAL  PRODUCTS, INC. (the  Company) markets  a number  of
products using a volcanic  mineral known as zeolite  which is mined from  mining
claims owned  by the  Company in  the State  of Oregon  or purchased  as a  bulk
commodity in  the open  market.   These  products are  used primarily  for  odor
control, gas or liquid  adsorption, and the slow  release of nutrients into  the
soil.

The Company currently produces and markets products which target the retail  and
agricultural consumable products area and the turf grass industry and which  use
the natural zeolite mineral  mined from the Company's  claims or purchased as  a
bulk commodity in the open market.  A partial listing of these products includes
Mother Earth  KittyKatTM Premium  Cat Litter  and Soil  Enhancer, a  cat  litter
product which, when used, can be disposed of  into the soil as a soil  enhancer;
Stall Fresha, a product to eliminate  urine-generated ammonia odors and  wetness
caused by  livestock;  White Buffaloa,  a  multi-purpose home,  farm  and  ranch
absorb-all  product;  and  Stinky  PinkysTM  and  Shoe  FreshTM,  products  that
eliminate moisture and odor from shoes and boots.  The Company has not currently
entered into the  industrial or  bulk sales  markets with  the zeolite  minerals
located on the Company's claims, but it may enter these markets during the  next
fiscal year.

All of the Company's  products use the natural  zeolite minerals mined from  the
Company's unpatented placer mining  claims located in the  Harney Basin area  in
the State of Oregon or purchased as a bulk  commodity in the open market.   When
mined, the minerals are  stored in bulk near  the claims and  may be shipped  by
truck as needed to an independent processing facility in New Mexico for crushing
and screening.   The Company's  larger packaged  products such  as Mother  Earth
KittyKata Premium Cat Litter and Soil Enhancer, White Buffaloa and Stall Fresha,
are packaged  and  stored  at  this  facility until  they  are  shipped  to  the
distributor or end retailer.   The smaller packaged  products, such as the  shoe
odor and moisture   products, Stinky  Pinkysa and Shoe  Fresha are packaged  and
stored at the  Company's facility  in Austin, Texas.   The  Company uses  mostly
contract labor  for each  phase of  its current  mining, milling  and  packaging
operations.  In  October, 1995,  the Company purchased  in a  distress sale  for
$65,000 plus an additional $15,000 for repairs, a milling, packaging and storage
facility containing 103,125 square feet  and approximately 3,500,000 cubic  feet
of inventory storage space in Hines, Oregon, near the Company's mining claims in
Oregon.    The  Company's  insurance  carrier  placed  a  replacement  value  of
$2,049,172 on  the facility.   This  facility  has not  yet been  equipped  with
milling and packaging equipment.   However, the  Company raised sufficient  cash
through a private placement during  the first part of  fiscal 1998 to equip  the
facility with the  necessary milling and  packaging equipment and  has placed  a
purchase order  with an  equipment  supplier to  purchase  the equipment.    The
Company expects the facility to be operable by mid-summer, 1997.

Marketing of the Company's products is  performed by the Company's wholly  owned
subsidiary,  American   Absorbents,   Inc.  and   through   joint-venture   type
relationships.   Since the  commencement of  its  zeolite products  business  in
approximately 1992, the Company has been  principally in the product and  market
development stage and has  focused its marketing efforts  primarily in the  test
market area.   More  recently, the Company has  begun the implementation of  its
Agricultural Marketing Plan  which includes a  concentrated marketing effort  of
Mother Earth KittyKatTM Premium  Cat Litter and  Soil Enhancer, White  BuffaloTM
and Stall FreshTM.  The Company began marketing its agricultural products in the
European marketplace in November, 1995, through an import/export company located
in France.

The Company has  engaged in   product promotion through  participation in  trade
shows, direct  contacts  with  distributors,  product  brokers,  large  national
chains, product promotions to consumers and  advertisements in various trade  or
other  publications.  The Company is also engaged in public awareness  campaigns
to inform the general public about the uses of natural zeolite minerals.

The Company  is  also  engaged  in  a  continuing  product  development  program
including test marketing and packaging design  programs.  The Company  currently
has available over a dozen products  that it has researched, developed and  test
marketed.  Since there are so many potential uses (estimated at 3,000+) for  the
zeolite mineral in consumer products, any  future research and development  will
be primarily in the area of market research.  The Company will be  concentrating
its efforts over the next twelve  months to marketing existing products but  may
introduce new products during that time period.

The majority of  the Company's unpatented  placer mining claims  are located  on
federal land in the Harney Basin, Harney County, Oregon.  These 259 claims cover
approximately 7.475 square miles or 6,000 acres.  The estimated proven  reserves
of in-place  zeolite on  the southern  40% (approximately  135 claims  or  2,700
acres) of the Harney Basin claims is 477,653,873 tons and the estimated probable
reserves is 746,089,789 tons, (based on  independent geologist's reports).   The
geologist assumed mining  of only  the top  80 feet  of the  deposit.   In-house
reports of Anaconda (former  owner of the northern  portion of the Harney  Basin
Deposit) geologists placed the estimated reserves of zeolite mineral located  on
the northern 4060 acres of the Harney  Basin in excess of 1,000,000,000 tons  of
90% pure zeolite.  Their  assumptions included mining only  the top 100 feet  of
the deposit.  Existing drill hole  core data indicates that the total  thickness
of the deposit is approximately 300 feet which would significantly increase  the
estimated reserves  within the  deposit.   An independent  geological  appraisal
relating only  to the  approximately 400  acres on  which the  Company has  made
application for its Permanent  Mining Permit and Plan  of Operations placed  the
reserves on the top  60 feet of that  area at 20-30,000,000  tons and valued  at
2.2-3.3 billion dollars.  Mining on the  claims is open-pit and is performed  by
removing any overburden with a front-end loader and then hauling the mineral  in
trucks to be stored  in Hines, Oregon, approximately  25 miles from the  claims.
From there it may be shipped in bulk to a facility in New Mexico for processing.
After equipping of the  Oregon facility with processing  equipment, most of  the
mining and milling operations will be conducted in Oregon.

The Company also  owns 26  unpatented zeolite  placer mining  claims in  Malheur
County, Oregon, near the town of Sheaville on the Oregon/Idaho border as well as
10 unpatented lode  zeolite mining claims  situated in  Mohave County,  Arizona,
approximately 60 miles  northwest of Kingman,  Arizona, near the  town of  Dolan
Springs, Arizona.


WARRANTIES:


The Company's  products are  all manufactured  from natural  zeolite, a  natural
mineral mined  from the  earth.   As such,  the products  do not  have  specific
warranties relative to the  product.  The  Company does offer  a 100%   customer
satisfaction guarantee.  If, for any reason, a customer is not satisfied with  a
particular product's performance, the Company will  refund 100% of the  purchase
price.



SUPPLIERS:


The Company is the country's largest corporate holder of zeolite reserves  which
assures the Company of always having an adequate inventory of the major material
used in its products.   Other supplies, primarily  packaging materials, used  by
the Company in its manufacturing process are readily available from a number  of
suppliers.  Services used by the  Company for its mining, milling, grinding  and
processing are also readily available from a number of service providers.



TRADEMARKS AND PATENTS:


The Company markets  its products  under a  number of  trademarks and  trademark
applications.  The Company has applied  for federal trademark protection on  its
products currently  marketed, or  to be  test  marketed, by  the Company.    The
Company does not own, hold or use any patents.



INVENTORY:


The Company has maintained lower inventory levels during the development  stage,
but plans to increase inventory levels  when full-scale marketing efforts  begin
under the Agricultural  Marketing Plan.   The book  value of  inventory for  the
fiscal years  ended  January 31,  1997  and January  31,  1996 was  $99,952  and
$109,098, respectively.




CUSTOMERS:


The Company's products  are currently being  sold  through  direct sales to  the
customer, to retail outlets and   through regional distributors.  Products  have
been sold  to  over 100  different  retailers with  approximately  2,000  retail
outlets.   For  the  fiscal  year  ended  January  31,  1997,  E.N.S.R./S.A.R.L.
accounted for approximately 58% of sales. For the fiscal year ended January  31,
1996, H.E. Butt Grocery Company accounted for 18.6% of sales,  E.N.S.R./S.A.R.L.
accounted for 48.2% of sales and  Academy Surplus accounted for 15.9% of  sales.
The Company's products are currently being sold, or have been approved for sale,
in several large  national retail  outlets as  well as  smaller retail  outlets.
Currently, and at the present sales levels in the development stage,  management
does not believe that the loss of any  single or group of the Company's  largest
customers would have a materially adverse effect on the Company's business.



BACKLOG:


The Company has been  primarily in a test  marketing phase.  Accordingly,  there
was no  backlog at  January 31,  1997 or  January  31, 1996.   The  Company  has
maintained sufficient inventory levels  to ship products  when they are  ordered
and plans to  continue to maintain  sufficient inventory levels  to fill  future
orders.



COMPETITION:


The Company experiences some competition in the developing and marketing of  its
products.  Management has categorized competition into three areas, namely:   1)
producers of products similar to those marketed by the Company but not using any
natural zeolite mineral; 2) producers of products using natural zeolite minerals
mined from the  producer's own  reserves; and,  3) producers  of products  using
zeolite minerals purchased from an outside source.  The Company believes that it
can compete favorably with many of these producers because of the ability of the
Company to produce its natural zeolite  products at relatively low cost  because
of the vast amount of easily accessible zeolite located on the Company's  mining
claims.   Management also  believes that  because the  Company's operations  are
designed to reduce  overhead expenses and  the costs of  producing the  products
through the use of contract labor and independent contractors, the Company  will
be  able  to   quickly  adapt  to   the  changing  nature   of  products   using
environmentally safe materials.

The Company is aware of approximately thirty-two other companies in the  central
Texas area which are marketing cat litter products, some of which contain  small
percentages of zeolites.  Management is  also aware of three other companies  in
the nation which market a cat litter product using natural zeolite minerals, two
of which own small zeolite mining claims.  Management believes that Mother Earth
KittyKata Premium Cat Litter  and Soil Enhancer can  favorably compete with  the
cat litters not using natural zeolite minerals  on a price per pound basis  with
the added benefit  of an environmentally  friendly, dual-purpose  product.   The
Company's  management views the percentage of the Texas and national cat  litter
market currently held by the present  cat litter products using natural  zeolite
minerals to be  insignificant and therefore  does not believe  that the sale  of
such products by such companies will significantly impact sales of Mother  Earth
KittyKata Premium Cat Litter and Soil Enhancer by the Company.

The Company's shoe products,  Shoe FreshTM and Stinky  PinkysTM, compete with  a
number of large companies which manufacture similar shoe products, none of which
are believed to use natural  zeolite minerals.  Management  is aware of a  small
company currently  marketing  a shoe  product  using natural  zeolite  minerals;
however, such company  does not have  access to its  own zeolite mining  claims.
Management believes that it can compete favorably with these entities based upon
pricing of the Company's  products with the advantage  of being friendly to  the
environment.

The Company is not aware of any product similar to or which competes with  Fresh
PakTM.

The Company competes with a number  of manufacturers of products used to  absorb
automotive fluids, chemicals  and other liquid  wastes from  motor vehicles  and
machines.  However,  management is aware  of only one  other product which  uses
natural zeolite minerals in part.  Again management believes that the  Company's
product, Sorbs-A-Lota, can  compete favorably  with these  other products  based
upon pricing and performance of the product.

The Company is aware of only one  other company which markets a product  similar
to Stall FreshTM.  The competing product is marketed by a company which does not
own its own zeolite  deposits and uses natural  zeolite minerals purchased  from
zeolite suppliers.   Management  expects to  begin marketing  its Stall  FreshTM
product in  areas  where the  competing  product is  sold  and believes  it  can
favorably compete with the competitor due to the Company's ownership of  its own
zeolite deposits.

The Company is not aware of any other company that produces a product similar to
its multi-purpose White BuffaloTM home, farm and ranch absorbs all product.



RESEARCH AND DEVELOPMENT:


The Company is engaged in continuing  market research and development  programs.
The  Company  currently  has  available  over  a  dozen  products  that  it  has
researched, developed and test marketed.  Since there are so many potential uses
(estimated at  3,000+) for  the zeolite  mineral  in consumer  products,  future
research and development will be primarily in the area of market research.   The
Company will  be  concentrating its  efforts  over  the next  twelve  months  to
marketing existing  products but  may introduce  new products  during that  time
period.   During the  development  stage a  large  percentage of  the  Company's
overhead was  allocated  to  research and  development  but  the  percentage  of
overhead allocated to research and development  has declined as the Company  has
moved more  to the  marketing phase.    The Company  has developed  its  zeolite
products in-house and test markets each  product in a limited number of  stores.
During the fiscal years ended January 31, 1997 and January 31, 1996, the Company
recorded research and development expenses of $0 and $8,115, respectively.



ENVIRONMENTAL  MATTERS:


The Company's products, being environmental products, have a positive impact  on
the environment  and are  considered environmentally  friendly.   Compliance  in
general with regulations relating to the  protection of the environment has  not
had, and  is  not  anticipated to  have,  a  material effect  upon  the  capital
expenditures, earnings or competitive position of  the Company.  Because of  the
limited nature of  the mining  operations in Oregon  at this  time, the  Company
operates under a Total  Exemption From Reclamation  Requirements.  However,  the
Company's current policy is to reclaim all of its mined areas.  The Company  has
received a limited mining permit and  grant of total exemption from  reclamation
from the  Federal  Bureau of  Land  Management for  1997.   In  anticipation  of
expanding its operations the Company has contracted an independent geologist who
has submitted to   the Federal Bureau  of Land Management,  the State of  Oregon
Department of  Geology  and  Minerals  Industries  and  Harney  County,  Oregon,
officials, a permanent mining  permit application and  a reclamation plan  which
includes an environmental assessment or an environmental impact statement  which
sets forth the plan of operation, assesses  the impact of the operations on  the
local environment and specifies the extent and type of reclamation which will be
accomplished.  The 30-day Notice of Public  Hearing was filed on April 23,  1997
relative to this application.

On portions  of  the  Harney  Basin Claims  the  Company  has  discovered  small
quantities of  erionite in  the zeolite  deposits.   The  federal  Environmental
Protection Agency has  classified erionite  as a  potentially hazardous  mineral
which may be harmful to animals and humans.  However, no conclusive research has
been completed by the government and  the possibility currently exists that  the
government will remove the  potentially hazardous classification from  erionite.
The Company has no intent to mine deposits where erionite is present.
South of the Harney Basin Claims is a small area known as the South Narrows Area
of Critical Environmental Concern containing an endangered species known as  the
Malheur Wirelettuce.  The Company has  released its claims which border on  this
area which  management  believes  satisfactorily minimizes  any  impact  on  the
habitat for  this  endangered  plant  species.   The  Harney  Basin  Claims  are
generally surrounded by, and on the east side adjoin, the Malheur Wildlife Area.
To the extent that mining operations may be visible from the wildlife area,  the
Company will utilize dust  abatement and other measures  designed to reduce  any
impact on the wildlife area.




EMPLOYEES:


At January 31,  1997, the Company  had three full-time  employees not  including
contract laborers who are employed on  an "as needed" basis.   In the past,  the
majority  of  Mr.  Young's  salary  has  been  paid  by  the  Company's   parent
corporation.  The Company does not  anticipate adding any significant number  of
employees in the immediate future but will continue to employ contract  laborers
on an "as  needed" basis.   After completion of  additional capitalization,  the
Company does plan  to add  a marketing  executive with  national prominence  and
possibly two administrative personnel.




ITEM 2.  DESCRIPTION OF PROPERTIES:



 Mining Properties


The Company controls 259 unpatented placer  mining claims located in the  Harney
Basin, Harney  County, Oregon,  covering approximately  7.475 square  miles  and
situated approximately 25 miles south of Burns, Oregon, and about 214 miles west
of Boise, Idaho (Harney Basin Claims).  Also, the Company controls 26 unpatented
zeolite placer  mining  claims in  Malheur  County,  Oregon, near  the  town  of
Sheaville (Sheaville Claims).  In addition,  the Company controls 10  unpatented
lode zeolite mining claims situated in Mohave County, Arizona, approximately  60
miles northwest of  Kingman, Arizona, near  the town of  Dolan Springs,  Arizona
(Arizona Claims).   The Company's initial  focus is on  the Harney Basin  Claims
because there is more  geological data available from  previous owners on  these
claims and the zeolite  deposits are on or  near the surface  with little or  no
overburden, thus reducing the cost of extraction.

The owner of  an unpatented mining  claim holds possessory  title to the  claim.
Possessory title is not legal title in the usual sense of that term, nor does it
arise out of any instrument or grant by the  United States or out of any  action
taken by any officer or agency of the state or federal governments.  Only when a
claim is patented is  there any affirmative government  grant under which  legal
title vests in the usual concept of property ownership.  Possessory title arises
as a matter of law out of the performance by the locator of the claim of certain
acts of location, including  the staking of claim  boundaries and the making  of
certain record filings in compliance with the requirements of federal and  state
laws.   The  validity of  an  unpatented  mining claim  cannot  be  conclusively
determined by an inspection of public records.   It is dependent upon the  legal
availability of the lands at the time the  location is made and the validity  of
the mineral discovery within  the boundaries of each  claim, in compliance  with
federal, state and local  laws relative to location  procedures.  Prior to  1992
possessory title  was  maintained  against subsequent  location  by  the  annual
performance of labor or improvements on or for the benefit of each mining claim.
The Company  believes all  past assessment  work  requirements relating  to  the
Company's claims were  adequately performed.   Since 1992  possessory title  for
persons holding ten or more claims is  maintained by payment of an annual  claim
fee of $100.00 per 20 acre  claim site.  The Company  believes it has met  these
requirements.  The Company believes the  unpatented mining claims it holds  have
been located in compliance with the applicable state and federal mining laws and
generally accepted standards in the mining  industry.  The Company is not  aware
of any material conflicts with other parties concerning the claims and  believes
it has valid possessory right in those claims.


Office And Warehouse Facilities


The Company's principal  executive offices  are located  in approximately  4,300
square feet of office space which  is being leased from Austin-Young, Inc.,  the
Company's parent corporation.   Such space is  being furnished by  Austin-Young,
Inc. pursuant to a 5-year lease agreement dated July, 1996.  Monthly rental  for
such office space is  $1,900.  Such lease  also includes the  use of the  office
furniture and equipment located at such facility.

In October,  1993, the  Company acquired,  a building  containing  approximately
4,400 square feet of commercial warehouse space located in Austin, Texas.   This
space is used by the Company to package and store its inventory of smaller sized
products.   The  facility  is owned  subject  to  an existing  mortgage  in  the
principal amount of approximately $125,000.  Said mortgage is payable in monthly
interest only  payments of  approximately $750.00  with a  balloon payment    of
$125,000 due in September, 1997.  Because said facility lacks permanent  heating
and air conditioning, it is limited for use during the months of extreme cold or
heat. The Company plans to improve this facility to facilitate year-round use.

In October, 1995, the  Company completed the acquisition  of a milling  facility
containing  103,125  square  feet  and   approximately  3,500,000  cu.  ft.   of
production, packaging and storage space in Hines, Oregon, approximately 25 miles
from its Harney Basin zeolite deposits.  The facility is already equipped with a
70-ton overhead crane. The Company has  completed a private placement that  will
be used,  in  part, to  equip  this  facility with  crushing,  milling,  drying,
screening, packaging and storage equipment. The  facility is not subject to  any
existing mortgages.



ITEM 3.  LEGAL PROCEEDINGS:


Neither the Company, any of its properties, nor its subsidiary is a party to any
material pending legal proceeding or  government action, including any  material
bankruptcy, receivership, or  similar proceedings.   Management  of the  Company
does not believe that there are any material proceedings to which any  director,
officer or affiliate  of the  Company or its  subsidiary, any  owner of  record,
beneficially, of more than 5 percent of the common stock of the Company, or  any
associate of any such director, officer or affiliate of the Company, or security
holder is a party  adverse to the Company  or its subsidiary  or has a  material
interest adverse to the Company or its subsidiary.



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


During the fiscal year ended January 31, 1997, the Company solicited the proxies
of its security holders to vote upon the following matters at the annual meeting
of shareholders held on June 5, 1996:
         1. Election of five directors
         2. Ratification  of all  acts of  the officers  and directors  for  the
fiscal year ended January 31, 1996
         3. Ratification and approval of the borrowing of working capital  funds
from Austin-Young, Inc.
         4. Ratification of the  appointment of  Orton  and Company,   Certified
Public Accountants  to serve  as independent  auditors of  the Company  for  the
fiscal years ended January 31, 1996 and 1997.

                                    PART II



ITEM 5.  MARKET FOR  COMMON EQUITY AND RELATED STOCKHOLDER MATTERS:


The common stock  of the  Company is traded  on the  over-the-counter market  on
NASDAQ's Bulletin Board.   There currently exists a  limited trading market  for
the common stock;  however, management of  the Company does  not believe that  a
highly established market exists for the common stock.  The following table sets
forth the high and low bid  quotations for the common  stock as reported to  the
Company by market makers for the common stock.  These quotations reflect  inter-
dealer prices,  without retail  mark-up, mark-down  or  commission and  may  not
necessarily represent actual transactions.

                                Quarter            High            Low


     Year ended               First               $2.00            $0.75
      January 31,             Second              $2.12            $1.12
      1996                    Third               $2.12            $1.50
                              Fourth              $2.25            $1.50

      Year ended              First               $2.37            $1.37
       January 31,            Second              $2.37            $1.12
       1997                   Third               $1.50            $0.62
                              Fourth              $0.90            $0.47

As of January  31, 1997,  there were approximately  227 holders  of record  (not
including shares held in street names in street accounts) of the common stock of
the Company  as reported  to the  Company by  its transfer  agent.   Based  upon
requests for proxy materials  by various proxy  services, the Company  estimates
that it currently has approximately 500 shareholders.

No cash dividends have been declared or paid as yet on the common stock and  the
Board of Directors  of the Company  has not yet  decided on  a dividend  policy.
Whether dividends will be paid will be  determined by the Board of Directors  of
the Company and  will necessarily depend  on the  Company's earnings,  financial
condition, capital requirements and other factors.   The Board of Directors  has
no current plans to declare any dividends in the foreseeable future.

At January 31,  1997, the  Company had 50,000,000  shares of  common ($.001  par
value) stock authorized and had 5,360,100  common stock shares outstanding.   At
March 31, 1997, 5,499,300 common stock shares were outstanding.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS:


The Company, per FASB statement No. 7, is properly accounted for and reported as
a development  stage  enterprise.   The  Company's efforts  since  entering  its
current  business  have  been  devoted  primarily  to  Company   capitalization,
acquisition of mining  properties, packaging and  milling facility  acquisitions
and product and market development.

The Company has realized limited sales in each of its fiscal years ended January
31, 1992 through January 31, 1997  from limited test marketing programs for  its
products while  in the  development stage.   During  the development  stage  the
Company has developed over a dozen products and test marketed these products  in
various parts of the country.

LIQUIDITY
Austin-Young, Inc., the major stockholder of  the Company,  provided a   portion
of the Company's operating capital during fiscal years 1993, 1994, 1995 and 1996
through loans and equity funding and the Company owed approximately $182,539  to
Austin-Young, Inc. at January 31, 1996.  The balance owing to Austin-Young, Inc.
increased to 202,385 at January 31, 1997 due to the rolling of accrued  interest
into the note and $7,000 of advances made to the Company.  Revenues to date have
provided insignificant funding  of working  capital because  of the  development
stage status of the company and the limited test marketing programs.

During the fiscal years   1995, 1996 and 1997,  the Company has incurred  losses
that reflect the development  stage activity of  researching and test  marketing
its products.  The company has paid $140,739, $8,115 and $0.00 for research  and
development for the years 1995, 1996  and 1997, respectively.  The Company  paid
$91,700 to the Bureau of  Land Management in the  fiscal year ended January  31,
1996 and $29,500  in the fiscal  year ended January  31, 1997.   In the  future,
approximately $29,500 will be due to the Bureau of Land Management in August  of
each year to satisfy claim maintenance  fees on existing claims.   Austin-Young,
Inc. has provided,  through loans and  equity funding, any  deficiencies to  the
necessary funding during the development stage, but expects funding from private
placements and other offerings will be sufficient for future development  costs.
Total net funds loaned to the Company from Austin-Young, Inc. as of January  31,
1996, and January  31, 1997,  were $182,539  and $202,385,  respectively.   When
possible, the Company has issued stock for the acquisition of assets or services
to reduce the need for additional operating capital from the major  stockholder,
additional shareholders or gross profits from its limited marketing efforts.   A
large part of  the Company's  zeolite mineral  deposits were  acquired by  stock
issuance which is expected to play an integral part of maintaining a competitive
edge by keeping supply costs  of the principle ingredient  of its products to  a
minimum.  During the development stage, the Company has also relied on the  time
and talents of Austin-Young,  Inc. personnel and office  space and equipment  to
maintain a lower  overhead to  conserve its  limited resources  for product  and
market development.
During the fiscal year ended January 31, 1994, the Company issued 12,000  shares
of common stock to the major stockholder under an option agreement for  $36,000.
During October 1993, the Company issued 66,667 shares of common stock to a group
of private investors  for $200,000  in a private  offering.   The offering  also
granted a 90-day  option to  these investors to  take additional  shares and  on
December 17, 1993, the investors exercised their options in the amount of 80,072
shares for $191,400.  During the fiscal year ended January 31, 1995, the Company
issued 22,500 shares in a private placement for $90,000.  During that same  time
period the Company also issued a total of 62,750 shares for services rendered to
the Company and valued at $251,735. These services included consulting  services
for legal  work on  securities issues  and trademark  defense ($72,500),  market
development and promotion ($140,000) and geological work on the Company's Oregon
mining claims ($38,500).   During the  fiscal year ended  January 31, 1996,  the
Company issued 214,168  shares in a  private placement for  $394,362 and  issued
9,000 shares for artwork and packaging  design services rendered to the  Company
and valued at  $22,400.   During the  fiscal year  ended January  31, 1997,  the
Company issued  130,960 shares  in private  placements for  $156,860 and  issued
259,620 shares for services rendered to the Company and valued at $262,219.

Net General  and  Administrative  Expenses increased  by  approximately  $75,000
during the fiscal year ended  January 31, 1997, from  $393,000 to $468,000.   Of
this increase  in  general and  administrative  expenses, legal  and  accounting
expenses increased  by  $9,700, interest  expense  by $2,400,  rent  expense  by
$13,000, repairs and maintenance by $1,200, miscellaneous expense by $2,200  and
professional services by  $190,000.   Professional services  included shares  of
stock that  were issued  to officers  and directors  as compensation  for  their
services.  Decreases to the general and administrative accounts include  zeolite
lease expense ($52,500), printing, postage and office expenses ($11,100), travel
and entertainment ($7,700), advertising  ($5,700), business promotion  ($2,950),
contract labor  ($4,000),  insurance  ($4,000), salaries  and  wages  ($27,000),
property taxes ($700), and payroll taxes $1,200).  Other accounts accounted  for
the remaining difference.
The Company realizes gross profit margins  generally ranging from 20% to 60%  on
its product sales depending on product line and pricing levels.  For the  fiscal
years ended January  31, 1996,   January 31, 1997  and for the  period from  the
inception date on February 9, 1984 to January 31, 1997, the Company had  average
gross profit margins of 35%, 30% and  36%, respectively.   At current  operating
expense levels and with the anticipated product sales mix, the Company estimates
its break-even  at  approximately $100,000  in  sales  per month  or  just  over
$1,000,000 in sales per year.

The Company has $125,000 in bank debt outstanding.  This bank debt is secured by
an equivalent amount of   CD's that are owned  by Austin-Young, Inc., the  major
stockholder  of  the  Company.    Austin-Young,   Inc.  does  not  receive   any
compensation for the use of its CD's as collateral.  The debt includes  interest
only payments to the  bank in the approximate  amount of $750  per month.   This
bank debt was  incurred to pay  off an existing  mortgage on  the Austin,  Texas
warehouse facility.  The Company intends to pay the principal amount of the bank
debt  from proceeds of a public or private stock offering.  All accounts payable
and accrued expenses are paid when due or sooner when discounts are available.



RESULTS OF OPERATIONS


Because the Company is a development stage enterprise, it has incurred losses in
each of its fiscal years ended January 31, 1995, 1996 and 1997.  This is due  to
the Company incurring operating expenses during a time when most of the  efforts
were expended in  product and market  development and other  areas not  directly
related  to  marketing  while  positioning  the  Company  to  implement  various
marketing programs.

In fiscal 1992, the Company began test marketing products that it had  developed
and/or to  which it  had acquired  the rights  from other  companies.   Revenues
increased from $11,388  in 1992  to $43,115  in 1993  due to  test marketing  of
existing products in limited market areas.  During the fiscal year ended January
31, 1994,  the Company  concentrated on  attractive packaging  of its  products,
Company capitalization and distribution networks, with less emphasis on  product
research as  it  prepared  to  implement  various  marketing  programs  for  its
products.  Sales for the fiscal year indicated no growth over the previous  year
and, in fact, showed a decline in sales to  $20,323.  Sales for the fiscal  year
ended January 31, 1995, increased to $69,467, or 242% over the previous year, as
the Company expanded the test marketing  of products into more outlets.   During
the fiscal  year  ended January  31,  1996, sales  declined  to $26,070  as  the
Company's  management  concentrated  on  the  revamping  of  existing  marketing
structures in  retail outlets,  the  design of  a  marketing program  to  market
agricultural products through  feed dealers, the  development of the  conceptual
framework for marketing  the smaller packaged  products through  a direct  sales
organization, the development of a relationship with an import company in France
to market  products in  France and  the  acquisition of  a milling  facility  in
Oregon.  During  the fiscal year  ended January 31,  1997 revenues increased  to
$69,293, or  166%  over the  previous  year, as  the  Company began  to  realize
revenues from  the agricultural  marketing programs  in  the United  States  and
France.  The Company's products are  priced at various levels to generate  gross
profit margins of 20% to 60%.  Even in the test marketing programs, the  Company
has maintained  gross profit  margins of  30% and  35%, respectively,   for  the
fiscal years ended January 31, 1997 and 1996.   The gross profit margin for  the
fiscal year ended January 31, 1995, was negative primarily due to a write-off of
obsolete and excess inventory in the amount of $42,702 and to product promotions
that involved free product to new customers in introductory offers. Gross profit
margins have averaged  36% for  the period from  inception on  February 9,  1984
through January 31, 1997. Profit margins should increase and then stabilize once
production and marketing costs become  reasonable with higher production  levels
and higher sales volume.  Bringing  the Oregon milling facility into  production
should also  decrease costs,  thereby allowing  the  Company to  increase  gross
profit margins or reduce selling prices to facilitate increasing market share on
each of the products sold by the  Company.  Quantity discounts on bag  purchases
for certain of the Company's products  could result in up  to a 30% increase  in
the gross profit percent.

Ownership of its own zeolite deposits should allow the Company to better control
its cost of sales since zeolite is the major raw material used in its  products.
The Company also  has negotiated mining  arrangements with  mining companies  to
eliminate  large  capital  requirements  that  would  be  necessary  to  acquire
equipment.  Also, milling, packaging, and inventory arrangements have eliminated
the need to  spend additional money  for capital equipment  necessary for  these
processes in past years.

General and administrative  expenses have increased  steadily since January  31,
1991, as the Company developed more products and added personnel to test  market
products.  Depreciation and amortization  expenses since inception have remained
low because the Company  has contracted many of  its needs that would  otherwise
require capital expenditures.  A significant portion (approximately $251,000) of
the Company's  January  31,  1995  operating  expenses  relating  to  consulting
services were  funded through  the  issuance of  common  stock pursuant  to  S-8
Registration Statements.   Approximately $22,400 of  the operating expenses  for
the fiscal year  ended January 31,  1996, were funded  through S-8  Registration
Statements.  Approximately $262,000 of services were acquired during the  fiscal
year ended January 31, 1997 through the issuance of common stock.  In  addition,
another $157,000 of  common stock   was issued  in private  placements to  cover
other overhead expenses.

The Company's note payable to its  major stockholder increased by  approximately
$65,000 during the fiscal  year ended January 31,  1995, and by another  $46,000
during the fiscal year ended January 31,  1996 as the Company borrowed funds  to
help cover overhead expenses  and accrued rent expenses  owing to Austin  Young,
Inc.  During the  fiscal year ended January  31, 1997, the  note payable to  the
major stockholder increased by only $20,000 mostly due to accrued interest  that
was rolled  into the  note plus  approximately $7,000  of advances  made to  the
Company.  The balance of the note is expected to be paid from future earnings of
the Company.

In August, 1996, the Company paid  off a note payable of approximately  $125,000
on the warehouse/plant  facility in Austin,  Texas from the  proceeds of a  bank
loan that was secured by using CD's owned by the Company's major stockholder.

The Company has maintained current ratios of 0.47, 1.10 and 1.84,  respectively,
for the fiscal years ended January 31, 1997,  1996 and 1995.  The lower  current
ratio  for  the  fiscal   year  ended  January  31,   1997,  results  from   the
classification as short term debt of  $202,385 owing to Austin-Young, Inc.,  the
major stockholder of the Company.  This debt may  or may not be paid during  the
next fiscal year, depending upon profits of the Company.

The Company  does  not expect  inflation  to have  any  material effect  on  its
revenues, costs or overall  operation.  Since the  Company owns its own  zeolite
deposits that are the  main raw material used  in its products, inflation  would
generally give the  Company a competitive  edge over companies  that do not  own
their own deposits.  The Company expects that anticipated increased paper  costs
for the packaging used in its products can be off-set by price increases without
losing any competitive  edges since  all other  competitors will  face the  same
price increases.  The  Company has begun using  quality, less expensive  plastic
packaging for its Stall FreshTM product.



PLAN OF OPERATIONS


Management believes that it can continue to fund its operations through  private
placements or funds  received from the  major stockholder until  a public  stock
offering can be completed or revenues reach the level (approximately  $1,000,000
per year) at which the gross profits attained will finance the operations.   The
Company will have  to raise  a more  significant amount  of equity  in order  to
expand its operations at a more rapid rate.

Management has begun a limited marketing  campaign, based on available  capital,
of its  agricultural related  products in  certain market  areas of  the  United
States and in France.  Several  distributors have been signed to distribute  the
products and discussions are being held with others and are in different  stages
of completion which usually requires extensive  testing and approval by each  of
the wholesale or  retail outlets.   The Company continues  to sell  some of  its
smaller  packaged  products   through  several  of   the  retail  outlets   that
participated in the test marketing program for the products.  In November, 1995,
the  Company   began   shipping   some   of   its   agricultural   products   to
E.N.S.R./S.A.R.L., an import company located in France.

The Company has completed design and packaging for products such as Mother Earth
KittyKatTM Premium Cat Litter and Soil  Enhancer, White Buffaloa, Stall  Fresha,
Stinky PinkysTM and Shoe Fresha as well as eight other products.  The Company is
also working  the  conceptual framework  of  various other  products  using  the
zeolite materials  present in  its existing  product line.   This  includes  the
impregnation of zeolites with pesticides, herbicides and fertilizers for use  in
fields, pastures and gardens as well as chemicals to help eradicate fire ants.

In October, 1995, the  Company purchased a  production plant containing  103,125
sq. ft. and approximately 3,500,000 cu. ft. of production, packaging and storage
space  near its zeolite properties  in Oregon.  The  facility is not subject  to
any existing mortgages.  The facility  is already equipped with a 70-ton  crane.
The Company has  completed an equity  offering that will  be used,  in part,  to
equip this facility  with crushing,  milling, drying,  screening, packaging  and
storage equipment.   The Company expects  the Oregon milling  facility to be  in
production by mid-summer, 1997.  If the Company is successful in its efforts  to
complete a public stock offering currently being reviewed by the Securities  and
Exchange Commission, the  Company expects  to spend  approximately $400,000  for
milling equipment;  $155,000  on warehouse  facilities  in Texas;  $500,000  for
market development  of its  product line  and marketing  programs; $150,000  for
inventory;  $50,000 for  repairs and maintenance, and  $750,000 for general  and
administrative, working capital and contingency operations.



ITEM 7.  FINANCIAL STATEMENTS:




           ORTON & COMPANY
           CERTIFIED PUBLIC ACCOUNTANTS
           A PROFESSIONAL CORPORATION
50 West Broadway, Suite 1130, Salt Lake City, Utah 84101 . (801) 537-7044, fax.
                                 (801) 363-0615

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors
American Absorbents Natural Products, Inc.
and Subsidiary
(a development stage company)

We have  audited  the  accompanying  consolidated  balance  sheets  of  American
Absorbents Natural  Products,  lnc.  (a Utah  Corporation)  and  subsidiary  (a-
development stage  company) as  of January  31, 1997  and 1996  and the  related
consolidated statements of operations, cash  flows and stockholders' equity  for
the years ended January 31, 1997 and 1996  and for the period from inception  on
February 9,  1984  through  January 31,  1997.    These  consolidated  financial
statements  are  the   responsibility  of   the  Company's   management.     Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally  accepted   auditing
standards.   Those standards  require that  we plan  and perform  the audits  to
obtain reasonable assurance about whether the  financial statements are free  of
material misstatement.  An audit includes  examining, on a test basis,  evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and  significant
estimates made  by  management, as  well  as evaluating  the  overall  financial
statement presentation.  We believe that  our audits provide a reasonable  basis
for our opinion.

In our opinion, the consolidated financial statements referred to above  present
fairly, in all material respects, the financial position of American  Absorbents
Natural Products, Inc. and subsidiary  as of January 31,  1997 and 1996 and  the
results of their operations and   their cash flows  for the years ended  January
31, 1997 and 1996 and for the period from inception on February 9, 1984  through
January 31, 1997 in conformity with generally accepted accounting principles.


Orton & Company
Salt Lake City, Utah
February 14, 1997




MEMBERS: American Institute of Certified Public Accountants, Utah Association of
Certified Public Accountants, Division for CPA Firms - SEC Practice Section


                   AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                 AND SUBSIDIARY
                         (A Development Stage Company)

                       Consolidated Financial Statements

                           January 31, 1997 and 1996







                                    CONTENTS
Independent Auditors'
Report......................................................................12
Consolidated Balance Sheets
 ............................................................................15
Consolidated Statements of Operations
 .........................................................__________________ 17
Consolidated Statements of Stockholders' Equity
 ...............................................                             18
Consolidated Statements of Cash Flows
 .............................................................               22
Notes to the Consolidated Financial Statements
 .................................................                           24

                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                         Consolidated Balance Sheets
                          January 31, 1997 and 1996

<TABLE>
<CAPTION>


                                    ASSETS


                                                   1997            1996
CURRENT ASSETS
<S> <C>
  Cash                                        $       1,078    $      1,107
  Accounts receivable (Note 1)
    Trade                                            18,144           7,562
    Other                                                 -             580
  Prepaid expenses (Note 1)                          57,208          35,658
  Inventory (Note 1)                                 99,952         109,098

     Total Current Assets                           176,382         154,005


PROPERTY AND EQUIPMENT (Note 7)


OTHER ASSETS

  Mining claims (Note 8)                          5,081,669       5,081,669
  Notes receivable (Note 5)                           5,000               -
  Business development costs (Note 1)                     -             750
  Product tradenames (Note 9)                             -           2,500

     Total Other Assets                           5,086,669       5,084,919
                                              $   5,477,649    $  5,469,447

</TABLE>


                               (Continued)
                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                   Consolidated Balance Sheets (Continued)
                          January 31, 1997 and 1996

                     LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                   1997            1996
CURRENT LIABILITIES
<S> <C>
  Accounts payable and accrued expenses     $      49,119    $     13,060
  Current portion of note payable -
   related party (Note 10)                        202,385               -
  Note payable (Note 11)                          125,000         127,520

     Total Current Liabilities                    376,504         140,580


LONG-TERM DEBT

  Notes payable-related party-less
   current portion (Note 10)                            -         182,539

STOCKHOLDERS' EQUITY

  Common stock; authorized 50,000,000
   common shares at $0.001 par value;
   5,360,100 and 4,969,520 shares issued
   and outstanding, respectively                     5,361           4,970
  Capital in excess of par value                 7,270,816       6,851,728
  Deficit accumulated during the
   development stage                            (2,175,032 )    (1,710,370 )
     Total Stockholders' Equity                  5,101,145       5,146,328

                                             $   5,477,649    $  5,469,447

</TABLE>


                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>

                                                                    From
                                                                  Inception
                                                                on February 9,
                                                                 1984 Through
                                           For the years ended    January 31,
                                                January 31,          1997
                                           1997          1996
  <S> <C>
  Net Sales                         $     69,293   $    26,070  $     239,656
  Cost of goods sold                      48,716        16,950        152,690


     Gross Profit                         20,577         9,120         86,966



EXPENSES

  General and administrative             467,524       392,835      2,188,540
  Depreciation and
    amortization                          17,615        17,652         71,011


     Total Expenses                      485,139       410,487      2,259,551
Net loss before provision
 for income taxes                       (464,562 )    (401,367)    (2,172,585)

Provision for income taxes                   100           100          2,447

NET LOSS                             $   (464,662 ) $  (401,467) $ (2,175,032)


WEIGHTED AVERAGE
 LOSS PER SHARE                      $       (.09 ) $      (.08 )$      (1.22)

AVERAGE SHARES
 OUTSTANDING                            5,172,860     4,914,777      1,780,273

</TABLE>


                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                Consolidated Statement of Stockholders' Equity
            From Inception on February 9, 1984 to January 31, 1997

<TABLE>
<CAPTION>
                                                                         Deficit
                                                                         Accumu-
                                                                          lated
                                                                          During
                                                              Additional Develop
                                             Common Stock      Paid-in     ment
                                             Shares  Amount    Capital    Stage
<C> <S>
Balance at inception-February 9, 1984         -       $ -       $  -    $    -

Issuance of common stock for cash (Note 3)    37,500    38         962       -

Expenses paid by shareholders for the
years ended January 31, 1990                  -         -          518       -

Loss for the years ended January 31, 1990     -         -           -    (1,618)

Balance, January 31, 1990                      37,500    38      1,480   (1,618)

Issuance of common stock for
services rendered in August 1990              391,000   391      7,429        -

Issuance of common stock in September
 for various assets from
Austin-Young, Inc. (Note 5)                    50,000    50     198,890       -

Issuance of common stock for distribution
expenses from Global Environmental Industries
(GEI) for UT & WA, September 1990 (Note 3)     50,000    50      37,070       -

Contribution from Austin-Young, Inc.           -         -       13,500       -

Issuance of common stock for
services rendered in October 1990              12,500    12      37,488       -

Net loss for the year ended January 31, 1991   -         -          -   (57,756)

Balance, January 31, 1991                     541,000 $ 541   $ 295,857$(59,374)

Common stock returned in exchange for
common stock of GEI in March 1991 (Note 5)    (17,000)  (17)   (85,423)      -

Purchase of common stock from
Austin-Young, Inc. in May 1991 (Note 5)      (338,000) (338)   (64,682)      -

Cancellation of common shares                 (20,000)  (20)        20

Issuance of common stock for the
purchase of product from Steelhead
Specialty Minerals in August 1991 (Note 6)     10,000    10     74,990       -

Issuance of common stock for the
purchase of mining claims in
October 1991 (Note 8)                          13,214    13    184,987       -

Common stock canceled by officers/
directors in January 1992                     (20,000)  (20)        20       -

Contribution from Austin-Young, Inc.          -         -       17,000       -

Net loss for the year ended January 31, 1992  -         -         -     (93,315)

Balance, January 31, 1992                     169,214   169    422,769
(152,689)

Issuance of common stock for
acquisition of Geo- Environment
Services, Inc. in February 1992 (Note 5)      701,800   702     96,442       -

Issuance of common stock for
purchase of mining claims
in March 1992 (Note 5)                        243,000   243   4,859,757       -
Common stock canceled by officers
and directors in June 1992 (Note 6)           (32,430)  (32)         32       -

Cancellation of fractional shares
due to reverse stock split                        (21)   -          -         -

Contribution by Austin-Young, Inc.             -         -       10,000       -

Issuance of common stock  (pursuant to
purchase agreement in May, 1991)
to Austin-Young, Inc. for relief of
debt in July 1992 (Note 5)                 3,380,000   3,380     61,620       -

Net Loss for the year ended January 31, 1993   -         -         -   (136,304)

Balance, January 31, 1993                  4,461,563   4,462  5,450,620(288,993)

Issuance of common stock for
services rendered in June 1993 (Note 6)       17,800      18     26,682       -

Issuance of common stock to Austin-
Young, Inc. in June 1993 (Note 5)             12,000      12     35,988       -

Issuance of common stock for cash
October 1993 (Note 12)                        66,667      67    199,936       -

Issuance of common stock as down payment
on building October 1993 (Note 5)              6,000       6     29,994      -

Issuance of common stock for services
rendered October 1993 (Note 6)                17,000      17     50,983      -

Issuance of common stock for cash
December 1993 (Note 12)                       80,072      80    191,321      -

Contribution by Austin-Young, Inc.               -      -        36,000      -

Net loss for the year ended
January 31, 1994                                 -      -         -    (310,862)

Balance, January 31, 1994                  4,661,102   4,662  6,021,524(599,855)

Issuance of common stock for services
rendered February 1994 (Note 6)                6,000       6     29,994       -

Issuance of common stock for services
rendered in June 1994 (Note 6)                41,750      42     175,458      -

Issuance of common stock in a private
offering                                      22,500      22      89,978      -

Issuance of common stock for services
rendered in November 1994 (Note 6)            15,000      15      46,235      -

Contribution by Austin-Young, Inc.                                36,000

Net loss for the year ended January 31, 1995    -        -         -
(709,048)

Balance, January 31, 1995                  4,746,352   4,747
6,399,189(1,308,903)

Issuance of common stock
for services (Note 6)                          9,000       9    22,391

Issuance of common stock in
a private offering (Note 12)                 214,168     214   394,148

Contribution by Austin-Young, Inc.                              36,000

Net loss for the year ended
January 31, 1996                                 -        -        -
(401,467)

Balance at January 31, 1996                4,969,520   4,970
6,851,728(1,710,370)

Issuance of common stock for cash
in a private offering (Note 12)              130,960      131  156,729         -

Issuance of common stock for
services (Note 5 & 6)                        259,620      260  262,359         -

Net loss for the year ended
January 31, 1997                                -           -      -
(464,662)

Balance, January 31, 1997                  5,360,100  $
5,361$7,270,816$(2,175,032)

</TABLE>


                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                    Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                      From
                                                                   Inception on
                                                                    February 9,
                                          For the Years Ended      1984 through
                                             January 31,            January 31,
                                          1997         1996            1997
<S> <C>
Cash Flows From Operating Activities
Net loss                             $   (464,662)  $   (401,467)  $(2,175,032)
Depreciation and amortization              17,615         17,652        71,011
(Increase) decrease in receivables        (10,002)         3,457       (18,144)
Decrease (increase) in prepaid expenses   (21,550)        15,904       (45,208)
Decrease (increase) in inventory            9,146        (10,417)      (26,777)
Increase (decrease) in payables            36,059        (47,889)       48,129
Loss from disposal of fixed asset           1,560              -         1,560
Stock issued for services                 262,619         22,400       659,789
Expenses paid by shareholder                    -         36,000       149,018


Net Cash Used by Operating
  Activities                             (169,215)      (364,360)   (1,335,654)


Cash Flows From Investing Activities
Purchase of fixed assets                        -        (67,505)     (227,115)
Purchase of product tradenames                  -               -      (26,958)
Purchase of note receivable                (5,000)              -       (5,000)
Organization costs                              -               -       (1,524)
Purchase/sale of mining                         -               -          -
 development costs                              -               -        7,920
Purchase of mining claims                       -               -      (58,599)
Sale of licenses                                -               -      150,000
Purchase of stock                                                      (65,000)


Net Cash Used by Investing
  Activities                                (5,000 )      (67,505)     (226,276)


Cash Flows From Financing Activities
Issuance of common stock                   156,860        394,362     1,170,623
Issuance of notes payable                  144,846         46,423       647,210
Principal payments on long-term debt      (127,520 )      (10,020)     (254,825)


Net Cash Provided by Financing
 Activities                                174,186        430,765     1,563,008


Net (Decrease) Increase in Cash                (29 )       (1,100)        1,078

Cash at Beginning of Period                  1,107          2,207             -


Cash at End of Period                 $      1,078   $      1,107  $      1,078



Supplemental cash flow information:

Cash Paid For:
Interest                              $      8,688   $     18,834 $      61,385
Income Taxes                                   100            100         2,347

Non-Cash Transactions:
Stock issued for mining claims         $          -  $          - $   5,045,000
Stock issued for down
 payment on building                   $          -  $          - $      30,000
Stock issued for services              $     262,619 $     22,400 $     659,789
Stock issued for stock of
 Geo-Environment Services, Inc.        $          -   $         - $      97,144
Stock issued for Inventory             $          -   $         - $      75,000
Stock issued for assets from
 Austin-Young, Inc. and
 Global Environmental Industries       $          -   $         - $     236,060

</TABLE>

                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                Notes to the Consolidated Financial Statements
                          January 31, 1997 and 1996

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       Business Organization

       American Absorbents Natural Products, Inc. was incorporated on February
       9, 1984 under the laws of the State of Utah and under the name of TPI
       Land, Inc. as a wholly-owned subsidiary of TPI, Inc.  On September 14,
       1990, the Company changed its name to Environmental Fuels, Inc. and
       began developing its involvement in various phases of the conversion of
       vehicles to operating on compressed natural gas.  That developing
       business was sold on April 23, 1991 (see Note 3).

       On May 6, 1991, the Company changed its name to Geo-Environmental
       Resources, Inc. and is now developing its involvement in the
       distribution of zeolite, a mineral product which is an absorbent and has
       many potential uses such as oil and gas well cleanup, shoe and
       refrigerator freshener, landfill absorption, and other agricultural
       uses.

       On February 6, 1992, the Company acquired the outstanding stock of  Geo-
       Environment Services, Inc., a wholly owned subsidiary involved in
       marketing of the zeolite products.  The transaction was accounted for at
       historical cost in a manner similar to that in pooling of interest
       accounting for business combinations.

       In June 1995, the Company changed its name to American Absorbents
       Natural Products, Inc. and the name of its subsidiary to American
       Absorbents, Inc.

       Principles of Consolidation

       The consolidated financial statements include the accounts of American
       Absorbents Natural Products, Inc. and its subsidiary American
       Absorbents, Inc.  Collectively, these entities are referred to as the
       Company.  All significant intercompany transactions and accounts have
       been eliminated.

       Method of Accounting

       The Company recognized income and expenses according to the accrual
       method of accounting.  Expenses are recognized when performance is
       substantially complete and income is recognized when earned.  Earnings
       (loss) per share are computed based on the weighted average method.
       Stock options currently outstanding were not used in calculating
       earnings per share since the effect would be antidilutive.    The fiscal
       year of the Company ends January 31 of each year.  The financial
       statements reflect activity from inception, February 9, 1984.

       Cash and Cash Equivalents

       For purposes of the statement of cash flows, the Company considers all
       highly liquid debt instruments with a maturity of three months or less
       to be cash equivalents.

       Nonmonetary Transactions

       Nonmonetary transactions are transactions for which no cash was
       exchanged and for which shares of common stock were exchanged for
       assets.  These transactions are recorded at fair market value as
       determined by the board of directors.

                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                Notes to the Consolidated Financial Statements
                          January 31, 1997 and 1996

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


       Inventories

       Inventories are stated at the lower of cost (FIFO method)  or market,
       and consist of finished goods and packaging materials.

       Accounts Receivable

       Accounts receivable are shown net of the allowance for doubtful
       accounts.  This amount was determined to be $0 and $0 at January 31,
       1997 and 1996 after writing off all accounts determined to be
       uncollectible.  Other accounts receivable consists of $580 in employee
       receivables.

       Prepaid Expenses

       Prepaid expenses at January 31, 1996 and 1997 consist of the following:

                                                  1996      1997

         Prepaid mining land lease              $ 22,908  $ 17,208
         Prepaid fees                             12,750    40,000

                                                $ 36,658  $ 57,208


       Business Development Costs


       Business Development costs mainly consist of video production cost for a
       business promotional video and product packaging design.  These costs are
       amortized over the estimated useful life of the asset, which is 5 years,
       The costs and accumulated amortization at January 31, 1997 are as
       follows:

           Business development costs                       $     3,026
           Accumulated amortization                              (3,026)

                                                            $         -

       Mining Claims

       Mining claims are stated at the lower of cost or market, whichever is
       lower.

       Any costs incurred for the betterment or to increase the expected
       efficiency of the operations related to the extraction from the Company
       mining claims are capitalized and charged off to operations over the
       expected economic life of the claims.

       The Company has adopted SFAS statement #121 which requires a review of
       any potential for the impairment of value of any long-lived assets.  It
       is the  policy of the Company to annually review the future economic
       benefit of all long- lived assets and to charge off to operations any
       potential impairment of value of long-lived assets when applicable.

                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                Notes to the Consolidated Financial Statements
                          January 31, 1997 and 1996

NOTE 2 - DEVELOPMENT STAGE ENTERPRISE

       The Company, per FASB Statement No. 7, is properly accounted for and
       reported as a development stage enterprise.  Substantially all of the
       Company's efforts since its formation have been devoted to establishing
       its new business.  No significant revenue has been earned as of the
       balance sheet date.  Operations have been devoted to raising capital,
       purchasing zeolite property and establishing a marketing plan.

       Continuation of the development effort is contingent upon the Company
       raising sufficient capital from shareholders or other sources.  It is
       managements' intent to raise capital and further develop the marketing of
       its zeolite products. (See Note 15)

NOTE 3 -      COMMON STOCK AND STOCKHOLDERS' EQUITY

       During the periods shown, the Company had a one-for-two reverse stock
       split and a one-for-ten reverse stock split.  The financial statements
       have been retroactively restated to reflect the stock splits.

       Stock of the Company has been issued for cash, license agreements, mining
       claims, compensation for services, and in exchange for other stock.

       On February 10, 1984, the Company issued 37,500 shares of its stock to
       TPI, Inc. for $1,000 cash.  On June 30, 1984, TPI, Inc. distributed the
       37,500 shares to its stockholders in a partial liquidating dividend.

       In August and September 1990, control of the Company was acquired by
       Austin-Young, Inc. and shares of stock were issued to Austin-Young, Inc.
       and to some of its officers and directors (see Note 5).

       In September 1990, the Company acquired four license agreements to
       distribute the products of Natural Gas Resources, Inc., (NGRI) a wholly-
       owned subsidiary of Global Environmental Industries, Inc.  NGRI was
       engaged in the business of licensing the operations of compressed natural
       gas conversion centers and natural gas refueling stations.  NGRI had
       certain patented products used in the conversion of vehicles from
       gasoline and diesel to the use of natural gas.  Under these license
       agreements, the Company acquired the right to distribute the products of
       NGRI in San Antonio, Texas (metropolitan area); Burnet County, Texas;
       state of Utah; and the state of Washington.  On April 23, 1991, the
       Company sold the license agreements along with stock of Global
       Environmental Industries, Inc. and Natural Gas Industries, Inc. for
       $150,000.  All assets were sold at book value and no gain or loss was
       recognized on the sale.

       In August of 1991 the Company issued 10,000 shares of stock at $7.50 per
       share for the rights to two zeolite products of Steelhead Specialty
       Mineral, Inc. (see Note 9).

       In October 1991 the Company issued 13,214 shares of stock at $14 per
       share for mining claims in Harney County, Oregon and in March 1992,
       issued 243,000 shares  at $20 per share for additional zeolite mining
       claims in the same area (see Note 8).

                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                Notes to the Consolidated Financial Statements
                          January 31, 1997 and 1996

NOTE 3 - COMMON STOCK AND STOCKHOLDERS' EQUITY (Continued)

       In February 1992 the Company issued 701,800 shares at $0.14 per share for
       all the outstanding stock of American Absorbents, Inc. (AAI) which became
       a wholly owned subsidiary.  AAI had, prior to being acquired, purchased
       zeolite mining claims in Mohave County, Arizona (see Note 5).

NOTE 4 - INCOME TAXES

       The Company adopted Statement of Financial Accounting Standards No. 109
       "Accounting for Income Taxes" in the fiscal year ended January 31, 1996
       and has applied the provisions of the statement on a retroactive basis to
       the previous fiscal year which resulted in no significant adjustment.

       Statement of Financial Accounting Standards No. 109 "Accounting for
       Income Taxes" requires an asset and liability approach for financial
       accounting and reporting for income tax purposes.  This statement
       recognizes (a) the amount of taxes payable or refundable for the current
       year and (b) deferred tax liabilities and assets for future tax
       consequences of events that have been recognized in the financial
       statements or tax returns.

       Deferred income taxes result from temporary differences in the
       recognition of accounting transactions for tax and financial reporting
       purposes.  There were no temporary differences at January 31, 1997 and
       earlier years, accordingly, no deferred tax liabilities have been
       recognized for all years.

       The Company had cumulative net operating loss carryforwards of
       approximately $2,160,000 at January 31, 1997 and $1,700,000 at January
       31, 1996.  No effect has been shown in the financial statements for the
       net operating loss carryforwards as the likelihood of future tax benefit
       from such net operating loss carryforwards is not presently determinable.
       Accordingly, the  potential tax benefits of the net operating loss
       carryforwards, estimated based upon current tax rates of $734,400 at
       January 31, 1997 and $578,000 at January 31, 1996 have been offset by
       valuation reserves of the same amount.  The net change in deferred tax
       asset and offsetting valuation reserve amounted to $156,400 for 1997 and
       $136,000 for 1996.

NOTE 5 - RELATED PARTY TRANSACTIONS

       The majority of the outstanding shares of the Company are owned by
       Austin-Young, Inc., a Utah corporation that has its primary office in
       Austin, Texas.  Some individuals are officers and directors in both
       Austin-Young, Inc. and the Company.  During the periods shown, there were
       several transactions involving the majority shareholder and the Company's
       officers and directors, as follows:

       August 10, 1990 - Common investment shares of 250,000 were issued to
       Austin-Young, Inc. and 1,000 shares were issued to two officers and
       directors of the Company for services rendered.
       August 13, 1990 - Common investment shares of 100,000 were issued to
       Terry Young,

                  AMERICAN ABSORBENT NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                Notes to the Consolidated Financial Statements
                          January 31, 1997 and 1996

NOTE 5 - RELATED PARTY TRANSACTIONS (Continued)

       president of the Company, for serving as president.  Such shares were
       subsequently sold to Austin-Young, Inc.

       August 13, 1990 - Common investment shares of 5,000 were issued to Susan
       Young for bookkeeping services.  Susan Young was the wife of Terry Young
       at the time of issuance.

       August 17, 1990 - An option was given to Austin-Young, Inc. to purchase
       an additional 2,000,000 shares (pre-split)(100,000 shares post-split) of
       stock at the price of one cent per share.  Also, an option plan was
       approved which provides that the board of directors is authorized to
       issue up to 1,000,000 shares (pre-split) (50,000 shares post-split) to
       current and future employees at a price of one cent per share.  None of
       these options were exercised.  These options were later rescinded by the
       board of directors in July 1993.

       August 17, 1990 - Common investment shares of 12,500 were issued to an
       officer and director for services.

       September 3, 1990 - 50,000 shares were issued at $3.98 per share to
       Austin-Young, Inc. in exchange for distributorship license agreements,
       stock in Global Environmental Industries, Inc. and Natural Gas
       Industries, Inc., and cash. The assets acquired in the transaction were
       recorded at historical cost.  The Company subsequently transferred
       178,000 shares of Global stock back to the original transferor in
       exchange for 17,000 shares of Company stock.  The remaining 200,000
       shares of Global stock were sold as part of the transaction which
       occurred on April 23, 1991 (see Note 3).

       May 13, 1991 - 3,380,000 shares of common stock were purchased for
       $65,000 cash from Austin-Young, Inc. and canceled.  The Company agreed
       that Austin-Young, Inc. had the right to repurchase these shares for the
       same price at any time up to June 1, 1993 (see July, 1992 comment below).

       February 1992 - the Company issued 701,800 shares of common stock at
       $0.14 per share to the shareholders of Geo Environment Services, Inc.,
       (now AAI)  for their stock.  Officers of the corporation were major
       shareholders of AAI.

       July 1992 - 3,380,000 shares of common stock were issued at $0.02 per
       share to  Austin -Young, Inc. for debt relief of $65,000.

       February 1, 1993 - the Company issued to Austin-Young, Inc. an option to
       purchase up to 1,000,000 shares of common stock at a price of $3 per
       share.  This option expires on February 1, 1998, and there have been
       12,000 shares exercised to date at a price of $36,000.

       July 27, 1993 - the Company issued an option to the employees, officers
       and directors to purchase up to a maximum of 250,000 shares of common
       stock at a price of $3 per share.  This option was canceled on June 5,
       1995.
                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                Notes to the Consolidated Financial Statements
                          January 31, 1997 and 1996

NOTE 5 - RELATED PARTY TRANSACTIONS (Continued)

       October 8, 1993 - 6,000 shares of stock were issued at $5 per share to
       Susan Young as down payment on the purchase of a building.

       During 1994, Austin-Young, Inc. issued several promissory notes to the
       Company to cover cash shortages.  Total promissory notes issued was
       $61,424.  (See Note 10)

       In June 1995, the Company adopted a 1995 stock option plan for the
       employees, officers and directors to purchase up to 1,000,000 shares of
       common stock at market price.  The options expire in seven years from the
       date of offer.

       The Company is leasing its office space from a related party pursuant to
       a 60 month lease agreement dated July 30, 1996 on a month to month basis
       at $1,900 per month.

       During 1996, Austin-Young, Inc. issued $38,000 in promissory notes to
       cover cash shortages.  $5,000 was paid back during the year.

       For the years 1990 to 1996, The Company's major stockholder, Austin-
       Young, Inc. provided compensation to one of the  Company's officers and
       directors while working on projects related to Company business.  The
       compensation is shown as an expense to the Company and capital
       contribution.  Total compensation paid was $36,000 for 1994, 1995 and
       1996.

       For 1997, the Company issued 128,869 shares of common stock in lieu of
       cash to its officers and directors for services performed.  The stock was
       valued at $128,869, or $1 per share, the trading value of the stock at
       the time of issuance.

       In 1997, the Company was required to pay a balloon payment due on its
       warehouse in September, 1996.  Instead of finding long term funding
       through a mortgage company, Austin-Young, Inc., the majority shareholder
       provided $125,000 in certificates of deposit for collateral on a one year
       note of $125,000 provided by a local bank to pay the balloon payment.
       The note is due in September, 1997 (See Note 11).

       In 1997, the Company issued 16,751 shares of stock to Austin-Young, Inc.
       for rent for the use of office space.  Total rent for fiscal year 1997
       was $13,000.  The office space is rented pursuant to a 60 month lease
       agreement.  (See Note 18)

       In 1997, the Company contracted with American Crisis Publishing (a wholly
       owned subsidiary of Austin-Young, Inc.) to provided $40,000 (40,000
       shares of common stock) of future _mail out_ services for company
       literature and future advertising promotions.  American Crisis Publishing
       specializes in _the creation and preparation of booklets and mailouts for
       the dissemination of information to the public_.  The services have not
       yet been performed and is classified as a prepaid expense.

       In 1997, the Company purchased for $5,000 from Austin-Young, Inc. a
       $20,000 note receivable from a former officer and director for the
       purchase of common stock.  The note was discounted due to the poor
       probability of collection.  The Company intends to make a demand for
       payment on the note or cancel the shares that were issued under

                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                Notes to the Consolidated Financial Statements
                          January 31, 1997 and 1996

NOTE 5 - RELATED PARTY TRANSACTIONS (Continued)

       the note.

       In January, 1997, the Board of Directors approved a compensation package
       for David Redding, President, at $7,000 per month, $3,500 cash and $3,500
       in stock until the Company could compensate entirely with cash.

       In future years, when the Company operations become more fully developed,
       the compensation will increase in proportion to the time and expertise
       given by the officer/director and will be paid directly from Company
       funds.

NOTE 6 - NONMONETARY TRANSACTIONS

       Nonmonetary transactions consist of the transactions detailed in Note 5
       above and the transfer of common investment shares to individuals and
       corporations for services and distributorship license agreements, as
       follows:

       September 24, 1990 - 50,000 shares of common stock were issued at $0.74
       per share to two corporations for distributorship license agreements.

       October 25, 1990 - 12,500 shares of common stock were issued  at $3 per
       share to individuals for services.

       August 1991 - 10,000 shares of stock were issued at $7.50 per share for
       trademarks and patents for two zeolite products.

       October 1991 - 13,214 shares of stock were issued at $14 per share for
       zeolite mining claims (see Note 8).
       January, 1992 - 20,000 shares of common stock were returned to the
       treasury and canceled.

       February 1992 - 701,800 shares were issued at $0.14 per share for 100% of
       the shares of Geo-Environment Services, Inc (see Note 5).

       March 1992 - 243,000 shares were issued at $20 per share for zeolite
       mining claims (see Note 8).

       June 1992 - 32,430 shares were canceled by officers and directors.

       June 1993 - 17,800 shares were issued at $1.50 per share for services
       performed.

       October 1993 - 6,000 shares were issued at $5 per share for down payment
       on plant facility.

       October 1993 - 17,000 shares were issued at $3 per share for advisory
       services.

       February 1994 - 6,000 shares were issued at $5 per share for legal
       services.
                  AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                AND SUBSIDIARY
                        (A Development Stage Company)
                Notes to the Consolidated Financial Statements
                          January 31, 1997 and 1996

NOTE 6 - NONMONETARY TRANSACTIONS (Continued)

       June 1994 - 25,750 shares were issued at $4 per shares for services
       rendered.
       June 1994 - 11,000 shares were issued at $5 per share for services
       rendered.

       June 1994 - 5,000 shares were issued at $3.50 per share for services
       rendered.

       November 1994 - 10,000 shares were issued at $3.50 per share for services
       rendered.

       November 1994 - 5,000 shares were issued at $2.25 per share for services
       rendered.

       During 1995, 9,000 shares were issued at an average price of $2.49 per
       share for services rendered.

       During 1997, 259,620 shares (185,620 related party) were issued at an
       average price of $1.01 per share for various services rendered.

       All nonmonetary transactions, with related parties and non related
       parties, transacted with stock of the Company were measured either at the
       estimated fair value of the stock being issued (stock market quotations)
       or fair value of goods or services being rendered, whichever was more
       readily measurable.

NOTE 7 -      PROPERTY AND EQUIPMENT

       Property and equipment consists of the following:


<TABLE>
<CAPTION>
                                                      January 31,
                                                   1997          1996
       <S> <C>
       Plant                                    $  244,978  $   244,978
       Machinery and equipment                      10,582       12,382
       Accumulated depreciation                    (40,962)     (26,837)

                                                $  214,598  $   230,523

</TABLE>

       Machinery and equipment is depreciated on the straight-line method over
       the estimated useful lives of five (5) years.  Plant is being depreciated
       over the estimated useful life of 20 years.  Depreciation expense is
       $14,365 and $12,047 for the years January 31, 1997, 1996 respectively.
       Amortization expense is $3,250, $5,605 for the years ended January 31,
       1997 and 1996 respectively.

       The Company has agreements with various vendors to do the mining and
       milling of its zeolite mineral and products; this has resulted in minimal
       investment in machinery and equipment.

       In October, 1995, the Company purchased from a defunct logging operation,
       a 103,125 square foot building containing approximately 3,500,000 cubic
       feet of milling, packaging and inventory storage space for a cash price
       of $65,000.  The building is to be used to house the Company's zeolite
       milling operations in Oregon.  The Company has completed approximately
       $10,000 worth of repairs that needed to be made to the building.  Farmers

                   AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                 AND SUBSIDIARY
                         (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                            January 31, 1997 and 1996

NOTE 7 - PROPERTY AND EQUIPMENT (Continued)

        Group Insurance, which insures the building, has determined that the
        replacement value of the building is $2,049,172.

NOTE 8 -  MINING CLAIMS

        The Company has purchased several zeolite mining claims in three
        different regions in the western United States.  All purchases were
        acquired through stock issuances and are described below.

        In April 1991 (before acquisition by Geo-Environmental Resources) (now
        American Absorbents Natural Products, Inc.), the Company's subsidiary
        issued 440,000 shares of its stock for mining claims containing zeolite
        in the Mohave County, Arizona region, and the stock given was
        originally valued at $.50 per share.  Thus the mining claims were
        originally valued at $220,000.  Since the value of the mining claims
        was not readily determined the mining claims were written down to a
        nominal value.

        In October 1991 the Company acquired twenty zeolite mining claims in
        Harney County, Oregon.  The value of the claims was agreed to be
        $185,000 by the seller and purchaser and 13,214 (132,143 presplit)
        shares of common stock were issued.  The stock was quoted on the market
        at $1.40 per share, thus determining the number of shares to be issued
        for the claims.

        In December 1991, the Company acquired an additional 203 zeolite mining
        claims in the Harney County, Oregon region.  A geological study was
        conducted and reserves were estimated at over 477,600,000 tons.  The
        value per ton was also estimated based on mining costs and market value
        of other companies in the industry.  The reserves were then discounted
        99 1/2% and a value was determined to be approximately $4,800,000.
        Stock was then issued at market price to equal the value given to the
        claims.

       To date no depletion has been taken on any of these claims.  Depletion
       of these assets will begin once material mining operations on these
       claims begins.

NOTE 9  -     PRODUCT TRADENAMES

        In August of 1991 the Company purchased for common stock, notes payable
        and cash, the inventory and the trade names for two shoe products.  The
        inventory was valued at $115,000 and the remainder of the purchase
        price of $25,000 was attributed to the tradenames of the products.  The
        tradenames are being amortized on the straight-line method over a five
        (5) year period.

                   AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                 AND SUBSIDIARY
                         (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                            January 31, 1997 and 1996

NOTE 10 - RELATED PARTY NOTES PAYABLE

        The notes payable-related party consist of advances from Austin-Young,
        Inc., a major shareholder of the Company.  The balances are as follows:

<TABLE>
<CAPTION>

                                                          January 31,
                                                      1997          1996
        <S> <C>
        Notes payable - Austin-Young, bearing
           interest at 7% interest and payable
         in 1997. Unsecured.                         $       -  $   182,539

        Notes payable - Austin-young, bearing
         interest at 7% and payable on demand.
         Unsecured.                                    202,385            -

        Less current portion                          (202,385)           -


        Totals                                       $       -  $    182,539

</TABLE>



NOTE 11-  NOTES PAYABLE

        Notes Payable consist of the following:

<TABLE>
<CAPTION>

        <S> <C>
        Note payable to an unrelated corporation,          Janaury 31,
        bearing interest at 6%, amortized over 30       1997         1996

         years, balloon payment due September
         1996. Secured by warranty deed.             $        -   $  127,520
         Note payable to a bank, bearing interest
         at 7.34%, due September, 1997.  Secured
         by $125,000 CD=s (see Note 5)                  125,000            -
                                                     $  125,000   $   127,520

</TABLE>

        Total interest expense for 1997 was $21,535.

NOTE 12 - PRIVATE PLACEMENT OF COMMON STOCK

        During October 1993, the Company issued 66,667 shares of restricted
        common stock in a private placement.  The shares sold for $3 per share
        and carried an option to purchase additional shares within 120 days.

        During December 1993, the Company issued 38,170 and 41,902  shares of
        restricted common stock in a private placement at $3 and $1.84 per
        share, respectively.  The shares issued were under an option agreement
        as part of the private placement that occurred during October 1993.

        On July 5, 1994, 22,500 shares of common stock were issued at $4 per
        share in a regulation D private stock offering.

                   AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                 AND SUBSIDIARY
                         (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                            January 31, 1997 and 1996

NOTE 12 - PRIVATE PLACEMENT OF COMMON STOCK (Continued)

        In 1996, the Company issued 214,168 shares of common stock in a
        regulation D private placement for total consideration of $394,362.

        In 1997, the Company issued 130,960 shares of common stock in a
        regulation D private placement for total consideration of $156,860.

NOTE 13 - RESEARCH AND DEVELOPMENT

        The Company expenses all research and development costs as incurred.
        The Company is accounted for as a development stage enterprise, and a
        portion of expenses incurred since inception have been directly related
        to research and development.  The research and development expenses
        incurred for the years ended January 31, 1997 and 1996 respectively are
        as follows:

<TABLE>
<CAPTION>

                                        1997         1996

        <S> <C>
        Labor and wages            $       -     $      8,115
        Materials and supplies             -              -
        Rent allocation                    -              -

                                   $       -     $      8,115

</TABLE>


        Research and development of the Company primarily relate to product and
        package design and market research.

NOTE 14 - ECONOMIC DEPENDENCY
        During the current fiscal year, the Company has developed an overseas
        customer that provided 58% of the years sales volume.

NOTE 15 - SUBSEQUENT EVENTS

        In January, 1997, the Company authorized a private placement of up to
        $500,000 to be used to purchase milling equipment to be used in the
        milling plant in Oregon, to begin mining and milling operations,
        increase inventories and for working capital.  During the first quarter
        of the 1998 fiscal year, the Company raised approximately $204,000 and
        began the purchasing process for the milling equipment.  This portion
        of the private placement was sold in Units consisting of 4,800 shares
        of restricted common stock and a $3.00 per ton royalty on 6,000 tons of
        zeolite mineral as it is mined, milled and sold.  The Company has
        expanded the total amount of capital to be raised up to $500,000 and
        has engaged Northstar Securities to sell the remaining $300,000 of the
        private placement to accredited investors only.  Each purchaser will
        receive their pro-rata share of the royalty payment based upon the
        number of Units purchased relative to the total number of Units sold.
        The royalty payments will be paid from the first tonnages of zeolite
        mineral mined and sold by the Company.  The Company may increase the
        amount of the royalty payment above the $3.00 amount per ton, but in no
        event will the total royalty payment to any holder of Units exceed
        $18,000.00 per Unit held.  The increase in the royalty amount paid
        would only decrease the time limit in which the

                   AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                 AND SUBSIDIARY
                         (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           January 31, 1997 and 1996

NOTE 15 - SUBSEQUENT EVENTS (Continued)

        holder of a Unit would receive the total royalty amount.  Royalty
        payments will be made quarterly after the Company has made its
        quarterly financial statement filings with the Securities and Exchange
        Commission and determined the total tonnage that has been mined, milled
        and sold during the reporting quarter.

NOTE 16 - USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

        The preparation of financial statements in conformity with generally
        accepted accounting principles requires management to make estimates
        and assumptions that affect reported amounts of assets and liabilities,
        disclosure of contingent assets and liabilities at the date of the
        financial statements and revenues and expenses during the reporting
        period.  In these financial statements, assets, liabilities and
        earnings involve extensive reliance on management's estimates.  Actual
        results could differ from those estimates.

NOTE 17 - FAIR VALUES OF FINANCIAL INSTRUMENTS

        The following of the estimated fair value of financial instruments is
        made in accordance with the requirements of SFAS No. 107, _Disclosure
        about Fair Value of Financial Instruments_.  The carrying amounts and
        fair value of the Company's financial instruments at January 31, 1997
        and 1996 are as follows:

<TABLE>
<CAPTION>


                                  January 31,1 997        January 31, 1996
                                  Carrying   Fair         Carrying    Fair
                                   Amounts  Values        Amounts     Values

<S> <C>
Cash and cash equivalents    $           -   $        -   $       -  $     -

Notes receivable                      5,000           -           -        -

Notes payable including current
 maturities                         327,385     327,385      310,059   310,059

</TABLE>

        The following methods and assumptions were used by the Company in
        estimating its fair value disclosures for financial instruments.

        Cash and Cash Equivalents

        The carrying amounts reported on the balance sheet for cash and cash
        equivalents approximate their fair value.

        Notes Receivable

        The fair values of notes receivable are based upon the interest rate
        the Company would receive on market rates available for savings and
        investment.

        Notes Payable

        The fair values of notes payable are estimated using discounted cash
        flow analyses based on the Company's incremental borrowing rate at the
        discount rate.

                   AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                                 AND SUBSIDIARY
                         (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           January 31, 1997 and 1996

NOTE 18 - LEASE OBLIGATION

        The Company leases space from its parent company, Austin-Young, Inc.
        pursuant to a 60 month lease beginning July 30, 1996 at $1,900 per
        month.

        Minimum lease obligations for future years is as follows:

        1998                $ 22,800
        1999                  22,800
        2000                  22,800
        2001                  22,800
        2002                  11,400






ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE:


There were no changes in or disagreements with the independent certified  public
accountants relating to accounting and financial disclosure in any of the three
most recent fiscal years of the Company.

                                 PART III



ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;     
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT:


                                                      SERVED AS
                 POSITIONS WITH                       DIRECTOR OR
NAME             THE COMPANY               AGE        OFFICER SINCE


Terry L. Young Chairman of the Board,       50          1990
               Chief Executive Officer,
               Director

David W.
Redding     President, Chief Financial      48          1993
            Officer, Assistant Secretary,
            Treasurer, Director

Kimberly
A. Love     Secretary                       34          1995

William
C. Branch   Director                        44          1995

Terry L. Young  became a director  of the  Company in 1990.   He  has served  as
Chairman of the Board  of Directors of the  Company from 1991  to present.   Mr.
Young has also served  as President of  the Company from  August 1990 until  May
1991, and  from June  1992 to  December 1993.    Mr. Young  has been  the  Chief
Executive Officer  of the  Company since  1990.   He  is  also President  and  a
director of Austin-Young,  Inc., the major  stockholder of the  Company, and  is
Chairman and Chief Executive  Officer of American  Absorbents, Inc., the  wholly
owned subsidiary of the Company.  He  served in the United States Military  from
1968 to 1971 when  he received an  honorable discharge.   Mr. Young received  an
associate degree in business from San  Antonio College in 1967 and attended  the
University of Texas at Austin for two years.  Age 50.

David W. Redding became  a director of the  Company in 1993.   He has served  as
President of the Company since February 1997.  He has served as Chief  Financial
Officer, Executive Vice President  and Treasurer of  the Company since  November
1993.  He has also served as  Assistant Secretary of the Company since  December
1994. Mr. Redding is  also Chief Financial Officer,  Treasurer, Secretary and  a
Director of  American  Absorbents, Inc.,  the  wholly owned  subsidiary  of  the
Company.    From  May 1988 until November  1993, he was self-employed  providing
tax, management and financial  services.  From November  1978 until May 1988  he
was Chief Financial Officer, Executive Vice President, Secretary, Director and a
member of the Executive  Committee of ASK Corporation,  a publicly held,  NASDAQ
listed company  engaged in  manufacturing and  marketing of  alternative  energy
equipment in  the emerging  solar energy  industry.   He was  nominated for  and
accepted  for inclusion in Who's Who Worldwide in Business in 1993.  He received
a bachelors degree in  business and accounting from  the University of Texas  at
Austin in 1974.  Age 48.

William C.  Branch became  a director  of the  Company  in June  1995.   He  was
President and Chief Executive  Officer of Charles P.  Davis Hardware, Inc.  from
1978 until 1982  when the  business was  sold to  Handyman, Inc.  in San  Diego,
California. Following a  period of  retirement, he  became the  Chairman of  the
Board and President of Branch International,  Inc., operating Branch Travel  and
has served in that capacity  from 1985 until present.   Mr. Branch attended  and
received an AA degree from Marion Military Institute, Marion, Alabama, in  1973.
He received a  BS degree in  International Business from  The American  College,
Leysin, Switzerland,  in 1977.    After that,  he  pursued graduate  studies  in
International Business at the  International Business Institute in  Switzerland.
Mr. Branch spends less than 10% of his time involved with Company business.  Age
44.

Kimberly A. Love  has served  as secretary of  the Company  since October  1995.
From September 1992 until October 1995, she was the owner of Harvest Company,  a
company specializing in the harvesting and  selling of timber to companies  such
as Champion Corporation, Louisiana Pacific and Kirby Industries.  From July 1990
until September 1992, Ms. Love worked for Baker Oil Tools in Houston, Texas as a
departmental specialist, where she assisted in budget analysis and planning  for
the manufacturing department.  She also  has experience as a market manager  for
F.M.I. and B.D.S. in  California, marketing new products  for companies such  as
R.J. Reynolds  and  other  consumer  products  marketing  companies  in  various
industries.  She attended  Southwest Texas State  University, San Marcos,  Texas
for two years.  Age 34.


ITEM 10.  EXECUTIVE COMPENSATION:


The following table sets  forth the aggregate remuneration  paid or accrued  for
the fiscal years ended January 31, 1994, 1995, 1996 and 1997, as to each officer
of the Company  whose aggregate  remuneration exceeds  $100,000, and  as to  the
aggregate remuneration of all officers as a group:


                  Annual Compensation        Long-Term
                          (1)               Compensation

                                                     Awards
                                        Payouts


                                        Restri

Name and                      Other     cted   Option  LTIP  All
Principal    Ye  Sala  Bonu   Annual    Stock  s/      Payo  Other
Positions    ar    ry    s    Compensa  Awards SAR's   uts   Compensa
                              tion                           tion

Terry L.
Young,       19    -0-          -0-      -0-   1,000,  -0-     -0-
CEO          94        $1,8                    000
                         00

             19
             95  -0-   $5,0   -0-       -0-    -0-     -0-   -0-
                       00

             19
             96  -0-   -0-    -0-       -0-    -0-     -0-   -0-

             19
             97  -0-   $7,0   -0-       59,473 -0-     -0-   -0-
                       00


All
Officers as  19  $34,  $1,8     -0-      -0-     -0-   -0-     -0-
a            94  390   00
Group (4
persons)

             19  $85,  $5,0
(4 persons)  95  500   00     -0-       -0-    -0-     -0-   -0-

             19  $44,  $1,0
(3 persons)  96  714   00     -0-       -0-    -0-     -0-   -0-

             19  $64,  $7,0
(3 persons)  97  800   00     -0-       112,20 -0-     -0-   -0-

                                        2


1)  Excludes the value of personal use of Company office facilities and  certain
other personal  benefits.    The  value of  such  personal  benefits  cannot  be
specifically or  precisely  ascertained  without  unreasonable  effort.    After
reasonable inquiry,  however, the  Company believes  that the  aggregate  annual
amount of such personal benefits does not  exceed $50,000 per person  or 10% of
the  total annual salary and bonus for the named executive officer.

The Company  does not  have any  pension, retirement,  deferred compensation  or
similar plan  for  its  officers, directors  or  employees.   It  does  have  an
incentive stock option  plan for its  officers, directors,  employees and  other
persons who perform substantial services for or  on behalf of the Company.   The
1995 Stock Option  Plan provides for  the granting of  options on  a maximum  of
1,000,000 shares  of the  Company's common  stock (which  number is  subject  to
adjustments in the  event of  stock dividends,  stock splits  and other  similar
events).  The 1995 Stock Option Plan is administered by the Board of Directors ,
or, at its option,  a duly authorized committee  of the Board.   Options may  be
granted at the market bid price of the common stock at the time of issuance  and
can be exercised by the payment  of cash or, at the  discretion of the Board  of
Directors, in shares of  common stock of the  Company.  The  term of any  option
granted may extend for seven years from the date of grant.  No options have been
granted under the 1995 Stock Option Plan.

Currently, directors do not receive any compensation for serving in their  roles
as directors of the Company.

There were no  options granted  and/or exercised  during the  fiscal year  ended
January 31, 1997.

The following table sets forth the  aggregated option/SAR exercises in the  last
fiscal year and the fiscal year-end option/SAR values:


            AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
                            FY-END OPTION/SAR VALUES

                                                   Value of
                                                 Unexercise
              Shares                  Number of       d
             Acquired                     d        in-the-
                on         Value     Options/SA     Money
             Exercise     Realized       Rs      Options/SA
   Name         (#)         ($)       at FY-End       Rs
                                         (#)      at FY-End
                                     Exercisabl      ($)
                                         e/      Exercisabl
                                     Unexercisa       e/
                                         ble     Unexercisa
                                                     ble
 Terry L.
Young, CEO      -0-         -0-       988,000 E      -0-



ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

                  MANAGEMENT:


The following table sets  forth certain information  furnished by the  following
persons concerning the common stock ownership as of March 31, 1997, of (i)  each
person who is known  to the Company to  be the beneficial owner  of more than  5
percent of the common  stock; (ii) all directors  and executive officers;  (iii)
directors and executive officers of the Company as a group:

Name and Address Number of        Common Stock      Percent of
                 Shares           Subject
of Beneficial    of Common        to Options or     Class
Owner            Stock            Warrants

Austin Young,                              988,000     62.55**
Inc.             3,069,789
3800 Hudson Bend
Rd.
Austin, TX.
78734

Terry L. Young                             988,000     62.55
                 3,069,789
3800 Hudson Bend
Rd.
Austin, TX.
78734

David W. Redding                              -0-       4.53
                 248,931
3800 Hudson Bend
Rd.
Austin, TX.
78734

Kimberly A. Love                              -0-       0.15
                 8,423
3800 Hudson Bend
Rd.
Austin, TX,
78734

William C.                                    -0-       2.65
Branch           145,944
3800 Hudson Bend
Rd.
Austin, TX.
78734

Officers and                                           68.77
Directors        3,473,087        988,000
as a group (6
Persons)

1)   Unless otherwise indicated, the second column reflects amounts as to  which
the beneficial  listed  in the  first  column has  sole  voting power  and  sole
investment power.

2)    The total number  of shares of  common stock outstanding  as of March  31,
1997, was 5,499,300.   As  of such date,  Austin Young,  Inc. had  the right  to
acquire 988,000 shares of common stock through the exercise of an option granted
to it by  the Company.   Such shares, which  are not  currently outstanding  but
which are subject to such option, are  deemed to be outstanding for the  purpose
of computing  the percentage  of outstanding  shares of  common stock  owned  by
Austin Young, Inc., Terry L. Young and the executive officers and directors as a
group, but shall  not be  deemed outstanding for  the purpose  of computing  the
percentage of the common stock owned by any other person.

3)   Austin Young, Inc. is approximately  90% controlled by Terry L. Young,  its
Chairman and  CEO.   Mr. Young  is a  director, officer  and 55.82%  controlling
shareholder of the Company  through his control position  in Austin Young,  Inc.
Of the shares set forth above, 47,000 are held in brokerage accounts in the name
of Austin Young, Inc.

4)   Of the shares  set forth above for Terry L.  Young, 2,923,091 are owned  of
record by Austin Young,  Inc., a corporation controlled  by Mr. Young;   988,000
represent options granted to Austin Young,  Inc.;  47,000 are held in  brokerage
accounts in  the name  of Austin  Young, Inc.;   75,598  are held  in  brokerage
accounts in the name of Mr. Young;   3,500 are owned of record by the spouse  of
Mr. Young, and, 20,600 are owned of record by the children of Mr. Young.

5)   Of the shares set forth above for David W. Redding, 248,431 are held in the
name of David  W. Redding  and 500  are owned  of record  by the  spouse of  Mr.
Redding.

6)   Of the shares set forth above for  William C. Branch, 119,471 are owned  of
record by Mr. Branch, 7,500 are owned of  record by Mr. Branch as custodian  for
the Charles  P. Davis  Trust and  26,423 are  held of  record by  Mr. Branch  as
custodian for family members.

** Mr. Young  and Austin Young,  Inc. currently have  no plans  to exercise  the
option that it holds for 988,000 shares.  If said option is not exercised by Mr.
Young and  Austin Young,  Inc., the  percentage  of beneficial  ownership  would
decline from 62.55% to 55.82% relative  to the currently outstanding shares  and
the percentage of beneficial ownership of the officers and directors as a  group
would decline  from  68.77% to  63.16%  relative to  the  currently  outstanding
shares.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:


Austin-Young, Inc. is the major stockholder of the Company, beneficially  owning
3,069,789 shares, or approximately 55.82% of the common stock at March 31, 1997,
excluding options  granted  to  Austin-Young, Inc.  to  purchase  an  additional
988,000 shares of common  stock.  Austin-Young, Inc.  is controlled by Terry  L.
Young, the Chief Executive Officer, Chairman and controlling shareholder of  the
Company.  Austin-Young, Inc. is a publicly held Texas corporation which operates
as a real estate developer principally in the Austin, Texas, area.  It also owns
a publishing company, American Crisis Publishing, Inc., which publishes drug and
alcohol abuse literature,  educational books and  magazines for  ages 5  through
adult, and coloring books for  children ages one through  four.  Mr. Young  owns
approximately 90%  and the  public shareholders  own  approximately 10%  of  the
outstanding common  stock of  Austin-Young, Inc.   Mr.  Young beneficially  owns
3,069,789 or approximately  55.82% of the  outstanding stock of  the Company  at
March 31, 1997, which amount includes  the shares beneficially owned by  Austin-
Young, Inc. as described above.

In October 1993 the Company purchased the Austin, Texas, packaging and warehouse
facility from Cassidy Consolidated Properties, Inc., a corporation controlled by
the former spouse of  Terry L. Young.   The purchase price  of the building  was
$180,000, paid with 6,000 shares  of common stock and  a promissory note in  the
amount of $150,000 payable in  installments of $1,500 per  month.  The note  was
paid off in August, 1996.  The building was  acquired by the seller in 1992  for
$150,000.

In February  1992 the  Company  issued stock  to  the shareholders  of  American
Absorbents, Inc.  in return  for all  the outstanding  shares of  such  company.
Terry L. Young received  290,000, or approximately 41%  of the shares of  common
stock issued in such transaction.  In addition, Tina B. Morris (former director)
received 5,000 shares and Donald L.  Gillespie (former director) received  5,000
shares in the transaction.  Mr. Young received 200,000 of the 290,000 shares for
services rendered in  founding the  subsidiary of  the Company;   the  remaining
shares were also issued for services rendered to the Company.

On May 13, 1991, 3,380,000 (pre-one-for-ten reverse split) shares were purchased
by the Company from  Austin-Young, Inc. for $65,000  and canceled.  The  Company
agreed that  Austin-Young, Inc.  would have  the right  to repurchase  the  same
number of shares without dilution by any reverse stock splits for $65,000 at any
time up to June 1, 1993.  On July  15, 1992, the Company issued 3,380,000  (post
reverse split) shares to Austin-Young, Inc. for debt relief of $65,000.

In February 1993 the Company issued to Austin-Young, Inc. a five-year option  to
purchase up to 1,000,000 shares  of common stock at  an exercise price of  $3.00
per share.    On June  16,  1993, Austin-Young,  Inc.  exercised its  option  to
purchase 12,000 shares.  These options  expire on February 1, 1998, and  Austin-
Young, Inc. does not plan to exercise any additional options.

Austin-Young, Inc. furnishes to the Company the office space and some  equipment
currently used by the Company pursuant to a 5-year lease dated July, 1996, for a
monthly lease rate of $1,900.  Austin-Young, Inc., in past years, also has  paid
the majority of the salary of Mr. Young, an officer of the Company who devotes a
significant amount of time and effort to the business of the Company.

Austin-Young, Inc.  has advanced  funds to  the Company  from time  to time  for
operating expenses.    At  January 31,  1997,  the  Company  owed  approximately
$202,385 in principal  to Austin Young,  Inc., which amount  was evidenced by  a
promissory note  bearing  interest at  7%  per annum  and  due on  demand.    In
addition, Austin Young, Inc. has pledged approximately $125,000 in CD's  against
a $125,000 note payable to a bank on the Austin warehouse facility.




ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K:


(a) (1) The following financial statements re included in Part II, Item 7:


                                                                 Page
Report of Independent Auditors                                   12

Financial Statements:

Consolidated Balance Sheets - January 31, 1996 and 1997          15,16

Consolidated Statements of Operations - Years ended January
 31,1 996 and 1997                                               17

Consolidated Statements of Stockholders' Equity (Deficit) - From
 inception on February 9, 1984 to January 31, 1997               18-21

Consolidated Statements of Cash Flows - Years ended January
 31, 1996 and 1997 and from inception on February 9, 1984 to
 January 31, 1997                                                22-23

Notes to Consolidated Financial Statements                       24-36

(2)  
submitted herewith.  Registrant is exempted from filing such schedules
because of its Form SB-2 Registration Statement filing.

(3)  
and from inception on February 9, 1984 to January 31, 1997 are submitted
herewith.

Exhibit 11 - Computation of Per Share Earnings (Loss)            44

Exhibit 21 - Subsidiary of the Registrant                        45

Exhibit 23 - Consent of Experts and Counsel                      46

All other exhibits are omitted since the required information is included in
the financial statements or notes thereto, or since the required information
is either not present or not present in sufficient amount.

(b) There wer no reports filed on Form 8-K during the last quarter of the
period covered by this report.


                                   SIGNATURES


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

                                  AMERICAN ABSORBENTS NATURAL PRODUCTS , INC.

                                  By:
                                     Terry L. Young, Chairman of the Board
                                     and Chief Executive Officer

Date:  May 27, 1997



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





Signature                         Title                       Date




__________________________  Chairman, Chief Executive        May 27, 1997
Terry L. Young              Officer and Director


__________________________  President, Chief Financial       May 27, 1997
David W. Redding            Officer, Principal Accounting
                            Officer, Assistant Secretary,
                            Treasurer and Director


__________________           Director                        May 27, 1997
William C. Branch

                   AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
      EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (LOSS)

                                                                 From
                                                                 Inception on
                                                                 February 9,
                                                                 1984 Through
                         For the Years Ended January 31,         January 31,
                                1997              1996              1997

<TABLE>
<CAPTION>
<S> <C>
Primary and Fully Diluted:

Average Shares Outstanding    5,172,860           4,914,777      1,780,273

Net Loss                    $  (464,662)        $  (401,467)   $(2,175,032)

Earnings (Loss) Per Share   $     (0.09)        $     (0.08)   $     (1.22)

</TABLE>




                              
                   AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                   EXHIBIT 21 - SUBSIDIARY OF THE REGISTRANT


   Name                                      Jurisdiction of Incorporation 
American Absorbents, Inc.                         Texas


The corporation listed is  a wholly owned subsidiary  of the Registrant, and  is
included in the consolidated financial statements.



                   AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
                  EXHIBIT 23 - CONSENT OF EXPERTS AND COUNSEL





                              ACCOUNTANT'S CONSENT





We hereby consent to the use of our audit report of American Absorbents Natural
Products, Inc. and Subsidiary dated February 14, 1997 for the years ended
January 31, 1997 and 1996 in the Form 10-KSB Annual Report for American
Absorbents Natural Products, Inc. and Subsidiary.




Orton & Company
May 27, 1997
Salt Lake City, Utah