SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                       ----------------------------------

                                   FORM 10-KSB

(Mark One)
[X]   ANNUAL  REPORT  UNDER  SECTION  13 OR  15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 1997
                                       OR
[ ]   TRANSITION  REPORT  UNDER  SECTION  13 OR  15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934 for the transition period from ________ to __________

                         Commission file number 0-22872

                              SYMBOLLON CORPORATION
                 (Name of small business issuer in its charter)

            Delaware                                     36-3463683
     (State of incorporation)              (I.R.S. employer identification no.)


          37 Loring Drive                              (508) 620-7676
    Framingham, Massachusetts 01702              (Issuer's telephone number)
(Address of principal executive offices)

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

                                      None

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

          Units, each consisting of one share of Class A Common Stock,
                    $.001 par value per share, one Redeemable
               Class A Warrant and one Redeemable Class B Warrant
                                (Title of class)

                 Class A Common Stock, $.001 par value per share
                                (Title of class)

              Redeemable Class A Warrants, each Redeemable Class A
              Warrant entitling the holder to purchase one share of
             Class A Common Stock and one Redeemable Class B Warrant
                                (Title of class)

               Redeemable Class B Warrants, each Redeemable Class
                        B Warrant entitling the holder to
                   purchase one share of Class A Common Stock
                                (Title of class)

         Check  whether  the issuer:  (1) has filed all  reports  required to be
filed by Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or
for such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No __

         Check if there is no disclosure of delinquent  filers  pursuant to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         The  issuer's  revenues  for its most  recent  fiscal  year (year ended
December 31, 1997) were $1,697,349.

         As of March 25, 1998, the aggregate market value of the voting stock of
the issuer held by  non-affiliates  of the issuer was  approximately  $2,225,339
based upon the closing price of such stock on that date.

         As of March 25, 1998, 3,182,953 shares of Class A Common Stock and
15,738 shares of Class B Common Stock of the issuer were outstanding.  See
"Market for Common Equity and Related Stockholder Matters."

         Transitional Small Business Disclosure Format (check one): Yes _ No X

                      DOCUMENTS INCORPORATED BY REFERENCE.

     Portions of the Proxy Statement for the 1998 Annual Meeting -- Part III


<PAGE>




                                     PART I

Item 1.  Description of Business

General Background

         Symbollon  Corporation  (the  "Company" or  "Symbollon")  is engaged in
research,   development  and   commercialization  of  proprietary   iodine-based
pharmaceutical agents,  disinfectants,  antiseptics and sanitizers (collectively
referred  to  as  "applications").   The  Company  is  a  Delaware   corporation
incorporated  in August 1993 and is the  successor by merger to a  Massachusetts
corporation of the same name incorporated in May 1991 which was the successor by
merger to an Illinois corporation which was incorporated in July 1986.

The Company's Technology

         The Company has  developed  proprietary  iodine  technologies  that the
Company believes addresses many of the issues associated with the use of iodine.
The technologies  control the ratio of molecular iodine (I2), which is lethal to
microorganisms,  to other  inactive  species of iodine in solution.  The Company
believes that this will enable it to produce  iodine-based  applications  having
advantages over currently  available  iodine-based  products.  By increasing the
ratio of molecular  iodine to other iodine  species,  the Company's  current and
proposed products will have greater killing power per unit of total iodine.  The
Company believes that this feature will enable its current and proposed products
to utilize less iodine and therefore  minimize or eliminate some of the negative
characteristics associated with the use of iodine.

         Overall,  the Company believes that the major strengths of its patented
technologies  are the minimization of staining and color associated with iodine,
broad  spectrum of  antimicrobial  activity,  rapidity of cidal  activity,  safe
residues,  no known  resistance,  and no environmental  disposal  concerns.  The
primary weaknesses of the Company's  technologies are the inconvenience and cost
of a multi-part delivery system and the potential for staining and corrosivity.

Initial Product

         The  Company  focused a majority  of its  initial  development  efforts
regarding   its   technologies   on  a  bovine  teat   sanitizer,   marketed  as
"IodoZyme(R)".  The Company co-developed IodoZyme with West Agro, Inc. of Kansas
City,  MO ("West  Agro"),  a  subsidiary  of the Tetra Laval Group and a leading
manufacturer  and  distributor  of  iodophor-based  products  for dairy use.  In
January 1995, the Company and West Agro signed a marketing and supply  agreement
covering IodoZyme, and the Company began shipping IodoZyme to West Agro in early
1995. Pursuant to this agreement,  West Agro was granted the exclusive worldwide
right to market, distribute, promote and sell IodoZyme. Under the agreement, the
Company  manufactures  and supplies West Agro with IodoZyme in finished  product
form.

         Total  product  sales from IodoZyme for 1996 and 1997 were $117,906 and
$376,660, respectively.  Substantially all sales were in the United States. West
Agro,  through its foreign  affiliates,  has begun the  registration  process in
several foreign markets, for which clearances must be received prior to sales in
those foreign markets.

         The  Company's  invoice terms are net 30 days.  The Company had no firm
orders for future  delivery of products at year end.

<PAGE>

Research and Product Development

         During 1997 the Company  concentrated  its product  development work on
proposed product  applications  for a treatment for fibrocystic  breast disease,
the treatment of various dermatological and ophthalmic diseases, and a treatment
for stomach  ulcers.  Additional  development  efforts  regarding  the Company's
technology  for  use in  dental  water  line  disinfection,  medical  instrument
sterilization and hemodialysis  membrane disinfection were conducted during 1997
at various  universities and other third party laboratories  through grants from
the Small Business  Innovation  Research ("SBIR")  program.  See "Small Business
Innovation Research."

         The Company spent approximately $1,002,208 and $562,360 on research and
development  during the years ended  December  31, 1996 and 1997,  respectively.
Since inception,  the Company has spent approximately $4,036,698 on research and
development. Under certain collaborative relationships, the Company has received
payments which are reflected in the Company's  financial  statements as contract
and license fee revenues.

         Given the Company's limited financial resources, the uncertainty of the
development  effort and the necessity for regulatory  approval,  there can be no
assurance of ultimate success with respect to any product development program or
that resulting products, if any, will be commercially successful.  Additionally,
the  Company's  limited  resources  will  require  substantial  support  for new
business  areas from  corporate  partners  who would  ultimately  introduce  the
products  into  the  marketplace.  The  Company's  current  strategic  corporate
partners are described below.

         Material  developments in the Company's  ongoing programs during fiscal
1997 are detailed below:


         Fibrocystic Breast Disease

         During 1997, the Company initiated a development program to investigate
the  potential use of the  Company's  technology as a treatment for  fibrocystic
breast disease ("FBD").  FBD is a term used to describe a range of benign breast
conditions  which  affect  a  large  number  of  women  to some  degree.  FBD is
characterized by breast  nodularity,  lumpiness or cysts which can cause pain or
tenderness.  It is  generally  suspected  to be caused by a  hormonal  imbalance
within a woman.

         The Company's  1997 efforts were focused on  identifying an appropriate
formulation, conducting pre-clinical toxicology studies in rats and transferring
the formulation  from the laboratory to a current good  manufacturing  practices
("cGMP")  contract  manufacturer for production of materials  suitable for human
clinical trials. In 1998, the Company  anticipates filing an Investigational New
Drug ("IND") application to initiate clinical trials in humans.

         Dermatology Applications

         In May 1996, the Company signed a collaboration  and license  agreement
with Oclassen  Pharmaceuticals,  Inc.  ("Oclassen") for dermatological  products
based on Symbollon's proprietary iodine technologies. Pursuant to the agreement,
the  companies  plan to  co-develop  products for the  treatment of certain skin
diseases,  with initial development focused on products for acne,  bacterial and
fungal  skin  diseases.  Under the  terms of the  agreement,  Oclassen  obtained
exclusive  marketing  rights in the United States and Canada for  dermatological
products based on Symbollon's  iodine  technologies.  Subject to continuation of

<PAGE>

the agreement,  Oclassen will make a series of milestone  payments to Symbollon,
plus royalty  payments on product sales.  Oclassen is primarily  responsible for
product development and commercialization. Symbollon consults, for a fee, on the
product development.

         In August  1997,  the  Company  amended its  Collaboration  and License
Agreement  with  Oclassen  primarily  to  account  for  delays  incurred  in the
development  program.  The  original  agreement  had  anticipated  that  an  IND
application  covering use of the Company's  chemistry in dermatology  would have
been filed by August 1997;  however,  the  development  process had not advanced
sufficiently  to warrant such filing.  Along with certain other changes,  in the
amendment  Symbollon agreed to remove the time based payment requirement for the
next two milestones  which were to be paid in May 1998 and 1999.  Such milestone
payments will now be payable only upon the occurrence of certain events. As part
of the amended  relationship,  Symbollon has agreed to become more active in the
program.  In 1998,  the  Company  will  undertake  to  provide  Oclassen  with a
preliminary  formula and analytical  methods  necessary to validate  formulation
stability, without further remuneration for its time.

         Ophthalmology Applications

         In August 1997, the Company  signed a  collaboration  and  sale/license
agreement  with  Bausch & Lomb  Pharmaceuticals,  Inc.  ("B&L")  for  ophthalmic
products based on Symbollon's  proprietary iodine technologies.  Pursuant to the
agreement, the companies plan to develop products for the treatment of infective
diseases of the eye.  Under the terms of the agreement,  B&L obtained  exclusive
marketing  rights in the United States and Canada for ophthalmic  products based
on Symbollon's iodine technologies. The agreement also provides B&L with options
to broaden its exclusive  marketing rights to include the rest of the world, and
to include otic (ear) products.  Subject to  continuation of the agreement,  B&L
will make a series of milestone payments to Symbollon,  plus royalty payments on
product sales. In conjunction with the development collaboration,  B&L also made
an equity  investment in  Symbollon.  B&L is primarily  responsible  for product
development and commercialization. Symbollon consults, for a fee, on the product
development.  Symbollon  anticipates that work under the agreement will continue
throughout 1998.

         Ulcer Treatment

         In June  1995,  the  Company  entered  into an  Evaluation  and  Option
Agreement with Astra Merck Inc.  ("Astra  Merck") to explore the possible use of
the  Company's  technology  against  Helicobacter  pylori for the  treatment  of
stomach  ulcers.  As of March 1997, the parties  amended the agreement to extend
the period  Symbollon had to conduct  animal  studies to March 1998.  From March
1998,  Astra Merck has six months to evaluate the Company's  technology  and, in
Astra  Merck's  discretion,  to negotiate a  development  and  commercialization
agreement  covering the technology for use as a treatment  against  Helicobacter
pylori in the gastrointestinal tract. Unless a development and commercialization
agreement is entered into with Astra Merck,  Symbollon does not anticipate  that
further work in this area will continue in 1998.

         Other Potential Applications

         The Company believes that its microbicide  technologies  have potential
applications  in the  development  of a variety  of human  healthcare  and other
products such as topical anti-infectives,  oral care and hygiene products, wound
care  applications,  and as a preventive for urinary tract infection.  Given the
Company's limited resources, although certain preliminary research,  development
and  regulatory  activities  may be  undertaken  by the Company in some of these
potential  product  areas,  the Company's  ability to fund the  development  and
commercialization  of such  applications  will  depend in large part on entering
into  product  development  and  commercialization   agreements  with  corporate
partners.

<PAGE>

Small Business Innovation Research

         In  1989,  the  Company  entered  into  an  agreement  with  Biomedical
Development  Corporation  located in San Antonio,  Texas ("BDC") to cooperate in
applying for and performing under Small Business  Innovation  Research  ("SBIR")
grants  based  on  the  Company's  technology.  The  Small  Business  Innovation
Development Act of 1982 requires agencies of the Federal  government  engaged in
research  to set aside a  specified  percentage  of their  research  budgets for
grants  ranging  from  approximately  $50,000 to  $75,000  for Phase I and up to
$500,000 to $600,000 for Phase II.

         The  Company is  required to pay to BDC a royalty of 5% of net sales up
to a maximum of the amount of the SBIR grant related to the product. The results
of  research  undertaken  by BDC become the  property  of the  Company.  In some
instances,  BDC may cause  research to be  conducted  by  employees  of academic
institutions. Such institutions may have rights in the results of such research.
Under the agreement,  BDC is required to use its best efforts to obtain licenses
to such  information  and to  transfer  all such  technical  information  to the
Company.  The United States  government  retains a  royalty-free  license in the
results of research funded by SBIR grants, whether patented or not.

         In May 1997,  the Company  terminated  its agreement with BDC. While no
further SBIR grants  covering the  Company's  technology  will be applied for by
BDC, all ongoing grants will continue until their  completion.  To the Company's
knowledge, grants covering use of the Company's technology for medical equipment
sterilization,   dental  water  line  disinfection  and  hemodialysis   membrane
disinfection are ongoing.

Manufacturing and Supplies

         The development  and manufacture of the Company's  products are subject
to good laboratory  practices  ("GLP") and cGMP  requirements  prescribed by the
United States Food and Drug  Administration  (the "FDA") and to other  standards
prescribed  by the  appropriate  regulatory  agency in the  country of use.  The
Company   currently   produces   IodoZyme  through  a  combination  of  internal
manufacturing  activities  and a network of  subcontractors.  See  "Management's
Discussion and Analysis or Plan of Operation." The Company currently has limited
in-house  manufacturing  capacity,  and  if the  Company  continues  to  perform
manufacturing activities related to IodoZyme in-house,  additional manufacturing
space  and  equipment  may  be  necessary  if  product  volumes  increase.   See
"Description of Property."

         The Company does not presently have FDA certified facilities capable of
producing  quantities  of human  pharmaceutical  products  required for clinical
trials or commercial production. The Company will need to rely on collaborators,
licensees or contract  manufacturers to produce such materials.  There can be no
assurance  that the  Company  will be able to obtain an  adequate  supply of its
product  from a third  party  manufacturer,  or that  if  such a  supply  can be
obtained, that it will comply with GLP and cGMP, as applicable

         The  Company  believes  that  there  are  adequate  sources  of the raw
materials  required to produce its  applications  for commercial  production and
testing  purposes.  Pursuant to its agreement  with West Agro, all sodium iodide
used by the Company in the  manufacture  of the bovine teat  sanitizer  is to be
purchased  from West Agro at a price not to  exceed  the price  which  West Agro
charges its largest  customers.  The Company has been and expects to continue to
be  able  to  obtain  all  materials  needed  for  these  purposes  without  any
significant  interruption  or sudden price  increase,  although  there can be no
assurance thereof.

<PAGE>

Marketing and Distribution

         In accordance with the marketing and supply  agreement signed with West
Agro, West Agro is marketing and distributing IodoZyme, and has agreed to market
and distribute other potential cleaners, sanitizers and disinfectants covered by
the agreement to dairy farms and dairy processing  plants on an exclusive basis.
The principal market for IodoZyme is dairy farms.

         The Company  intends to market and  distribute  its potential  products
through  others  having  pre-established  marketing  and  distribution  networks
pursuant  to  contractual   arrangements  such  as  joint  venture,   licensing,
distribution or similar collaborative agreements.  The principal markets for the
potential  pharmaceutical  and healthcare  products include  hospitals,  medical
offices, dental offices, dialysis centers, outpatient clinics and nursing homes.

Government Regulation

         The Company's  research and  development  activities and the production
and  marketing of the  Company's  current and  proposed  products are subject to
regulation  by  numerous  governmental  authorities  in the  United  States  and
comparable  state agencies.  Foreign  governments also regulate the development,
production  and  marketing  of products  in their  countries.  The  development,
manufacturing and marketing of human  pharmaceuticals  are subject to regulation
in the United States for safety and efficacy by the FDA in  accordance  with the
Federal Food,  Drug and Cosmetic Act. There can be no assurances that regulatory
approvals or clearances  will be obtained for any  applications of the Company's
technology  once  developed,  that if granted they will not be withdrawn or that
other  regulatory  action  might  result in an adverse  impact on the ability to
market the Company's proposed products.

         In the United States, human pharmaceuticals are subject to rigorous FDA
regulation including preclinical and clinical testing, The process of completing
clinical  trials and  obtaining FDA approvals for a new drug is likely to take a
number of years,  requires the expenditure of substantial resources and is often
subject to  unanticipated  delays.  There can be no assurance  that any proposed
product will receive such approval on a timely basis, if at all.

         The  steps  required  before  new  products  for use in  humans  may be
marketed in the United States include (i) preclinical trials, (ii) submission to
the FDA of an application  for IND, which must be approved before human clinical
trials  commence,  (iii) adequate and  well-controlled  human clinical trials to
establish the safety and efficacy of the product,  (iv) submission of a New Drug
Application  ("NDA")  for a new drug to the FDA and (v) FDA  approval of the NDA
prior to any commercial sale or shipment of the product.

         Preclinical tests include laboratory evaluation of product formulation,
as well as animal  studies (if an  appropriate  animal  model is  available)  to
assess the potential  safety and efficacy of the product.  Formulations  must be
manufactured according to cGMP and preclinical safety tests must be conducted by
laboratories that comply with FDA regulations  regarding GLP. The results of the
preclinical tests are submitted to the FDA as part of an IND application and are
reviewed by the FDA prior to the  commencement of human clinical  trials.  There
can be no assurance  that  submission of an IND  application  will result in FDA
authorization  to  commence   clinical  trials.   Clinical  trials  involve  the
administration  of the  investigational  new drug to healthy  volunteers  and to
patients under the supervision of a qualified principal investigator.

<PAGE>

         Clinical  trials are typically  conducted in three  sequential  phases,
although  the  phases  may  overlap.  In Phase I, the  investigational  new drug
usually is  administered  to healthy  human  subjects  and is tested for safety,
dosage,  tolerance,   absorption,   distribution,   metabolism,   excretion  and
pharmacokinetics.  Phase II involves studies in a limited patient  population to
(i)  determine  the  efficacy  of the  investigational  new  drug  for  specific
indications,  (ii)  determine  dosage  tolerance  and  optimal  dosage and (iii)
identify possible adverse effects and safety risks. When an investigational  new
drug is found to be effective and to have an acceptable  safety profile in Phase
II  evaluation,  Phase III trials are  undertaken to further  evaluate  clinical
efficacy and to further test for safety within an expanded patient population at
geographically  dispersed  clinical study sites.  There can be no assurance that
Phase I, Phase II or Phase III testing will be completed successfully within any
specified time period, if at all, with respect to any of the Company's  proposed
products  subject  to such  testing.  Furthermore,  the  Company  or the FDA may
suspend  clinical trials at any time if the participants are being exposed to an
unacceptable  health  risk.  The FDA may  deny an NDA if  applicable  regulatory
criteria  are not  satisfied,  require  additional  testing or  information,  or
require post  marketing  testing and  surveillance  to monitor the safety of the
Company's proposed products.

         All data obtained from development  programs are submitted as an NDA to
the FDA and the  corresponding  agencies  in  other  countries  for  review  and
approval.  FDA approval of the NDA is required before marketing may begin in the
United  States.  Although  the FDA's policy is to review  priority  applications
within 180 days of their filing,  in practice longer times may be required.  The
FDA frequently  requests that  additional  information  be submitted,  requiring
significant  additional review time.  Essentially,  all proposed products of the
Company will be subject to demanding and  time-consuming NDA or similar approval
procedures  in the  countries  where the Company  intends to market its proposed
products.  These  regulations  define  not  only the  form  and  content  of the
development of safety and efficacy data regarding the proposed product, but also
impose  specific  requirements  regarding  manufacture of the proposed  product,
quality  assurance,   packaging,  storage,  documentation  and  record  keeping,
labeling and advertising and marketing procedures.  Effective  commercialization
also requires inclusion of the Company's  proposed products in national,  state,
provincial or institutional formularies or cost reimbursement systems.

         In addition to  regulations  enforced by the FDA,  the Company  also is
subject  to  regulation  under the  Occupational  Safety  and  Health  Act,  the
Environmental  Protection  Act, the Toxic  Substances  Control Act, the Resource
Conservation  and Recovery Act and other present and potential  future  federal,
state or local regulations.  The Company's research and development involves the
controlled  use of  hazardous  materials  and  chemicals.  Although  the Company
believes that its safety procedures for handling and disposing of such materials
comply with the standards prescribed by state and federal regulations,  the risk
of accidental  contamination or injury from these materials cannot be completely
eliminated.  In the event of such an accident,  the Company could be held liable
for any damages that result,  and any such liability  could exceed the resources
of the Company.

         In both  domestic  and foreign  markets,  the ability of the Company to
commercialize  its proposed  product  candidates  will depend,  in part,  on the
availability of reimbursement from third-party payers, such as government health
administration  authorities,  private health  insurers and other  organizations.
Third-party payers are increasingly challenging the price and cost-effectiveness
of medical products. There can be no assurance that Symbollon-developed products
will be considered  cost  effective.  Significant  uncertainty  exists as to the
reimbursement  status of newly-approved  medical products.  Government and other
third-party  payers are  increasingly  attempting  to contain  medical  costs by
limiting  both  coverage  and the  level of  reimbursement  for new  therapeutic
products  approved for marketing by the FDA and by refusing,  in some cases,  to
provide coverage for uses of approved products for disease indications for which
the FDA has not  granted  marketing  approval.  There can be no  assurance  that
adequate  third-party  insurance  coverage  will be available for the Company to
establish and maintain price levels sufficient for realization of an appropriate

<PAGE>

return on its investment in developing new therapies.  If adequate  coverage and
reimbursement  levels are not provided by government and third-party  payers for
uses of the Company's proposed  therapeutic  products,  the market acceptance of
these products would be adversely affected.

         There have been a number of federal and state proposals during the last
few years to subject the pricing of pharmaceuticals to government control and to
make other  changes to the  medical  care  system of the  United  States.  It is
uncertain what  legislative  proposals will be adopted or what actions  federal,
state or private  payers for medical  goods and services may take in response to
any medical  reform  proposals or  legislation.  The Company  cannot predict the
effect medical  reforms may have on its business,  and no assurance can be given
that any such reforms will not have a material adverse effect on the Company.

         IodoZyme,  the bovine teat dip manufactured by the Company,  is subject
to regulation  by the FDA as an animal drug.  Although a lengthy new animal drug
application  ("NADA") approval process is generally  required prior to marketing
an animal drug, under regulatory discretion afforded by the FDA, the agency does
not currently  require  manufacturers  of bovine teat sanitizers to undergo this
process.  The  only  current  FDA  requirements  applicable  to  teat  treatment
manufacturers   are   compliance   with  the   FDA's   labeling,   establishment
registration, drug listing, and manufacturing requirements. The Company believes
that  it  and  its  subcontractors  are  in  compliance  with  the  current  FDA
requirements  applicable to teat treatment  manufacturers.  However, in February
1993, the FDA issued draft guidelines  setting forth the types of data necessary
to demonstrate that a teat treatment is safe for the cow, effective and fulfills
human food safety,  manufacturing  and  environmental  requirements.  Testing of
IodoZyme was not conducted in accordance with such  guidelines.  Future required
compliance with these guidelines or other FDA  requirements,  the probability of
which cannot  currently be ascertained by the Company,  would have a significant
adverse effect on the marketing of IodoZyme and, consequently,  on the Company's
results of operations.

Patents and Proprietary Rights

         The Company  considers patent protection of its iodine technology to be
critical to its business prospects.  The Company currently holds ten patents and
eight additional patent  applications filed in the United States relating to its
technology.  In addition,  the Company  holds  patents and has filed a number of
patent applications relating to its technology in foreign countries.

         The first of the  Company's  patents  was issued in 1984 and relates to
bactericidal  compositions  and methods for  applications to oral cavities.  The
second  patent  was  issued  in 1990  and  relates  to the use of the  Company's
technology as an aqueous sporicidal microbicide. In 1991, two additional patents
were issued,  one of which covers  formulations  of the Company's  technology to
rapidly  sterilize and maintain a sterile  environment for an extended period of
time,  while the other  relates to methods  to avoid  discoloration  of plant or
animal  tissue during the  sterilization  process.  The fifth patent,  which was
issued in 1993,  relates  to a method to clean and  disinfect  pathogens  on the
epidermis.  The sixth patent, which was issued in 1994, relates to a composition
to clean and disinfect pathogens on the epidermis. The seventh patent, which was
issued in 1995, relates to a method for forming a sterilant using an immobilized
enzyme. The Company had three patents issue in 1997, one relating to a method of
forming an iodine germicidal composition using an iodine sequestering agent; one
relating to a method for the  therapeutic  treatment of a mammalian eye; and the
last  relating to an  enzymatically  generated  iodine  microbiocide  for use in
sensitive biological materials. The Company intends to continue to pursue patent
protection for the various applications of its technology.

<PAGE>

         The Company  sold to B&L the United  States  patent that issued in 1997
relating  to a method for the  therapeutic  treatment  of a mammalian  eye.  See
"Research and Product  Development -  Ophthalmology  Applications."  The Company
continues to own the foreign  rights and any  continuations-in-part  relating to
the invention.

         The Company also relies upon unpatented proprietary technology,  and in
the future may determine in some cases that its interest  would be better served
by reliance on trade secrets or confidentiality  agreements rather than patents.
To the extent  that  consultants  or other  third  parties  apply  technological
information  independently  developed by them or by others to Company  projects,
disputes may arise as to the proprietary  rights to such  information  which may
not be  resolved  in  favor of the  Company.  The  Company  is  required  to pay
royalties  to a  co-inventor  on  certain  patents  relating  to  the  Company's
technology  based on revenues  received  by the  Company  from sales of products
falling within the scope of such patents.

Competition

         The  Company's   proposed  products  and  products   incorporating  the
Company's proposed products would compete with many other applications currently
on the market.  In addition,  the Company is aware of other companies engaged in
research and  development of other novel  approaches to  applications in some or
all of the markets  identified by the Company as potential fields of application
for its products.  Many of the Company's present and potential  competitors have
substantially  greater  financial and other  resources  and larger  research and
development staffs than the Company. Many of these companies also have extensive
experience  in testing and  applying  for  regulatory  approvals.  In  addition,
colleges,  universities,  government  agencies,  and public and private research
organizations  conduct  research and are becoming more active in seeking  patent
protection  and  licensing  arrangements  to  collect  royalties  for the use of
technology that they have developed,  some of which may be directly  competitive
with that of the Company.

         The Company is aware of one company,  Mimetix Inc.,  which is currently
conducting  human clinical  trials in the United States and Canada  utilizing an
iodine-based  compound  for the  treatment of  fibrocystic  breast  disease.  If
Mimetix receives marketing approval for its drug compound prior to Symbollon, it
could adversely affect the Company's ability to receive marketing  approval,  or
if approved, the Company's ability to sell its product.

         The bovine teat  sanitizer  market is  currently  dominated by iodophor
products,  which  generally  compete  on the  basis  of price  and the  ratio of
microbial  killing  power to total  iodine.  The Company  believes that IodoZyme
competes on the basis of its superior convenience,  efficiency,  safety and high
ratio of killing power to total iodine. Additionally,  IodoZyme, manufactured by
the Company and sold by West Agro,  competes  directly with  products  currently
being manufactured and sold by West Agro.

Employees

         As of December 31, 1997, the Company had six employees, all of whom are
full-time.  The Company has relationships with and from time to time engages the
services of university  professors and other qualified  consultants to assist it
in  technological  research  and  development.  No  employee  of the  Company is
currently  represented  by a labor  union.  Management  considers  its  employee
relations  to be good.  The  Company  believes  that the  future  success of the
Company is  dependent to a  significant  degree on its being able to continue to
attract and retain skilled personnel.

<PAGE>

Executive Officers

         The Company's executive officers are:

                Name               Age           Position with the Company
                ----               ---           -------------------------
         Jack H. Kessler, Ph.D.     47        Executive Vice-President, Chief
                                              Scientific Officer, Secretary and
                                              Chairman of the Board of Directors

         Paul C. Desjourdy          36        Executive Vice-President,
                                              Chief Financial Officer,
                                              Treasurer and Director

         Certain  biographical  information  regarding each executive officer of
the Company is set forth below:

         Jack H. Kessler, Ph.D., is the founder of the Company and has served as
Executive  Vice-President,  Chief Scientific Officer,  Secretary, and a director
since the Company's  move to  Massachusetts  in May 1991, and as Chairman of the
Board of Directors since May 1996. Prior to that time, and since the Company was
initially  formed  in  Illinois  in 1986,  Dr  Kessler  was the  Company's  sole
stockholder and served as its sole officer and director. From January 1990 until
May 1991,  he served as principal  systems  engineer for Kollsman  Manufacturing
Company, a diagnostic instrument design and manufacturing company.

         Paul C.  Desjourdy  has served as Executive  Vice  President  and Chief
Financial   Officer   since  July  1996,   as   Vice-President   -  Finance  and
Administration and Chief Financial Officer of the Company from September 1993 to
June 1996, as Treasurer from May 1994 to present, and as a director since August
1996. From September 1989 to September 1993, Mr.  Desjourdy,  a certified public
accountant, was an attorney at the law firm of Choate Hall & Stewart.

         Officers are elected  annually and serve at the discretion of the Board
of Directors.

Item 2.  Description of Property

         The Company leases approximately 5,400 square feet of office,  research
and  development  and  manufacturing  space in Framingham,  Massachusetts  for a
current base annual rental of approximately  $28,350 increasing $0.25 per square
foot each year effective  September 1 through August 31, 2002. The lease expires
on August 31, 2002 and may be renewed  for a five year  period at the  Company's
option on the same terms and  conditions  except that the rent shall continue to
increase  $0.25 per square  foot each year of the  renewal  period.  The Company
believes  that this  space is  suitable  and  adequate  for its  current  needs;
however, because the existing space has limited in-house manufacturing capacity,
additional manufacturing space may be necessary if product volumes increase.

Item 3.  Legal Proceedings

         The Company is not a party to any legal proceedings.

<PAGE>

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

         No matters  were  submitted  to a vote of security  holders  during the
quarter ended December 31, 1997.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

(a)  Price Range of Securities

         The  Company's  Class A Common  Stock,  Class A  Warrants  and  Class B
Warrants trade separately on the Nasdaq SmallCap Market tier of The Nasdaq Stock
Market under the symbols:  SYMBA, SYMBW and SYMBZ,  respectively.  The following
sets  forth  the high and low sales  prices  for each of the  quarterly  periods
during fiscal 1996 and 1997, as reported by Nasdaq.

                                  Fiscal 1996                  Fiscal 1997
                           -------------------------  --------------------------
                              High           Low          High           Low
Class A Common Stock

First quarter                6 15/16        4 1/8        2 7/8          1 5/16
Second quarter               6 3/8          1 5/8        2 3/16         1 9/16
Third quarter                2 1/2            3/4        2 3/8          1 7/16
Fourth quarter               2 5/8            5/8        2 1/8            15/16

Class A Warrants

First quarter                4 3/4          2              5/8            1/8
Second quarter               4 3/4             31/32       1/2            3/16
Third quarter                1 1/16            1/4         1/2            3/16
Fourth quarter                 1/2             3/32        5/16           1/16

Class B Warrants

First quarter                4               1 7/8         3/16           1/16
Second quarter               2 3/8             1/4         3/16           1/32
Third quarter                  15/32           1/8         5/32           1/32
Fourth quarter                 7/32            1/16        5/32           1/32


         There is no established public trading market for the Company's Class B
Common Stock.

(b)  Approximate Number of Equity Security Holders

         Based upon information  supplied from the Company's transfer agent, the
Company  believes  that the  number of record  holders of the  Company's  equity
securities as of March 25, 1998 are approximately as follows:

<PAGE>

         Title of Class                     Number of Record Holders

         Class A Common Stock                          40
         Class B Common Stock                           3
         Class A Warrants                              10
         Class B Warrants                               8

         Based upon information  supplied from the Company's transfer agent, the
Company believes that the number of beneficial  holders of the Company's Class A
Common Stock as of March 25, 1998 is in excess of 600.

(c)  Dividends

         The Company  has never paid a cash  dividend on any class of its common
stock and  anticipates  that for the  foreseeable  future any  earnings  will be
retained for use in its  business  and,  accordingly,  does not  anticipate  the
payment of cash dividends.

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

         The Company is a  development  stage  company.  Since  inception of the
Company's  predecessor  in 1986,  the  Company's  efforts have been  principally
devoted to research and  development,  securing patent and trademark  protection
and raising capital,  most of which efforts commenced after May 1991. Except for
revenue earned in 1996 and 1997 on sales of IodoZyme, the Company's sole revenue
to date has been from  licensing/option  arrangements and contract  research and
development efforts with corporate partners.

Safe Harbor Statements

         Any  statements  contained  herein by the  Company  with  regard to its
expectations  as to  financial  results and other  aspects of its  business  may
constitute   forward-looking  statements  within  the  meaning  of  the  Private
Securities  Litigation  Reform  Act of 1995.  Although  the  Company  makes such
statements  based  on  assumptions  which  it  believes  to be  reasonable,  the
Company's business is subject to significant risks and there can be no assurance
that actual results will not differ materially from the Company's  expectations.
Accordingly,  the Company  hereby  identifies the following  important  factors,
among  others,  which could  cause its results to differ from any results  which
might  be  projected,  forecasted  or  estimated  by the  Company  in  any  such
forward-looking  statements:  (i) the timely  development  and acceptance of new
products,  (ii)  the  achievement  of  product  development  milestones  by  the
Company's corporate partners,  (iii) the timely receipt of regulatory clearances
required to market the Company's proposed  products,  (iv) the continued sale of
IodoZyme,  the Company's only product,  (v) the Company's  ability to enter into
new arrangements with corporate partners.

Results of Operations

         Fiscal 1997 versus Fiscal 1996

         Symbollon's  net income in fiscal 1997 was $511,464,  compared to a net
loss of  $905,415  in fiscal  1996.  This net  income  resulted  primarily  from
increased  license fee revenues  from  research and  development  programs  with
corporate partners,  increased net sales of IodoZyme, and decreased research and
development expenses.

<PAGE>

         Product revenues from sales of IodoZyme increased by $258,754 or 219.5%
from  $117,906 in fiscal 1996 to $376,660 in fiscal 1997.  The  increased  sales
relate  primarily to greater market  penetration in the United States.  Based on
sales  forecasts  provided  to  Symbollon  by West Agro,  Symbollon  anticipates
further  increases in sales volume for IodoZyme in 1998,  primarily related to a
potential introduction of the product in a number of foreign markets.

         Cost of goods sold for  IodoZyme  increased  by $108,425 or 154.7% from
$70,106 in fiscal  1996 to $178,531 in fiscal  1997.  The  increase in the gross
profit margin on product sales in fiscal 1997,  from the comparable 1996 period,
was primarily due to manufacturing  efficiencies  resulting from increased sales
volume. The Company anticipates that the gross profit margin in 1998 will remain
consistent with 1997.

         Contract revenues decreased by $74,302 or 51.2% from $144,991 in fiscal
1996 to $70,689 in fiscal 1997.  License fee  revenues  increased by $750,000 or
150.0% from  $500,000 in fiscal 1996 to  $1,250,000  in fiscal 1997.  All of the
contract  revenue and $1,000,000 of the license fee revenue  generated in fiscal
1997 relate to one corporate  relationship entered into in May 1996 in the field
of dermatology.  This relationship  provided all of the contract and license fee
revenues in fiscal 1996.  The  remaining  license fee revenue in fiscal 1997 was
generated from a new corporate  relationship  entered into in August 1997 in the
field of  ophthalmology.  In 1998,  subject to continuation of existing research
and development contracts, the Company anticipates receiving $400,000 in license
fees.  The level of contract  revenues for 1998 is difficult to predict since it
depends  on the  amount of  consulting  effort  expended  by the  Company at the
request of corporate partners.

         Research and development  expenses  decreased by $439,848 or 43.9% from
$1,002,208 in fiscal 1996 to $562,360 in fiscal 1997. The decrease resulted from
the  discontinuation  of the  development  effort relating to the Company's high
level disinfectant  formulation and a decrease in salary and other labor related
costs  associated  with a reduction in the  Company's  research and  development
staff. The Company is anticipating  that research and development  expenses will
significantly  increase in 1998 as the Company  continues the  development  of a
formulation to treatment  fibrocystic  breast disease,  which development effort
may include conducting clinical trials.

         General and administrative expenses decreased by $162,448 or 23.7% from
$686,026  in fiscal  1996 to $523,578 in fiscal  1997.  This  decrease  resulted
primarily  from decreases in director and officer  insurance  premiums and legal
fees.

         The Company's  interest income increased by $2,710 or 2.9% from $92,098
in fiscal  1996 to  $94,808  in fiscal  1997.  The  Company's  interest  expense
increased by $14,154 from $2,070 in fiscal 1996 to $16,224 in fiscal 1997.  This
increase  resulted  from  borrowings  in 1997 under the  Company's  bank line of
credit which was established in March 1997.

         During 1998, the Company anticipates incurring significant  development
expenses  associated  with  its  proposed   formulation  for  the  treatment  of
fibrocystic  breast  disease,  including the cost of preparing and filing an IND
application  with  the FDA,  manufacturing  supplies  for  clinical  trials  and
conducting human clinical trials.

Liquidity and Capital Resources

         The Company has funded its activities  primarily  through proceeds from
private  and  public  placements  of  equity  and debt  securities.  Independent
research and development  activities regarding the Company's technology has been
funded through SBIR grants received and administered by BDC. See "Small Business

<PAGE>

Innovation  Research."  The Company's  $500,000  bank line of credit  expired in
March 1998, and the Company has no current plans to replace such line of credit.

         During 1997, the Company generated its first operating profit; however,
it anticipates that 1998 revenues will be less than its 1998 operating expenses.
The  Company  has  incurred a  cumulative  loss  through  December  31,  1997 of
$4,821,615.  As of  December  31,  1997,  the  Company  had  working  capital of
$2,631,019. The Company believes that it has the necessary liquidity and capital
resources to sustain  planned  operations for fiscal 1998. In the event that the
Company's  internal  estimates  relating  to  its  planned   expenditures  prove
inaccurate,  the Company may be required to  reallocate  funds among its planned
activities and curtail certain planned  expenditures.  In any event, the Company
anticipates that it will require additional financing after 1998, and therefore,
the Company will seek new  financing in fiscal 1998.  The  Company's  ability to
obtain new  financing  may, in part,  be affected  by the  Company's  ability to
continue to meet the criteria for continued listing of its securities on Nasdaq.
Nasdaq's current continued  listing criteria require,  in part, that the Company
maintain net tangible assets (total assets less total  liabilities and goodwill)
of at least  $2,000,000,  a minimum bid price of $1.00 per share of common stock
and two market makers for its securities.  There can be no assurance that in the
future the Company will be able to continue to meet the  criteria for  continued
listing of its securities on Nasdaq.

         During 1998, the Company is committed to pay approximately  $305,000 as
compensation for its current executive  officers and  approximately  $26,100 for
lease payments on its facilities.  The Company has no planned  material  capital
expenditures  for fiscal  1998.  At  December  31,  1997,  the Company had a net
operating loss  carryforward  for Federal  income tax purposes of  approximately
$4,552,000 expiring through 2011.

         In  connection  with the Company's  initial  public  offering,  certain
stockholders of the Company agreed to transfer an aggregate of 700,000 shares of
Common  Stock to the  Company if the  Company  does not attain  certain  minimum
earnings  thresholds.  In the event the  Company  attains  any of such  earnings
thresholds,  the position of the Securities and Exchange  Commission is that the
release of these restrictions will be treated,  for financial reporting purposes
only, as expense to the Company which is nondeductible  for income tax purposes.
Accordingly,  the Company will, in the event of the release of the restrictions,
recognize during the period in which the earnings thresholds are met or probable
of being met, what could be a substantial  one-time  charge which would have the
effect of substantially increasing the Company's loss or reducing or eliminating
earnings,  if any, at such time. The amount of expense recognized by the Company
will not affect the Company's total stockholders' equity.

<PAGE>

Item 7.  Financial Statements

Independent Auditors' Report

The Board of Directors and Stockholders
Symbollon Corporation
Framingham, Massachusetts


We have audited the  accompanying  balance  sheets of Symbollon  Corporation  (a
development  stage  company) as of December  31, 1997 and 1996,  and the related
statements of  operations,  stockholders'  equity and cash flows for each of the
years in the  two-year  period  ended  December 31, 1997 and for the period from
July 15, 1986 (inception) to 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 based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit 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 enumerated above present fairly, in all
material respects,  the financial position of Symbollon  Corporation at December
31, 1997 and 1996, and the results of its operations and its cash flows for each
of the years in the two-year  period ended  December 31, 1997 and for the period
from July 15, 1986 (inception) to December 31, 1997 in conformity with generally
accepted accounting principles.



Richard A. Eisner & Company, LLP

Cambridge, Massachusetts
January 22, 1998


<PAGE>


<TABLE>

                              SYMBOLLON CORPORATION
                          (a development stage company)

                                 Balance Sheets
<CAPTION>
                                                             December 31,
                                                       ----------------------
                                                       1997              1996
                                                       ----              ----
ASSETS
<S>                                              <C>              <C>
Current assets:
   Cash and cash equivalents                     $   2,527,865    $   1,707,099
   Accounts receivable                                  24,972           50,406
   Inventory                                            73,629           17,818
   Prepaid expenses                                     75,156           82,439
                                                 -------------    -------------

        Total current assets                         2,701,622        1,857,762


Equipment and leasehold improvements,
   net of accumulated depreciation and
   amortization (Note C)                               146,868          124,463

Other assets:
   Patent and trademark costs, net of
      accumulated amortization (Note D)                153,157          127,097
   Deposit                                               2,364            5,000
                                                 -------------    -------------

                                                 $   3,004,011    $   2,114,322
                                                 =============    =============

LIABILITIES

Current liabilities:
   Accounts payable                              $       5,879    $      41,173
   Other accrued professional fees                      21,867           83,910
   Other current liabilities                            22,857           14,441
   Accrued finder's fee (Note J)                        20,000
   Deferred revenue                                                      17,596
                                                 -------------    -------------

        Total current liabilities                       70,603          157,120

Accrued rent                                                             14,000
                                                 -------------    -------------

                                                        70,603          171,120
                                                 -------------    -------------

Redeemable common stock, Class A, par
   value $.001 per share, 266,667 shares
   issued at December 31, 1997 (aggregate
   involuntary liquidation value $500,000) (Note F)    500,000

Commitments (Note J)

STOCKHOLDERS' EQUITY (Notes F and G)

   Preferred stock, par value $.001 per share,
      5,000,000 shares authorized,
      444,444 shares issued at December 31, 1996                            444
   Common stock, Class A, par value $.001 per
      share, 18,750,000 shares authorized,
      2,916,286 and 1,288,253 shares issued
      in 1997 and 1996, respectively                     2,916            1,288
   Common stock, Class B, par value $.001 per share,
      1,250,000 shares authorized, 15,738 and
      1,196,275 shares issued in 1997 and 1996,
      respectively.  Each share is convertible
      into one share of Class A common stock                16            1,196
   Additional paid-in capital                        7,252,091        7,273,353
   Deficit accumulated during the development stage (4,821,615)      (5,333,079)
                                                   ------------    -------------

        Total stockholders' equity                   2,433,408        1,943,202
                                                  -------------    -------------
                                                  $  3,004,011     $  2,114,322
                                                  =============    =============
See notes to financial statements

</TABLE>

<PAGE>

<TABLE>
                              SYMBOLLON CORPORATION
                          (a development stage company)

                            Statements of Operations
<CAPTION>

                                                                                                 July 15,
                                                                                                   1986
                                                                                               (Inception)
                                                               Year Ended December 31,              to
                                                            ----------------------------       December 31,
                                                                 1997            1996              1997
                                                            ------------    ------------     ---------------
<S>                                                         <C>             <C>               <C>
Income:
   Net sales                                                $    376,660    $    117,906      $      617,547
   Contract revenue                                               70,689         144,991             540,680
   License fee revenue                                         1,250,000         500,000           1,790,000
                                                            ------------    ------------     ---------------

      Total income                                             1,697,349         762,897           2,948,227
                                                            ------------    ------------     ---------------

Operating expenses:
   Cost of goods sold                                            178,531          70,106             352,237
   Research and development costs                                562,360       1,002,208           4,036,698
   General and administrative expenses                           523,578         686,026           3,506,287
                                                            ------------    ------------     ---------------

      Total operating expenses                                 1,264,469       1,758,340           7,895,222
                                                            ------------    ------------     ---------------

Income (loss) from operations                                    432,880        (995,443)         (4,946,995)
Interest income                                                   94,808          92,098             481,640
Interest expense and debt issuance costs                         (16,224)         (2,070)           (356,260)
                                                            ------------    ------------     ---------------

Net income (loss)                                           $    511,464    $   (905,415)        $(4,821,615)
                                                            ============    ============     ===============

Net income (loss) per share of common stock                        $ .24          $ (.52)
                                                                   =====          ======

Net income per common share - assuming dilution                    $ .22
                                                                   =====

Weighted average number of common shares outstanding           2,168,783       1,781,796
                                                           =============    ============

Weighted average number of common shares and potential
   common shares outstanding                                   2,360,333
                                                           =============
See notes to financial statements

</TABLE>

<PAGE>

<TABLE>
                              SYMBOLLON CORPORATION
                          (a development stage company)

                       Statements of Stockholders' Equity
<CAPTION>
                                                                   Common Stock, $.001 Par Value                Deficit
                                                                 ---------------------------------            Accumulated
                                                Preferred Stock,    Class A           Class B     Additional  During the
                                                 $.001 Par Value---------------- ----------------  Paid-in   Development
                                                 Shares  Amount  Shares   Amount   Shares  Amount  Capital       Stage      Total
                                                 ------- ------ --------- ------ --------- ------ ---------- ------------ ----------
<S>                                              <C>     <C>    <C>       <C>    <C>       <C>    <C>        <C>          <C>
Balance, January 1, 1992, consisting of net
  losses from July 15, 1986 (inception)
  through December 31, 1991                                                                                  $  (143,451) $(143,451)
Merger and recapitalization, May 1991:
  Issuance of new shares of Symbollon Corporation                                  831,316 $  831 $    9,169                 10,000
Contribution of shares to the Company, September                                   (41,565)   (42)        42                      0
Issuance of shares, September                                                      425,251    426    299,574                300,000
Net loss for the year                                                                                           (207,457)  (207,457)
                                                                                 --------- ------ ---------- ------------ ----------

Balance, December 31, 1992                                                       1,215,002  1,215    308,785    (350,908)   (40,908)
Issuance of shares, June                                                            34,998     35    104,965                105,000
Capital contribution as of July                                                                      100,000                100,000
Warrants issued with bridge financing                                                                 25,000                 25,000
Public offering, December:
   Issuance of shares                                           1,000,000 $1,000                   5,999,000              6,000,000
   Costs of offering                                                                              (1,244,133)            (1,244,133)
   Sale of unit purchase option                                                                          100                    100
Net loss for the year                                                                                         (1,186,132)(1,186,132)
                                                                --------- ------ --------- ------ ---------- ------------ ----------

Balance, December 31, 1993                                      1,000,000  1,000 1,250,000  1,250  5,293,717  (1,537,040) 3,758,927
Issuance of over-allotment units of public offering               150,000    150                     899,850                900,000
Additional public offering costs                                                                     (99,369)               (99,369)
Net loss for the year                                                                                         (1,516,913)(1,516,913)
                                                                --------- ------ --------- ------ ---------- ------------ ----------

Balance, December 31, 1994                                      1,150,000  1,150 1,250,000  1,250  6,094,198  (3,053,953) 3,042,645
Warrant conversion, July - August                                  77,920     78                     629,126                629,204
Conversion of Class B to Class A                                   35,287     35   (35,287)   (35)                                0
Stock purchase plan sales                                           2,216      2                       9,415                  9,417
Net loss for the year                                                                                         (1,373,711)(1,373,711)
                                                                --------- ------ --------- ------ ---------- ------------ ----------

Balance, December 31, 1995                                      1,265,423  1,265 1,214,713  1,215  6,732,739  (4,427,664) 2,307,555
Issuance of preferred stock, August              444,444 $ 444                                       499,555                499,999
Conversion of Class B to Class A                                   18,438     19   (18,438)   (19)                                0
Stock purchase plan sales                                           4,392      4                       7,943                  7,947
Reduction of warrant conversion costs                                                                 33,116                 33,116
Net loss for the year                                                                                           (905,415)  (905,415)
                                                 ------- ----- ---------- ------ --------- ------ ---------- ------------ ----------

Balance, December 31, 1996                       444,444   444  1,288,253  1,288 1,196,275  1,196  7,273,353  (5,333,079) 1,943,202
Conversion of preferred stock, May              (444,444) (444)   444,444    444                                                  0
Conversion of Class B to Class A                                1,180,537  1,180(1,180,537)(1,180)                                0
Stock purchase plan sales                                           3,052      4                       3,738                  3,742
Issuance costs of redeemable common stock, August                                                    (25,000)               (25,000)
Net income for the year                                                                                          511,464    511,464
                                                 ------- ----- ---------- ------ --------- ------ ---------- ------------ ----------

Balance, December 31, 1997                             0 $   0  2,916,286 $2,916    15,738 $   16 $7,252,091 $(4,821,615) $2,433,408
                                                 ======= ===== ========== ====== ========= ====== ========== ============ ==========

See Note F for additional information

See notes to financial statements

</TABLE>


<PAGE>

<TABLE>
                              SYMBOLLON CORPORATION
                          (a development stage company)

                            Statements of Cash Flows
<CAPTION>
                                                                                                                  July 15,
                                                                                                                    1986
                                                                                                                 (Inception)
                                                                                  Year Ended December 31,            to
                                                                             -------------------------------     December 31,
                                                                                  1997             1996             1997
                                                                             ------------     --------------  ---------------
<S>                                                                          <C>              <C>             <C>
Cash flows from operating activities:
   Net income (loss)                                                         $    511,464     $    (905,415)  $  (4,821,615)
   Adjustments to reconcile net income (loss) to net cash used in
      operating activities:
        Depreciation and amortization expense                                      59,677            57,680         379,202
        Amortization of debt issuance costs                                                                         130,000
        Accrued rent                                                              (14,000)          (10,500)              0
        Loss on disposition of equipment                                            7,274                             7,274
        Changes in:
           Accounts receivable                                                     25,434           (19,536)        (24,972)
           Inventory                                                              (55,811)           13,461         (73,629)
           Prepaid expenses                                                         7,283            (1,885)        (75,156)
           Deferred revenue                                                       (17,596)           17,596               0
           Accounts payable and other current liabilities                         (68,921)           90,758         127,778
                                                                             ------------     -------------   -------------

              Net cash provided by (used in) operating activity                   454,804          (757,841)     (4,351,118)
                                                                             ------------     -------------   -------------

Cash flows from investing activities:
   Purchase of equipment and leasehold improvements                               (85,333)           (5,828)       (340,653)
   Patent and trademark costs                                                     (41,383)          (53,323)       (357,148)
   Proceeds from sale of equipment                                                 11,300                            11,300
   Deposit                                                                          2,636                            (2,364)
                                                                             ------------     -------------   -------------

              Net cash used in investing activities                              (112,780)          (59,151)       (688,865)
                                                                             ------------     -------------   -------------

Cash flows from financing activities:
   Warrant conversion                                                                                               629,204
   Borrowings from stockholders                                                                                     253,623
   Repayment of borrowings from stockholders                                                        (21,609)       (127,683)
   Sale of common stock and units                                                 478,742             7,947       7,706,106
   Sale of option to purchase units                                                                                     100
   Public offering costs                                                                                         (1,343,502)
   Issuance of preferred stock                                                                      450,000         450,000
                                                                             ------------     -------------   -------------

              Net cash provided by financing activities                           478,742           436,338       7,567,848
                                                                             ------------     -------------   -------------

Net increase (decrease) in cash and cash equivalents                              820,766          (380,654)      2,527,865
Cash and cash equivalents at beginning of period                                1,707,099         2,087,753
                                                                             ------------     -------------

Cash and cash equivalents at end of period                                   $  2,527,865     $   1,707,099   $   2,527,865
                                                                             ============     =============   =============

Supplemental cash flow information:
   Cash paid during the year for interest                                    $     16,224

See Note F with respect to noncash transactions.

See notes to financial statements

</TABLE>


<PAGE>



NOTE A - CERTAIN TRANSACTIONS AND DESCRIPTION OF BUSINESS

The  Company was formed to develop and  commercialize  proprietary  iodine-based
products for infection  control and treatment in biomedical and  bioagricultural
industries.  The  Company  is in the  development  stage and its  efforts  since
inception have been principally  devoted to research and  development,  securing
patent and trademark  protection and raising capital.  Management of the Company
anticipates  that  additional  losses  will be  incurred  as these  efforts  are
pursued.  Management  will seek  additional  financing  when,  and if,  required
although  there can be no assurance  that such financing will be available or on
terms acceptable to the Company.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1]    Cash and cash equivalents:

       Cash and cash equivalents are short-term,  highly liquid investments with
maturities of less than three months when acquired.

[2]    Inventory:

       Inventory is stated at the lower of cost or market.

[3]    Revenue recognition:

       The  Company  recognizes  revenue  when the Company  fulfills  all of its
       obligations under its collaborative  research and licensing agreements or
       when its products are shipped.  Through December 31, 1997 the Company has
       generated its revenue from a small number of customers and agreements.

[4]    Depreciation and amortization:

       Equipment  is  depreciated  over its  estimated  useful  life  using  the
       straight-line method.  Leasehold  improvements are being amortized by the
       straight-line  method over the term of the lease which is less than their
       estimated useful lives.

       Patent and  trademark  costs are being  amortized  over  their  estimated
       useful  lives of 17 years by the  straight-line  method.  Such  costs are
       reviewed for impairment  periodically.  If the sum of the expected future
       undiscounted cash flows is less than the carrying amount of such costs, a
       loss will be recognized.

[5] Income (loss) per share:

       In 1997, the Financial  Accounting  Standards Board issued  Statement No.
       128,  Earnings  per share.  Statement  128 replaced  the  calculation  of
       primary  and fully  diluted  earnings  per share with  basic and  diluted
       earnings per share. Unlike primary earnings per share, basic earnings per
       share excludes any dilutive effects of options,  warrants and convertible
       securities.  Diluted earnings per share is very similar to the previously
       reported fully diluted earnings per share. All earnings per share amounts
       for all periods have been presented,  and where appropriate,  restated to
       conform to the Statement 128 requirements.

<PAGE>

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

[6]    Stock-based compensation:

       The Company  accounts for its  employee  stock-based  compensation  under
       Accounting  Principles Board Opinion No. 25, "Accounting for Stock Issued
       to Employees".  In October 1995, the Financial Accounting Standards Board
       issued Statement of Financial  Accounting  Standards No. 123, "Accounting
       for Stock-Based  Compensation" ("SFAS No. 123"). SFAS No. 123 establishes
       a  fair-value-based  method of accounting  for  stock-based  compensation
       plans.  The Company adopted the disclosure only alternative in 1996 which
       requires  disclosure  of the pro forma effects on loss and loss per share
       as  if  SFAS  No.  123  had  been  adopted,  as  well  as  certain  other
       information.

[7]    Use of 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.


NOTE C - EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment  and  leasehold  improvements  are  stated at cost and  consist of the
following:

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

    Equipment and fixtures                           $   201,519    $  218,528
    Leasehold improvements                                61,811        36,791
                                                     -----------    ----------

                                                         263,330       255,319
    Less accumulated depreciation and amortization       116,462       130,856
                                                     -----------    ----------

    Equipment and leasehold improvements, net        $   146,868    $  124,463
                                                     ===========    ==========

NOTE D - PATENT AND TRADEMARK COSTS

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

    Patent costs                                     $   339,340   $   298,704
    Trademark costs                                        8,520        16,272
                                                     -----------   -----------

                                                         347,860       314,976
    Less accumulated amortization                        194,703       187,879
                                                     -----------   -----------
    Patent and trademark costs, net                  $   153,157   $   127,097
                                                     ===========   ===========

<PAGE>

NOTE E - LINE OF CREDIT

On March 27, 1997 the Company  signed a loan and security  agreement with a bank
which  expires on March 26, 1998 and  provides for advances to the Company of up
to $500,000 and  interest on the  advances of 1.5% plus prime.  Any advances are
collateralized by essentially all of the assets of the Company.  At December 31,
1997 there were no advances outstanding under this agreement.


NOTE F - CAPITALIZATION

The Company has issued  both Class A and Class B common  stock.  The Class A and
Class B common stock are substantially  identical except that holders of Class A
common stock have the right to cast one vote for each share held and the Class B
shareholders  have the right to cast five votes for each share held. The Class B
shares are automatically convertible into an equal number of Class A shares upon
the sale or transfer of Class B shares by the original holders thereof,  subject
to certain exceptions.

On December 13, 1996 the Company  requested its Class B common  stockholders  to
voluntarily  convert  their  outstanding  shares of Class B common stock into an
equal  number of shares of Class A common stock which  convert on a  one-for-one
basis. In 1997,  1,180,537 of the 1,196,275  shares of Class B common stock were
converted.

On August 14, 1996 the Company  completed a private  placement of 444,444 shares
of a new series of convertible  preferred  stock at a price of $1.125 per share.
In exchange for the shares issued in the private placement, the Company received
net  proceeds  of  approximately  $450,000  and the  cancellation  of $50,000 of
principal and accrued interest on a demand note payable to a stockholder. In May
1997 the preferred stock was converted into an equal number of shares of Class A
common stock.

On August 4, 1997, the Company  entered into a Stock  Purchase  Agreement with a
pharmaceutical company whereby the Company sold 266,667 shares of Class A common
stock for $500,000.  Under this agreement,  the  pharmaceutical  company has the
right, up to August 4, 1998, to purchase an additional  $350,000 of common stock
at the then fair market value.  Pursuant to certain  restrictions,  the stock is
redeemable at the per share price that it originally  paid, as an offset against
future  milestone  payments.  If the  collaboration  and  license  agreement  is
terminated by the  pharmaceutical  company before August 4, 2001,  then, for the
calendar years ended December 31, 2001, 2002 and 2003 the pharmaceutical company
has the right to require the Company to purchase, at the per share price that it
originally paid, the number of shares which equals 25% of the Company's positive
cash flows from operating activities, not to exceed $350,000.

<PAGE>

NOTE F - CAPITALIZATION  (CONTINUED)

In addition to the outstanding options under the Company's stock plans (Note G),
the Company has the following  options and warrants  outstanding at December 31,
1997:

                                Number of          Exercise        Expiration
                              Units/Warrants        Price             Date
                              --------------       --------        ----------

Redeemable Class A warrants     1,572,080         See below       December 1998
Redeemable Class B warrants     1,227,920         See below       December 1998
Unit purchase option            100,000 units         $9.00       December 1998

Each Class A warrant  entitles the holder to purchase,  for $8.50,  one share of
Class A common stock and one Class B warrant.  Each Class B warrant entitles the
holder to purchase,  for $11.00, one share of Class A common stock. The exercise
prices of the warrants are subject to adjustment and the warrants are subject to
redemption  in certain  circumstances.  The unit  purchase  option  entitles the
holder to purchase one share of Class A common stock,  one Class A warrant,  and
one Class B warrant.

In connection with the Company's public offering, certain stockholders agreed to
restrictions  on  700,000  shares of the then  1,250,000  Class B common  shares
outstanding  prior to the  offering.  In January 1997 684,950 of the  restricted
shares  converted to Class A common stock.  These shares will be  transferred to
the Company for no  consideration  if the future earnings  thresholds  described
below are not achieved.  When, and if, the share restrictions are released,  the
Company  will incur an expense  based on the fair market  value of the shares at
the time  the  restrictions  lapse,  which is a  nondeductible  expense  for tax
purposes.

The  restricted  shares  are to be  released  if the  Company  meets  any of the
following earnings levels, (defined as income before income taxes, extraordinary
items or any charge related to the release of shares):

                    Fiscal Year Ending          Earnings
                       December 31,              Level
                    ------------------          --------

                          1998             $    10,000,000
                          1999                  15,000,000


NOTE G - STOCK PLANS

[1]    Stock plans:

       The Company has  adopted  three stock  plans:  a stock  option  plan,  an
employee stock purchase plan and a nonemployee directors' stock option plan.

       The stock option plan provides for the grant of incentive  stock options,
       nonqualified stock options and stock appreciation rights. At December 31,
       1997 the Company has  reserved  800,000  shares for  issuance  under this
       plan.

<PAGE>

NOTE G - STOCK PLANS (CONTINUED)

[1]    Stock plans: (Continued)

       The employee  stock  purchase  plan  provides for the purchase of Class A
       common stock at 85 percent of the fair market value at specific dates, to
       encourage  stock  ownership  by all eligible  employees.  At December 31,
       1997,  the Company has reserved  200,000  shares for purchase  under this
       plan.  During the year ended 1997, the plan  purchased  3,052 shares from
       the Company to satisfy its obligation under the plan.

       On May 17, 1995 the Company adopted a nonemployee directors' stock option
       plan  that  provides  for  the  grant  of   nonstatutory   stock  options
       automatically on January 1 of each calendar year commencing on January 1,
       1996.  The Company has reserved  100,000  shares for  issuance  under the
       plan. Each outside  director shall be granted an option to purchase 2,500
       shares of Class A common stock at fair market value,  vesting 50% on each
       of the first two anniversaries of the grant.

       Under the above plans  558,532  shares are  available for future grant or
purchase.

       On July 1, 1996 all 128,333 of the then outstanding employee stock
       options were repriced to the current  market price,  using the existing
       exercise durations.

       The Company had the following option activity in 1996 and 1997:


                                             Number         Weighted-Average
                                               of            Exercise Price
                                             Shares            Per Share
                                          -----------       ----------------

          Balance - December 31, 1995        221,833             $3.74
          Granted                            251,500             $2.32

          Repriced options:
              Original                      (128,333)            $5.74
              Repriced                       128,333             $2.31

          Cancelled                          (16,833)            $2.98

          Balance - December 31, 1996        456,500             $2.99
          Granted                            170,562             $1.39
          Cancelled                          (98,167)            $4.36
                                          -----------

          Balance - December 31, 1997        528,895             $2.21
                                          ===========

       Options for 342,166  shares are  exercisable  as of December  31, 1997 at
       exercise  prices  ranging  from  $1.13 to $10.00  and a  weighted-average
       exercise price of approximately  $2.29 per share, with a weighted-average
       remaining contractual life of approximately eight years.

<PAGE>

NOTE G - STOCK PLANS (CONTINUED)

[1]    Stock plans: (Continued)

       The  exercise  prices of options  outstanding  at December 31, 1997 range
       from $1.02 to $10.00 per share and have a weighted-average exercise price
       of  approximately  $2.21 per  share,  with a  weighted-average  remaining
       contractual life of approximately eight years.

       All options  outstanding  at December  31,  1997 are  categorized  by the
following ranges in the table below:

                                         Weighted-Average         Number of
                       Range              Exercise Price            Shares
                   ----------------      ----------------         ----------

                    $1.00 to $4.00            $1.76                 465,395
                    $4.00 to $10.00           $5.50                  63,500
                                                                  ----------

                                                                    528,895
                                                                  ==========

[2]    Stock-based compensation:

       The Company has adopted the  disclosure-only  provisions of SFAS No. 123,
       but  applies  Accounting  Principles  Board  Opinion  No. 25 and  related
       interpretations  in accounting for its plans.  There was no  compensation
       expense  recognized  in 1997 or  1996.  If the  Company  had  elected  to
       recognize  compensation cost for the plans based on the fair value at the
       grant  date for  awards  granted  as of  January 1, 1995 under the plans,
       consistent with the method prescribed by SFAS No. 123, net income or loss
       per share  would  have been  changed to the pro forma  amounts  indicated
       below:

                                                           Year Ended
                                                          December 31,
                                                  ----------------------------
                                                     1997             1996
                                                  ------------    ------------

       Net income (loss)            As reported    $   511,464     $  (905,415)
                                    Pro forma          370,530      (1,019,725)
       Net income (loss) per share  As reported            .24            (.52)
                                    Pro forma              .17            (.57)

The fair value of the  Company's  stock  options  used to compute  pro forma net
income  (loss) and net  income  (loss) per share  disclosures  is the  estimated
present value at grant date using the  Black-Scholes  option-pricing  model with
the following weighted-average  assumptions for 1997 and 1996: dividend yield of
2.5%; expected volatility of 40%; a risk-free interest rate of between 5.25% and
7.88%; and an expected holding period of 2 to 5 years.

The per share  weighted-average  grant-date fair value of options granted during
the years ended December 31, 1997 and 1996 was $.20 and $1.23, respectively.

<PAGE>


NOTE H - EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share at December 31, 1997:

                                          Income       Shares       Per Share
                                       (Numerator) (Denominator)      Amount

Basic EPS:
   Net income and income available
      to common stockholders          $   511,464     2,168,783        $.24

Effect of Dilutive Securities:
   Convertible preferred stock                          170,472
   Stock options                                         21,078
                                      -----------     ---------        ----

Diluted EPS:
   Income available to common
      stockholders                    $   511,464     2,360,333        $.22
                                      ===========     =========        ====

Options to purchase 391,895 shares of common stock at $1.05 to $10.00 per share,
the unit purchase option and warrants (see Note F) were outstanding  during 1997
but were not  included in the  computation  of diluted EPS because the  exercise
price was  greater  than the  average  market  price of the common  shares  and,
therefore, the effect would be antidilutive.

At December 31, 1996 the effect of dilutive  securities has not been  considered
as they are antidilutive.

NOTE I - INCOME TAXES

At December 31, 1997,  the Company had no current tax  liability or deferred tax
liability.  It had deferred tax assets due to net operating  loss  carryforwards
and research and development tax credits  amounting to approximately  $1,820,000
and $140,000,  respectively,  all of which had been fully  reserved  because the
likelihood of realization of the benefits cannot be established.  The net income
for 1997 results in no current tax liability  because of the  utilization of the
net operating loss carryforwards. The expected tax expense or benefit derived by
applying  statutory tax rates to the income or loss before income taxes has been
offset by the increase or decrease in the valuation reserve.

At  December  31,  1997,  the  Company  had a net  operating  loss  carryforward
amounting to  approximately  $4,555,000  which  expires at various dates through
2011.

The Company is subject to Internal  Revenue Code provisions which limit the loss
carryforwards  available  for use in any given  year if  significant  changes in
ownership occur.

<PAGE>

NOTE J - COMMITMENTS

[1]    Facilities lease:

       The Company leases its research  facilities under an operating lease that
       expires  August  31,  2002 with an option to extend  for five  additional
       years.  The lease requires  payment of real estate taxes and other common
       area maintenance expenses.  Rent expense for the years ended December 31,
       1997 and December 31, 1996 was $32,000 and $34,000, respectively.

       Future  minimum  rental  payments due during the years ended December 31,
amount to approximately:

                      1998                        $    26,100
                      1999                             30,150
                      2000                             31,500
                      2001                             32,850
                      2002                             22,500
                                                  -----------

                                                  $   143,100

[2]    Employment agreements:

       The Company has entered into  employment  agreements  with its  principal
       officers  providing for minimum base  compensation and severance pay. For
       the years ended  December 31, 1997 and December 31, 1996,  the  aggregate
       amount  paid  under  these   agreements  was  $280,000.   The  employment
       agreements provide for inflationary  adjustments and are subject to other
       increases  based on the  Board of  Director's  approval.  Two  employment
       agreements  are in effect which expire  December 31, 2000.  Amounts to be
       paid under these agreements in 1998 total approximately $305,000.

[3]    Royalty agreement:

       A royalty agreement with one of the inventors who assigned certain patent
       rights to the Company provides for royalties based on a percentage of the
       licensing  revenues  received by the Company from products falling within
       the scope of the patent  rights.  The  percentage  varies from 1.5% to 5%
       depending on the gross revenues  received,  with maximum royalty payments
       under the agreement not to exceed  $2,884,000.  Through December 31, 1997
       no royalties have been earned under this agreement.

 [4]   Consulting agreements:

       The Company has entered into various  scientific  advisory and consulting
       agreements,  including  agreements with certain directors of the Company,
       to support its development activities.  These agreements generally expire
       over several  future years.  Amounts  charged to operations in connection
       with these  agreements for the years ended December 31, 1997 and December
       31, 1996 amounted to  approximately  $42,400 and $162,564,  respectively.
       The Company expects to incur similar or higher expenses in future years.

<PAGE>

NOTE J - COMMITMENTS  (CONTINUED)

[5]    Finder's fees:

       The  Company  has  entered  into an  agreement  whereby it pays a fee for
       agreements  entered into with certain companies for investment or revenue
       purposes.  A  percentage  of the  investment  or  revenue is paid up to a
       maximum  of  $150,000  with   increases  if  more  than  one  product  is
       commercialized under the agreements.



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

         None.

                                    PART III

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

         The Company incorporates herein by reference the information  appearing
under the  caption  "Board  of  Directors"  in the  Company's  definitive  Proxy
Statement to be filed with the Securities and Exchange  Commission in connection
with the Company's 1998 Annual Meeting of Stockholders.

         Information  concerning  executive officers of the Company is contained
in Part I of this report under the caption "Executive Officers."

Item 10.  Executive Compensation

         The Company incorporates herein by reference the information  appearing
under the caption  "Executive  Compensation"  in the Company's  definitive Proxy
Statement to be filed with the Securities and Exchange  Commission in connection
with the Company's 1998 Annual Meeting of Stockholders.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

         The Company incorporates herein by reference the information  appearing
under the caption  "Principal  Stockholders"  in the Company's  definitive Proxy
Statement to be filed with the Securities and Exchange  Commission in connection
with the Company's 1998 Annual Meeting of Stockholders.

Item 12  Certain Relationships and Related Transactions

         The Company incorporates herein by reference the information  appearing
under the caption  "Certain  Transactions"  in the  Company's  definitive  Proxy
Statement to be filed with the Securities and Exchange  Commission in connection
with the Company's 1998 Annual Meeting of Stockholders.

<PAGE>

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

         (a)  Exhibits

         See Index to Exhibits on Page E-1.  Compensatory plans and arrangements
required to be filed as exhibits are as follows:

1        1993 Stock Option Plan.

2        Form of Stock Option Agreement to be entered into between the Company
         and each option   holder.

3        1994 Employee Stock Purchase Plan.

4        1995 Non-Employee Directors' Stock Option Plan.

5        Employment  Agreement,  dated  December 23, 1995,  between the Company
         and Dr. Jack H. Kessler.

6        Employment  Agreement,  dated July 1, 1996,  between  the Company and
         Paul C. Desjourdy.

         (b)  Reports on Form 8-K

         No reports on Form 8-K were filed  during the last  quarter of the year
ended December 31, 1997.


<PAGE>


                                   SIGNATURES

In accordance  with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                            SYMBOLLON CORPORATION

                            By:   /s/ Paul C. Desjourdy
                               ------------------------
                               Paul C. Desjourdy
                               Executive Vice President, Chief Financial Officer

Date: March 30, 1998

In accordance  with the Exchange Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
dates indicated.

      Signature                Title                                Date

 /s/ Jack H. Kessler           Executive Vice-President,          March 30, 1998
-----------------------        Chief Scientific Officer,
    Jack H. Kessler            Secretary and Chairman
                               of the Board of Directors
                               (Principal Executive Officer)

 /s/ Paul C. Desjourdy         Executive Vice President           March 30, 1998
-----------------------        Treasurer, Chief Financial
   Paul C. Desjourdy           Officer, and Director (Principal
                               Financial and Accounting Officer)

 /s/ James C. Richards         Director                           March 30, 1998
-----------------------
  James C. Richards


<PAGE>


                              Symbollon Corporation
                                Index to Exhibits

3.1      Certificate of Incorporation of the Company;  including  Certificate of
         Designations, Preferences and Rights of Series A Preferred Stock of the
         Company. (previously filed as an exhibit to Form 10-QSB for the quarter
         ended September 30, 1996 and incorporated by reference.)
3.2      By-Laws of the Company. (1)
3.3      Agreement of Merger, dated as of August 4, 1993, between the Company
         and Symbollon Corporation, a Massachusetts corporation, (including
         Certificate of Merger and other state filings). (1)
4.1      Form of Warrant  Agreement  among the Company,  D.H.  Blair  Investment
         Banking Corp. (the "Underwriter") and American Stock Transfer and Trust
         Company,  including forms of Class A and Class B Warrant  Certificates.
         (1)
4.2      Form of Specimen Class A Common Stock Certificate. (1)
4.3      Form of Stock Restriction Agreement among the Company, the Class B
         Stockholders and the Underwriter. (1)
10.1     1993 Stock Option Plan of the Company, as amended. (incorporated by
         reference to Exhibit A to the Company's 1994 Annual Stockholders
         Meeting Proxy Statement filed under cover of Schedule 14A dated
         May 4, 1994.)
10.2     Form of Employment Agreement, effective July 1, 1996, between the
         Company and Paul C. Desjourdy. (previously filed as an exhibit to Form
         10-QSB for the quarter ended June 30, 1996 and incorporated by
         reference.)
10.3     Employment Agreement, dated December 23, 1995, between the Company and
         Dr. Jack H. Kessler. (previously filed as an exhibit to Form 10-KSB for
         the year ended December 31, 1995 and incorporated by reference.)
10.4     Commercial Lease dated June 5, 1997,  between Pine Street Realty Trust
         and the Company.  (previously filed as an exhibit to Form 10-QSB for
         the quarter ended March 31, 1997 and incorporated by reference.)
10.5     Loan and Security Agreement, dated March 26, 1997, between the Company
         and Silicon Valley Bank. (previously filed as an exhibit to Form 10-QSB
         for the quarter ended March 31, 1997 and incorporated by reference.)
10.6     Form of Indemnification Agreement between the Company and each officer
         and director of the Company. (1)
10.7     Marketing and Supply Agreement, dated January 11, 1995 between the
         Company and West Agro. (previously filed as an exhibit to Form 8-K of
         the Registrant dated January 11, 1995 and incorporated by reference). *
10.8     Agreement, dated August 31, 1992 among the Company, Dr. Jack H. Kessler
         and Dr. Robert Rosenbaum. (1)
10.9     Promissory note dated August 1, 1993 issued by the Company to Dr. Jack
         Kessler. (1)
10.10    Form of Stock Option Agreement to be entered into between the Company
         and each option holder. (1)
10.11    Stock Purchase Agreement, dated August 14, 1996, among the Company,
         Anthony J. Cantone and Jack H. Kessler. (previously filed as an exhibit
         to Form 10-QSB for the quarter ended September 30, 1996 and
         incorporated by reference.)
10.12    Consultant Agreement between Dr. Mason and the Company dated June 1,
         1994 (previously filed as an exhibit to Form 10-QSB for the quarter
         ended June 30, 1994 and incorporated by reference).
10.13    1994 Employee Stock Purchase Plan of the Company. (incorporated by
         reference to Exhibit B to the Company's 1994 Annual  Stockholders
         Meeting Proxy Statement filed under cover of Schedule 14A dated
         May 4, 1994.)
10.14    1995 Non-Employee Directors' Stock Option Plan of the Company.
         (previously filed as an exhibit to Form 10-QSB for the quarter ended
         June 30, 1995 and incorporated by reference.)
10.15    Collaboration and License  Agreement,  dated May 14, 1996,  between the
         Company and  Oclassen  Pharmaceuticals,  Inc.  (previously  filed as an
         exhibit  to Form  10-QSB  for the  quarter  ended  June  30,  1996  and
         incorporated by reference.), as amended on August 14, 1997. (previously
         filed as an exhibit to Form 10-QSB for the quarter ended  September 30,
         1997 and incorporated by reference.) *
10.16    Collaboration and Sale/License Agreement, dated August 4, 1997, between
         the Company and Bausch & Lomb  Pharmaceuticals,  Inc. (previously filed
         as an exhibit to Form  10-QSB for the  quarter  ended June 30, 1997 and
         incorporated by reference.) *
10.17    Stock Purchase Agreement, dated August 4, 1997, between the Company and
         Bausch & Lomb Pharmaceuticals,  Inc. (previously filed as an exhibit to
         Form 10-QSB for the quarter  ended June 30,  1997 and  incorporated  by
         reference.)
 11.1    Statement re Computation of Earnings per Share.
23.1     Consent of Richard A. Eisner & Company, LLP
27.1     Financial Data Schedule

(1)  Incorporated  by  reference  to the  corresponding  exhibit  number  of the
Registration  Statement  on Form  SB-2  (Registration  No.  33-68828)  filed  on
November 24, 1993 and declared effective on December 7, 1993.

* Indicates that material has been omitted and  confidential  treatment has been
granted  or  requested  therefore.  All such  omitted  material  has been  filed
separately with the Commission pursuant to Rule 24b-2.