SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q


(Mark One)
[X]             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 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 0-13634

                              MACROCHEM CORPORATION
                          (Exact name of registrant as
                            specified in its charter)


             DELAWARE                                           04-2744744
             --------                                           ----------
   (State or Other Jurisdiction                              (I.R.S. Employer
of Incorporation or Organization)                         Identification Number)

               110 HARTWELL AVENUE, LEXINGTON, MASSACHUSETTS 02173
               ---------------------------------------------------
               (Address of principal executive offices, Zip Code)

                                 (617) 862-4003
                                 --------------
              (Registrant's telephone number, including area code)


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

Yes  X          No
    ---            ---


     As of June 30, 1997, there were 16,150,375 shares of Common Stock, $.01 par
value per share, of the Registrant outstanding.


<PAGE>
                              MACROCHEM CORPORATION

                                      INDEX
                                      -----
   
                                                             PAGE NUMBER
                                                             -----------
PART I   Financial Information

Item 1   Financial Statements (Unaudited)

              Balance Sheets
              June 30, 1997 and December 31, 1996                3-4

              Statements of Operations
              Three Months and Six Months Ended
              June 30, 1997 and 1996                               5

              Statements of Cash Flows
              Six Months Ended  June 30, 1997 and 1996           6-7

              Notes to Financial Statements                      8-9


Item 2   Management's Discussion and Analysis of
         Financial Condition and Results of Operations          9-12


PART II  Other Information

Item 4   Submission of Matters to a Vote of Security Holders      13

Item 6   Exhibits and Reports on Form 8-K                         14


<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  UNAUDITED FINANCIAL STATEMENTS
         ------------------------------

                              MACROCHEM CORPORATION
                                 BALANCE SHEETS
                                   (UNAUDITED)

                                     ASSETS

                                              June 30,     December 31,
                                               1997            1996
                                               ----            ----
CURRENT ASSETS:

   Cash and cash equivalents              $  6,772,064    $  7,329,881
   Marketable securities                             -          21,824
   Accounts receivable                          34,850          43,977
   Prepaid expenses and other 
      current assets                           125,886         100,033
                                          ------------    ------------

   TOTAL CURRENT ASSETS                      6,932,800       7,495,715
                                          ------------    ------------

PROPERTY AND EQUIPMENT,
   net of accumulated depreciation: 
      1997-$527,303; 1996-$472,651             306,027         345,343
                                          ------------    ------------

OTHER ASSETS:
      
   Patents, net of accumulated 
      amortization:  1997-$52,457; 
      1996-$46,933                             245,751         218,232
   Deposits                                      4,460           4,460
                                          ------------    ------------

TOTAL ASSETS                              $  7,489,038    $  8,063,750
                                          ============    ============
     
                                                                     (CONTINUED)


<PAGE>


                              MACROCHEM CORPORATION
                                 BALANCE SHEETS
                                    UNAUDITED

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------


                                            June 30,              December 31,
                                              1997                    1996
                                              ----                    ----
CURRENT LIABILITIES:
   Current portion of capitalized
      lease obligations                   $     28,669            $     38,630
   Accounts payable and accrued 
      expenses                                 276,219                 281,769
   Accrued compensation                         47,050                  47,050
   Deferred rent                                   ---                   1,014
   Deferred income                              34,850                     ---
                                          ------------            ------------

TOTAL CURRENT LIABILITIES                      386,788                 368,463

CAPITALIZED LEASE OBLIGATIONS,
   net of current portion                        9,483                  18,408
                                          ------------            ------------

TOTAL LIABILITIES                              396,271                 386,871
                                          ------------            ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock                                ---                      ---
   Common stock, $.01 par value; 
      authorized 60,000,000 shares; 
      issued and outstanding, 
      16,150,375 shares and 15,601,274
      shares at June 30, 1997 and 
      December 31, 1996,
      respectively.                            161,504                 156,013
   Additional paid-in capital               27,246,300              25,839,675
   Unearned compensation                      (402,396)               (222,674)
   Accumulated deficit                     (19,912,641)            (18,096,135)
                                          ------------            ------------
TOTAL STOCKHOLDERS' EQUITY                   7,092,767               7,676,879
                                          ------------            ------------
TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                   $  7,489,038            $  8,063,750
                                          ------------            ------------

The accompanying notes are an integral part of these unaudited financial
statements.
                                                                     (Concluded)
<PAGE>
                              MACROCHEM CORPORATION
                      STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>

                                   For the three months         For the six months
                                      ended June 30,               ended June 30,
                                   1997          1996           1997          1996
                                   ----          ----           ----          ----
<S>                            <C>           <C>           <C>           <C>
REVENUES:
   
   Research contracts          $       ---   $    82,905   $    50,000   $    82,905
   Product sales                       ---           ---           650           ---
                               -----------   -----------   -----------   -----------

      TOTAL REVENUES                   ---        82,905        50,650        82,905
                               -----------   -----------   -----------   -----------

OPERATING EXPENSES:

   Marketing, general and
      administrative               478,101       846,409       879,908     1,244,678
   Research and development        723,703       505,820     1,168,521       909,709
   Consulting fees with related 
      parties                        3,000         2,000         6,000        12,000
                               -----------   -----------   -----------   -----------
      TOTAL OPERATING
         EXPENSES                1,204,804     1,354,229     2,054,429     2,166,387
                               -----------   -----------   -----------   -----------

   LOSS FROM OPERATIONS         (1,204,804)   (1,271,324)   (2,003,779)   (2,083,482)
                               -----------   -----------   -----------   -----------

OTHER INCOME (EXPENSE):

   Interest income                 102,558       129,184       191,419       196,508
   Interest expense                 (1,943)       (4,811)       (4,145)       (8,372)
   Other                               ---           198           ---            (3)
                               -----------   -----------   -----------   -----------   --------------------
      TOTAL OTHER INCOME           100,615       124,571       187,274       188,133
                               -----------   -----------   -----------   -----------
                         
NET LOSS                       $(1,104,189)  $(1,146,753)  $(1,816,505)  $(1,895,349)
                               ===========   ===========   ===========   ===========

NET LOSS PER SHARE             $     (0.07)  $     (0.07)  $     (0.11)  $     (0.13)
                               ===========   ===========   ===========   ===========

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING    16,049,370    15,476,934    15,892,009    14,939,219
                               ===========   ===========   ===========   ===========
</TABLE>

The accompanying notes are an integral part of these unaudited financial
statements.

<PAGE>
                              MACROCHEM CORPORATION
                      STATEMENTS OF CASH FLOWS (UNAUDITED)

                                               For the six months ended June 30,
                                                  1997                  1996
                                                  ----                  ----

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Loss                                    $(1,816,505)         $(1,895,349)
                                               -----------          -----------
  Adjustments to reconcile net loss 
      to net cash used by operating
      activities:
         Depreciation and amortization              61,274               50,897
         Stock-based compensation                  113,404              453,884
         Loss on disposal of equipment               1,900                  ---
         Amortization of discounts on
            marketable securities                     (176)             (38,047)

Increase (decrease) in cash from:
   Accounts receivable                               9,127              (41,453)
   Prepaid expenses and other current 
      assets                                       (25,853)             (23,790)
   Accounts payable and accrued expenses            (5,550)               9,190
   Accrued compensation                                ---              (50,000)
   Deferred rent                                    (1,014)              (2,964)
   Deferred income                                  34,850                  --- 
                                               -----------          ----------- 
Total adjustments                                  187,962              357,717
                                               -----------          -----------

Net cash used by operating activities           (1,628,543)          (1,537,632)
                                               -----------          -----------

CASH FLOWS FROM INVESTING ACTIVITIES:        
   Purchases of marketable securities                  ---           (6,478,487)
   Proceeds from maturities of
      marketable securities                         22,000            3,440,000
   Expenditures for property and equipment         (18,335)             (81,232)
   Additions to patents                            (33,042)                 ---
                                               -----------          -----------

   Net cash used for investing activities          (29,377)          (3,119,719)
                                               -----------          -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal payments on capital leases            (18,886)             (16,938)
   Proceeds from exercise of common 
      stock options                                139,689              396,157
   Proceeds from exercise of common 
      stock warrants                               454,300            2,170,064
   Proceeds from exercise of unit 
      purchase options                             525,000            2,581,250
                                               -----------          -----------
   Net cash provided by financing 
      activities                                 1,100,103            5,130,533
                                               -----------          -----------

The accompanying notes are an integral part of these unaudited financial 
statements.
                                                                     (Continued)
<PAGE>                       

                             MACROCHEM CORPORATION
                      STATEMENTS OF CASH FLOWS (UNAUDITED)
                                                                    (CONTINUED)
                        
                                     For the six months ended June 30,
                                          1997              1996
                                          ----              ----

NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS              $  (557,817)       $   473,182

CASH AND CASH EQUIVALENTS,
   BEGINNING OF PERIOD                 7,329,881          3,591,779
                                     -----------        -----------
CASH AND CASH EQUIVALENTS,
   END OF PERIOD                     $ 6,772,064        $ 4,064,961
                                     ===========        ===========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

     During the six months ended June 30, 1997 and 1996, cash paid for interest
was $2,815 and $6,892, respectively.

     The Company did not pay any income taxes during those periods.









The accompanying notes are an integral part of these unaudited financial
statements.

                                                                     (Concluded)

<PAGE>


                              MACROCHEM CORPORATION
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

(1)  As permitted by the rules of the Securities and Exchange Commission (the
     "Commission") applicable to quarterly reports on Form 10-Q, these notes are
     condensed and do not contain all disclosures required by generally accepted
     accounting principles. Reference should be made to the financial statements
     and related notes included in the Company's Annual Report on Form 10-K for
     the year ended December 31, 1996.

     In the opinion of management of the Company, the accompanying unaudited
     financial statements reflect all adjustments which were of a normal
     recurring nature necessary for a fair presentation of the Company's
     financial position, results of operations and cash flows for the three and
     six months ended June 30, 1997 and 1996.

     The results disclosed in the Statements of Operations for the three and six
     months ended June 30, 1997 are not necessarily indicative of the results to
     be expected for the full year.

(2)  Certain prior year amounts have been reclassified to conform to their
     current presentation.

(3)  During 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based
     Compensation". SFAS No. 123 addresses the financial accounting and
     reporting standards for stock or other equity-based compensation
     arrangements.

     The Company has elected to continue to use the intrinsic value based method
     to account for employee stock option plans and provide disclosures based on
     the fair value method in the notes to the annual financial statements as
     permitted by SFAS No. 123.

     Stock or other equity based compensation for non-employees must be
     accounted for under the fair value based method as required by SFAS No.
     123. Under this method, the equity based instrument is valued at either the
     fair value of the consideration received or equity instrument issued on the
     date of grant. The resulting compensation cost is recognized and charged to
     operations over the service period, which is usually the vesting period.

     During the six months ended June 30, 1997, the Company recorded unearned
     compensation of approximately $293,126 net of a forfeiture of $144,629. The
     unearned compensation will be amortized over the remaining service period
     of the stock-based compensation arrangements. Of the $293,126, $134,918 is
     related to the issuance of 16,000 shares of common stock and $158,208 is
     related to the grant of stock options to consultants.

     For the six months ended June 30, 1997 and 1996, stock-based compensation
     expense of $113,404 and $453,884, respectively, was amortized and charged
     to operations. For the three months ended June 30, 1997 and 1996, stock
     based compensation expense of $72,091 and $453,884, respectively, was
     amortized and charged to operations.

(4)  In March 1997, the Financial Accounting Standards Board released Statement
     of Financial Accounting Standards No. 128, "Earnings Per Share", which is
     effective for fiscal 1997. SFAS No. 128 will require the Company to restate
     amounts previously reported as earnings per share to comply with the
     requirements of SFAS No. 128. The Company has determined that the adoption
     of SFAS No. 128 will have no effect on previously reported earnings per
     share since the results would be anti-dilutive.

(5)  In June 1997, the FASB issued FAS No. 130, "Reporting Comprehensive
     Income," and FAS No. 131, "Disclosures about Segments of an Enterprise and
     Related Information", both of which will be effective for the Company in
     fiscal year 1999. FAS No. 130 establishes standards for the reporting and
     display of comprehensive income and its components (revenues, expenses,
     gains and losses) in a full set of general purpose financial statements.
     FAS No. 131 establishes standards for the way that public business
     enterprises report selected information about operating segments. FAS No.
     131 also establishes standards for related disclosures about products and
     services, geographic areas, and major customers. The implementation of FAS
     No. 130 and FAS No. 131 are not expected to have a material effect on the
     Company's financial statements.

(6)  The Company granted 186,000 common stock options under the 1994 Equity
     Incentive Plan during the six months ended June 30, 1997. During this same
     period, 15,000 options under the 1984 Non-Qualified Stock Option Plan,
     12,000 options under the 1984 Incentive Stock Option Plan and 26,001
     options under the 1994 Equity Incentive Plan were exercised. In addition,
     during this period, 56,000 options under the 1994 Equity Incentive Plan
     were forfeited. All options were granted with an exercise price at the fair
     market value of the underlying common stock determined on the date of
     grant.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         ---------------------------------------------------------------
         RESULTS OF OPERATIONS.
         ----------------------

GENERAL

     MacroChem Corporation's primary business is the development and
commercialization of transdermal drug delivery compounds and systems designed to
promote the delivery of drugs from the surface of the skin into the skin tissues
and bloodstream. The Company currently derives no significant revenue from
product sales, royalties or license fees. The Company plans to develop specific
SEPA(R) (the Company's proprietary transdermal penetration enhancer)
formulations for use with proprietary and non-proprietary drugs manufactured by
pharmaceutical companies, and to commercialize these products through the
formation of partnerships, strategic alliances and license agreements with those
companies. In order to attract strategic partners, the Company is conducting
clinical testing of certain SEPA-enhanced drugs.

     The Company's results of operations vary significantly from year to year
and quarter to quarter, and depend, among other factors, on the signing of new
licenses and product development agreements, the timing of revenues recognized
pursuant to license agreements, the achievement of milestones by licensees and
the progress of clinical trials conducted by the licensees and the Company. The
timing of the Company's revenues may not match the timing of the Company's
associated product development expenses. To date, research and development
expenses have generally exceeded revenue in any particular period and/or fiscal
year.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996

     During the three months ended June 30, 1997, the Company had no revenues as
compared to revenues of $82,905 during the same period in 1996. The 1996 revenue
was derived from research contracts.

     Marketing, general and administrative expenses decreased significantly
(44%) from the comparable 1996 period, primarily as a result of a $387,000
decrease in stock-based compensation expense compared to the 1996 period.

     Research and development expenses in the 1997 period increased
approximately $218,000 (43%) over the comparable 1996 period due primarily to an
increased effort in the management and execution of the ongoing clinical trials.

     Other income decreased approximately $24,000, resulting primarily from
lower levels of cash and cash equivalents in the 1997 period.
<PAGE>
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

     Total revenues for the six months ended June 30, 1997 were approximately
$51,000 compared to approximately $83,000 for the same period in 1996. This
revenue is primarily due to completed research contracts.

     Marketing, general and administrative expenses decreased approximately
$365,000 (29%) due primarily to a stock-based compensation expense reduction of
approximately $320,000 in 1997 from the comparable 1996 period.

     Research and development costs increased approximately $259,000 (28%) for
the first six months of 1997 compared to the same period in 1996. This increase
was due primarily to an increased effort in the management and execution of the
ongoing clinical trials.

     Other income remained essentially the same for the six month periods ended
June 30, 1997 and 1996. Lower interest income was mostly offset by lower
interest expense on capital leases.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, the primary source of funding for the Company's operations
has been the private and public sale of its securities, and to a lesser extent,
the licensing of its proprietary technology, government grants and research
contracts.

     The Company's working capital declined approximately $581,000 from December
31, 1996 to June 30, 1997. Working capital used by operations of approximately
$1.6 million was partially offset by proceeds of approximately $1.1 million
received upon the exercise of common stock options, warrants and unit purchase
options.

     Until such time as the Company obtains agreements with third-party
licensees or partners to provide funding for the Company's anticipated business
activities or the Company is able to obtain funds through the private or public
sale of its securities, the Company's working capital will be utilized to fund
its activities.

     Capital expenditures and additional patent development costs for the six
months ended June 30, 1997 aggregated approximately $51,000. The Company expects
additional capital expenditures and patent development costs for the remainder
of the year to aggregate approximately $160,000.

     The Company's long term capital requirements will depend upon numerous
factors including the progress of the Company's research and development
programs; the resources that the Company devotes to clinical testing of SEPA
enhanced compounds, proprietary manufacturing methods and advanced technologies;
the ability of the Company to enter into additional licensing arrangements or
other strategic alliances; the ability of the Company to manufacture products
under those arrangements and the demand for its products or the products of its
licensees or strategic partners if and when approved for sale by regulatory
authorities. In any event, substantial additional funds will be required before
the Company is able to generate revenues sufficient to support its long term
operations. There is no assurance that the Company will be able to obtain such
additional funds on favorable terms, if at all. The Company's inability to raise
sufficient funds could require it to delay, scale back or eliminate certain
research and development programs.

     The Company believes that its existing cash and cash equivalents will be
sufficient to meet its operating expenses and capital expenditure requirements
for at least the next twelve months. The Company's cash requirements may vary
materially from those now planned because of changes in focus and direction of
the Company's research and development programs, competitive and technical
advances, patent developments or other developments. It is not believed that
inflation will have any significant effect on the results of the Company's
operations.
<PAGE>

     THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS IN THIS REPORT AND IN
FORWARD-LOOKING STATEMENTS MADE FROM TIME TO TIME BY THE COMPANY ON THE BASIS OF
MANAGEMENT'S THEN-CURRENT EXPECTATIONS. FACTORS THAT MIGHT CAUSE SUCH A
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO THE FOLLOWING: THE COMPANY'S HISTORY
OF OPERATING LOSSES AND NEED FOR CONTINUED WORKING CAPITAL; TECHNOLOGICAL
UNCERTAINTY RELATING TO TRANSDERMAL DRUG DELIVERY SYSTEMS AND THE EARLY STAGE OF
DEVELOPMENT OF THE COMPANY'S PROPOSED PRODUCTS; THE COMPANY'S NEED FOR
SIGNIFICANT ADDITIONAL PRODUCT DEVELOPMENT EFFORTS AND ADDITIONAL FINANCING;
UNCERTAINTIES RELATED TO CLINICAL TRIALS OF THE COMPANY'S PROPOSED PRODUCTS; THE
COMPANY'S DEPENDENCE ON THIRD PARTIES FOR DEVELOPMENT AND LICENSING
ARRANGEMENTS; THE LACK OF SUCCESS OF THE COMPANY'S PRIOR DEVELOPMENT EFFORTS;
THE COMPANY'S LACK OF EXPERIENCED MARKETING PERSONNEL AND DEPENDENCE ON THIRD
PARTIES FOR MARKETING AND DISTRIBUTION; THE COMPANY'S DEPENDENCE ON THIRD
PARTIES FOR MANUFACTURING; THE COMPANY'S RELIANCE ON KEY EMPLOYEES, THE LIMITED
PERSONNEL OF THE COMPANY AND ITS DEPENDENCE ON ACCESS TO SCIENTIFIC TALENT;
UNCERTAINTIES RELATING TO COMPETITION, GOVERNMENT REGULATIONS AND PATENT AND
LICENSE RIGHTS; UNCERTAINTIES RELATING TO AVAILABILITY OF ADEQUATE PRODUCT
LIABILITY AND OTHER INSURANCE; UNCERTAINTIES RELATED TO PHARMACEUTICAL PRICING
AND RELATED MATTERS; AND OTHER FACTORS. ADDITIONAL INFORMATION ON THESE AND
OTHER FACTORS WHICH COULD AFFECT THE COMPANY'S ACTUAL RESULTS AND EXPERIENCE ARE
INCLUDED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1996 AND, IN PARTICULAR, THE SECTION ENTITLED "RISK FACTORS".






<PAGE>


                           PART II - OTHER INFORMATION

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

         On May 23, 1997, the Company held its Annual Meeting of Stockholders to
         vote on the following proposals:

         1.  To elect six members of the Board of Directors.  Nominees for 
             Director were:  a) Carlos M. Samour;  b) Alvin J. Karloff;  
             c) Willard M. Bright; d) Peter G. Martin;  e) Stephen J. Riggi;  
             f) Michael A. Davis  ("Proposal No. 1").

         2.  To ratify the appointment of Deloitte & Touche LLP, as independent 
             auditors for the Company for the fiscal year ending December 31,
             1997.

         3.  To approve an amendment to the Company's 1994 Equity Incentive
             Plan to increase the number of shares of Common Stock that may be
             delivered thereunder from 2,500,000 to 4,000,000.

             Each of the proposals was adopted with a total vote as follows:


                                       Shares
                       Shares       Voting Against         Shares        Broker
Proposal             Voting For  Or Authority Withheld   Abstaining    Non-votes

No. 1

Carlos M. Samour     13,631,568        158,835

Alvin J. Karloff     13,646,818        143,585

Willard M. Bright    13,631,818        158,585

Peter G. Martin      13,654,818        135,585

Stephen J. Riggi     13,654,818        135,585

Michael A. Davis     13,654,818        135,585

No. 2                13,718,618         46,085            25,700

No. 3                 4,529,719      2,167,252           156,050      6,937,382



<PAGE>



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         --------------------------------

         (a)  The following exhibits are filed herewith:

              10.10.3      1984 Incentive Stock Option Plan as amended
                           November 15, 1996

              11.          Statement of Earnings Per Share

              27.          Financial Data Schedule

              99.1         1994 Equity Incentive Plan as amended May 23, 1997.

         (b)  No reports on Form 8-K were filed during the quarter
              for which this report is filed.


                                   SIGNATURES
                                   ----------


     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.


                                                     MACROCHEM CORPORATION
                                                     ---------------------
                                                     (Registrant)



August 13, 1997                                      /S/ ALVIN J. KARLOFF
                                                     --------------------
                                                     Alvin J. Karloff
                                                     Chief Executive Officer and
                                                     Principal Financial Officer