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           FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934 for the fiscal year ended December 31, 1997.
                                      ------------------

                                           OR

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934 for the transition period from ____________to_________________.

                          Commission File Number 0-9860
                                                 ------


                            BIOSEARCH MEDICAL PRODUCTS, INC.
                 ------------------------------------------------------
                 (Exact name of registrant as specified in its charter)


           New Jersey                                      22-2090421
  ------------------------------                      ----------------------
 (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                      Identification Number)


         35 Industrial Parkway, Somerville, New Jersey       08876-1276
         ---------------------------------------------     --------------
           (Address of principal executive offices)        (Zip Code + 4)


Registrant's telephone number, including area code: (908) 722-5000
                                                    --------------


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


Title of each class                   Name of exchange on which registered
-------------------                   ------------------------------------
      NONE                                            NONE


           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, without par value
                         -------------------------------
                                (Title of class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                            [X] Yes                    [ ] No

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

     The aggregate market value on March 28, 1998 of voting stock held by
non-affiliate of the Registrant is estimated to be $360,000.

     The number of shares outstanding of the registrants common stock, no par
value, at March 28, 1998 was 2,202,878.

     List hereunder the documents, all or portions of which are incorporated by
reference herein, and the Part of the Form 10-K into which the document is
incorporated: Proxy Statement to be filed with respect to the 1998 Annual
Meeting of the Shareholders, Form 8-K and Form 8 filed prior to this 10-K --
Part III.

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<PAGE>


                                     PART I

ITEM 1.   BUSINESS

General


     Biosearch Medical Products Inc. (the "Company") was incorporated in the
State of New Jersey on September 17, 1975. The Company's early business emphasis
was on contract research and development of medical devices and systems for
larger medical product companies. During 1982, the Company successfully made its
initial public offering. The Company had designed and successfully marketed
under its own Dobbhoff(R) trademark, a small bore feeding catheter which quickly
became the enteral industry's feeding device standard.

     Later, in 1983, other developments led the Company into the Enteral Food
Business with its introduction of Entri-Pak(R), the first ready-to-use
disposable feeding bag, which was pre-filled with Entrition(R), a specially
developed nutritional formula available in many caloric and fiber content
formulations. Entri-Pak was manufactured by the Company's former subsidiary,
Pouch Laboratories, Inc.

      The dominance of the enteral food market by larger medical product
companies and reimbursement changes in the Federal Government Medicare System
prompted the Company's decision to reassess its business objectives. The Enteral
Food Business was then sold in June, 1991 to Clintec Nutrition Company
("Clintec") of Deerfield, Illinois (an affiliate of Baxter Healthcare
Corporation and Nestle, SA). This transaction provided the Company with needed
funds to continue pursuing its strength, which is the development of new
products for the medical device market. The Company has since expanded its
innovative medical device focus and continues to develop, manufacture and market
products designed for medical and surgical applications.

      Throughout the Company's history innovative products have been developed
and marketed directly to hospitals, alternative healthcare centers and through
distributors, both domestic and international. Although, in the opinion of the
Company, its products remained superior, offering many advantages over
competitor products, the Company could not foster the strength nor demand the
recognition which the Company felt its products deserved. To this end, the
Company found themselves competing against organizations which had immense sales
and distribution networks and greater financial strength as well. Other factors
involving the FDA regulatory climate for medical devices continues to lengthen
the time necessary to have medical device approvals granted. The products are
classified by the U.S. Food and Drug Administration ("FDA") as Class II
regulated devices. FDA Class II regulated devices are required to meet
established performance standards and a pre-market notification via submission
of a 510(k) pre-market notification. See "Government Regulation".


                                        2

<PAGE>


General (cont)

     In order to remain a viable business, sustaining cash flow through cost
reduction and avoidance has remained a top corporate-wide priority. Incremental
spending reductions were put into effect as lower production volumes for the
older line products continued. In 1994, the Company completed negotiations with
a large medical products company and formed a strategic alliance for the purpose
of increasing sales volumes. The arrangement provided the Company with cash
which was desperately needed to maintain longer term operations.

     The strategic alliance was with Sherwood Medical Company ("Sherwood") a
leading manufacturer and marketer of medical products and a subsidiary of
American Home Products Corporation (NYSE: AHP), a New Jersey based diversified
healthcare company. See "Marketing and Customers".

     The Company holds an exclusive, world-wide, license to apply Hydromer(R), a
patented coating technology, to certain medical devices pursuant to licenses and
royalty agreements entered into between the Company and Hydromer, Inc., an
affiliated company. See "Patents, Trademarks and Material Contracts" below. The
Hydromer coating ("Hydromer"), a polymer product, is applied onto several of the
Company's medical devices. When the Hydromer coated device is subsequently
moistened with water, the device's surface will become significantly lubricous.
The alternative to Hydromer is to dip or smear other more conventional
lubricating substances on the surface of the medical device. The Company does
not believe that there is any other product available which performs in a manner
comparable to Hydromer in terms of bonding and lubricity.

     In the opinion of the Company there are many opportunities for the
application of Hydromer in the medical device industry and would expand its
licensing of the Hydromer coating technology for newly developed products.
Presently, the Company uses Hydromer on its contract manufacturing of enteral
feeding tubes, gastrointestinal devices and its surgical products (stents and
coagulation probes), along with its intermittent urinary catheters.

     The Hydromer coating facilitates the insertion of enteral feeding tubes
into the patient and reduces their discomfort during the medical procedure. The
Hydromer also facilitates the removal of the placement stylet which has been
inserted through the tube to position it properly in the patient's body. The
Company has applied the Hydromer to its line of biliary stents and coagulation
probes. When applied to the interior wall of the stent, Hydromer has been shown
to significantly increase the life of the implanted device. The need to
regularly replace the device has been reduced and thus, may lessen the patient's
frequency of enduring the trauma of replacement procedures. When applied to the
tip of a coagulation probe the moistened Hydromer allows the instrument's clean
removal after an ulcerated area has been coagulated with the device. Therefore
the ulceration is not re-injured after the surgical procedure.

     The Company received ISO 9000 certification on October 9, 1996, which is
needed to sell products in Europe. The Company feels this certification will
open the European market to its products and will also allow it to build
additional relationships with other large medical products companies, who for
whatever reason, have not received their certification and wish to sell their
products in Europe.


                                        3

<PAGE>


PRODUCTS & CONTRACT SERVICES

Products

     Historically, the Company designed, manufactured and marketed Enteral
Feeding Devices and Specialty G.I. Products. However, during 1994, the company
entered into agreements with Sherwood Medical Company which formed with them a
strategic business alliance. The alliance drastically changed the structure of
the Company's business. The majority of the Company's current manufacturing is
now largely focused on its intermittent urinary catheters but current purchase
orders expire on or about May 1, 1998. The Company continues to explore other
business opportunities, develop new medical products and market their remaining
products, e.g., Biofeedback for anorectal dysfunction applications, indwelling
biliary stents and hemostatic coagulation probes through direct customer and
contract manufacture.

     Sales of contract manufactured products during 1997 were approximately 80%
of total revenue compared to approximately 86% for the same period of 1996. The
Company considers that its products and services compete in the business segment
of the "Medical Device" industry involving research, development, manufacturing
and sales.

Contract Research & Development

      The Company derives a small portion of its revenue from contract research
& development arrangements which was less than 1% of total Company revenue in
1997 and 1996. From time-to-time, the Company may be contracted by larger
medical product companies to develop or assist in the development of prototype
medical devices. The Company continues to explore opportunities in this area of
business as it aligns itself with larger medical product companies for contract
manufacturing and original equipment manufactured ("OEM") products.

Marketing and Customers

     Through 1989, the Company marketed many of its products including a line of
dietary products to the alternate care market. However, the dominance in this
market by larger medical product companies for enteral food products and
reimbursement changes in the Federal Government Medicare System prompted the
Company's decision to reassess its business objectives. The Company subsequently
curtailed its selling activities in the alternate care market and in August
1989, laid off its dietary sales force. In late 1991, management attempted to
expand its sales distribution network by using independent manufacturer
representatives ("IMR") and focus on the G.I. Lab market with devices carrying a
higher return on investment than nutritional products. However, by mid-1992,
after experiencing disappointing marketing results using this distribution
channel, the Company began to restructure its marketing of these products by
using other sales distribution outlets including the expansion of its private
label and OEM network.

     The Company had distribution arrangements, renewable on an annual basis, in
many of the countries in which its products were sold. In connection with the
Sherwood agreement many of the remaining international distribution arrangements
have been terminated. The remaining distributors operate on an order by order
basis pursuant to the Company's terms and conditions of sale and/or past
practices. Sales are made directly by the Company to its distributors who, in
turn, determine prices to customers and service customer accounts.


                                        4

<PAGE>


Marketing and Customers (cont)


     By mid-1993, the Company announced it had entered into an exclusive
technology and patent license agreement with Nutricia, B.V. In connection with
the agreement the Company has sublicensed one of two Hydromer technology and
patent licenses. The agreement provides Nutricia with the right to manufacture
and sell, under their name, the Company's former line of enteral and surgical
products in Europe, Africa, Australia and Asia, with the exception of Japan,
while reserving the Company's rights to sell its products, now restricted by the
Sherwood agreement, and in connection with the Company's trademarks/tradenames.
The Company received $300,000 cash which was recorded in other income in 1993,
and will receive a 5% royalty for the life of patented products. There were no
royalties in 1997 or 1996.

     The agreement with Nutricia, B.V. provides for the development of products
by both companies per a five year non-cancellable cooperative arrangement. This
European partner had been expected to retain the Company's innovative research
and development abilities for additional fees but this had not materialized. The
rights to any new products subsequently developed will be individually
negotiated. Any other similar new product developed independently by either
party will be subject to the right of first refusal by the other. The Company
sent a notice of termination by registered mail on February 3, 1997.

     In early 1994, the Company appointed a large U.S. medical products company
as a distributor of certain specialty G.I. products, specifically, the Company's
"J-Tubes" and the related accessories. The distributor was also licensed to
manufacture the "J-Tubes". This agreement, together with the above agreements
accomplished part of the Company's business strategy of expanding its private
label and OEM product manufacturing and distribution network.

     Through mid-1994, the majority of the Company's medical devices were sold
directly to customers and distributors, who in turn sell them directly to
hospitals and other medical institutions and facilities and to smaller
distributors concentrating on the home health care market. The Company also
manufactured and sold its products to larger medical product companies on a
private label and OEM basis as discussed above.

     In May 1994, the Company successfully negotiated several agreements with
Sherwood Medical Company which provided the Company with much needed cash to
operate the business. In addition, the Company licensed and sub-licensed certain
patented technology. The two year supply agreement, agreed to by the Company,
expired in 1996. The Company agreed to a five year covenant not to manufacture
or sell medical devices promoted for gastrointestinal feeding or gastric
decompression. A two and one half year supply agreement was also signed on the
Company's "J-Tube" products subject to existing agreements with other companies
which expired in 1996.

     Sales of the Company's products to specific customers may, at times, be
significant to the overall revenues of the Company. During 1997, Sherwood
Medical Company accounted for approximately $514,000, or 27% of the Company's
revenues, approximately $1,951,000 or 74% of the Company's revenues during 1996
and approximately $2,600,000 or 85% in 1995. Sales to Smith Industries Medical
Systems/Portex Ltd. amounted to $700,000 or 36% versus $116,000 or 4% in 1996,
and Bard Interventional amounted to $225,000 or 12% versus sales of $200,000 or
8% in 1996. No other single customer accounted for more than 10% of the
Company's revenue in 1997, 1996, or 1995. In May 1996 the agreement was
completed and the Company will continue to do OEM work for Sherwood Medical on a
purchase by purchase order basis. The company has refocused its efforts on the
manufacture and selling of the Endoscopic Product line through its developing
dealer network and with its ISO 9000 certification, the development of the line
in Europe along with the continuation of its contract manufacturing, using the
Company's extensive technology, for medical product companies without this
certification.


                                        5

<PAGE>


Competition

     The market for private label, OEM and contract manufacturing of medical
devices is highly competitive and subject to rapid technological change.
Management considers the most significant competitive factors in its market to
be product innovation, quality of customer service and satisfaction, reliability
of product performance plus, competitive pricing, terms of purchase, and
dependability of product on-time delivery.

     The Company believes that its products have significant characteristics
which differentiate them from available competing products in the medical device
market. As indicated under "General" above, these characteristics are in part
attributable to the application of Hydromer to certain of the Company's
products. One distinguishing feature of the Company's line of "Biliary Stents",
compared to many competitors' devices, is the application of Hydromer to the
interior wall of the stent. Hydromer has been shown to significantly increase
the life of the implanted device. The need to regularly replace the device has
been reduced and thus, may lessen the patient's frequency of enduring the trauma
of replacement procedures. Additionally, when applied to the tip of the
Company's line of "Coagulation Probes" the moistened Hydromer allows the
instrument's clean removal after an ulcerated area has been coagulated with the
device. Therefore the ulceration is not re-injured after the surgical procedure.

     There can be no assurance that, as market acceptance of Hydromer's patented
technology as applied to medical devices increases, alternatives to the
Company's products, with similar products, properties and applications, could
not be developed by other companies. The industry in which the Company competes
is characterized by rapid technological advances and includes competitors which
possess significantly greater financial resources and research and manufacturing
capabilities, larger marketing and sales staffs, and longer established
relationships with customers than does the Company. Moreover, the Company's
products and services encounter and will encounter significantly more
competition in both domestic and European markets as a consequence of the
relatively greater market presence of competing corporations. Competitors range
from small specialized firms to large diversified companies, many of which have
resources substantially greater than those of the Company. Furthermore, United
States Government health care cost containment efforts may have an adverse
affect on prices that the Company can charge for its products.

Backlog

     The Company maintains a high degree of service for its customers by
shipping its product within the predetermined time allotments usually
established by the customer. Delivery of product may be required anywhere from a
few days to several weeks from receipt of an order. Backlog, which are orders
placed and not yet shipped, was $675,000 and $267,000 as of December 31, 1997
and 1996, respectively.

Production and Quality Control

     The principal raw materials utilized in the production of the Company's
products is United States Pharmacopeia ("USP") class VI grade polyurethane. This
polyurethane is manufactured to the Company's specifications and is purchased in
pellet form to be subsequently processed at the Company's facilities via
extrusion or injection molding. Considerably all materials employed in the
manufacturing process are purchased domestically and can generally be obtained
from a number of sources at competitive prices. The Company maintains what it
considers to be adequate inventories of the raw materials used in its production
processes. The Company has experienced no substantial shortages of any raw
material employed in its production processes. In its manufacturing and other
processes, the Company follows procedures designed to maintain a high level of
quality in its medical devices. Such procedures include adherence to precise
specifications which are continually reviewed and upgraded by the Company for
both product integrity and packaging materials. A staff of quality assurance
employees with technological expertise is maintained by the Company at its
manufacturing facilities.


                                        6

<PAGE>


Production and Quality Control (cont)

     The Company, beginning in 1995, initiated a program to ensure that its
products conform to the European Community legislation for medical devices.
Conformance is demonstrated by affixing the CE mark to the products made by the
Company. The Company has met the requirements of the ISO (international
organization for standardization) standard by certification to ISO 9001 on
October 9, 1996. The standard requires the Company to design and manufacture
products according to a rigorous quality system. In addition, the Company has
employed British Standards Institution Inc. to serve as its notified body and is
directing its efforts to BS EN ISO 9000 registration. Four of the products made
by the Company were being reviewed for registration to carry the CE mark, two
have been granted approval, one has been discontinued. The remaining product
(stent) is pending sterility and package integrity testing.

Research and Development

     The Company's research and development activities have been primarily
devoted to the development and enhancement of the products described above and
to the design and development of new products. In connection with this
innovative development ability the Company, from time-to-time, may be contracted
by larger medical product companies to develop or assist in the development of
prototype medical devices. A portion of the Company's overall business objective
is to continue promoting this area of the business as it aligns itself with
larger medical product companies. Further, the Company has and continues to
utilize certain physicians and surgeons, who are recognized in their field of
expertise, for product development and evaluations. Remuneration to these
medical professionals for their efforts may be in the form of royalties
contingent on the products being subsequently marketed and revenue streams
generated.

Patents, Trademarks and Material Contracts

     The Company holds an exclusive, world-wide license to use Hydromer, in
connection with certain medical products, under the United States and foreign
patents relating to the Hydromer process. In 1991, and amended later that year,
the Company entered into a license agreement with Hydromer for the application
of its coating to pancreatic and biliary stents and a hemostatic coagulation
probe used in conjunction with endoscopic surgical procedures. Terms and
conditions of this license are comparable to the license Hydromer grants to
other third parties. In the opinion of the Company, the terms are commercially
reasonable.

     In addition to United States process patent and applications patents, which
will be in effect until 2005, there are currently 11 issued foreign counterpart
patents for Hydromer. In 1995, as a result of a change to the U.S. Patent Law,
patents in effect on June 8, 1995 have an expiration date of the longer of 17
years from issuance or 20 years from filing.

     The table below sets forth information on the status of the patents in each
country and the expiration of such patents:

                      Country                  Expiration
                      -------                  ----------

            Belgium                                  1998
            United States (One Patent)               2005
            Canada                                   1998
            France                                   1998
            Germany                                  1998
            Italy                                    1998
            Japan                                    1998
            Netherlands                              1998
            Sweden                                   1998
            Switzerland (Two Patents)                1998
            United Kingdom                           1998


                                        7

<PAGE>


Patents, Trademarks and Material Contracts (cont)

     The Company believes that the protection afforded by the Hydromer patents
in the United States will be a significant factor in the Company's ability to
successfully market its products which utilize the Hydromer technology.

     Until May 1994, the Company held the rights to several trademarks (among
others "Dobbhoff", "Entriflex", "Hydroflex", "Pedi-Tube" "Entrimit", and
"Entri"), in the United States and abroad. These trademarks were conveyed to
Sherwood as part of the asset purchase agreement dated May 19, 1994 between
Sherwood Medical Company and Biosearch Medical Products, Inc. See note 4,
"Disposition of Assets - Sherwood Medical Company Agreement".

     The Company uses the trademark "Hydromer" pursuant to the terms of a
license. The Company regards such trademarks to be of material importance to its
business. The Company's now existing registrations in the United States have a
term of twenty (20) years, renewable for a second term of ten (10) years.
(Registrations and renewals granted after November 16, 1989 have a term of nine
years.) The initial terms of the foregoing trademark registrations will not
expire before 1998.

     The Company has a material contract with Sherwood Medical Company which was
announced on May 20, 1994. The agreement provided for the sale of all assets,
except inventories, used exclusively in the manufacture, sale and distribution
of substantially all of its enteral access device business, including trademarks
to Sherwood Medical Company. In addition, the Company licensed and sub-licensed
certain patented technology. The Company agreed to a two year supply agreement
of the same products with annual minimum purchases of $2,500,000 at cost plus
ten percent. The Company agreed to a five year covenant not to manufacture or
sell medical devices promoted for gastrointestinal feeding or gastric
decompression. A two and one half year supply agreement was also signed on the
Company's "J-Tube" products subject to existing agreements with other companies.
This two year supply agreement expired in May 1996.

     In addition to the Sherwood agreement, the Company has OEM relationships
with C.R. Bard, United States, U.S. Endoscopy, United States and Smith
Industries Medical Systems, England. The Company manufactures products for these
clients under the clients' label.

     The Company and the Company's President have agreed not to compete with
Sherwood Medical Company, with respect to enteral feeding and gastric
decompression devices for a period of five (5) years beginning May 19, 1994.
This agreement was negotiated in connection with the sale of assets and
resulting license and supply agreements. (See note 4, "Disposition of Assets -
Sherwood Medical Company Agreement").

Government Regulation

     The Company's medical products come under the jurisdiction of the United
States Federal Food and Drug Administration ("FDA"), an agency of the Federal
Department of Health and Human Services, as well as other federal, state and
local agencies, and similar agencies in other countries.

     Substantially, all of the Company's medical device products have been
classified by the FDA as Class II regulated devices. In accordance with section
510(k) of the Federal Food, Drug, and Cosmetic Act and the Safe Medical Devices
Act of 1990 ("SMDA") a pre-market notification must be submitted informing the
FDA of the Company's intent to place the device into commercial distribution. A
device cannot be commercially distributed in the United States until the FDA
finds the device substantially equivalent to existing devices marketed in
interstate commerce prior to May 28, 1976, the enactment date of the medical
device amendments.


                                        8

<PAGE>


Government Regulation (cont)

     Since the Company's devices come under the jurisdiction of the FDA, the
Company and such products are subject to FDA regulations which, among other
things, allow for the conduct of detailed inspections of device manufacturing
establishments and require adherence to current good manufacturing practices
("CGMP") for the manufacture and design of medical devices. Noncompliance with
applicable regulations promulgated by such agencies can result in criminal
and/or civil penalties, voluntary recall, seizure of products, total or partial
suspension of production and refusal to process applications for product review.
The Company makes every effort to continually monitor its compliance to CGMPs
and does not believe that these regulations will have a material adverse effect
on its business.

Environmental Matters

     The Company is subject to the regulatory jurisdiction of Federal, State and
local agencies regarding the protection of the environment. It is classified as
a "small hazardous waste generator" as a result of using plastic adhesives in
its process. The Company has been able to comply with the various laws and
regulations without any material adverse affect on its business.

     There are no legal proceedings or claims involving environmental issues and
the Company is of the opinion that its operational methods are adequate to
prevent any such claim or proceeding from arising.

Executive Officers and Significant Employees

     The executive officers and other significant employees of the Company are
as follows:


<TABLE>
<CAPTION>
                                  Age
                             December 31,
        Name                     1997                Position with the Company
        ----                 ------------            -------------------------
<S>                               <C>                                        
Manfred F. Dyck                   62                 Chairman of the Board of
                                                     Directors, President and
                                                     Director

Robert J. Moravsik                55                 Vice President - General
                                                     Counsel and Secretary


Robert C. Keller                  59                 Treasurer & Chief Accounting
                                                     Officer

Martin C. Dyck                    36                 Vice President - Operations,
                                                     New Product Development Coordinator
</TABLE>


                                        9

<PAGE>


Executive Officers and Significant Employees (cont)

     Manfred F. Dyck has been the President of the Company and Chairman of the
Board since its inception. Previously, Mr. Dyck was engaged in biomedical
product development at Ethicon, Inc., a manufacturer of medical devices and a
subsidiary of Johnson & Johnson, and served as a member of the president's staff
at Cordis Corporation, a manufacturer of medical devices from 1965 to 1971. Mr.
Dyck has been the Chairman of the Board of Hydromer, Inc. ("Hydromer") a company
formed for the purpose of developing polymeric complexes for commercial use
since 1980. Prior to that time Mr. Dyck was President of Hydromer, which was,
until 1983, a subsidiary of the Company. From 1979 to 1986 Mr. Dyck was a
director of CardioSearch, Inc., a manufacturer of cardiovascular devices. He
devotes most of his business time to his responsibilities with the Company.

     Robert J. Moravsik has been Vice President - General Counsel and Secretary
since January 1987. Mr. Moravsik served as Vice President - General Counsel and
Secretary of Fisher Stevens, Inc. from 1978 to 1986. He is a member of the Bar
of the State of New Jersey, the State of New York, the Federal District Courts
of New Jersey and New York and the United States Supreme Court.

     Robert C. Keller has been Treasurer and Chief Accounting Officer since July
1995. Prior to this appointment, Mr. Keller was the accounting manager and
controller for Mailing Services Inc. He joined Mailing Services as an Accounting
Manager in 1985. Prior to that he held positions of increased responsibility
with Midland Ross Corp. from 1980 to 1985, Johnson & Johnson from 1976 to 1980,
Quaker Oats Co. from 1972 to 1976, and Beecham Pharmaceutical from 1966 to
1972.

     Martin C. Dyck has been Vice President of Operations, New Product
Development Coordinator since January 1993. For the previous three years, Mr.
Dyck was the Director of Manufacturing and New Product Development Coordinator.
He joined the company in 1986 as a Junior Financial Assistant and R&D Supervisor
of the Company's second shift Pilot Plant Operations.


     The executive officers of the Company serve at the discretion of the Board
of Directors (except for Manfred F. Dyck who has an employment agreement
providing for 6 months notice prior to termination) and are active in its
business on a day-to-day basis. No family relationship exists between any of the
foregoing persons except Manfred and Ursula Dyck who are husband and wife and
Martin C. Dyck their son.


                                       10

<PAGE>


Employees

     As of December 31, 1997 the Company had 56 employees compared to 28
employees as of December 31, 1996. Currently, the Company has no foreign
facilities or employees located abroad and it is not a party to any collective
bargaining agreements. There were no wage increases given during 1997 and 1996.


ITEM 2. PROPERTIES

     The Company's headquarters is located in Somerville, New Jersey where all
of the manufacturing, engineering and administration functions are conducted.
The facility is owned by the Company, subject to a primary mortgage held by a
bank, and consists of an approximately 24,600 square foot building situated on
approximately 6.27 acres of land. The Company is currently operating one
production shift at this location.

      The foregoing facility is regarded by management as adequate for the
current requirements of the Company's business.


ITEM 3. LEGAL PROCEEDINGS

     On August 25, 1997 Summit Bank notified the Company that it is in default
for failure to make payments when due. The bank exercised its right under the
Loan Document to declare immediately due and payable the entire outstanding
balance due pursuant to the Loan. On February 24, 1998, Summit bank obtained a
judgement against the Company on the docket of the Superior Court in Bergen
County, N.J. for nonpayment of notes and on March 18, 1998 they obtained a
judgement for foreclosure against the Company on the docket of the Superior
Court of Somerset County, N.J.

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

     Not applicable.


                                       11

<PAGE>


                                     PART II


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

     The Company estimates that its shares of common stock had traded between
$.30 and $.50 per share during 1997. Since it was denied an exception to the new
NASDAQ listing and maintenance standards, the Company's stock experiences
limited trading activity. The new NASDAQ standards were approved by the S.E.C.
on August 29, 1991, effective on March 2, 1992. The Company's stock was deleted
from the NASDAQ system on August 4, 1992, and is now traded on the OTC Bulletin
Board.

     As of March 28, 1997, the Company had approximately 600 shareholders of
record and 2,202,878 shares of no par, common stock outstanding. At the annual
shareholders' meeting on June 21, 1995, the shareholders authorized a 5 for 1
reverse stock split which reduced the number of outstanding shares from
11,014,290 to 2,202,858.

     The Company has never paid a cash dividend on its Common Stock and does not
expect to pay dividends in the foreseeable future. The payment of dividends in
the future will depend upon the Company's available earnings, the general
financial condition of the Company, its capital needs and other factors deemed
pertinent by the Board of Directors.


                                       12

<PAGE>


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                         Years Ended December 31,
                                          ---------------------------------------------------
                                                  (In thousands, except for per share data)
Operations Data
                                            1997       1996       1995       1994       1993
                                          -------    -------    -------    -------    -------
<S>                                         <C>        <C>        <C>        <C>        <C>  
Revenues                                    1,936      2,649      3,268      3,574      3,794

Gross profit                                  399        410        490        664        877

Loss from operations                         (493)      (813)      (842)      (788)      (723)

(Loss)/earnings
  before extraordinary item                  (556)      (884)      (844)     2,897       (244)

Extraordinary item                           --         --         --          114       --

Federal Income Tax                           --         --         --          (60)      --
                                          -------    -------    -------    -------    -------

Net (loss)/income                         $  (556)   $  (884)   $  (844)   $ 2,951    $  (244)
                                          =======    =======    =======    =======    =======

Income (loss) per common share from:
      Continuing operations
      before extraordinary item           $  (.25)   $  (.40)   $  (.38)   $   .26    $  (.02)

      Extraordinary item                     --         --         --          .01      --
                                          -------    -------    -------    -------    -------

Net income/(loss)                         $  (.25)   $  (.40)   $  (.38)   $   .27    $  (.02)
                                          =======    =======    =======    =======    =======

Weighted average number
  of common shares                          2,203      2,203      2,203      2,203      2,202
</TABLE>


<TABLE>
<CAPTION>
                                                          As Of December 31,
                                          ---------------------------------------------------
                                                            (In thousands)
Balance Sheet Data
                                            1997       1996       1995       1994       1993
                                          -------    -------    -------    -------    -------
<S>                                    <C>        <C>        <C>        <C>       <C>    
Total assets                              $ 2,117    $ 2,513    $ 3,464    $ 4,452    $ 2,721
Current maturities of
      long-term debt                      $   691    $    37    $    33    $    29    $   900
Long-term debt                            $  --      $   663    $   699    $   732    $   778
</TABLE>

                  NOTE: The Company has not paid a dividend during the
                      five (5) year period ended December 31, 1996.


                                       13

<PAGE>


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
1997 Compared to 1996

Revenues

     Revenues of $1,936,000 for 1997 were approximately $713,000, or 27% lower
than revenues of $2,649,000 for 1996. The sales of the old line disposable
products have steadied, however the overall sales were negatively impacted by
the expiration of the Sherwood agreement in May 1996, partially offset by the
Company's sales to Smith Industries Medical Systems, now part of Portex Ltd,
continued in 1997.

     Since the expiration of the Sherwood agreement, the Company continued to
produce products for Sherwood Medical on a purchase order basis at greater gross
margins than the agreement margin of 10%. Sales to Sherwood in 1997 were
approximately $514,000, or 27% compared to $1,951,000 or 74% of total sales for
1996. The Company also sells other medical devices under both private label and
Original Equipment Manufacture ("OEM") agreements. OEM sales for 1997 amounted
to approximately $1,030,000, or 53% versus 1996 sales of $320,000 or 12%. This
was due to sales to Smith Industries Medical Systems/Portex Ltd. amounting to
$700,000 or 36% of sales.

     International sales for 1997 and 1996 totaled approximately 47% and 11%
respectively. The increase is due to the ("OEM") agreement with Smith Industries
Medical Systems (Portex Ltd.). The Company received its ISO 9001 certification
in 1996, and feels it will have a large impact on the development of its
international sales in the future.

     The Company continues to develop, manufacture and sell products for
endoscopic surgery and biofeedback devices for the treatment of anorectal
dysfunctional conditions. During 1997, these products accounted for
approximately $286,000, or 15% of the Company's revenue versus $253,000, or 10%
of revenues during 1996.

Gross Profit

     Gross profit of $399,000 for 1997 was lower by $11,000, or 3% less than the
gross profit of $410,000 for 1996. The gross profit was 21% of revenues in 1997
and 15% in 1996. The Sherwood agreement, which carried a profit margin of 10%,
expired during 1996. The underlying products relating to the Sherwood agreement
consist of the Company's former line of Enteral Feeding Devices and Specialty
G.I. Products. These products, when marketed and sold by the Company, have
generated significantly higher profit margins. Incremental sales of any
additional or newer products could potentially improve the Company's gross
profit performance provided that the pricing of such products absorb and exceed
direct and incremental costs while fixed overhead spending is not materially
increased.

Operating Loss

     Operating loss of $493,000 in 1997 was $320,000 less than the operating
loss of $842,000 generated during 1996. The favorable change in operating loss
is due mainly to the increase in gross profit from continued cost savings
attained during the year in manufacturing of $361,000 or 33% and in selling and
general administration of $330,000, or 27% versus 1996.


                                       14

<PAGE>


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
1997 Compared to 1996 (cont)

Interest Expense

     Net interest expense in 1997 of $84,000 was $13,000, or 18% higher than
$72,000 in 1996. The increase in net interest expense in 1997 is directly
related to the decreasing interest income on cash reserves offset by the
continuing mortgage debt.


Other Income, Net

     Other income of $22,000 was $21,000 favorable to the other income of $1,000
in 1996. The other income in 1997 is due to rental income received from
Hydromer.

Federal Income Taxes

     No federal income taxes were incurred in 1997 and 1996.


                                       15

<PAGE>


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS
1996 Compared to 1995


CONTINUING OPERATIONS

Revenues

     Revenues of $2,649,000 for 1996 were approximately $619,000, or 19% lower
than revenues of $3,268,000 during 1995. The sales of the old line disposable
products have steadied, however overall sales were negatively impacted by the
expiration of the Sherwood agreement in May 1996 and the reduction in sales to
Nutricia offset by the Company's sales to Smith Industries Medical Systems, now
part of Portex Ltd., which began in 1996.

     Since the expiration of the Sherwood agreement, the Company continues to
produce products for Sherwood Medical on a purchase order basis at greater gross
margins than the agreement margin of 10%. Sales to Sherwood in 1996 were
approximately $1,951,000, or 74% compared to $2,600,000, or 85% of total sales
in 1995. The Company also sells other medical devices under both private label
and Original Equipment Manufacture ("OEM") agreements. OEM sales for 1996
amounted to approximately $322,000, or 12% versus 1995 sales of $200,000, or 6%.

     International sales for 1996 and 1995 totaled approximately 11% and 7%,
respectively. The increase is due to the ("OEM") agreement with Smith Industries
Medical Systems (Portex Ltd.). The Company received its ISO 9001 certification
in 1996, and feels it will have a large impact on the development of its
international sales in the future.

     The Company continues to develop, manufacture and sell products for
endoscopic surgery and biofeedback devices for the treatment of anorectal
dysfunctional conditions. During 1996, these products accounted for
approximately $253,000, or 10% of the Company's revenue versus $146,000 or 5% of
revenues during 1995.


Gross Profit

     Gross profit of $410,000 for 1996 was lower by $80,000, or 8% less than the
gross profit of $490,000 for 1995. The gross profit was 15% of revenues in 1996
and 1995. The Sherwood agreement, which carried a profit margin of 10%, expired
in 1996. The underlying products relating to the Sherwood agreement consist of
the Company's former line of Enteral Feeding Devices and Specialty G.I.
Products. These products when marketed and sold by the Company have previously
generated significantly higher profit margins. Incremental sales of any
additional or newer products could potentially improve the Company's gross
profit performance provided however, that the pricing of such products absorb
and exceed direct and incremental costs while fixed overhead spending is not
materially increased.


                                       16

<PAGE>


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
1996 Compared to 1995 (cont)

CONTINUING OPERATIONS (cont)

Operating Loss

     Operating loss of $813,000 in 1996 was $29,000 unfavorable to the operating
loss of $842,000 generated during 1995. The unfavorable change in operating loss
is due mainly to the decrease in sales volume of $619,000 offset by cost savings
attained during the year in manufacturing of $136,000, or 11% and in selling and
general administration of $110,000, or 8% versus 1995.

Interest Expense

     Net interest expense in 1996 of $72,000 was $42,000, or 30% higher than
$30,000 in 1995. The increase in interest expense in 1996 is directly related to
the decreasing interest income on cash reserves offset by the continuing
mortgage debt.

Other Income, Net

     Other income of $1,000 was $28,000 unfavorable to the other income of
$29,000 in 1995. The other income in 1995 was due to monies received against bad
debts already written off.


Federal Income Taxes

     No federal income taxes were incurred in 1996 and 1995.


Year 2000 Issue

     The Company has conducted a review of its computer systems and products to
identify what could be affected by the "Year 2000" issue. No products are
affected; all PC based hardware and software are not affected; the Company's
System 36 software may not perform the Year 2000 calculation correctly, hence
the Company is developing an implementation plan to resolve the issue. The Year
2000 problem is the result of computer programs written using only two digits
rather than four digits to define the applicable year. The Company presently
believes, with modifications to existing software or converting to new software
and hardware, the Year 2000 will not pose significant operational problems for
the Company's computer system.


                                       17

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES


     The Company's operating activities used $310,000 of cash and cash
equivalents during 1997. Investing activities provided $11,000 for the year as
$35,000 was used for capital expenditures and the Company received $46,000 in
proceeds from the sale of fixed assets.

     Financing activities used $8,000 for the year. This was used to make
payments against the note payable to Summit Bank for the mortgage on the
Company's Somerville, New Jersey facility.

     Cash used by net operating activities decreased by $447,000 during 1997
from the prior year. The largest contributing factor was the reduction in the
Company's loss due to cost cutting procedures implemented in 1995 and continued
through 1997.

     Capital expenditures were $35,000 and $172,000 in 1997 and 1996,
respectively. Capital expenditures were cut drastically to due to fiscal
constraints.

     The Company has no available line of credit established and has not been
able to obtain an asset based loan on unencumbered assets. Commercial banks and
lending institutions were not willing to provide funds to the Company due to the
history of recurring losses from operations before non-recurring items and
extraordinary gains and there is no assurance that operations will generate
sufficient cash flow to meet long-term obligations.

     The Company has suffered recurring losses from continuing operations of
approximately $556,000 in 1997 and $884,000 in 1996. The Company has continued
its cost containment activities started in an effort to reduce expenses.

     Management believes that the Company's financial condition at December 31,
1997 represents an uncertain base to conduct current operations. The Company's
ability to continue as a going concern is dependent upon its success at
generating sufficient cash flow or obtaining additional financing as required to
meet its long-term obligations, support its working capital needs and curtailing
the ongoing losses by generating profitable revenue levels. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.

     On August 25, 1997, Summit Bank notified the Company it was in default for
failure to make payments when due. Summit Bank exercised its right under the
Loan Document to declare immediately due and payable the entire outstanding loan
balance. On February 24, 1998, Summit Bank entered a judgement against the
Company on the docket of the Superior Court in Bergen County, N.J. for
nonpayment of notes and on March 18, 1998 they entered a judgement for
foreclosure against the Company on the docket of the Superior Court in Somerset
County, N.J.


                                       18

<PAGE>


RECENT ACCOUNTING PRONOUNCEMENTS


     In July 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". Statement No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The objective of the Statement is to report a measure of
all changes in equity of an enterprise that result from transactions and other
economic events of the period other than transactions with owners
("Comprehensive income"). Comprehensive income is the total of net income and
all other nonowner changes in equity. The Statement is effective for fiscal
years beginning after December 15, 1997, with earlier application permitted.

     In July 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information". Statement No. 131 requires disclosures
of each segment that are similar to those required under current standards with
the addition of quarterly disclosure requirements and a finer partitioning of
geographic disclosures. It requires limited segment data on a quarterly basis.
It also requires geographic data by country, as opposed to broader geographic
regions as permitted under current standards. The Statement is effective for
fiscal years beginning after December 15, 1997, with earlier application
permitted.

     In management's opinion, SFSF Nos. 130 and 131 when adopted, will not have
a material effect on the Company's financial statements.


ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     For additional information concerning this item, see "Item 13. Exhibits and
Financial Statement Schedules and Reports on Form 8-KSB".



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

     Not applicable.


                                       19

<PAGE>


                                    PART III


ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     For information concerning this item, see "Item 1. Business-Executive
Officers and Significant Employees" and the Proxy Statement to be filed with
respect to the 1998 Annual Meeting of Shareholders (the "Proxy Statement"),
which information is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION

     For information concerning this item, see the Proxy Statement, of which its
information is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT

     For information concerning this item, see the Proxy Statement, of which its
information is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     For information concerning this item, see the Proxy Statement, of which its
information is incorporated herein by reference.

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
         AND REPORTS ON FORM 8-KSB

     (a) 1. Financial Statements:

     The financial statements of the Company filed in this Annual Report on Form
10-KSB are listed in the attached Index to Financial Statements and Schedules.

     2. Financial Statement Schedules:

     The financial statement schedule of the Company filed in this Annual Report
on Form 10-KSB is listed in the attached Index to Financial Statements and
Schedules.

     3. Exhibits:

     The exhibits required to be filed as part of this Annual Report on Form
10-KSB are listed in the attached Index to Exhibits.

     (b) 1. Reports on Form 8-KSB:

     The Company filed reports on Form 8-KSB with the Commission: 1.) dated
May, 23, 1994, amended July 26, 1994 regarding "Disposition Of Assets", and 2.)
dated January 27, 1995, amended February 9, 1995 regarding "Changes In
Registrant's Certifying Accountant", and 3.) dated September 9, 1997 regarding
"Default on Summit Bank Mortgage" and 4.) dated December 3, 1997 regarding
"Contract of Sale of Real Estate Holdings".


                                       20

<PAGE>


                                POWER OF ATTORNEY


      The Company and each person whose signature appears below hereby appoint
Manfred F. Dyck and Robert C. Keller as attorneys-in-fact with full power of
substitution, severally, to execute in the name and on behalf of the registrant
and each such person, individually and in each capacity stated below, one or
more amendments to the annual report; which amendments may make such changes in
the report as the attorney-in-fact acting deems appropriate and to file any such
amendment to the report with the Securities and Exchange Commission.


                                   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.


     Dated: April 13, 1998

                  BIOSEARCH MEDICAL PRODUCTS INC.

                  By:  /s/  Manfred F. Dyck
                       ------------------------------
                            Manfred F. Dyck
                            President and Principal
                            Executive Officer


      Pursuant to the requirements of the Securities and 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.


      Dated:  April 13, 1998

                  By:  /s/  Manfred F. Dyck
                       ------------------------------
                            Manfred F. Dyck
                            President, Principal Executive
                            Officer and Director


      Dated:  April 13, 1998

                  By:  /s/  Robert C. Keller
                       ------------------------------
                            Robert C. Keller
                            Chief Accounting Officer and
                            Treasurer


                                       21

<PAGE>


                                SIGNATURES (cont)


      Dated:  April 13, 1998

                  By:  /s/  Ursula M. Dyck
                       ------------------------------
                            Ursula M. Dyck
                            Director


      Dated:  April 13, 1998

                  By:  /s/  David M. Schreck, M.D.
                       ------------------------------
                            David M. Schreck, M.D.
                            Director


      Dated:  April 13, 1998

                  By:  /s/  Klaus J.H. Meckeler, M.D.
                       ------------------------------
                            Klaus J.H. Meckeler, M.D.
                            Director



      Dated:  April 13, 1998

                  By: /s/   Frederick L. Perl, M.D.
                      ------------------------------
                            Frederick L. Perl, M.D.
                            Director


                                       22

<PAGE>


                         BIOSEARCH MEDICAL PRODUCTS INC.
                       FINANCIAL STATEMENTS AND SCHEDULES


                                      INDEX



                                                                       Page
                                                                      Number
                                                                      ------
Financial Statements:
---------------------


Independent Auditors' Reports                                           24

Balance Sheets at
  December 31, 1997 and 1996                                          25 - 26

Statements of Operations for the Years Ended
  December 31, 1997, 1996 and 1995                                      27

Statements of Shareholders' Equity
  for the Years Ended
  December 31, 1997, 1996 and 1995                                      28

Statements of Cash Flows for the Years Ended
  December 31, 1997, 1996 and 1995                                      29

Notes to Financial Statements                                         30 - 39

Financial Statement Schedule:

Schedule VIII - Valuation and Qualifying Accounts                       40



                      All other schedules have been omitted
           because they are not applicable or the required information
          is included in the financial statements or the notes thereto.


                                       23

<PAGE>


                          Independent Auditors' Report


The Board of Directors and Shareholders
Biosearch Medical Products, Inc.:



     We have audited the accompanying balance sheets of Biosearch Medical
Products, Inc. as of December 31, 1997 and 1996 and the related statements of
operations, shareholders' equity and cash flows for each of the three years
ended December 31, 1997 and the financial schedule for each of the three years
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule 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 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 financial statements referred to above present fairly
the financial position of Biosearch Medical Products, Inc. as of December 31,
1997 and 1996, and the results of its operations and its cash flows for each of
the three years ended December 31, 1997, in conformity with generally accepted
accounting principles.

     In connection with our audits of the financial statements referred to
above, we audited the financial schedule listed under Item No. 14. In our
opinion, the financial schedule, when considered in relation to the financial
statements taken as a whole, presents fairly, in all material respects, the
information stated therein.

      The accompanying financial statements have been prepared assuming that
Biosearch Medical Products, Inc. will continue as a going concern. As discussed
in note 1 to the financial statements, the Company has suffered recurring losses
from operations. There is no assurance that the Company's operations will
generate sufficient cash flow to meet its obligations or that the Company has
the ability to obtain additional financing as required, which raises substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.


                                             Amper, Politziner & Mattia P.A.


Edison, New Jersey
March 18, 1998


                                       24

<PAGE>


                        BIOSEARCH MEDICAL PRODUCTS, INC.

                                 BALANCE SHEETS

                                     ASSETS


                                                         December 31,
                                                  -----------------------
                                                     1997         1996
                                                  ----------   ----------

Current assets:

      Cash and cash equivalents                   $   14,486   $  321,376

      Trade receivables - less allowance for
         doubtful accounts of $10,000 and
         $32,838 at December 31, 1997 and
         1996                                        351,964      182,247
      Inventories                                    372,012      513,551
      Other assets                                    18,762       30,665
                                                  ----------   ----------

              Total current assets                   757,224    1,047,839
                                                  ----------   ----------


Property, plant and equipment                      4,239,648    4,251,055
      Less accumulated depreciation
      and amortization                             2,887,766    2,799,250
                                                  ----------   ----------

              Net property, plant and equipment    1,351,882    1,451,805


Other assets
         Other assets, net                             8,123       13,580
                                                  ----------   ----------

              Total other assets                       8,123       13,580
                                                  ----------   ----------


              Total assets                        $2,117,229   $2,513,224
                                                  ==========   ==========


                                   (continued)

                                       25

<PAGE>


                        BIOSEARCH MEDICAL PRODUCTS, INC.

                                 BALANCE SHEETS
                                   (continued)


                      LIABILITIES AND SHAREHOLDERS' EQUITY


                                                       December 31,
                                               ----------------------------
                                                   1997            1996
                                               ------------    ------------

Current liabilities:

      Current maturities of long-term debt     $    691,041    $     36,788
      Accounts payable                              353,712         185,653
      Accrued liabilities                           132,330         131,693


              Total current liabilities           1,177,083         354,134

Long-term debt, less current maturities                --           662,734
                                               ------------    ------------

              Total liabilities                   1,177,083       1,016,868
                                               ------------    ------------


Shareholders' equity:

      Common stock, no par value; 5,000,000
         shares authorized; 2,210,798 issued
         and 2,202,878 
         shares outstanding at
         December 31, 1997 and 1996              11,129,954      11,129,954


      Accumulated deficit                       (10,158,569)     (9,602,359)

      Treasury stock, at cost;
         7,920 shares at December 31, 1997
         and 1996                                   (31,239)        (31,239)
                                               ------------    ------------

              Total shareholders' equity            940,146       1,496,356

Commitments and contingencies                          --              --
                                               ------------    ------------

                                               $  2,117,229    $  2,513,224
                                               ============    ============


                            See accompanying notes to
                              financial statements


                                       26

<PAGE>




                            BIOSEARCH MEDICAL PRODUCTS, INC.
                                STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                        Years Ended December 31,
                                               -----------------------------------------
                                                   1997           1996          1995
                                               -----------    -----------    -----------

<S>                                            <C>            <C>            <C>        
Revenues                                       $ 1,936,171    $ 2,648,719    $ 3,268,220

Cost of goods sold                               1,536,936      2,238,606      2,777,747
                                               -----------    -----------    -----------

Gross profit                                       399,235        410,113        490,473

Selling, general and administrative expenses       892,602      1,222,901      1,332,497
                                               -----------    -----------    -----------

Loss from operations                              (493,367)      (812,788)      (842,024)
                                               -----------    -----------    -----------

Other income (expense):
   Interest expense, net                           (84,441)       (72,055)       (30,426)
   Other, net                                       21,598          1,275         28,818
                                               -----------    -----------    -----------
                                                   (62,843)       (70,780)        (1,608)
                                               -----------    -----------    -----------
(Loss) before provision for income taxes          (556,210)      (883,568)      (843,632)


Provision for income taxes                            --             --             --
                                               -----------    -----------    -----------
Net (loss)/income                              $  (556,210)   $  (883,568)   $  (843,632)
                                               ===========    ===========    ===========

Basic and diluted net loss
  per common share                             $      (.25)   $      (.40)   $      (.38)
                                               ===========    ===========    ===========

Weighted average number of
   common shares outstanding                     2,202,878      2,202,878      2,202,808
                                               ===========    ===========    ===========
</TABLE>

                            See accompanying notes to
                              financial statements


                                       27

<PAGE>


                                   BIOSEARCH MEDICAL PRODUCTS, INC.
                                  STATEMENTS OF SHAREHOLDERS' EQUITY

                             YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
                                                                  Common Stock                 
                                                 --------------------------------------------  
                                                    Shares           Shares
                                                    Issued        Outstanding       Amount
                                                 ------------    ------------    ------------  

<S>                                                <C>             <C>          <C>            
      Balance, January 1, 1995                      2,210,798*      2,202,758*   $ 11,129,913  


Issuance of treasury shares in connection with
      employee stock awards                              --               100              35  


Net loss                                                 --              --              --    
                                                 ------------    ------------    ------------  
      Balance, December 31, 1995                    2,210,798       2,202,858    $ 11,129,948  



Issuance of treasury shares in connection with
      employee stock awards                              --                20               6  


Net loss                                                 --              --              --    
                                                 ------------    ------------    ------------  
      Balance, December 31, 1996                    2,210,798       2,202,878    $ 11,129,954  
                                                 ------------    ------------    ------------  


Net Loss                                                 --              --              --    
                                                 ------------    ------------    ------------  

      Balance, December 31, 1997                    2,210,798       2,202,878    $ 11,129,954  
                                                 ============    ============    ============  


                                                                          Treasury Stock
                                                  Accumulated     -----------------------------
                                                    Deficit          Shares           Amount          Total
                                                  ------------    ------------     ------------    ------------

<S>                                              <C>                   <C>        <C>             <C>         
      Balance, January 1, 1995                    $ (7,875,158)         (8,040)*   $    (32,709)   $  3,223,046


Issuance of treasury shares in connection with
      employee stock awards                               --               100              394             428


Net loss                                              (843,632)           --               --          (843,632)
                                                  ------------    ------------     ------------    ------------
      Balance, December 31, 1995                  $ (8,718,791)         (7,940)    $    (31,315)   $  2,379,842



Issuance of treasury shares in connection with
      employee stock awards                               --                20               76              82


Net loss                                              (883,568)           --               --          (883,568)
                                                  ------------    ------------     ------------    ------------
      Balance, December 31, 1996                  $ (9,602,359)         (7,920)    $    (31,239)   $  1,496,356
                                                  ------------    ------------     ------------    ------------

Net Loss                                              (556,210)           --               --          (556,210)
                                                  ------------    ------------     ------------    ------------

      Balance, December 31, 1997                  $(10,158,569)         (7,920)    $    (31,239)   $    940,146
                                                  ============    ============     ============    ============
</TABLE>

                            See accompanying notes to
                              financial statements.
          * Retroactively restated for the reverve stock in June 1995.


                                       28

<PAGE>


                              BIOSEARCH MEDICAL PRODUCTS, INC.
                                  STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                              Years Ended December 31,
                                                        -----------------------------------
                                                           1997         1996         1995
                                                        ---------    ---------    ---------
<S>                                                     <C>          <C>          <C>       
Cash flows from operating activities:

Net (loss)                                              $(556,210)   $(883,568)   $(843,632)

Adjustments to reconcile (loss) to net
  cash (used in) operating activities:
       Depreciation and amortization                       91,279       90,862      115,215
       Gain on sale of fixed assets                        (2,763)        --           --


Changes in assets and liabilities:
       Decrease/(increase) in trade receivables          (169,716)     (19,747)     385,486
       (Increase)/decrease in inventories                 141,538      102,540      (41,325)
       Decrease (increase) in other current assets         11,903      (13,114)      18,165
       Increase in other assets                             5,457          (23)      (2,534)
       Increase (decrease) in accounts payable            168,059       22,119      (65,474)
       Decrease in accrued liabilities                        637      (56,553)     (50,647)
                                                        ---------    ---------    ---------

Net cash used in operating activities                    (309,816)    (757,484)    (484,746)
                                                        ---------    ---------    ---------

Cash flows from investing activities:

Capital expenditures                                      (34,593)    (172,180)     (98,500)
Proceeds from sale of fixed assets                         46,000         --           --
Decrease in escrow                                           --        312,811      712,895
                                                        ---------    ---------    ---------

Net cash provided by investing activities                  11,407      140,631      614,395
                                                        ---------    ---------    ---------

Cash flows from financing activities:

Proceeds from surrendering whole life policy                 --        402,785         --
Principal payments on long-term borrowings                 (8,481)     (32,648)     (28,389)
                                                        ---------    ---------    ---------

Net cash provided by (used in)
  financing activities                                     (8,481)     370,137      (28,389)
                                                        ---------    ---------    ---------

Net (decrease)/increase in cash and cash equivalents     (306,890)    (246,716)     101,260
                                                        ---------    ---------    ---------

Cash and cash equivalents at beginning of period          321,376      568,092      466,832
                                                        ---------    ---------    ---------

Cash and cash equivalents at end of period              $  14,486    $ 321,376    $ 568,092
                                                        =========    =========    =========
</TABLE>

                            See accompanying notes to
                              financial statements.

                                       29

<PAGE>


                        BIOSEARCH MEDICAL PRODUCTS, INC.
                          NOTES TO FINANCIAL STATEMENTS

1. Liquidity


     The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company had
recurring losses from continuing operations of $566,210 in 1997 and $883,568 in
1996.

     There is no assurance that the Company's revenue from its OEM strategic
alliances or niche surgical and biofeedback products will reach volumes to which
long-term operations can be conducted.

     Management believes that the Company's financial condition at December 31,
1997 represents an uncertain base to conduct current operations. The Company's
ability to continue as a going concern is dependent upon its success at
generating sufficient cash flow or obtaining additional financing as required to
meet its long-term obligations, support its working capital needs and curtailing
the ongoing losses by generating profitable revenue levels. The Company had no
available line of credit established at December 31, 1997.

     See Note No. 7 regarding bank foreclosure.


2. Summary of Significant Accounting Policies


     Nature of operations - Biosearch Medical Products, Inc. (the "Company") is
a U.S. based corporation whose principal lines of business are in contract
manufacturing and manufacturing and distributing, under its own label of medical
devices. The Company is an OEM manufacturer for various medical product
companies and manufactures and distributes its own line of endoscopic products
to hospitals, through a network of dealers, both domestically and
internationally. Credit is granted to substantially all customers.

     Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

     Cash and cash equivalents - The Company considers all short-term
investments with maturities of three months or less at the date of purchase to
be cash equivalents. Cash and cash equivalents include money market funds and
short term treasury bills. The Company, at December 31, 1997 and 1996 and
periodically throughout the years, has maintained balances in various operating
and money market accounts in excess of federally insured limits.

     Property, plant and equipment - Property, plant and equipment are carried
at cost less accumulated depreciation and amortization. Depreciation and
amortization are computed using the straight-line method over the estimated
useful lives of the related assets.

     Inventories - Inventories are valued at the lower of cost, determined by
the first-in, first-out method, or market. Cost includes materials, direct labor
and manufacturing overhead.


                                       30

<PAGE>


2. Summary of Significant Accounting Policies (cont)


     Research and development contracts - The Company recognizes revenue on
research and development contracts on the completed contract method. The related
costs are deferred until the completion of the contract. Anticipated losses on
contracts are recorded in the period they become known.

     Stock option plan - The Company has elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB25) and
related interpretations in accounting for its employee stock options. Under this
method, compensation cost is measured as the amount by which the market price of
the underlying stock exceeds the exercise price of the stock option at the date
at which both the number of options granted and the exercise price are known.

     Loss per common share - Effective for the Company's financial statements
for the year ended December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS 128). SFAS replaces the
presentation of primary earnings per share ("EPS") and fully diluted EPS with a
presentation of basic EPS and diluted EPS, respectively. Basic EPS excludes
dilution and is computed by dividing earnings available to common stockholders
by the weighted average number of common shares outstanding during the period.
Diluted EPS assumes conversion of diluted options and warrants, and the issuance
of common stock for all other potentially dilutive equivalent shares
outstanding. All potentially dilutive equivalent shares outstanding are
anti-dilutive for all periods. The adoption of SFAS 128 did not have a material
effect on the Company's reported EPS amounts.


3. Sale of Product Enteral Pump Business and Product Licensing/Distribution

     In 1993, the Company entered into an exclusive technology and patent
license agreement with Nutricia, B.V. In connection with the new agreement the
Company has sublicensed its Hydromer technology and patent license. The
agreement provides Nutricia with the right to manufacture and sell under their
name the Company's line of enteral and surgical products in Europe, Africa,
Australia and Asia, with the exception of Japan, while reserving the Company's
rights to sell its products in those markets under the Company's
trademarks/tradenames. The Company is entitled to a 5% royalty for the life of
patented products.

     The agreement also provides for the development of products by both
companies per a five year non-cancellable cooperative arrangement which expired
February 1998.


                                       31

<PAGE>


                         BIOSEARCH MEDICAL PRODUCTS INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


4. Sale of Product Line

     Sherwood Medical Company Agreement

     On May 20, 1994, the Company announced that it sold all assets, except
inventories, used exclusively in the manufacture, sale and distribution of its
enteral access device business, including trademarks to Sherwood Medical Company
(except the Pee WeeTM low profile enteral product line which was sold to another
large medical products company during April 1994). In addition, the Company
licensed and sub-licensed certain patented technology. The Company agreed to a
two year supply agreement of the same products at cost plus ten percent. The
Company agreed to a five year covenant not to manufacture or sell medical
devices promoted for gastrointestinal feeding or gastric decompression. A two
and one half year supply agreement was also signed on the Company's "J-Tube"
products subject to existing agreements with other companies. The total
consideration for the asset sale and license of technology was a $3,500,000 cash
payment, $1,000,000 of which was subject to a two year escrow arrangement.
Sherwood Medical Company is a leading manufacturer and marketer of medical
products and a subsidiary of American Home Products Corporation (NYSE: AHP), a
New Jersey based diversified healthcare company.


5. Inventories
                                    December 31,
                             -----------------------
                                1997         1996
                             ----------   ----------

Finished goods               $   95,992   $  130,432
Work-in-process                 140,271      167,897
Raw materials                   135,749      215,222
                             ----------   ----------
                             $  372,012   $  513,551
                             ==========   ==========

6. Property, Plant and Equipment

                                                        
                                    December 31,
                             -----------------------
                                1997         1996             Estimated    
                             ----------   ----------         Useful Lives  
                                                             ------------  
Land                         $  137,182   $  137,182                       
Buildings and improvements    1,667,355    1,699,172         40 years      
Machinery and equipment       1,915,249    1,897,315         3 - 10 years  
Furniture and fixtures          519,862      517,386         5 years       
                             ----------   ----------
                             $4,239,648   $4,251,055       
                             ==========   ==========

     Depreciation and amortization charged to income was $91,279, $90,862 and
$115,215 in 1997, 1996 and 1995, respectively.


                                  32

<PAGE>


                         BIOSEARCH MEDICAL PRODUCTS INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

7. Long-Term Debt


                                    December 31,
                                 -------------------
                                   1997       1996
                                 --------   --------

Note payable due April 1, 2007   $691,041   $699,522
Less current maturities           691,041     36,788
                                 --------   --------
Long-term debt                   $   --     $662,734
                                 ========   ========


     This note is collateralized by a first mortgage on the Company's
Somerville, New Jersey facility and miscellaneous equipment, and represents
Economic Development Authority ("EDA") funds. The note bears an interest rate of
75% of prime (8.50% at December 31, 1997) with a minimum interest rate of 11.25%
and a maximum interest rate of 22.5%. The principal is payable in varying
monthly installments of principal and interest, with the final payment due April
1, 2007.

     On August 25, 1997, Summit Bank notified the Company that it was in default
for failure to make payments when due. Summit Bank exercised its right under the
Loan Document to declare immediately due and payable the entire outstanding
balance. On February 24, 1998, Summit Bank entered a judgement against the
Company on the docket of the Superior Court in Bergen County, N.J. for
nonpayment of notes and on March 18, 1998 they entered a judgement for
foreclosure against the Company on the docket of the Superior Court of Somerset
County, N.J.


8. Savings and Investment Plans

     In May 1988, the Company established a contributory 401(k) plan for all
eligible employees. However, in April 1991, the Company's Board of Directors
indefinitely suspended the Company's contribution primarily due to the Company's
adverse profit performance. The Company pays the cost of administering the plan
which totaled approximately $7,000, $7,000 and $6,600, for 1997, 1996 and 1995,
respectively.


                                       33

<PAGE>


                         BIOSEARCH MEDICAL PRODUCTS INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

9. Income Taxes


     Deferred tax attributes resulting from differences between financial
accounting amounts and tax bases of its assets and liabilities at December 31,
follow:

                                                  1997          1996
                                               ----------    ----------
Current assets and liabilities:

Allowance for doubtful accounts                $    4,000    $   13,000
Inventory valuation reserve                       103,000       127,000
Inventory overhead capitalization                    --          21,000
                                               ----------    ----------
                                                  107,000       161,000
Valuation allowance                               107,000       161,000
                                               ----------    ----------
    Net current deferred tax assets            $     --      $     --
                                               ==========    ==========

Non current assets and liabilities:

Depreciation                                       89,000      (316,000)
Net operating loss carryforward                 3,987,000     3,853,000
Alternative minimum tax credit carryforward        60,000        60,000
Investment tax credit carryforward                182,000       182,000
                                               ----------    ----------
                                                4,318,000     3,779,000
Valuation allowance                             4,318,000     3,779,000
                                               ----------    ----------
Net noncurrent deferred tax asset              $     --      $     --
                                               ==========    ==========


    The provision for income taxes consists of the following for the years ended
December 31:

                                       1997         1996         1995
                                    ---------    ---------    ---------
Current tax expense                 $    --      $    --      $    --
Deferred tax benefit                 (485,000)    (504,000)    (280,000)
Net change in valuation allowance     485,000      504,000      280,000
                                    ---------    ---------    ---------
                                    $    --      $    --      $    --
                                    =========    =========    =========


                                  34

<PAGE>


                         BIOSEARCH MEDICAL PRODUCTS INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

9. Income Taxes (cont)

     The statutory income tax rate differs from the effective tax rate used in
the financial statements for the years ended December 31, 1997, 1996 and 1995 as
a result of current year net operating losses, the benefit of which has not been
recognized in the current year.

     The investment tax credit carryforward expires in various years through
2000.

     As of December 31, 1997, the Company had available the following net
operating loss carryforwards for tax purposes:

    Expiration Date:
Year ending December 31,              Federal     State
------------------------              -------     -----


     1998                               --     $1,439,000
     1999                               --      1,707,000
     2000                               --        295,000
     2002                               --        939,000
     2003                          $1,374,000   1,091,000
     2004                           2,183,000     636,000
     2005                             195,000         --
     2006                           1,637,000         --
     2007                           1,739,000         --
     2008                             316,000         -- 
     2010                             938,000
     2011                           1,092,000
     2012                             636,000         --
                                  -----------   ----------
                                  $10,110,000   $6,107,000
                                  ===========   ==========


10. Supplemental Cash Flow Information

     Cash payments during 1997, 1996 and 1995 for interest were approximately
$83,275, $85,063 and $204,970, respectively. There were no cash payments for
income taxes during 1997, 1996 and 1995.


                                       35

<PAGE>


                         BIOSEARCH MEDICAL PRODUCTS INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


11. Stock Options and Stock Awards

Stock Options

     During 1992, 8,000 options at $3.35 per share were granted to a board
member and 5,000 options at $1.50 per share were granted to a product
development consultant, (options were at the per share market value on the date
of the grant). At December 31, 1997 these 13,000 options expired. In September
1992, the Company issued 30,180 five-year stock options to employees in
recognition of a wage freeze and service time, reflecting a market price at the
time of $.35 per share which vested in one-third portions per year over three
years of continued employment beginning October 1, 1993. At December 31, 1997,
all options have expired.

     During 1994, 133,515 five-year stock options were granted to employees in
continued recognition of a wage freeze and service time. The options reflect a
market price on the date of the grant of $.50 per share which vested in
one-third portions per year over three years of continued employment beginning
April 6, 1994. Additionally, 32,000 five-year stock options were granted to
board members and 5,000 options were granted to a product development consultant
reflecting a price of $.50 per share, and 600 five year options granted to a
certain officer of the Company at $.60 per share. These shares were also priced
at the per share market value on the date of the grant. A total of 171,115
shares were granted in 1994. At December 31, 1997, 100,015 shares remain
reserved which is net of the expirations attributed to employment terminations.

     During 1996, 8,000 five-year stock options were granted to a new board
member at $.30 per share. At December 31, 1997 all 8,000 shares remain reserved.

     During 1997, 200,043 five-year stock options were to key employees in
continued recognition of a wage freeze and service time. The options reflect a
market price on the date of the grant of $.19 per share. Additionally, 8,000
five-year stock options were granted to a new board member reflecting a price of
$.17 per share. A total of 208,043 were granted in 1997. At December 31, 1997
all 208,043 shares remain reserved.

     Pro forma information regarding net income and earnings per share has been
determined as if the Company had accounted for its employee stock options under
the fair value method. The fair value for these options was estimated at the
date of the grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 1997 and 1996; respectively: risk free interest
rates of 5.53% and 7.07%; dividend yields of 0% and 0%; volatility factors of
the expected market price of the Company's common stock of $1.74 and $1.81; and
a weighted-average expected life of the options of 5 years. There were no
options issued in 1995.

     The Black-Scholes option value model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.


                                       36

<PAGE>


                         BIOSEARCH MEDICAL PRODUCTS INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows:

                                    1997           1996         1995
                                  --------       ---------      -----
   Pro forma net loss            $(593,510)      $(885,868)     $  --

   Pro forma loss per share
   Primary                        $   (.27)      $    (.40)     $  --
   Diluted                        $   (.27)      $    (.40)     $  --

There was no compensation expense recorded from stock options for the years
      ended December 31, 1997, 1996 and 1995.

A summary of the Company's stock option activity, and related information for
the years ended December 31, follows:



<TABLE>
<CAPTION>

                   Options  Weighted-Average       Options  Weighted-Average     Options  Weighted-Average
                    (000)    Exercise Price         (000)    Exercise Price       (000)    Exercise Price
                   -------  ----------------       -------  ----------------     -------  ----------------
<S>                  <C>         <C>                  <C>         <C>              <C>         <C>  
Outstanding -
beginning of year    148        $ .66                 150         $.67             220         $1.10


   Granted           208          .19                   8          .10              --            --
   Exercised          --           --                  --           --              --            --
   Expired           (40)        1.13                 (10)         .49             (70)           --
                     ---         ----                 ---          ---             ---          -----


Outstanding -
end of year          316        $ .29                 148         $.66             150         $ .67

Exercisable -
end of year          316        $ .29                  98         $.67             122         $ .71

Weighted-average fair
value of options granted
during the year:

   Where exercise price
   equals stock price           $ .18               $ .29

   Where exercise price
   equals stock price           $  --               $  --

   Where exercise price
   equals stock price           $  --               $  --
</TABLE>


                                       37

<PAGE>


                         BIOSEARCH MEDICAL PRODUCTS INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

Following is a summary of the status of stock options outstanding at December
31, 1997.

<TABLE>
<CAPTION>
           Outstanding Options                             Exercisable Options
-------------------------------------------    --------------------------------------------
                              Weighted
                               Average            Weighted                      Weighted
 Exercise                     Remaining           Average                       Average
Price Range     Number     Contractual Life    Exercise Price    Number      Exercise Price
-----------     -------    ----------------    --------------    -------     --------------
<S>      <C>      <C>            <C>               <C>           <C>             <C>  
$.17 - $.19     208,043        4.8 years           $ .19         208,043         $ .19
$.30 - $.30       8,000        3.4 years           $ .30           8,000         $ .30
$.50 - $.50     100,015        1.3 years           $ .50         100,015         $ .50
</TABLE>


11. Stock Awards

     During 1997, 1996 and 1995 the Company awarded shares of common stock to
certain employees for five and ten years of continued employment. The common
stock awarded was issued without any restrictions from the Company's treasury
stock. The related compensation expense is recorded in selling, general and
administrative expense.


12. Stock Authorization

     As of June, 1995 the Company's aggregate of authorized common stock stood
at 25,000,000 shares. On June 21, 1995, the shareholders authorized a 1 for 5
reverse stock split, making the total of the Company's aggregate of authorized
common stock stand at 5,000,000 shares. As of December 31, 1997, there were
2,210,798 shares issued. All common stock shares and related information have
been restated for the reverse stock split.


13. Related Party Transactions

     In 1982 the Company entered into an exclusive, world-wide, royalty free
license with Hydromer, Inc. to use Hydromer coating on its enteral feeding
products. In 1991, the Company entered into a license agreement, as amended,
with Hydromer for the use of certain patents to coat products which were not
included in the royalty-free license, specifically the products are for
pancreatic and biliary stents, hemostatic coagulation probes and a introducer
catheter device. Manfred F. Dyck, President and Chief Executive Officer of the
Company, is also a major stockholder, President and Chief Executive Officer of
Hydromer, Inc.

     Purchases of coating products from Hydromer in 1997, 1996 and 1995 amounted
to approximately $40,000, $30,000 and $18,000, respectively. Royalty fee expense
for the years ended December 31, 1997, 1996 and 1995 were approximately $27,000,
$36,000 and $32,000 respectively.


                                       38

<PAGE>


                         BIOSEARCH MEDICAL PRODUCTS INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

14. Commitments and Contingencies

     See Note No. 7 regarding bank foreclosure.


15. Segment Information and Credit Concentration

     The Company considers that its products and services compete in the
business segment of the "Medical Device" industry involving research,
development, manufacturing and sale.

     Sales of the Company's products to specific customers may, at times, be
significant to the overall revenues of the Company. During 1997 and 1996,
Sherwood Medical Company accounted for approximately 27% and 74% of the
Company's revenues, respectively, and is approximately 3% and 36% of the
Company's net accounts receivable at December 31, 1997 and 1996, respectively.
During 1997 Smith Industries Medical Systems/Portex Ltd. (SIMS) accounted for
36% of revenues and 71% of accounts receivable at December 31, 1997. Additional
purchase orders are not expected from SIMS after June 1998. No other single
customer accounted for more than 10% of the Company's revenue in 1997, 1996, or
1995.


16. Research and Development

     Research and development costs are expensed as incurred. Such expenses were
approximately $2,000, $38,000 and $65,000 in 1997, 1996 and 1995 respectively.
The Company may, from time to time, utilize certain physicians and surgeons, who
are recognized in their field of expertise, for product development and
evaluations. Remunerations to these medical professionals for their efforts may
be in the form of royalties contingent on the products being subsequently
marketed and revenue streams generated. The cost of such royalties is expensed
as incurred in selling, general and administration expense.


                                       39

<PAGE>


                        BIOSEARCH MEDICAL PRODUCTS, INC.
                                  SCHEDULE VIII
                        VALUATION AND QUALIFYING ACCOUNTS



                         Balance at   Charged to                     Balance at
                         Beginning    Costs and                        End of
                         of Period     Expenses     Deductions(1)      Period
                         ----------   ----------    -------------    ----------

Year ended:
   December 31, 1997
     Allowance for
      doubtful accounts   $ 32,838      $(22,838)      $       0      $ 10,000
 
Year ended:
   December 31, 1996
     Allowance for
     doubtful accounts    $ 67,562      $      0       $ (34,724)     $ 32,838

Year ended:
   December 31, 1995
     Allowance for
     doubtful accounts    $ 77,881      $(10,305)      $     (14)     $ 67,562


   (1) Accounts written off during year.


                                       40

<PAGE>


<TABLE>
<CAPTION>
                                INDEX TO EXHIBITS
<S>       <C>
3 (a)-    Certificate of Incorporation of the Company

3 (b)-    By-Laws of the Company

10(a)-    Agreement dated December 11, 1979 between the Company and Dr. Robert
          D. Dobbie (Incorporated by reference to Exhibit 10.1 to the
          Registration Statement on Form S-1 (No. 2-70688)

10(b)-    Employment Agreement dated December 29, 1980 between the Company and Manfred F. Dyck,
          (Incorporated by reference to Exhibit 10.3 to the Registration Statement on form S-1
          (No. 2-70688)

10(c)-    Credit Agreement dated as of April 1, 1982 among the New Jersey Economic Development
          Authority, the Company and Franklin State Bank (Incorporated by reference to Exhibit 10(g)
          to the Annual Report on Form 10-K for the fiscal year ended December 31, 1982)

10(e)-    Mortgage dated April 30, 1982 between the Company and the New Jersey Economic Development
          Authority (Incorporated by reference to Exhibit 20(h) to the Annual Report on Form 10-K
          for the fiscal year ended December 31, 1982)

10(f)-    Series A Note dated April 30, 1982 executed by the Company to the New Jersey Economic
          Development Authority (Incorporated by reference to Exhibit 10(i) to the Annual Report on
          Form 10-K for the fiscal year ended December 31, 1982)

10(g)-    Series B Note dated April 30, 1982 executed by the Company to the New Jersey Economic
          Development Authority (Incorporated by reference to Exhibit 10(j) to the Annual Report on
          Form 10-K for the fiscal year ended December 31, 1982)

10(h)-    Lease dated July 1, 1982 between Pembroke Agricultural Corporation and Pouch
          Laboratories, Inc. (Incorporated by reference to Exhibit 10(m) to the Annual Report on Form
          10-K for the fiscal year ended December 31, 1982)

10(i)-    License Agreement dated July 19, 1982 between the Company and Hydromer, Inc.
          (Incorporated by reference to Exhibit 10(n) reference to Exhibit 10(n) to the Annual Report
          on Form 10-K for the fiscal year ended December 31, 1982)

10(j)-    Manufacturing Agreement dated July 22, 1982 between the Company and Ludlow Corporation
          (Incorporated by reference to Exhibit 10(o) to the Annual Report on Form 10-K for the
          fiscal year ended December 31, 1982)

10(k)-    Purchase Agreement dated May 6, 1983 between the Company and Organon Inc. (Incorporated
          by reference to Exhibit 2(a) to the Current Report on Form 8-K dated June 14, 1983)

10(l)-    Amendment dated June 10, 1983 to Purchase Agreement dated May 6, 1983 between the Company
          and Organon Inc. (Incorporated by reference to Exhibit 2(b) to the current Report on Form
          8-K dated June 14, 1983)


                                       41

<PAGE>


10(m)-    Deed of Trust dated June 13, 1983 among the Company, Ticor Title Insurance Company and
          Franklin State Bank (Incorporated by reference on Exhibit 10(m) to the Annual Report on
          Form 10-K for the fiscal year ended December 31, 1983)

10(n)-    Revolving Credit Agreement dated June 14, 1983 between the Company and Franklin State Bank
          (Incorporated by reference on Exhibit 10(n) to the Annual Report on Form 10-K for the
          fiscal year ended December 31, 1983)

10(o)-    Mortgage dated June 14, 1983 executed by the Company to Franklin State Bank (Incorporated
          by reference on Exhibit 10(o) to the Annual Report on Form 10-K for the fiscal year ended
          December 31, 1983)

10(p)-    Amendment No. 2 dated June 14, 1983 to Purchase Agreement dated May 6, 1983 between the
          Company and Organon, Inc. (Incorporated by reference to the Current Report on Form 8-K
          dated June 14, 1983)

10(q)-    Amendment to Revolving Credit Agreement dated September 13, 1983 between the Company and
          Franklin State Bank (Incorporated by reference on Exhibit 10(q) to the Annual Report on
          Form 10-K for the fiscal year ended December 31, 1983)

10(r)-    Mortgage dated September 22, 1983 executed by the Company to Franklin State Bank
          (Incorporated by reference on Exhibit 10(r) to the Annual Report on Form 10-K for the fiscal
          year ended December 31, 1983)

10(s)-    Long Form Deed of Trust and Assignment of Rents dated September 22,
          1983 executed the Company to Franklin State Bank (Incorporated by
          reference on Exhibit 10(s) to the Annual Report on Form 10-K for the
          fiscal year ended December 31, 1983)

10(t)-   Second Amendment to Revolving Credit Agreement dated January 11, 1984 between the
          Company and Franklin State Bank (Incorporated by reference on Exhibit 10(t) to the Annual
          Report on Form 10-K for the fiscal year ended December 31, 1983)

10(u)-   Promissory Note dated January 11, 1984 executed by the Company to Franklin State Bank.
          (Incorporated by reference on Exhibit 10(u) to the Annual Report on Form 10-K for the fiscal
          year ended December 31, 1983)

10(v)-   Promissory Note dated January 11, 1984 executed by the Company to Franklin State Bank
          (Incorporated by reference on Exhibit 10(v) to the Annual Report on Form 10-K for the fiscal
          year ended December 31, 1983)

10(w)-    Warrant Certificate dated January 11, 1984 executed by the Company to Franklin State Bank
          (Incorporated by reference on Exhibit 10(w) to the Annual Report on Form 10-K for the
          fiscal year ended December 31, 1983)

10(x)-    Warrant Certificate dated January 11, 1984 executed by the Company to First Empire State
          Corporation. (Incorporated by reference on Exhibit 10(x) to the Annual Report on Form 10-K
          for the fiscal year ended December 31, 1983)

10(y)-    Promissory Note dated as of January 11, 1984 executed by the Company to Manfred F. Dyck.
          (Incorporated by reference on Exhibit 10(y) to the annual Report on Form 10-K for the
          fiscal year ended December 31, 1983)


                                       42

<PAGE>


10(z)-    Letter Agreement dated as of January 11, 1984 between the Company and Manfred F. Dyck.
          (Incorporated by reference on Exhibit 10(z) to the Annual Report on Form 10-K for the
          fiscal year ended December 31, 1983)

10(aa)-   Modification Agreement dated January 11, 1984 between the Company and Franklin State Bank
          (Incorporated by reference on Exhibit 10(aa) to the Annual Report on Form 10-K for the
          fiscal year ended December 31, 1983)

10(bb)-   Modification Agreement dated January 11, 1984 between the Company and Franklin State Bank.
          (Incorporated by reference on Exhibit 10(bb) to the Annual Report on Form 10-K for the
          fiscal year ended December 31, 1983)

10(cc)-   Stock Option Plan of the Company (Incorporated by reference to Exhibit 10(p) to the Annual
          Report on Form 10-K for the Fiscal year ended December 31, 1982)

10(dd)-   Assignment of Lease dated October 1, 1984 from CardioSearch Inc. to the Company.
          (Incorporated by reference to Exhibit 10(dd) to the Annual Report on Form 10-K for the
          fiscal year December 31, 1984)

10(ee)-   Lease Agreement dated September 26, 1984 between the Company and Morton Street Realty
          Company. (Incorporated by reference to Exhibit 10(ee) to the Annual Report on Form 10-K for
          the fiscal year December 31, 1984)

10(ff)-   Agreement dated June 6, 1984 between the Company and Midwest Metabolic Support Group as
          amended on October 17, 1984. (Incorporated by reference to Exhibit 10(ff) to the Annual
          Report on Form 10-K for the fiscal year December 31, 1984)

10(gg)-   Agreement dated October 18, 1984 between the Company and Midwest Metabolic Support Group.
          (Incorporated by reference to Exhibit 10(gg) to the Annual Report on Form 10-K for the
          fiscal year December 31, 1984)

10(hh)-   Agreement and release between Organon Inc. and the Company dated January 29, 1985.
          (Incorporated by reference to Exhibit 10(hh) to the Annual Report on Form 10-K for the
          fiscal year December 31, 1984)

10(ii)-   Documents evidencing $500,000 Loan from Franklin State Bank to the Company including
          Promissory Note Mortgage Modification Agreements Third Amendment to Revolving Credit
          Account. (Incorporated by reference to Exhibit 10(ii) to the Annual Report on Form 10-K for
          the fiscal year December 31, 1984)

10(jj)-   Form of 6 1/2 percent Convertible Subordinated Note due August 2, 1991 (Incorporated by
          reference to Exhibit 4(a) to the Registration Statement on Form S-3 Number 2-92798)

10(kk)-   Conversion Agency Agreement dated July 26, 1984 among the Company, 
          Citicorp Bank (Switzerland), J. Henry Schroder Bank AG, Banque 
          Scandinave en Suisse, Dai-Ichi Kangyo Bank (Schweiz) AG and 
          Kredietbank (Suisse) SA (Incorporated by reference to Exhibit 4(b) to 
          the Registration Statement on Form S-3 Number 2-92798)

10(ll)-   Letter Agreement dated August 9, 1984, between Franklin State Bank and the Company,
          amending Warrant No. 2 (Incorporated by reference to Exhibit 4(d) to the Registration
          Statement on Form S-3 Number 2-92798)

                                       43

<PAGE>


10(mm)-   Letter Agreement dated August 9, 1984 between First Empire State Corporation and the
          Company, amending Warrant No. 3 (Incorporated by reference to Exhibit 4(b) to the
          Registration Statement on Form S-3 Number 2-92798)

10(nn)-   Warrant No. 2-1 dated as of January 11, 1984 ("Warrant No. 2-1") executed by the Company to
          Manfred F. Dyck. (Incorporated by reference to Exhibit 4(q) to the Registration Statement
          on Form S-3 Number 2-92798)

10(oo)-   Letter Agreement dated August 9, 1984, between Manfred F. Dyck to the Company amending
          Warrant No. 2-1. (Incorporated by reference to Exhibit 4(h) to the Registration Statement
          on Form S-3 Number 2-92798)

10(pp)-   Warrant No. 5 dated August 6, 1984 executed by the Company to Franklin State Bank.
          (Incorporated by reference to Exhibit 4(i) to the Registration Statement on Form S-3 Number
          2-92798)

10(qq)-   Warrant No. 6 dated August 6, 1984 executed by the Company to First Empire State
          Corporation (Incorporated by reference to Exhibit 4(j) to the Registration Statement on
          Form S-3 Number 2-92798)

10(rr)-   Loan and Security Agreement between United Jersey Bank and the Company, including exhibits
          thereto, and Revolving Note executed by the Company pursuant to the terms thereof, all
          dated January 10, 1985. (Incorporated by reference to Exhibit 10(rr) to the Annual Report on
          Form 10-K for the fiscal year ended December 31, 1984)

10(ss)-   Documents evidencing the payment of debt to Franklin State Bank and return of all
          outstanding promissory notes and cancellation of mortgages. (Incorporated by reference to
          Exhibit 10(ss) to the Annual Report on Form 10-K for the fiscal year ended December 31,
          1984)

10(tt)-   Plant Purchase Agreement dated November 14, 1985 by and between Biosearch Medical
          Products Inc. and Cheeseborough-Ponds Inc.  (Incorporated by reference to Exhibit 2(a) to
          Current Report on Form 8-K dated November 14, 1985)

10(uu)-   Amendment to Loan and Security Agreement by and between United Jersey Bank and Biosearch
          Medical Products Inc. and revised Promissory Note, all dated November 25, 1985.

10(ww)-   Extension to Lease by and between Pouch Laboratories Inc. and Pembroke Agricultural
          Corporation dated June 24, 1985.

10(xx)-   Commitment Letter dated July 1, 1986 from United Jersey Bank describing amended facility.

10(yy)-   Employment Agreement dated December 29, 1980 between the Company and Ronald G. Callanan.

10(zz)-   Biosearch Medical Products, Inc. Profit Sharing Retirement Plan

10(aaa)-  Lease agreement by and between Biosearch Medical Products, Inc. and Morton Street Realty
          Company, dated January 1, 1986.


                                       44

<PAGE>


10(bbb)-  Amendment to Loan and Security Agreement by and between United Jersey Bank and Biosearch
          Medical Products, Inc. and revised Promissory Note, all dated November 7, 1986.

10(ccc)-  A long-term agreement by and between Biosearch Medical Products, Inc. and Mead Johnson
          Nutritional Group of Bristol-Myers for the exclusive marketing rights to private label
          Entri-Pak products and other marketing rights to Biosearch Enteral feeding pumps and pump
          sets.

10(ddd)-  Amendment Number 1 to agreement by and between Biosearch Medical Products, Inc. and Mead
          Johnson Nutritional Group of Bristol-Myers for cost reduction project for development of
          the capability to manufacture Entri-Pak packaging.

10(eee)-  Amendment number 2 to agreement by and between Biosearch Medical Products, Inc. and Mead
          Johnson Nutritional Group of Bristol-Myers for settlement of shortfall of first twelve
          months purchase requirements of Entri-Pak.

10(fff)-  Amendment of lease agreement dated January 8, 1986 by and between Biosearch Medical
          Products, Inc. and Morton Street Realty Company.

10(ggg)-  Term Note dated April 28, 1989 between Biosearch Medical Products, Inc. and the First
          Jersey National Bank.
</TABLE>



The following exhibits are incorporated by the respective reference symbol to
the Annual Report on Form 10-K for the fiscal year ended December 31, 1988:

<TABLE>
<CAPTION>

<S>       <C>
10(hhh)-  Pembroke Agricultural Corporation and Pouch Laboratories, Inc. Second rider to lease dated
          June 1, 1988.

10(iii)-  Extension and Amendment to a lease agreement between Morton Street Realty Company and
          Biosearch Medical Products, Inc. dated January 1, 1989.

10(jjj)-  Subordinated promissory note and warrant purchase agreement by and between Biosearch
          Medical Products, Inc. and The Redemptionist Order of New York due February 1, 1990.

10(kkk)-  Dieter Heinemann non-negotiable note - extension due February 27, 1990.

10(lll)-  Subordinated promissory note and warrant purchase agreement by and between Biosearch
          Medical Products, Inc. and Donald R. Gordon due February 1, 1991.

10(mmm)-  Subordinated promissory note and warrant purchase agreement by and between Biosearch
          Medical Products, Inc. and National Aviation and Technology Corporation due February 1,
          1991.

10(nnn)-  Subordinated promissory note and warrant purchase agreement by and between Biosearch
          Medical Products, Inc. and Phyllis A. McVeigh due February 1, 1991.

10(ooo)-  Subordinated promissory note and warrant purchase agreement by and between Biosearch
          Medical Products, Inc. and Ronald J. Clayton due February 1, 1991.

10(ppp)-  Subordinated promissory note and warrant purchase agreement by and between Biosearch
          Medical Products, Inc. and Louis P. Pellegrino due February 1, 1991.


                                       45

<PAGE>


10(qqq)-  Travenol Labs vendor-produced finished goods purchase agreement enteral feeding tubes.

10(rrr)-  Consulting and Finders agreement by and between Baladi and Company and Biosearch Medical
          Products, Inc.

10(sss)-  Term note of Biosearch Medical Products, Inc. payable to the order of the First Jersey
          National Bank $1,000,000- 90 days. Modification of note consent of Borrower and Guarantor.
          Reaffirmation of the obligations of Biosearch Medical Products, Inc. Reaffirmation of the
          guaranty of Biosearch Pouch Laboratories, Inc. Extension from 90 days to one year.
</TABLE>



The following exhibits are incorporated by the respective reference symbol to
the Annual Report on Form 10-K for the fiscal year ended December 31, 1989:


<TABLE>
<CAPTION>

<S>       <C>                                      
10(ttt)-  9% Subordinated Promissory Notes due February 1, 1991 agreement by Biosearch and Ben
          A. Posdal, National Aviation and Technology, T'Ang Management, Herbert W. Marache,
          Ronald Clayton and Richard K. Greene.

10(uuu)-  Revolving Credit Agreement dated August 15, 1990 between Biosearch and Fidelcor Business
          Credit Corporation.

10(vvv)-  10% Subordinated Convertible Notes due August 2, 1992, aggregate $3,080,000 by Biosearch
          and Kiener & Co., Attel et Cie, Algemene Bank Nederland, Mirabaud et Cie and Thurgauer
          Kantonalbank.

10(www)-  Agreement known as the "Hang and Spike Products Purchase Agreement" between Biosearch and
          Clintec Nutrition Company dated December 1, 1989.

10(xxx)-  Agreement of Sale between Biosearch Pouch Laboratories, Inc., and SPD Enterprises, Inc.,
          dated December 15, 1989 cancellation of lease agreement and acquire assets.

10(yyy)-  Warehouse lease agreement dated March 15, 1990 between Biosearch and MSA Associates.

</TABLE>


The following exhibits are incorporated by the respective reference symbol to
the Annual Report on Form 10-K for the fiscal year ended December 31, 1990:

<TABLE>
<CAPTION>

<S>       <C>                                                                  
10(zzz)-  Clintec "Hang & Spike Products Purchase Agreement" amendment dated September 14, 1990.

10(aaaa)- Agreement between Biosearch Medical Products, Inc. and Hydromer, Inc. dated January 11,
          1991 obtaining a license from Hydromer- use and sell coatings on Biosearch Products.

10(bbbb)- March 7, 1990 conversion of aggregate $2,080,000 10% U.S. Denominated Convertible
          Subordinated Notes, originally due August 2, 1992, into aggregate 1,040,000 shares of
          Common Stock and $1,040,000 of 10% U.S. Denominated Non-Convertible Subordinated Notes due
          April 1, 1992, between Biosearch and 1) Algemene Bank Nederland, 2) Attel et Cie, 3) Kiener
          & Co., 4) Miraband & Cie.

10(cccc)- Agreement between NatWest Bank, N.J. and Biosearch Med. Prod. dated February 20, 1991.
</TABLE>


                                       46

<PAGE>


The following exhibits are incorporated by the respective reference symbol to
the Annual Report on Form 10-K for the fiscal year ended December 31, 1991:

<TABLE>
<CAPTION>

<S>       <C>                                                                  

10(dddd)- License agreement amendment between Biosearch Medical Products, Inc. and Hydromer, Inc.
          Dated December 12, 1991.

10(eeee)- Independent Manufactures Representative standard agreement example between Biosearch
          Medical Products, Inc. and various manufacturer representative organizations.

10(ffff)- Sale of assets between Biosearch Medical Products, Inc. and Clintec Nutrition Company.
          Dated June 17, 1991.

10(gggg)- Royalty agreement example between Biosearch Medical Products, Inc. and various physicians
          for product development.

10(hhhh)- September 5, 1991 conversion of $890,000 of 10% U.S. Denominated Non-Convertible
          Subordinated Notes due April 1, 1992, into aggregate 754,239 shares of Common Stock between
          Biosearch and 1) Mirabaud & Cie, 2) Attel et Cie, 3) Algemene Bank Nederlands.
          (Incorporated by reference on exhibit 10(hhhh) to the Annual Report on Form 10-K for the
          fiscal year ended December 31, 1992).

10(iiii)- February 11, 1992 conversion of $620,000 10% U.S. Denominated Convertible Subordinated
          Notes, originally due August 2, 1992, and $150,000 of 10% U.S. Denominated NonConvertible
          Subordinated Notes due April 1, 1992, into aggregate 1,243,848 shares of Common Stock
          between Biosearch and 1) Kiener & Cie, 2) Royal Trust Bank - London.

10(jjjj)- Pump manufacturing agreement between Biosearch Medical Products, Inc. and N. V. Verenigde
          Bedrijven Nutricia.

10(kkkk)- Warehouse lease amendment dated May 8, 1992 between Biosearch and MSA Associates.
</TABLE>

The following exhibits are incorporated by the respective reference symbol to
the Annual Report on Form 10-K for the fiscal year ended December 31, 1992:

<TABLE>
<CAPTION>

<S>       <C>                                                                  
10(llll)- Ross Laboratories, paid-up royalty for a non-exclusive licence to the Company's patented
          Flow-Through(TM) stylet.

10(mmmm)- Retirement of $300,000 U.S. Denominated 10% Subordinated Convertible Notes, due August 2,
          1992, into $300,000 10% U.S. Denominated Non-Convertible Subordinated Notes, due August 2,
          1994,

10(nnnn)- Product line purchasing agreement between Biosearch Medical Products, Inc. and N. V.
          Verenigde Bedrijven Nutricia.

10(oooo)- Extension of existing warehouse lease - dated March 8, 1993 between Biosearch and MSA
          Associates.

10(pppp)  Promissory note between Medical Specialties Co., Inc. and Biosearch Medical Products, Inc.
</TABLE>


                                       47


<PAGE>


The following exhibits are incorporated by the respective reference symbol to
the Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993:
<TABLE>
<CAPTION>

<S>       <C>                                                                  
10(qqqq)  Product distribution and license agreements between Biosearch Medical Products, Inc. and N.
          V. Verenigde Bedrijven Nutricia, dated April 8, 1993.

10(rrrr)  Product distribution and license agreements between Biosearch Medical Products, Inc. and C.
          R. Bard, dated January 1, 1994.
</TABLE>

The following exhibits are incorporated by the respective reference symbol to
the Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994:

<TABLE>
<CAPTION>

<S>       <C>                                                                  
10(ssss)  Asset Purchase Agreement Pee Wee Tube product line between Biosearch Medical Products, Inc.
          and C. R. Bard, dated April 4, 1994.

10(tttt)  Asset Purchase Agreement including product supply patent license J-Tube Supply and Escrow
          Agreements between Biosearch Medical Products, Inc. and Sherwood Medical Products
          (subsidiary American Home Products), dated May 19, 1994.


22-       Subsidiary of the Company
</TABLE>


                                   Exhibit 22

Subsidiary of the Company

          The following table sets forth certain information as of December 31,
          1992 concerning the subsidiaries of the Company.

                                                   Percentage
                                    Place of        Owned by
                                  Incorporation   the Company
                                  -------------   -----------

          Pouch Laboratories, Inc.   New Jersey        100%


          During August, 1993 a resolution was passed by the Company's Board Of
          Directors to dissolve Pouch Laboratories, Inc. having no reason to
          maintain the existence of this subsidiary. (See note 4, "Discontinued
          Operations -- 1993 10-KSB)



25-       Power of Attorney (see "Power of Attorney" in the Annual Report on
          Form 10-KSB)


                                       48