SECURITIES AND EXCHANGE COMMISSION
                       Washington, DC  20549

                            FORM 10-KSB

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

            For the fiscal year ended DECEMBER 31, 1997

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

                   Commission file number 0-8161

                           DIONICS, INC.
          (Name of Small Business Issuer in Its Charter)

Delaware                                               11-2166744
(State or other jurisdiction                     (I.R.S. Employer
of incorporation or                                Identification
organization)                                             Number)

65 Rushmore Street
Westbury, New York                                          11590
(Address of principal                                  (Zip Code)
executive offices)

  Issuer's telephone number, including area code:  (516) 997-7474

  Securities registered under Section 12(b) of the Exchange Act: None

  Securities registered under Section 12(g) of the Exchange Act: Common,
par value $.01

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 the past 90 days.

                       Yes   X     No

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not 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. [ ]

State Issuer's revenues for its most recent fiscal year:  $1,801,500.

As of March 6, 1998, the aggregate market value of the Common Stock held by
non-affiliates of the Issuer (2,250,212 shares) was approximately
$1,125,106.  The number of shares outstanding of the Common Stock ($.01 par
value) of the Issuer as of the close of business on March 6, 1998 was
3,683,678 (excluding 164,544 treasury shares).

            Documents Incorporated by Reference:  None
<PAGE>

                              PART I

Item 1.   Description of Business.

     (a)  Business Development.

     Dionics, Inc. (the "Registrant" or the "Company") was incorporated
under the laws of the State of Delaware on December 19, 1968 as a general
business corporation.  On March 8, 1974, the Company formed Dionics
International, Inc. as its wholly owned subsidiary under the laws of the
State of New York as a general business corporation and as a Domestic
International Sales Corporation (D.I.S.C.) under the applicable provisions
of the Internal Revenue Code.  The status of such wholly owned subsidiary
as a D.I.S.C. corporation terminated pursuant to the applicable provisions
of the Tax Reform Act of 1984.  During fiscal 1987, such subsidiary was
dissolved.

     The Company has never been in bankruptcy, receivership or any similar
proceeding.

     The Company has never been involved in any material reclassification,
merger or consolidation.

     There have been no material changes in the mode of conducting the
business of the Company.

     (b)  Business of Issuer.

     The Company designs, manufactures and sells silicon semi-conductor
electronic products, as individual discrete components, as multi-component
integrated circuits and as multi-component hybrid circuits.

     (i)  The individual discrete components are predominantly transistors,
diodes and capacitors, intended for use in miniature circuit assemblies
called "hybrid micro-circuits".  In order to facilitate their being easily
assembled into the "hybrid" circuits products by its customers, these
products are supplied by the Company in un-wired unencapsulated microscopic
chip form.  A variety of such components is supplied by the Company, some
as "standard" products which it offers to the industry at large, and other
as special or custom-tailored products which it manufactures to certain
specific electronic requirements of an individual customer.

     Due to the rapidly changing needs of the marketplace, there are
continual shifts in popularity among the various chip components offered by
the Company.  Within the year, and from year to year, a largely random
variation in the needs of its customers prevents any meaningful comparison
among the many devices in this category.  Taken as a whole, however, the
category of discrete chip components for the hybrid circuit industry is one
of the three main classes of products offered by the Company.

     A second main class of products offered by the Company is
encapsulated, assembled, integrated circuits for use in electronic digital
display functions.  Due to unusual and proprietary technology, the Company
is able to produce high-voltage integrated circuits higher than the average
available in the industry.  These are designed for specific high-voltage
applications involved in digital displays based on gas-discharge or vacuum
fluorescence.

     For the most part, the Company's sales in this category of product are
standard circuits, designed by the Company, and offered to the industry at
large.  In some instances, customer-designed circuits are produced and sold
only to the sponsoring customer, with specific electrical performance
needed by that customer.

     The third main class of products offered by the Company is a range of
hybrid circuits that function as opto-isolated MOSFET drivers and custom
Solid State Relays.  Both of these incorporate a light emitting diode (LED)
as the input and a dielectrically-isolated (DI) array of photo-voltaic
diodes which, in response to the infra-red light input, generate a voltage
as the output.  MOSFET drivers, or ISO-GATES, as the Company has named
them, are sold as a packaged combination of the LED and photo-voltaic
chips.  Custom Solid State Relays also add the MOSFET output devices in the
same package along with certain other associated components.

     The percentage of total revenues for each of the three product classes
was in excess of fifteen (15%) percent in 1997.

     (ii) The Company has not invested any material amount of assets in,
nor has it announced, any new major product line in any new industry
segment.

     (iii)     Raw materials essential to the business of the Company are
readily available from many sources within the United States.

     (iv) The Company has had nine (9) United States patents issued to
date.  Each patent is for a 17-year duration.  The earliest patent was
granted in 1971 and the latest in 1990.  Therefore, the expiration dates
range from 1988 through 2007.  Of those, the only material ones are those
related to the Company's high-voltage integrated circuits and high speed
MOSFET-drivers, the latter a relatively new product area for the Company.

     (v)  The business of the Company is not seasonal.

     (vi) Customers to whom, for the fiscal year ended December 31, 1997,
sales were made equal to approximately 10% or more of the Company's sales:

                                        Approximate
                                        Percentage
                    Name                of Business

               Customer "A"             14.4%
               Customer "B"             11.9%

     The actual names of the customers above referred to are not set forth
since the identity of such substantial customers is a trade secret of the
Company and deemed confidential.  Disclosure of such names would be
detrimental to the best interests of the Company and its investors and
would adversely affect the Company's competitive position.

     The loss of any of the above customers would have a material adverse
affect on the business of the Company.

     (vii)     Almost all of the orders for the Company's products are by
their terms cancelable, or their delivery dates may be extended by a
customer without penalty.  There can be no assurance that any of the orders
will become consummated sales.  Accordingly, none of the orders that the
Company has can be designated as backlog.  With respect to orders that are
believed to be firm, but are nonetheless subject to cancellation, such
backlog was at December 31, 1996 $423,600, and at December 31, 1997
$622,400. At March 15, 1998, such backlog had increased to $667,400.

     (viii)    No material portion of the Company's business is subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.

     (ix)      The Company competes with numerous other companies which
design, manufacture and sell similar products.  Some of these competitors
have broader  industry recognition, have financial resources substantially
greater than the Company and have far more extensive facilities, larger
sales forces and more established customer and supplier relationships than
those which are available to the Company.

     Competition in the industry is principally based upon product
performance and price.  The Company's competitive position is based upon
its evaluation of its products' superior performance and its general
pricing structure which Management believes is favorable in its industry
although the Company may suffer from price competition from larger
competitors whose facilities and volume base enable them to produce a
competitive product at a lower price

     (x)  The estimated dollar amount spent during each of the last three
fiscal years on company-sponsored research and development activities,
determined in accordance with generally accepted accounting principles are:

                         1995 -  $ 30,000
                         1996 -  $ 35,000
                         1997 -  $ 40,000

     The amounts spent during each of such years on customer-sponsored
research activities are not material.

     (xi)      Compliance with Federal, State and local provisions which
have been enacted or adopted regulating the discharge of materials into the
environment or otherwise relating to the protection of the environment has
had no material effect upon the Company's capital expenditures, earnings or
competitive position.

     (xii)     The number of persons employed by the Company is 26.  The
Company's employees are not represented by unions and/or collective
bargaining agreements.

Item 2.   Description of Property.

     The Company's executive offices are located at 65 Rushmore Street,
Westbury, New York, which property is owned by the Company.

     The Company fully utilizes 65 Rushmore Street which presently houses
all of the Company's manufacturing facilities, as well as all of its
research, sales and management activities.

     In 1994, the Company sold adjoining property known as 73 Rushmore
Street, Westbury, New York, which at the time of sale housed approximately
10% of the Company's manufacturing facilities.  Since the sale of such
property, all manufacturing facilities have been combined at 65 Rushmore
Street.

     The Company believes that its present facilities at 65 Rushmore Street
are adequate for current operations.

Item 3.   Legal Proceedings.

     There are no material pending legal proceedings to which the Company
is a party or to which any of its property is subject.

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

     No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders.

<PAGE>

                              PART II

Item 5.   Market for Common Equity and Related Stockholder Matters.

     (a)  Market Information.

     The Company's Common Stock is traded in the over-the-counter market
and is quoted on the OTC Bulletin Board and  in the "pink sheets"
promulgated by the National Quotation Bureau, Inc.  Until July 31, 1989,
the Company's Common Stock was quoted on the National Association of
Securities Dealers Automated Quotation System (NASDAQ).  In addition from
May 21, 1985 to February 3, 1989, the Common Stock of the Company was
quoted on the NASDAQ National Market System.

     The following table sets forth the range of the high and low bid
quotations for the Company's Common Stock for each period indicated during
1996 and 1997.

               Period                     Bid Prices

               1996                     High      Low
               First Quarter            .02       .01
               Second Quarter           .02       .01
               Third Quarter            .0625     .01
               Fourth Quarter           .1875     .03125

               1997                     High      Low
               First Quarter            .28       .14
               Second Quarter           .20       .16
               Third Quarter            1-5/16    .17
               Fourth Quarter           1-5/8     3/8

     The foregoing over-the-counter market quotations reflect inter-dealer
prices, without retail mark-ups, mark-downs or commissions and may not
necessarily represent actual transactions.

     (b)  Holders.

     As of March 6, 1998 there were approximately 475 record holders of the
Company's Common Stock.

     (c)  Dividends.

     During the last two fiscal years of the Company, no cash dividends
have been declared or paid on the Company's Common Stock.

Item 6.   Management's Discussion and Analysis or Plan of Operation.

A.   LIQUIDITY AND CAPITAL RESOURCES

     The year-ended December 31, 1997 saw the Company continue its recent
trend of steady improvements and, having shown a profit in 1996 for the
first time in many years, the Company in 1997 showed a considerably larger
profit. The Company has been struggling back against the effects of
numerous adverse business conditions that began as far back as 1987 and,
working only with its very limited, sometimes "negative" Working Capital,
it has not only survived but now appears to have "turned the corner."
Since prospects for continued annual improvements are also very promising
now, it may be useful to briefly review some of the key developments that
have helped bring the Company to its presently improved status.

     Effective January 31, 1994 the Company had signed a "RESTRUCTURING
AGREEMENT between DIONICS, INC. and APPLE BANK FOR SAVINGS," successfully
completing negotiations for a total restructuring of all its debts with
that Bank. During the previous three years, the Company's inability to pay
either interest or principal had kept its loans in a non-performing
"default" status. With the signing of this new Agreement, the previous
default condition was cured, an amount of $376,146.59 in past-due interest
was forgiven, and numerous other favorable changes were made to the
Company's debt and payment obligations.

     In addition to the above Agreement, by December 31, 1994 favorable
settlements of several other large Accounts Payable debts had provided the
Company with an additional $112,900 of Forgiveness of Indebtedness, further
easing its debt obligations.

     By December 31, 1995, the Company had also fully met certain financial
performance standards called for in the new Bank Agreement, thus qualifying
for additional Forgiveness of both Debt and Deferred Interest for a total
of $213,300.  Although the actual Forgiveness is due to be  granted on the
"Interim Maturity Date" (January 31, 1999) as called for in the Agreement,
the Company has, in the interests of more clearly describing its over-all
debt situation, decided to adopt those changes for its 1995-and-future
reports. See Note 5 to the Financial Statement for a more detailed
description of the Restructuring Agreement. (In September of 1994 the above
loans were purchased from Apple Bank by D.A.N. Joint Venture, a Limited
Partnership, and an affiliate of The Cadle Company. All terms and
conditions remain unchanged.)

     In 1997 the Company generated a considerable improvement in its
financial condition. Nevertheless, it was still concluded by Management
that, in view of the near-term cash needs for debt and other obligations,
the expenditure of a significant portion of the Company's limited cash
resources for fully-audited financial reports would not be wise.  Instead,
the Company utilized its non-independent, non-auditing accounting firm
which performed a substantially upgraded Accountant's Review for this
filing. It should be noted that an Accountant's Review meets considerably
higher quality reporting standards than the Accountant's Compilation used
in years before 1996. The quality of the 1997 financial data was further
enhanced through written confirmation of both Accounts Receivable &
Accounts Payable, plus a sample-checking verification of Inventory.

     Further concerning the need for the Company to maximize its cash
position is the fact that it will soon be facing certain obligations that
will require substantial cash on hand.  See Notes 4 and 5B and C in the
Financial Statement, entitled DEFERRED COMPENSATION PAYABLE and LOANS
PAYABLE - APPLE BANK, respectively.  Effective January 31, 1999 the terms
of the Loan Agreement call for a "balloon" payment of $347,754.50 against
the new Mortgage Loan, which will pay that loan in full and release the
Company's real estate which had been the security for that loan.  The
Company presently has such cash amounts in reserve.  In addition, the
Company will on the same date enter the second five-year period of its Loan
Agreement, calling for the repayment of $451,300 of debt plus interest,
over the following 60 months.  This cash flow requirement will be somewhat
relieved, however, by the scheduled discontinuance of its monthly payments
on the Mortgage Loan.  Finally, the Deferred Compensation agreement calls
for payments to commence in November of 1998, following the schedule of
Note 4.  At present, although the combined effects of the above represent
substantial cash requirements, it is Management's opinion that current cash
reserves plus anticipated positive cash flow from operations should permit
the above obligations to be met.  In addition, Management is also exploring
the possibility of refinancing the above debt on more favorable payment
terms.

     The Company's Cash account continued to increase during 1997 by
$262,500, and its Total Current Assets rose from $874,500 at December 31,
1996 to $1,050,600 at December 31, 1997.  Total Current Liabilities
increased slightly from $156,800 to $188,300 but the ratio of Current
Assets to Current Liabilities remained at the 5.58 level of last year.  To
the extent that this ratio is indicative of near-term financial strength,
the above level may be considered a very positive sign for the Company.

     A further result of the Company's slow but steady improvements over
the last several years has been the upgrading of its Net Worth. As far back
as 1992, the Company's Net Worth was a negative $1,273,000, then progressed
to a negative $730,300 in 1993, a negative $694,900 in 1994, a negative
$527,300 in 1995, a negative $469,300 in 1996, and now a negative $323,200
for 1997.  Furthermore, it is interesting to note that if one calculates
Net Worth by using the Company's real estate property at the estimated
market-value instead of the greatly depreciated value on its books, then
the Company's true Net Worth would currently approach a positive $200,000.

     Management has been continuing its search for sources of additional
working capital to provide additional growth momentum for the Company.
Several contacts are active with potential lenders or acquirors, and it is
believed that continuing improvements in the Company's financial
performance and Balance Sheet should enhance those efforts, although no
assurance of success can be given.  For the immediate future, at least, the
Company is well able to support its current operations, while making
efforts to further strengthen both profitability and positive cash flow
results. Management is very encouraged by recent improvements in both those
directions.

     Working Capital also continued to improve further at December 31, 1997
to $862,300 from $717,700 at December 31, 1996 and $585,600 at December 31,
1995. The continuing positive trend in Working Capital reflects the
continuing improvements in operations over the past several years and
therefore, in summation, the Company's Liquidity has been substantially
upgraded.

     Capital expenditures in 1997 and 1996 were not at material levels, and
for 1998 the Company expects similar results.


B.   RESULTS OF OPERATIONS

     Operating results for 1997 showed an increase of 18.4 percent in Sales
volume at $1,801,500 as compared to $1,521,600 in 1996 and $1,360,900 in
1995. This continuing, accelerating trend of sales increases clearly
defines a solid upward phase in the Company's recent turnaround process.

     Perhaps of even more significance, the Company showed a Net Income of
$146,100 for the year-ended December 31, 1997, an increase of 161 percent
over the 1996 Net Income of $56,000. This also compares favorably to the
$45,700 1995 Net Loss Before Extraordinary Items, and demonstrates a solid
three-year improving trend in earnings.

     The Gross Profit Margin for 1997 was 29.8 percent as compared to 31.3
percent for 1996. The slight decrease occurred as a result of direct and
indirect consequences of the Company's growth efforts.  In order to deal
effectively with its increasing sales opportunities, the Company began
hiring direct-labor operators during 1997. The effects on Direct Labor and
Raw Material costs  stemming from manufacturing inefficiencies inherent in
any training process, plus the reduced  overhead rate applicable to the
Company's Inventory all combined to slightly lower the Gross Profit margin
in 1997.  This effect should gradually be worked out of the system as 1998
progresses.  For  the same reasons described above, the Net Income from
Operations only increased to $174,900 in 1997, as compared to $126,400 in
1996 and $43,300 in 1995.

     Selling, General & Administrative Expenses, benefitting from largely
fixed costs and growing Sales volume, dropped to 20.1 percent in 1997 as
compared to 23.0 percent in 1996 and 23.6 percent in 1995.

     Research & Development expenditures rose slightly to $40,000 in 1997,
as compared to $35,000 in 1996 and $30,000 in 1995. These levels reflect
primarily the limited funds available for R & D, as well as a continuing
emphasis on the sale of already existing products. The Company has numerous
fully-developed and almost-fully-developed products which it is trying to
market more extensively, although it does engage in a limited amount of new
product development. As the higher priority needs for consistent
profitability are met, the Company may be free to devote more resources to
R & D.

     Interest Expense for 1997 was $65,400 as compared to $70,400 for 1996
and $92,800 for 1995. Reductions in Interest trace to certain favorable
terms in the Bank Debt Restructuring Agreement.

     In recent years, the Company has been striving to correct its two
basic problems: past debts, primarily to the Bank; and the need for
currently profitable operations. With the 1993 sale of one of its two
buildings and the subsequent Debt Restructuring Agreement, the first
problem area was put onto a manageable basis. The Company is no longer in
default and appears able, for the foreseeable future, to manage its debt
obligations under the new debt repayment schedule. The Company has even
been able to further reduce that debt, first by meeting certain financial
performance standards for 1994 and 1995, and then through debt reduction
payments which started in 1996.

     Concerning its second basic problem, the need for currently profitable
operations, the Company appears to have "turned the corner" and has now
shown two consecutive years of increasing profits. This follows the
Company's having done a remarkable job of both surviving with little or no
working capital and also managing to consistently make slow but steady
improvements in financial performance. While earlier cost-reduction efforts
were able to keep the Company alive, it was only through increases in Sales
volume in 1997 and 1996 that the Company was able to show any profits. The
Company must now continue to stimulate increased use of its photovoltaic
(PV) MOSFET-driver and PV-Solid State Relay product lines, as well as its
other mature and newer products. Prospects for growth in the Solid State
Relay and in the MOSFET-driver lines both look excellent, with the latter
now finding a field of potentially major growth in medical electronics
applications. Management is determined to continue pursuing growth in Sales
and Profits, and to succeed in this challenge as it has in the challenges
of both debt-resolution and the need to return to profitability. Risks of
failure persist, of course, as they do in any commercial venture but the
Company, having slowly struggled back from the brink of failure, now
appears closer to the brink of a solidly successful future.

     THE PRECEDING TEXT CONTAINS FORWARD-LOOKING STATEMENTS WHICH REFLECT
MANAGEMENT'S BEST JUDGMENT OF CURRENTLY AVAILABLE INFORMATION.   SHOULD
CERTAIN ASSUMPTIONS FAIL TO MATERIALIZE, OR UNEXPECTED ADVERSE EVENTS
OCCUR, THE COMPANY MAY NOT REACH MANAGEMENT'S GOALS.

Item 7.   Financial Statements.

     See pages F-1 through F-11.   In addition, see Part II, Item 6 for
information as to the Company's decision to file unaudited financial
statements.

Item 8.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure.

     None.


                             PART III

Item 9.   Directors, Executive Officers, Promoters
          and Control Persons; Compliance with
          Section 16(a) of  the Exchange Act.

     Identity of Directors:

                           Position and Offices        Director
Name                Age    with Company                Since

Bernard Kravitz     64     President, Secretary,       1969
                           Treasurer

Solomon Berkowitz   75     None(1)                     1975

     The term of office for each director is until the next annual meeting
of stockholders.  There are no arrangements or  understandings between any
of the directors and any other persons pursuant to which he was selected as
director.


(1)  A partner in Ernest D. Loewenwarter & Co. LLP, Certified Public
     Accountants, which firm performs non-audit accounting services for
     Company.


     Identity of Executive Officers:

                                                    Officer
Name              Age    Position                   Since

Bernard Kravitz   64     President, Secretary,      1969
                         Treasurer

     The term of office for each officer is until the next annual meeting
of directors.  There are no arrangements or understandings between the
Company's sole officer and any other persons  pursuant to which he was
selected as an officer.


     Identity of certain significant employees:

     The Company does not believe it has any significant employees as
defined in Item 401, Regulation S-B.

     However, in the event that it shall be determined that the Company has
such significant employees, then the response to this item would require
disclosure of otherwise non-public corporate information, the disclosure of
which would adversely affect the Company's competitive position.

     Family Relationships:

     None.

     Business Experience:

     (i)  Bernard Kravitz has, for more than the past five years, been an
officer and employee of the Company.

     (ii) Solomon Berkowitz is a certified public accountant and has, for
more than the past five years, been a partner in the accounting firm of
Ernest D. Loewenwarter & Co. LLP, which firm performs non-audit accounting
services for the Company.  During 1997, fees of $15,900 were paid to such
firm.

     Involvement in Certain Legal Proceedings:

     None.

     Promoters and Control Persons:

     N/A

     Compliance with Section 16(a) of the Exchange Act:

     Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than
ten percent of the Company's Common Stock, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes of
ownership of Common Stock of the Company.  Officers, directors and greater
than ten percent stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.

     To the Company's knowledge, with respect to the year ended December
31, 1997, all Section 16(a) filing requirements applicable to each person
who, at any time during the fiscal year ended December 31, 1997, was an
officer, director and greater than ten percent beneficial owner, were
complied with.

Item 10.  Executive Compensation.

     Summary Compensation Table:

     The following summary compensation table sets forth information
concerning the annual and long-term compensation for services in all
capacities to the Company for the years ended December 31, 1997, 1996 and
1995, of those persons who were, (i) serving as the chief executive officer
of the Company or acting in a similar capacity during the year ended
December 31, 1997 and (ii) the other most highly compensated executive
officers of the Company, whose annual base salary and bonus compensation
was in excess of $100,000 (the named executive officers):

                        Summary Compensation Table

                                Annual
                                Compensation(1)


Name and Principal      Fiscal
Position                Year        Salary          Bonus

Bernard Kravitz,        1997        $104,400        $0
President               1996        $ 97,400        $0
                        1995        $ 89,600        $0

                        Summary Compensation Table

                                    Long-Term
                                    Compensation

                                    Restricted      Shares
Name and Principal      Fiscal      Stock           Underlying
Position                Year        Awards          Options

Bernard Kravitz,        1997        $0              0
President               1996        $2,000(2)       0
                        1995        $0              0


___________________________

(1)  Does not include matching contributions paid by the Company for Mr.
     Kravitz during 1995, 1996 and 1997 of $2,910, $3,638 and $2,556,
     respectively, pursuant to the Company's Savings and Investment Plan
     under section 401(k) of the Internal Revenue Code and premiums paid by
     the Company during 1995, 1996 and 1997 on a life insurance policy it
     owns and maintains on the life of Mr. Kravitz.  (See subsections
     "Bonus and Deferred Compensation" and "Compensation pursuant to plans"
     elsewhere herein under Item 10).

(2)  On July 1, 1996, the Company awarded to Mr. Kravitz a performance-
     related bonus of  200,000 shares of restricted stock.  As required by
     regulations of the Securities and Exchange Commission, the amount
     shown in the table was  calculated using the market price of the
     Company's unrestricted Common Stock on the date of the award.  That
     price, $.01 per share, was reported by the OTC Bulletin Board on July
     1, 1996 as the actual closing sales price.  Further, as of December
     31, 1996, the OTC Bulletin Board reported the actual closing sales
     price of the Common Stock to be $.17 per share.  Although the
     restricted stock granted to Mr. Kravitz therefore had an apparent
     value of $34,000 as of December 31, 1996 (200,000 multiplied by $.17),
     it should be noted that those shares may not be offered for sale, and
     may neither be sold nor otherwise transferred except pursuant to an
     effective registration statement under the Securities Act of 1933 or
     pursuant to an exemption from such registration requirement.

     Bonuses and Deferred Compensation:

     The Company has an agreement with  Bernard Kravitz, the sole officer
and a Director of the Company, to pay to his widow or estate for a period
of five (5) years following his death an amount per year equal to the
annual salary being earned by Mr. Kravitz at the time of his death,
provided  that  he was in the employ of the Company at the time of his
death.  Such arrangements had previously been funded by life insurance
policies owned by the Company on Mr. Kravitz's life, but currently remains
unfunded.

     In 1987, the Board of Directors, recognizing the contributions and
experience of Mr. Kravitz sought to take certain actions which would serve
both as an inducement and an incentive for him to remain in the continuous
employ of the Company until he attains the age of 65.  Accordingly, the
Company entered into a contingent salary continuation agreement with
Bernard Kravitz in 1987, as amended in 1997, which calls for payments to
Mr. Kravitz upon his reaching the age of 65, provided that he has not
voluntarily terminated his employment prior to that event.  Such agreement
further provides that in the event of death or if the Company terminates
the employment of Mr. Kravitz prior to age 65, such payments are to
commence during the month subsequent to such event.  Assuming his
continuous employment until age 65, the terms of the agreement call for Mr.
Kravitz to receive $25,000 per month for the 12 months beginning November
1, 1998 and $6,666.66 per month for the following 60 consecutive months.
Other than a life insurance policy to cover death benefits, the Company has
no funds specifically set aside to meet these requirements.  In view of its
debt obligations and the need for operating capital, there can be no
assurance that the Company will be able to meet the terms of this
agreement, in full or in part.  Should such turn out to be the case, the
terms of the agreement may have to be renegotiated to better match the
Company's then current financial circumstances.  Although there can be no
assurance of the following, the Company believes that, if such
renegotiation becomes necessary, it will be able to agree on terms
acceptable to both parties.  The above mentioned life insurance policy had
a cash surrender value at December 31, 1997 of approximately $1,700.

     Compensation pursuant to plans:

     On July 1, 1985, the Company adopted a Savings and Investment Plan
intended to qualify as a defined  contribution plan under section 401(k) of
the Internal Revenue Code.  Internal Revenue  approval was granted in 1986.
The plan, as amended, provides that a member  (an eligible employee of the
Company) may elect to save no less than 1% and no more than 15% of that
portion of his compensation attributable to each pay period (subject to
certain limitations).  The Company shall contribute (matching
contributions) 100% of the first 3% of the member's contribution and 50% of
the next 2% of the member's contribution.  In addition, the Company shall
contribute such amount as it may determine for each plan year (regular
contributions) pro rata allocated to each member subject to certain
limitations.

     Any employee with one year of service may become a member of the plan
excluding employees covered by a collective bargaining unit.

     Upon eligibility for retirement, disability (as defined in the plan),
or death, a member is 100% vested in his account.  Upon  termination of
employment for any other reason,  a  member is 100% vested in that portion
of his account which he contributed and vested in the balance of his
account dependent upon years of service as follows:

               Years                      Percentage
               Less than 2                0%
               2                          25%
               3                          50%
               4                          75%
               5 or more                  100%

     See subsection "Summary Compensation Table" elsewhere herein under
Item 10 for information on matching contributions paid by the Company for
Mr. Kravitz during 1995, 1996 and 1997.

     Compensation of Directors:

     During the year ended December 31, 1997, the Company's one non-
employee director received no compensation for his services as such and the
Company presently intends that the same will be the case for the year
ending December 31, 1998.

     Stock Option Plan:

     In September 1997, the Board of Directors of the Company adopted the
1997 Incentive Stock Option Plan (the "1997 Plan") for employees of the
Company to purchase up to 250,000 shares of Common Stock of the Company.
Options granted under the 1997 Plan are "incentive stock options" as
defined in Section 422 of the Internal Revenue Code.  Any stock options
granted under the 1997 Plan shall be granted at no less than 100% of the
fair market value of the Common Stock of the Company at the time of the
grant.  As of December 31, 1997, options to acquire 120,000 shares of
Common Stock have been granted under the 1997 Plan.  All of such options
were granted on September 11, 1997 and have an exercise price of $.38 per
share.  As of December 31, 1997, 130,000 options were available for future
grant.  The 1997 Plan is subject to obtaining stockholder approval within
twelve months of the adoption of the 1997 Plan.  If it is not so approved
by the stockholders of the Company, any options granted under the 1997 Plan
will be rescinded and will be void.  None of the options granted under the
1997 Plan were granted to the executive officer named in the Summary
Compensation Table (Mr. Kravitz).

     Termination of Employment and Change of Control Arrangements:

     None.

Item 11.  Security Ownership of Certain Beneficial Owners and
          Management.

     The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of March 6, 1998, by
(i) each person who is known by the Company to own beneficially more than
5% of the Company's outstanding Common Stock; (ii) each of the Company's
directors; and (iii) directors and officers of the Company as a group:

                                             Percent(1)
Name and Address         Shares Owned        of Class

Bernard Kravitz          944,952(2)(3)       25.7%
110-11 Queens Blvd.
Forest Hills, NY

Sherman Gross            339,544(3)           9.2%
848 Newburgh Ave.
Woodmere, NY

Gregory Coleman          269,720              7.3%
59-09 Northern Blvd.
East Norwich, NY

Solomon Berkowitz         15,548              0.4%
15 Story St.
Brooklyn, NY

D.A.N. Joint Venture,     361,080(4)          8.9%(4)
a Limited Partnership
4363 La France Street
Newton Falls, OH

All Directors & Officers  960,500            26.1%
as a Group (2 persons)
____________________________

(1)  Based upon issued and outstanding shares computed as follows:
     3,848,222 outstanding shares less 164,544 treasury shares resulting in
     3,683,678 issued and outstanding shares.

(2)  Includes 932,374 shares of record and 12,578 shares owned by Mrs.
     Phyllis Kravitz, Mr. Bernard Kravitz' wife.

(3)  Does not include 133,422 shares owned by the Company's Savings and
     Investment Plan under section 401(k) of the Internal Revenue Code, for
     which Mr. Kravitz and Mr. Gross serve as trustees.

(4)  Consists of up to 361,080 shares which D.A.N. Joint Venture, a Limited
     Partnership, an affiliate of Cadle Company ("D.A.N") has the right to
     acquire upon conversion of certain loans.  D.A.N. does not currently
     own any shares of record.  (See Part III, Item 12 included elsewhere
     herein).

Item 12.  Certain Relationships and Related Transactions.

     Effective as of January 31, 1994, the Company and Apple Bank for
Savings (the "Bank") entered into a Restructuring Agreement whereby the
Bank agreed to forgive a portion of existing indebtedness of the Company
and to restructure the balance.  In October 1988, the Company had obtained
from the Bank a Commercial Equity Line in the original principal amount of
$1 million (the "Original Mortgage") and in 1990 the Company had obtained
certain other asset-based loans from the bank in the principal amount of
$283,850 (the "1990 Loans").  Pursuant to the Restructuring Agreement:

     A.   The Bank has forgiven $376,146.59 of accrued and unpaid interest
stemming from the Original Mortgage and the 1990 Loans.

     B.   The 1990 Loans have been replaced by a new term loan in the
principal amount of $283,850, ("Term Loan A") structured over two five-year
periods.  During the first five-year period, the Company will pay interest
only, computed at an annual rate of 6.0 percent.  Of that amount, only one-
third (2.0 percent) will be payable monthly, with the remainder accruing
and becoming part of unpaid principal at the end of that period.  During
the second five-year period, the balance due will be repaid over 60 equal
monthly installments, plus interest at prime plus two percent on the unpaid
balance.

     C.   The remaining balance of $750,000 outstanding on the Original
Mortgage  has been replaced by a new $415,000 Mortgage Loan plus two
additional Term Loans of $167,500 each.  These are treated as follows:

     The new $415,00 Mortgage Loan ("Mortgage Loan B") has a five-year term
and carries an annual interest rate of 7.5 percent.  For the first two
years of Mortgage Loan B, the Company is obligated to make payments of
interest only, on a monthly basis.  Thereafter, monthly payments will
include interest plus the amount of $1,921.30 towards reduction of debt.
At the end of the five-year period, the then-remaining principal
($347,754.50) will be due.

     The first new Term Loan  ("Term Loan C") stemming from the Original
Mortgage has a face amount of $167,500 and carries the same interest rate
and payment terms over two five-year periods as the new $283,850 Term Loan
A described in Paragraph B above.

     The second new Term Loan ("Term Loan D") stemming from the Original
Mortgage also has a face amount of $167,500, but carries an annual interest
rate of 4.0 percent, none of which is payable during the initial five-year
period.  This interest will accrue and will be added to the principal at
the end of the first five-year period.  The new total balance due will be
repaid over the second five-year period with 60 equal monthly installments
plus interest of prime plus two percent on the unpaid balance.

     D.   Term Loans A and C also carry convertibility rights under which
the Bank may, at its sole discretion, exchange debt for Common Stock in the
Company at the price of (i) $.75 per share until May 31, 1995, (ii) $1.00
per share from June 1, 1995 until January 31, 1997, and (iii) $1.25 per
share from February 1, 1997 until expiration, provided, however, that the
aggregate number of shares that the Bank may acquire will not exceed 15
percent of the number of then outstanding shares of the Company's Common
Stock, subject to certain anti-dilution rights.  These convertibility
rights expire upon payment in full of the balance due on Mortgage Loan B,
due to mature on the Interim Maturity Date of January 31, 1999.

     E.   Contingent upon the Company achieving certain financial
performance levels during 1994 and 1995, the Bank has agreed to forgive, at
the end of the first five-year period, all of the principal of and accrued
interest on Term Loan D, as well as all the deferred interest accrued on
Term Loans A and C.

     Having met, in 1994 and 1995, certain particular financial performance
standards as called for in the  Restructuring Agreement, the Company has
qualified in full for the forgiveness of specific elements of its debt as
described in the preceding paragraph E.  While according to the terms of
the Restructuring Agreement, the actual forgiveness is due to be formally
granted on "the interim maturity date" (January 31, 1999), the Company has,
in the interests of more accurately describing its over-all debt situation,
decided to adopt those changes in its current and future reports.  The
forgiveness will cover all of the principal and accrued interest on Term
Loan D and all of the accrued interest on both Term Loans A and C, as more
fully described in the above-referenced Restructuring Agreement.

     All the Company's assets are pledged to the foregoing loans.

     In September 1994, the Company was advised that the foregoing loans
were purchased from the Bank by D.A.N. Joint Venture, a Limited
Partnership, an affiliate of the Cadle Company.

     The foregoing summary of certain provisions of the Restructuring
Agreement is qualified in its entirety by reference to the Restructuring
Agreement.

Item 13.  Exhibits, List and Reports on Form 8-K.

     (a)  Exhibits.

          3.1  Company's certificate of incorporation, as amended(1)
          3.2  Company's by-laws(1)
          4.1  Specimen of common stock certificate(1)
          10.1 Restructuring Agreement between Dionics, Inc.
               and Apple Bank for Savings dated as of January 31, 1994(1)


(1)  Previously filed and incorporated herein by reference.

     (b)  Reports on Form 8-K.

     Listed below are reports on Form 8-K filed during the last quarter of
the period covered by this report:

     None.

<PAGE>
                            SIGNATURES


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

                                   DIONICS, INC.
                                   (Registrant)


                                   By:/s/Bernard Kravitz
                                      Bernard Kravitz, President


                                   Dated: March 23, 1998


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

Signature              Title                    Date


/s/Bernard Kravitz     President, Secretary,    3/23/98
Bernard Kravitz        Treasurer,  Director
                       (Principal Executive
                       Officer and Principal
                       Financial Officer)

/s/Solomon Berkowitz   Director                 3/23/98
Solomon Berkowitz

<PAGE>



Dionics, Inc.
65 Rushmore Street
Westbury, N.Y. 11590

     We have reviewed the accompanying balance sheets of Dionics, Inc., as
of December 31, 1997 and December 31, 1996, and the related statements of
operations and cash flows for the years then ended, in accordance with
standards established by the American Institute of Certified Public
Accountants.  All information included in these financial statements are
the representations of the management of Dionics, Inc.

     A review consists principally of inquiries of company personnel and
analytical procedures applied to financial data.  It is substantially less
in  scope than an examination in accordance with generally accepted
auditing standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.  Accordingly, we do
not express such an opinion.

     Based on our reviews, we are not aware of any material modifications
that should be made to the accompanying financial statements in order for
them to be  in conformity with generally accepted accounting principles.


                                ERNEST D. LOEWENWARTER & CO. LLP
                                 Certified Public Accountants

New York, N.Y.
February 24, 1998

<PAGE>

                           DIONICS, INC.

                           BALANCE SHEET

                                        December   31,
                                1997           1996
                                (Unaudited)    (Unaudited)
A S S E T S

CURRENT ASSETS:
  Cash                          $   473,400    $ 210,900
  Accounts Receivable Trade
   (Less Estimated Doubtful
   Accounts of $10,000 in 1997
   and 1996) Note 5                 192,300      230,400
  Inventory - Notes 3 and 5         359,500      402,400
  Prepaid Expenses and Other-
    Current Assets                   25,400       30,800

Total Current Assets              1,050,600      874,500

PROPERTY, PLANT AND
 EQUIPMENT - Note 5
 (At Cost Less Accumulated
  Depreciation of $1,636,100
  in 1997 and $1,623,600
  in 1996)                          50,200       62,700

DEPOSITS AND OTHER ASSETS -
 Note 4                             20,200       23,100

Total                           $1,121,000    $ 960,300


All amounts have been rounded to the nearest $100.

See Accountants' Review Report

The accompanying notes are an integral part of this statements

<PAGE>

                           DIONICS, INC.

                           BALANCE SHEET

                                   December 31,
                                1997           1996
                                (Unaudited)   (Unaudited)
L I A B I L I T I E S

CURRENT LIABILITIES:
 Current Portion of Long-Term
    Debt - (Note 5)             $   26,700     $   28,200
  Accounts Payable                  54,400         66,200
  Accrued Expenses                  57,200         62,400
  Deferred Compensation
  Payable - Current (Note 4)        50,000            -0-
   Total Current Liabilities       188,300        156,800

Deferred Compensation Payable
 - Non-Current (Note 4)            453,000        442,900
Long-Term Debt Less Current -
  Maturities - (Note 5)            802,900        829,900

Total Liabilities                1,444,200      1,429,600

SHAREHOLDERS' EQUITY

Common Shares - $.01 Par Value
 Authorized 5,000,000 Shares
 Issued 3,848,222 Shares in
 1997 and 1996 (Note 6)              38,400       38,400

Additional Paid-in Capital        1,522,800    1,522,800
 Accumulated (Deficit)           (1,663,800)  (1,809,900)
                                   (102,600)    (248,700)
Less: Treasury Stock at Cost
 164,544 Shares in 1997
 and 1996                          (220,600)    (220,600)
Total Shareholder's Equity
 (Deficit)                         (323,200)    (469,300)

Total                            $1,121,000    $ 960,300

All amounts have been rounded to the nearest $100.

See Accountants' Review Report.

The accompanying notes are an integral part of this statement.

<PAGE>

                           DIONICS, INC.
 
                     STATEMENT OF OPERATIONS

                                     DECEMBER 31,
                                1997           1996
                                (Unaudited)    (Unaudited)

SALES                           $1,801,500     $1,521,600
COST AND EXPENSES:
 Cost of Sales (Including
 Research and Development
 Costs)                          1,264,200      1,045,800
  Selling, General and
  Administrative
  Expenses                         362,400        349,400
Total Costs and Expenses         1,626,600      1,395,200

NET INCOME FROM OPERATIONS         174,900        126,400

DIVIDENDS AND OTHER INCOME          38,000          5,000

                                   212,900        131,400
OTHER DEDUCTIONS:
  Provision for Doubtful
  Accounts                             -0-          5,000
  Interest Expense                  65,400         70,400

                                    65,400         75,400
NET INCOME FOR THE YEAR
  BEFORE INCOME TAXES              147,500         56,000
INCOME TAXES - Note 7                1,400            -0-

NET INCOME FOR THE YEAR         $  146,100     $   56,000

NET INCOME PER SHARE:
  Primary                       $     .040     $     .015
  Diluted - Note 6                    .039

Average Number of Shares
 Outstanding Used in
 Computation
 of Per Share Income
  Primary                        3,683,678      3,683,678
  Diluted (Note 6)               3,758,570

All amounts have been rounded to the nearest $100.

See Accountants' Review Report.

The accompanying notes are an integral part of this statements.

<PAGE>

                           DIONICS, INC.

                      STATEMENT OF CASH FLOWS

                                          DECEMBER 31,
                                     1997           1996
                                     (Unaudited)    (Unaudited)
CASH FLOWS FROM OPERATING
 ACTIVITIES:
Net Income                           $  146,100     $  56,000
Adjustment to Reconcile
  Net Income to Net Cash
  Provided from
  Operating Activities:
Depreciation and Amortization            12,500        29,400
Provision for Loss
 on Account Receivable                      -0-         5,000
Deferred Compensation and
 Related Interest                        60,100        56,800
Changes in Operating Assets
 and Liabilities:
(Increase) Decrease
 in Account Receivable                   38,100       (48,000)
(Increase) Decrease in Inventory         42,900       (48,300)
(Increase) Decrease
 in Prepaid Expenses
 and Other Current Assets                 5,400           100
(Increase) Decrease in Deposits
 and Other Assets                         2,900         3,700
(Decrease) in Accounts Payable          (11,800)      (17,500)
(Decrease) in Accrued Expenses           (5,200)      (14,200)
Net Cash Provided from Operating
 Activities                             291,000        86,400
CASH FLOWS FROM
 INVESTING ACTIVITIES:
Purchase of Equipment                       -0-        (2,400)
CASH FLOWS FROM
 FINANCIAL ACTIVITIES:
Capital Stock Issued                        -0-         2,000
  Repayment of Debt                     (28,500)      (22,100)
NET INCREASE IN CASH                    262,500        63,900
CASH - Beginning of Year                210,900       147,000
CASH - End of Year                   $  473,400     $ 210,900

All amount have been rounded to the nearest $100.

See Accountants' Review Report.

The accompanying notes are an integral part of this statements.

<PAGE>

                           DIONICS, INC.

                   NOTES TO FINANCIAL STATEMENTS

                    DECEMBER 31, 1997 AND 1996


NOTE 1 -  BUSINESS:

The Company designs, manufactures and sells silicon semi-conductor
electronic products, as individual discrete components, as multi-component
integrated circuits and as multi-component hybrid circuits.

The individual discrete components are predominantly transistors, diodes
and capacitors, intended for use in miniature circuit assemblies called
"hybrid micro-circuits".

Due to the rapidly changing needs of the marketplace, there are continual
shifts in popularity among the various chip components offered by the
Company.  Taken as a whole, the category of discrete chip components for
the hybrid circuit industry is one of the three main classes of products
offered by the Company.

A second main class of products offered by the Company is encapsulated,
assembled, integrated circuits for use in electronic digital display
functions.

The third main class of products offered by the Company is a range of
hybrid circuits that function as opto-isolated MOSFET drivers and custom
Solid State Relays.


NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Accounting

Assets, liabilities, revenues and expenses are recognized on the accrual
basis of accounting.

Cash and Cash Equivalents

The Company considers money market funds to be cash equivalents.

Merchandise Inventory

Inventory is stated at the lower of cost (which represents cost of
materials and manufacturing costs on a first-in, first-out basis) or
market.

<PAGE>
                           DIONICS, INC.

                   NOTES TO FINANCIAL STATEMENTS

                    DECEMBER 31, 1997 AND 1996


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

Property, Plant and Equipment

Property, Plant and Equipment is stated at cost less accumulated
depreciation and amortization.  Expenditures for renewals and improvements
that significantly extend the useful life of assets are capitalized for all
assets; depreciation is provided over the estimated useful lives of the
individual assets using the straight- line method.

               Machine and Equipment         8 Years
               Testing Equipment             8 Years
               Furniture and Fixtures       10 Years
               Building Improvements        10 Years
               Building                     25 Years


Deferred Compensation Plan

Future payments required under a plan of deferred compensation adopted in
1987, as well as interest accrued thereon are being charged to operations
over the period of expected service.

Bad Debts

The Company maintains a constant allowance for doubtful accounts of
$10,000.


NOTE 3 -  INVENTORIES:
                                 December 31,   December 31,
                                 1997           1996
                                 (Unaudited)    (Unaudited)

          Finished Goods           $ 39,900       $ 62,500
          Work-in-Process           193,700        233,700
          Raw Materials              90,100         69,300
          Manufacturing Supplies     35,800         36,900

                 Total             $359,500       $402,400

<PAGE>

                           DIONICS, INC.

                   NOTES TO FINANCIAL STATEMENTS

                    DECEMBER 31, 1997 AND 1996


NOTE 4 -  DEFERRED COMPENSATION PAYABLE:


In 1987 the company entered into an agreement, amended in 1997, which calls
for payments to its chief executive officer upon his reaching the age of
65, provided that he has not voluntarily terminated his employment prior to
that event.  Such agreement further provides that in the event of death or
if the Company terminates the employment of the officer prior to age 65,
such payments are to commence during the month subsequent to such event.
Assuming his continuous employment until age 65, the terms of the agreement
call for the executive to receive $25,000 per month for the 12-months
beginning November 1, 1998 and $6,666,66 per month for the following 60
consecutive months.

Other than a Life Insurance policy to cover death benefits, the Company has
no funds specifically set aside to meet these requirements.  In view of its
debt obligations and the need for operating capital, there can be no
assurance that the company will be able to meet the terms of this
agreement, in full or in part.  Should such turn out to be the case, the
terms of the agreement may have to be renegotiated to better match the
Company's then-current financial circumstances.  Although there can be no
assurance of the following, the Company believes that, if such
renegotiation becomes necessary, it will be able to agree on terms
acceptable to both parties.  The above-mentioned Life Insurance policy had
a cash surrender value at 12/31/97 of approximately $1,700 which is
included in other assets.

NOTE 5 -  LOANS PAYABLE - APPLE BANK:

Effective as of January 31, 1994, the Company and Apple Bank for Savings
(the "Bank") entered into a restructuring Agreement whereby the Bank agreed
to forgive a portion of existing indebtedness of the Company and to
restructure the balance.  In October 1988, the Company had obtained from
the Bank a Commercial Equity Line in the original principal amount of $1
million (the "Original Mortgage") and in 1990 the Company had obtained
certain other asset-based loans from the bank in the principal amount of
$283,850 (the "1990 Loans").

<PAGE>

                           DIONICS, INC.

                   NOTES TO FINANCIAL STATEMENTS

                    DECEMBER 31, 1997 AND 1996


NOTE 5 -  LOANS PAYABLE - APPLE BANK: (Continued)

Pursuant to the Restructuring Agreement:


A.  The bank has forgiven $376,146.59 of accrued and unpaid interest
stemming from the Original Mortgage and the 1990 Loans.

B.  The 1990 Loans have been replaced by a new term loan in the principal
amount of $283,850, ("Term Loan A") structured over two five-year periods.
During the first five-year period, the Company will pay interest only,
computed at an annual rate of 6.0 percent.  Of that amount, only one-third
(2.0 percent) will be payable  monthly, with the remainder accruing and
becoming part of unpaid principal at the end of that period.  During the
second five-year period, the balance due will be repaid over 60 equal
monthly installments, plus interest at Prime plus two percent on the unpaid
balance.

C.  The remaining balance of $750,000 outstanding on the Original Mortgage
Loan has been replaced by a new $415,000 Mortgage Loan plus two additional
Term Loans of $167,500 each.  These are treated as follows:

The new $415,00 Mortgage Loan ("Mortgage Loan B") has a five-year term and
carries an annual interest rate of 7.5 percent.  For the first two years of
Mortgage Loan B, the Company is obligated to make payments of interest
only, on a monthly basis.  Thereafter, monthly payments will include
interest plus the amount of $1,921.30, which began in April 1996, towards
reduction of debt.  At the end of the five-year period, the then-remaining
principal ($347,754.50) will be due.

The first new Term Loan  ("Term Loan C") stemming from the Original
Mortgage has a face amount of $167,500 and carries the same interest rate
and payment terms over two five-year periods as the new $283,850 Term Loan
A described in Paragraph B above.

The second new Term Loan ("Term Loan D") stemming from the Original
Mortgage also has a face amount of $167,500, but carries an annual interest
rate of 4.0 percent, none of which is payable during the initial five-year
period.  This interest will accrue and will be added to the principal at
the end of the first five-year period.  The new total balance due will be
repaid over the second five-year period with 60 equal monthly installments
plus interest of Prime plus two percent on the unpaid balance.
<PAGE>

                           DIONICS, INC.

                   NOTES TO FINANCIAL STATEMENTS

                    DECEMBER 31, 1997 AND 1996


NOTE 5 -  LOANS PAYABLE - APPLE BANK - (Continued)

D. Term Loans A and C also carry convertibility rights under which the Bank
may, at its sole discretion, exchange debt for Common Stock in the Company
at the price of (i) $.75 per share until May 31, 1995, (ii) $1.00 per share
from June 1, 1995 until January 31, 1997, and (iii) $1.25 per share from
February 1, 1997 until expiration, provided, however, that the aggregate
number of shares that the Bank may acquire will not exceed 15 percent of
the number of then outstanding shares of the Company's Common Stock,
subject to certain anti-dilution rights.  These convertibility rights
expire upon the payment-in-full of the balance due on Mortgage Loan B. due
to mature on the Interim Maturity Date of January 31, 1999.

E. Having met, in 1994 and 1995, certain particular financial performance
standards as called for in the January 31, 1994 Debt Restructuring
Agreement, the Company has qualified in full for the Forgiveness of
specific elements of its debt.  While according to the terms of the
Agreement, the actual forgiveness is due to be formally granted on "the
interim Maturity Date" (Jan. 31, 1999), the Company has, in the interests
of more accurately describing its over-all debt situation, decided to adopt
those changes in its current and future reports.  The forgiveness will
cover all of the principal and accrued interest on Term Loan D and all of
the accrued interest on both Term Loans A and C, as more fully described in
the above-referenced Debt Restructuring Agreement.

All the Company's Assets are pledged to the foregoing loans.

In September 1994, the Company was advised that the foregoing loans were
purchased from the Bank by D.A.N. Joint Venture, a Limited Partnership, an
affiliate of the Cadle Company.


NOTE 6 - STOCK OPTION PLAN

In September 1997, the Board of Directors of the Company adopted the 1997
Incentive Stock Option Plan (the "1997 Plan") for employees of the Company
to purchase up to 250,000 shares of common Stock of the Company.  Options
granted under the 1997 plan are "incentive stock options" as defined in
Section 422 of the Internal Revenue Code.  Any stock options granted under
the 1997 Plan shall be granted at no less than 100% of the fair market
value of the Common Stock of the Company at the time of the grant.  As of
December 31, 1997, options to acquire 120,000 shares of Common Stock have
been granted under the 1997 Plan.  All of such options were granted on
September 11, 1997 and have an exercise price of $.38 per share.  As of
December 31, 1997, 130,000 options were available for future grant.  The
1997 Plan is subject to obtaining stockholder approval within twelve months
of the adoption of the 1997 Plan.  If is not so approved by the
stockholders of the Company, any options granted under the 1997 Plan will
be rescinded and will be void.  The plan has not been approved at February
24, 1998.

<PAGE>

                           DIONICS, INC.

                   NOTES TO FINANCIAL STATEMENTS

                    DECEMBER 31, 1997 AND 1996


NOTE 7 -INCOME TAXES:

Provision for Corporate Federal, State and Local Income taxes for the year
1997 is as follows:

                    Federal                  None
                    State and Local          $1,400

                                             $1,400


As of December 31, 1997 the Company had available a federal operating loss
carry forward of $865,600.  This net operating loss originated in 1989
through 1992 and may be carried forward and expires as follows:

       Year of Origin        Amount       Carry Forward
                                          Expires In

          1990               $566,800        2005

          1991                 65,600        2006

          1992                233,200        2007

                             $865,600