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

                                   FORM 10-K/A

                                 AMENDMENT NO. 1

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[ ]      ANNUAL REPORT PURSUANT  TO  SECTION 13  OR  15 (d)  OF  THE  SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended                                     12/31/95
                                            ------------------------------------
                                       OR
[X]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from                to
                               --------------    ------------------
Commission file number          0-8410
                               ------------------------------------
                            HOSPOSABLE PRODUCTS, INC.
---------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             New York                           11-2236837
---------------------------------------------------------------------------
(State or other jurisdiction of     (I.R.S. Employer Identification No.)
incorporation or organization)

 100 Readington Road     Somerville, New Jersey                           08876
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)

Registrant's telephone number including area code  908-707-1800
                                                   -----------------------------
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class                                       Name of Each Exchange
-------------------                                       on Which Registered
                                                          ----------------------
Common Stock                                              Traded on the NASDAQ
par value $.01 per share                                  National Market

Securities registered pursuant to Section 12 (g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.
YES  X            NO
   ------            ------
Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X]
<PAGE>

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  (i.e.,  by persons  other than  officers and directors of Hosposable
Products, Inc. as reflected in the table incorporated by reference in Item 12 of
this Annual Report on Form 10-K) as of March 22, 1996, was $4,064,434.

As of March 22,  1996,  there were  1,692,476  Common  Shares of the  Registrant
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

1.       The Exhibits identified in Item 14 (b).


                                      -ii-

<PAGE>
                                     PART IV


Item 14.          EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS
                  AND SCHEDULES AND REPORTS ON FORM 8-K

(a)  1.   The following Financial Statements are included in Item 8.

          Report of Independent Public Accountants                          F-1

          Consolidated Balance Sheets as of December 31, 1995 and 1994.     F-2

          Consolidated Statements of Operations for the years ended
          December 31, 1995, 1994 and 1993.                                 F-3

          Consolidated Statements of Stockholders' Equity for
          the years ended December 31, 1995, 1994 and 1993.                 F-4

          Consolidated Statements of Cash Flows for the years ended
          December 31, 1995, 1994 and 1993.                                 F-5

          Notes to Consolidated Financial Statements.                       F-6


     2.   Financial Statement Schedules.

          Schedule II - Valuation and Qualifying Accounts.                  F-13

                  All  other   schedules  are  omitted   because  they  are  not
applicable  or not  required,  or the  applicable  information  is  shown in the
Consolidated Financial Statements or in notes thereto.


(b)      Exhibit Table

1.       Articles  of  Incorporation  and  Amendments  thereof  and  By-Laws are
         incorporated  by  reference.  They  were  filed  as  exhibits  with the
         Company's February 2, 1984 and January 7, 1987 Registration  Statements
         and the Registrant's Proxy Statement filed May 1990 (the "May 1990
         Proxy").

2.       Material  Contracts  and  Amendments:  The Stock  Purchase  and  Option
         Agreement,  the Supply  Agreement  and the  Marketing and Sales Support
         Agreement,  each  between  the  Company  and  Wood-Wyant  and  filed as
         exhibits  with  the May  1990  Proxy,  are  incorporated  by  reference
         thereto; as are, and by the same reference,  the Stock Option Agreement
         between  Leonard  Schramm  and  Wood-Wyant,  the  Employment  Agreement
         between  Leonard  Schramm  and the  Company,  and  the  Non-Competition
         Agreement between Leonard Schramm and Wood-Wyant.

3.       The  Purchase   Contract  for  the  "Branchburg   Property,"  the  Loan
         Agreement,  and the Letter of Credit and  Reimbursement  Agreement (see
         Item 1,  BUSINESS - The 1993  Purchase of  Property,  The Related  Bond
         Issue and Loan  Agreement)  and the  Company's  1991 Stock Option Plan,
         filed with the Company's  1994 Proxy  Statement,  are  incorporated  by
         reference thereto.

                  Shareholders  may  obtain  a copy  of any  exhibit  not  filed
herewith by writing to Hosposable Products, Inc., P.O. Box 8609, Somerville, New
Jersey 08876.


                                      -iii-
<PAGE>

                                   SIGNATURES

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

                                       HOSPOSABLE PRODUCTS, INC.
                                       (Registrant)


Date: February 11, 1997                Signature:/c/ Joseph H. Weinkam, Jr.
      -----------------                          --------------------------
                                                 Joseph H. Weinkam, Jr.
                                                 President and
                                                 Chief Operating Officer




                                      -iv-

<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Board of Directors and Stockholders' of
Hosposable Products, Inc.:

                  We have audited the accompanying  consolidated  balance sheets
of Hosposable  Products,  Inc. (a New York  corporation)  and subsidiaries as of
December  31,  1995  and  1994,  and  the  related  consolidated  statements  of
operations, changes in stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1995. 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  referred to above
present fairly, in all material  respects,  the financial position of Hosposable
Products,  Inc.  and  subsidiaries  as of December  31,  1995 and 1994,  and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31,  1995,  in  conformity  with  generally  accepted
accounting principles.

                  Our audit was made for the  purpose  of  forming an opinion on
the basic  financial  statements.  The schedule in Item 14(a)2 is not a required
part of the basic financial statements but is supplementary information required
by the Securities and Exchange  Commission.  This information has been subjected
to  the  auditing  procedures  applied  in our  audit  of  the  basic  financial
statements,  and, in our opinion,  is fairly stated in all material  respects in
relation to the basic financial statements taken as a whole.


Arthur Andersen, LLP
New York, New York
February 15, 1996



<PAGE>
<TABLE>
<CAPTION>


                    HOSPOSABLE PRODUCTS, INC AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993




                                            1995         1994          1993
                                            ----         ----          ----
<S>                                     <C>           <C>           <C> 
NET SALES                               $40,480,738   $34,515,494   $29,909,296

COST OF SALES                            33,000,141    26,534,271    22,253,329
                                        ------------  ------------  -----------
    Gross Profit                          7,480,597     7,981,223     7,655,967

OTHER EXPENSES (INCOME):
    Selling, General & Administrative     7,416,448     6,619,308     6,115,045
    Interest Income                        (148,571)     (216,638)     (211,769)
    Interest Expense                        321,655       384,638       161,893
    Other Income                           (286,647)     (455,783)     (334,857)
    Write-down of assets(Note 9)            550,000          -             -
                                        ------------  ------------  -----------

  Income(loss)before income tax expense    (372,288)    1,649,698     1,925,655

INCOME TAX (BENEFIT) EXPENSE (Note 7)      (163,082)      613,348       726,177
                                        ------------  ------------  ------------
    Net Income (loss)                      (209,206)    1,036,350     1,199,478

EARNINGS (LOSS)PER SHARE                    $ (.12)       $ .61        $ .70

WEIGHTED AVERAGE NUMBER OF COMMON
  AND COMMON EQUIVALENT SHARES            1,692,476     1,691,906     1,704,158


The  accompanying  notes are an integral  part of these  consolidated  financial
statements

</TABLE>

                                       F-1

<PAGE>
<TABLE>
<CAPTION>
                   HOSPOSABLE PRODUCTS, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993


                                     Common        Additional                                     Total
                                     Stock, $.01   Paid-in         Retained       Treasury     Stockholders'
                                     Par Value     Capital          Earnings        Stock         Equity
                                     -----------   ----------     -----------    -----------   -------------

<S>                                  <C>            <C>           <C>            <C>            <C>        
BALANCE, December 31,1993            $  17,017      $6,885,769    $5,485,526     $(31,530)     $12,356,782

   Net Income for the Year                -             -          1,036,350         -           1,036,350

   Exercise of 2,000 Stock Options          20           8,480          -            -               8,500
                                     ---------      ----------     ----------    ---------     -------------

BALANCE, December 31, 1994              17,037       6,894,249     6,521,876      (31,530)      13,401,632

   Net loss for the Year                  -              -          (209,206)        -            (209,206)
                                     ---------      -----------    ----------    ---------     -------------

BALANCE, December 31, 1995           $  17,037      $6,894,249    $6,312,670     $(31,530)     $13,192,426
                                     =========      ==========    ===========    =========     =============


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
</TABLE>


                                       F-2

<PAGE>
<TABLE>
<CAPTION>
                   HOSPOSABLE PRODUCTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993


CASH FLOWS FROM OPERATING ACTIVITIES:                                         1995               1994                 1993
                                                                          -----------         ----------            ----------
<S>                                                                       <C>                 <C>                   <C>      
  Net Income (Loss)                                                       $ (209,206)         $1,036,350            1,199,478
  Adjustments to reconcile net income (loss) to net cash provided
   by operating activities-
       Depreciation and Amortization                                         982,352           1,064,718              795,076
       Provision for Doubtful Accounts                                        14,289              37,000               25,497
       Loss on Sale of Fixed Asset                                            33,426                 -                    -
       Deferred Income Tax Benefit                                          (156,157)            (38,365)             (51,209)
       Write-down of Assets                                                  550,000                 -                    -
       Changes in Assets and Liabilities-
          (Increase)Decrease in-
              Accounts Receivable, trade                                  (1,252,859)           (485,657)            (596,109)
              Advances to Officers and Directors                                -                    -                 17,373
              Other Accounts Receivable                                        9,061              13,383              137,089
              Prepaid Income Taxes                                          (202,738)            (83,686)               4,939
              Inventories                                                    468,275            (485,848)              84,365
              Prepaid Expenses and Other                                     147,784             (74,419)            (162,480)
          Increase (decrease) in-
              Accounts Payable and Accrued Expenses                        2,462,532             240,905              193,703
              Income Taxes Payable                                              -               (178,931)             178,931
                                                                          ----------           ---------            ----------
                  Net Cash Provided by Operating Activities                2,846,759           1,045,450            1,826,653
                                                                          ----------           ---------            ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital Expenditures                                                     (1,505,141)         (2,433,372)          (4,155,724)
 Cash Proceeds from Sale of Fixed Asset                                      130,000                 -                    -
 Sale (purchase) of Marketable Securities                                  1,049,936           2,265,376             (549,378)
                                                                          ----------          ----------            ----------
                 Net Cash Used in Investing Activities                      (325,205)           (167,996)          (4,705,102)
                                                                          ----------          ----------            ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Utilization of Acquisition Escrow Fund                                      712,737             843,150
 Principal Payments Under Borrowing Agreements                              (340,000)         (2,520,114)            (666,608)
 Borrowing Under Long-term Debt Agreement, Net Acquisition Escrow Fund          -                    -               3,401,510
 Proceeds from Issuance of Common Stock                                         -                  8,500               36,250
                                                                          ----------          ----------            ----------
                 Net Cash Provided by (Used in)Financing Activities          372,737          (1,668,464)           2,771,152
                                                                          ----------          ----------            ----------
                 Net Increase (Decrease)in Cash and Cash Equivalents       2,894,291            (791,010)            (107,297)

CASH AND CASH EQUIVALENTS, Beginning of Year                                  25,178             816,188              923,485
                                                                          ----------          ----------            ----------

CASH AND CASH EQUIVALENTS, End of Year                                    $2,919,469          $   25,178           $  816,188
                                                                          ----------          ----------            ----------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 Cash Paid During the Year for-
       Interest                                                           $  296,530           $ 368,920           $  150,584
       Income Taxes                                                          287,037             863,046              618,128

     The accompanying notes are an integral part of these consolidated financial
statements
</TABLE>


                                       F-3

<PAGE>

                   HOSPOSABLE PRODUCTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         DECEMBER 31, 1995, 1994 & 1993


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

                  Hosposable Products, Inc., a New York corporation incorporated
in 1971, and its wholly owned subsidiaries,  Bridgewater  Manufacturing Corp., a
New Jersey corporation ("Bridgewater"),  and IFC Disposables,  Inc., a Tennessee
corporation ("IFC"),  manufacture disposable medical products,  wiping products,
and nonwoven roll goods. The disposable medical products are produced by various
converting  equipment,  some of  which  utilize  in-house  "airlaid"  processing
technology  and equipment.  The  disposable  medical  products  include  bedpads
incorporating unique designs for incontinent  patients.  Wiping products include
disposable  airlaid nonwoven  patient  washcloths and general wiping products in
addition  to the  use of  other  nonwoven  materials  which  are  purchased  and
converted in-house.

Principles of Consolidation

                  The consolidated  financial statements include the accounts of
Hosposable  Products,  Inc.  and  its  wholly  owned  subsidiaries,  Bridgewater
Manufacturing  Corp. and IFC  (collectively,  the  "Company").  All  significant
intercompany balances and transactions have been eliminated in consolidation.

Utilization 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.

Cash Equivalents

                  The  Company  considers  all highly  liquid  debt  instruments
purchased  with  an  original  maturity  of  three  months  or  less  to be cash
equivalents.

Inventories

                  Inventories  are  stated  at  the  lower  of  cost  (first-in,
first-out) or market.

Property, Plant and Equipment

                  Property,   plant  and   equipment   are   recorded  at  cost.
Depreciation  of property,  plant and  equipment is provided  over the estimated
useful life of the respective assets on the  straight-line  basis ranging from 5
to 30 years.  Leasehold improvements are amortized on a straight-line basis over
the term of the  related  leases or the  estimated  useful  life,  whichever  is
shorter.

Income Taxes

                  The Company files a  consolidated  federal  income tax return.
Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences  attributable to differences  between financial  statement carrying
amounts of  existing  assets and  liabilities  and their  respective  tax bases.
Deferred  tax  assets and  liabilities  are  measured  using  enacted  tax rates
expected  to apply to  taxable  income  in the  year in  which  those  temporary
differences are expected to be recovered or settled. Deferred income taxes


                                       F-4

<PAGE>

result  primarily  from  differences  between  financial  and tax  reporting  of
depreciation.

Per Share Data

                  Per  share  data is based on the  weighted  average  number of
common shares and common  equivalent  shares which would arise from the exercise
of dilutive stock options (Note 8).


2.       MARKETABLE SECURITIES

                  Marketable securities at December 31, consist of:

                                                     1995               1994
                                                 -----------       ------------
 
                  U.S. Treasury Bills            $    -            $    358,115
                  U.S. Government Obligations        623,048            327,755
                  Municipal Bonds                    654,035          1,633,314
                  Other Bonds                         85,150             92,985
                                                   ---------       ------------
                                                 $ 1,362,233       $  2,412,169

As of December 31, 1995 and 1994,  substantially all short-term investments have
been classified as held to maturity.  These  investments are stated at amortized
cost.


3.       INVENTORIES

                  Inventories at December 31, consist of:

                                                    1995               1994
                                                 -----------       ------------
 
                  Raw Materials                  $  2,308,121      $  2,812,716
                  Finished Goods                    1,098,959         1,062,639
                                                 ------------      ------------
                                                 $  3,407,080      $  3,875,355


4.       LONG-TERM DEBT

                  Long-term debt at December 31, consisted of the following:

                                                   1995               1994
                                                 -----------       ------------
  
                  Authority Bonds - II(a)        $  4,655,000      $  4,995,000
                                                 ------------      ------------
                           Total long-term debt  $  4,655,000      $  4,995,000

                  Less:
                  Unamortized discount on bonds        15,195            17,726
                  Current maturities                  350,000           340,000
                                                  -----------      ------------
                                                 $  4,289,805      $  4,637,274

                  Maturities  of long-term  debt over the next five years are as
follows:

                              1996                      $    350,000
                              1997                           365,000
                              1998                           380,000
                              1999                           395,000
                              2000                           415,000


(a)      In December  1993,  the Company  entered into a loan agreement with the
         New Jersey Economic Development Authority (the "Authority") and a bank,
         whereby the Authority issued Economic Development bonds with an


                                       F-5

<PAGE>

         aggregate principal amount of $5,325,000 to be loaned to the Company to
         finance  the  acquisition  of a building  and the land upon which it is
         situated,  as well as to  purchase  machinery  and  equipment  to add a
         production   line.  As  of  December  31,  1995,   total   proceeds  of
         approximately  $4,978,000 had been  distributed to the Company in order
         to complete its purchase of the  above-mentioned  land and building and
         machinery and equipment.  The remaining  balance is held in escrow,  as
         identified in the accompanying consolidated balance sheets, and will be
         distributed to the Company as machinery and equipment is purchased. The
         bonds are  secured by a letter of credit  provided  by a bank which has
         obtained:  (i) a first  mortgage and security  interest on the building
         and land that was acquired;  (ii) an assignment of all of the Company's
         right,  title and  interest  in and to all leases  with  respect to the
         building and land;  and (iii) a security  interest in any machinery and
         equipment purchased with a portion of the bond proceeds.

         The agreement contains several  restrictive  financial  covenants which
         include:  (i)minimum  net  worth  requirement;  (ii)  maximum  leverage
         ration; (iii) minimum debt service coverage ratio; (iv) minimum current
         ratio; and (v) maximum amount of annual capital expenditures.

                  The remaining  bond maturity dates range from December 1, 1996
to December  1, 2013,  and bear  interest at fixed rates from 4.1% to 5.7%.  The
bonds mature at various amounts  throughout this period ranging from $140,000 to
$940,000.  The bonds maturing December 1, 2007, 2009 and 2013 are to be redeemed
commencing  December 1, 2005 and on each December 1 thereafter  through  sinking
fund payments ranging from $165,000 to $255,000.

Line of Credit

                  The Company has available a secured line of credit from a bank
which expires on July 31, 1996, in the amount of $2,000,000 which bears interest
at the prime rate (8.5% at December  31,  1995).  The  Company had no  borrowing
outstanding  under the line at December 31, 1995 and 1994.  Under the agreement,
the Company is required  to provide the bank a first  priority  lien on accounts
receivable and inventory.

5.       PROPERTY, PLANT AND EQUIPMENT

                  Property, plant and equipment at December 31, consisted of the
following:

                                                    1995               1994
                                                 -----------       ------------
 
                  Land                           $   374,133        $   374,133
                  Building and improvements        3,639,338          3,589,752
                  Capitalized equipment leases        72,311            126,997
                  Machinery and equipment          9,208,427          9,344,140
                  Machinery and equipment -
                           in progress             2,196,677          1,124,608
                  Trucks and automobiles              68,198             68,198
                  Furniture and fixtures             659,913            604,176
                  Leasehold improvements             113,759            112,762
                                                  ----------        -----------
                                                 $16,332,756        $15,344,766

                  Less-Accumulated depreciation
                           and amortization        6,887,558          5,933,940
                                                 -----------        -----------
                                                 $ 9,445,198        $ 9,410,826


6.       RELATED-PARTY TRANSACTIONS

                  On  July  10,  1990,  the  Company  entered  into  a  six-year
marketing and sales support agreement with a significant shareholder,  G.H. Wood
+ Wyant Inc.  ("Wood + Wyant"),  pursuant to which the Company  would be paid by
Wood +


                                       F-6

<PAGE>

Wyant, over a five-year period, for providing services based upon and in respect
of its air-laid  fabric  production  and  marketing  expertise.  At the closing,
$100,000 was paid and  thereafter  $200,000 was payable on June 30, and December
31, of each year through  December 1994.  Income  recognized in connection  with
this agreement  amounted to $316,667 in each of the three years ended 1995, 1994
and 1993.  Deferred income of $166,662 and $283,450 is included in other accrued
liabilities as of December 31, 1995 and 1994, respectively.

         Sales made to Wood + Wyant amounted to approximately $222,000, $373,000
and $313,000 in 1995,  1994 and 1993  respectively.  Purchases  made from Wood +
Wyant amounted to approximately $1,040,000,  $261,799 and $124,000 in 1995, 1994
and 1993, respectively.

7.       INCOME TAXES

                  Components of income tax expense (benefit) are as follows:

                                            Current     Deferred      Total
                  1995:                    ---------- -----------  -----------
                           Federal         $ (19,407) $ (119,339)  $ (138,746)
                           State              12,482     (36,818)     (24,336)
                                            --------  ----------   -----------
                                           $  (6,925) $ (156,157) $  (163,082)

                  1994:
                           Federal         $ 581,251  $  (73,302) $   507,949
                           State             120,249     (14,850)     105,399
                                           ----------------------------------
                                           $ 701,500  $  (88,152) $   613,348

                  1993:
                           Federal         $ 618,438  $  (27,211) $   591,227
                           State             158,948     (23,998)     134,950
                                           ----------------------------------
                                           $ 777,386  $  (51,209) $   726,177


                  The actual tax expense differed from the "expected" amounts by
applying the U.S. federal income tax rate of 34% as follows:

                                                   Years Ended December 31
                                                 1995         1994       1993

Federal income tax expense at statutory rate   $(126,578)   $560,897  $ 654,723
State income taxes net of federal income
         tax benefit                             (16,062)     69,563     89,067
Other                                            (20,442)    (17,112)   (17,613)
                                                ---------   --------------------
         Actual tax (benefit)expense           $(163,082)   $613,348   $ 726,177


8.       COMMON STOCK

                  During 1991,  1987, and 1986, the  stockholders of the Company
approved  the  adoption of stock  option  plans that each permit the granting of
options for up to 250,000  shares of the Company's  common stock.  Options under
these  three  plans may be  either  incentive  or  nonqualified  stock  options.
Incentive  stock options may be granted to employees  only,  while  nonqualified
stock options may be granted to directors,  employees,  and  consultants  of the
Company. The exercise price of the nonqualified and incentive stock options must
be equal to 85% and 100% respectively,  of the fair market value of common stock
on the date of grant.  Any plan  participant  who is granted an incentive  stock
option  and  possesses  more  than 10% of the  voting  rights  of the  Company's
outstanding  common  stock is granted an option price of 110% of the fair market
value on the date of grant and the option  must be  exercised  within five years
from the date of grant. Other participants also must exercise the options within
five years of the date of grant.



                                       F-7

<PAGE>

                                                   Number       Option Price
                                                   of Shares    Per Share

Outstanding and exercisable, December 31, 1993      93,700       $ 2.50 - $ 6.00
         Exercised                                  (2,000)                 4.25
         Expired/Canceled                           (3,000)        2.50 -   6.00
                                                   -------       ---------------
Outstanding and exercisable, December 31, 1994      88,700         4.25 -   6.00
         Expired/Canceled                          (47,700)        4.25 -   6.00
         Granted                                    65,000         5.00 -   7.25
                                                   -------       ---------------
Outstanding and exercisable, December 31, 1995     106,000       $ 4.25 - $ 7.25

                  On July 10, 1990, the Company's stockholders approved a series
of capitalization  agreements between the Company and Wood + Wyant in which Wood
+ Wyant  acquired  229,288  newly  issued  shares from the Company for $5.75 per
share, 448,702 shares from the President of the Company and received a five-year
option to acquire an additional  456,157 common shares from the Company at $7.00
per share or 1.25 times the market  price,  whichever is greater.  These options
expired in 1995. Wood + Wyant's current ownership is 55%.

9.       WRITE-DOWN OF ASSETS

                  During the  fourth  quarter of 1995,  the  Company  recorded a
charge of $550,000  ($340,000  or $.20 per share after tax) for  selected  asset
write-downs  including  machinery and  equipment,  leasehold  improvements,  and
leased property.  The charge resulted from  management's  decision to dispose of
certain machinery and accrue for under-utilized space at its IFC facility.

10.      COMMITMENTS

                  The Company occupies manufacturing and office facilities under
an operating lease which expires on December 31, 1997. At December 31, 1995, the
minimum rental commitment under this lease is as follows:

                           Year:
                                    1996                      $ 448,480
                                    1997                        448,480
                                                              ---------
                                                              $ 896,960

                  Aggregate rental expense amounted to $410,148 (net of sublease
income of  $152,000),  $525,301 and  $967,493  for the years ended  December 31,
1995, 1994 and 1993, respectively.

                  The Company  maintains a consulting  agreement with its former
president  which expires on July 9, 1998.  The aggregate  commitment  for future
fees on this agreement is approximately $400,000.

11.      SIGNIFICANT CUSTOMERS/CONCENTRATIONS OF CREDIT

                  The Company operates  primarily in the disposable  health care
products industry.

                  For the years ended  December  31,  1995,  1994 and 1993,  the
largest customer  accounted for  approximately  11.8%, 11% and 13% of net sales,
respectively.

12.      RECENTLY ISSUED ACCOUNTING STANDARDS

                  In  March  1995,  the  Financial  Accounting  Standards  Board
("FASB") issued  Statement of Financial  Accounting  Standards  ("SFAS") No.121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." This statement  establishes  financial accounting and reporting
standards  for the  impairment  of  long-lived  assets and certain  identifiable
intangibles  to be disposed  of.  This  statement  is  effective  for  financial
statements for fiscal years beginning after December 15, 1995,


                                       F-8

<PAGE>

although earlier application is encouraged.  The Company has not concluded its
evaluation of the effect, if any, the adoption of SFAS No. 121 will have on
its financial position or results of operations.

                  In November  1995,  the FASB issued SFAS No. 123,  "Accounting
for Stock-Based  Compensation."  This statement  establishes a fair  value-based
method of accounting for an employee  stock option or similar equity  instrument
but allows  companies to continue to measure  compensation  cost for those plans
using the intrinsic  value-based method of accounting  prescribed by APB Opinion
No. 25, "Accounting for Stock Issued to Employees." Companies electing to remain
with the  accounting  under APB  Opinion  No. 25 must,  however,  make pro forma
disclosures  of net income  and  earnings  per share as if the fair  value-based
method of accounting defined in SFAS No. 123 has been applied.  These disclosure
requirements are effective for years beginning after December 15, 1995.


                                       F-9

<PAGE>
                                                                     SCHEDULE II


<TABLE>
<CAPTION>


                   HOSPOSABLE PRODUCTS, INC. AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS

              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993




                                      Balance at    Charged to                  Balance
                                      Beginning     Costs and                   at End
            Description                of Year      Expenses     Deductions(6)  of Year
            -----------               ----------   ----------    ------------   ---------
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
         Year ended December 31 -
<S>                        <C>        <C>           <C>           <C>            <C>     
                           1995       $118,759      $125,399      $111,110       $133,048
                           1994         95,643        37,000        13,884        118,759
                           1993        170,795        25,497       100,649         95,643



(1)  Represents amounts written off, net of recoveries

</TABLE>


                                      F-10

<PAGE>