<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-K A-2
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
    OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from _________ to __________

                         Commission file number 0-17458

                       WRP CORPORATION, FORMERLY KNOWN AS

                                  MBF USA, INC.
             (Exact name of registrant as specified in its charter)

                 MARYLAND                              73-1326131
                 --------                              ----------
       (State of incorporation)           (I.R.S. employer identification no.)

     500 PARK BOULEVARD, SUITE 1260                      60143
                                                         -----
               ITASCA, IL                              (Zip Code)
               ----------
(Address of principal executive offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (630) 285-9191
                                                    --------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                                               NAME OF EACH EXCHANGE
TITLE OF EACH CLASS                             ON WHICH REGISTERED
-------------------                             -------------------

Common Stock, par value $0.01 per share                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      .
                                              -----    -----



                                       

<PAGE>   2
 

     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]

     Aggregate market value of voting stock held by non-affiliates of the
Registrant, based upon the closing sale price of the stock as reported on the
Nasdaq SmallCap Market on March 18, 1998: $5,345,144.

     At March 18, 1998, 3,061,667 shares of the Registrant's Common Stock and
1,252,538 shares of Series A Common Stock were outstanding.




                                       ii

<PAGE>   3
 


                       DOCUMENTS INCORPORATED BY REFERENCE

Not applicable.






                                      iii

<PAGE>   4
 

                                  MBf USA, INC.
                                    FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

                                TABLE OF CONTENTS
                                -----------------
<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         ----
PART I
<S>          <C>                                                          <C>
    ITEM I.  BUSINESS.................................................     1
    ITEM 2.  PROPERTIES...............................................     7
    ITEM 3.  LEGAL PROCEEDINGS........................................     8
    ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......     9

PART II

    ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED 
             STOCKHOLDER MATTERS......................................    10
    ITEM 6.  SELECTED FINANCIAL DATA..................................    11
    ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  
             CONDITION AND RESULTS OF OPERATIONS......................    12
    ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..............    21
    ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 
             ACCOUNTING AND FINANCIAL DISCLOSURE......................    21

PART III

    ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......    22
    ITEM 11. EXECUTIVE COMPENSATION...................................    26
    ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 
             AND MANAGEMENT...........................................    30
    ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...........    31

PART IV

    ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K...    33

</TABLE>



<PAGE>   5



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     A list of financial statements and financial statement schedules for the
Registrant is contained in "Index to Financial Statements and Financial
Statement Schedules of MBf USA, Inc." on page F-1.


None.





                                       24



<PAGE>   6

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8K

(a)(1) and (2)   Financial Statements. A list of financial statements for the 
                 Registrant is contained in "Index to Financial Statements of
                 MBf USA, Inc." on page F-1.

(a)(3)           Exhibits. The following exhibits are included with this report:

EXHIBIT NO.                      NAME OF EXHIBIT
-----------                      ---------------

3.1     Certificate of Incorporation of the Company, incorporated herein by 
        reference to Exhibit No. 3.1 to the Company's Form S-1 Registration
        Statement (Registration No. 33-36206).

3.2     Certificate of Amendment to Certificate of Incorporation of the Company,
        incorporated herein by reference to Exhibit No. 3.2 to the Company's
        Form S-1 Registration Statement (Registration No. 33-36206).

3.3     Certificate of Amendment to Certificate of Incorporation of the Company,
        incorporated herein by reference to Exhibit 3.3 to the Company's
        Form 10-K Annual Report for the fiscal year ended December 31, 1991
        (File No. 0-17458).

3.4     Bylaws of the Company, incorporated herein by reference to Exhibit No. 
        3.3 to the Company's Form S-18 Registration Statement (Registration No.
        33-23164-FW).

3.5     Amendment to Bylaws of the Company, incorporation herein by reference to
        Exhibit 3.5 to the Company's Form 10-K Annual Report for the fiscal year
        ended December 31, 1991 (File No. 0-17458).

4.1     Common Stock Certificate, incorporated herein by reference to Exhibit 
        No. 4.1 to the Company's Form S-18 Registration Statement (Registration
        No. 33-23164-FW).

4.2     Warrant Agreement with The Liberty National Bank & Trust Company, 
        incorporated by reference to Exhibit No. 4.2 to the Company's Form S-1
        Registration Statement (Registration No. 33-36206).

4.3     Warrant, incorporated by reference to Exhibit No. 4.3 to the Company's 
        Form S-1 Registration Statement (Registration No. 33-36206).

10.1    Articles of Merger of Labspecs, Inc. and Laboratory Specialists, Inc., 
        incorporated herein by reference to Exhibit No. 2 to the Company's Form
        10-K Annual Report for the fiscal year ended December 31, 1988 (File No.
        0-17458).



                                       38



<PAGE>   7



10.2    Plan of Reorganization and Agreement of Merger between the Company and
        Laboratory Specialists, Inc., incorporated herein by reference to
        Exhibit No. 10.1 to the Company's Form 8 Amendment to Form 10-K, filed
        with the Securities and Exchange Commission on June 16, 1989 (File No.
        0-17458).

10.3    Plan of Reorganization and Agreement of Merger by and among the Company,
        Laboratory Specialists, Inc. of California, and Abused Drugs Laboratory,
        Inc., incorporated herein by reference to Exhibit No. 10.1 to the
        Company's Form 8-K Current Report filed with the Securities and Exchange
        Commission on September 26, 1989 File No. 0-17458).

10.4    Financial Public Relations Contract with The Wall Street Group, 
        incorporated herein by reference to Exhibit No. 10 to the Company's Form
        10-K Annual Report for the fiscal year ended December 31, 1988 (File No.
        0-17458).

10.5    Promissory Note from the Company to Arthur R. Peterson, Jr., 
        incorporated herein by reference to Exhibit No. 10.2 to the Company's
        Form 8 Amendment to Form 10-K, filed with the Commission on June 16,
        1989 (File No. 0-17458).

10.6    Asset Purchase Agreement between the Company and DataChem, Inc., dated
        December 22, 1989, incorporated herein by reference to Exhibit No. 10.5
        to the Company's Form 10-K Annual Report for the fiscal year ended
        December 31, 1989 (File No. 0-17458).

10.7    Lease of office space, Oklahoma City, Oklahoma, incorporated herein by
        reference to Exhibit No. 10.6 to the Company's Form 10-K Annual Report
        for the fiscal year ended December 31, 1989 (File No. 0-17458).

10.8    Asset Purchase Agreement dated September 30, 1991, between LSI of
        California and Medtox Laboratories, Inc., incorporated herein by
        reference to Exhibit No. 10.1 to the Company's Form 8-K Current Report
        dated September 30, 1991 (File No. 0-17458).

10.9    Distributorship Agreement dated February 27, 1992, by and among AHPC,
        ARPI and Multi-Com., incorporated herein by reference to Exhibit 10.9 to
        the Company's Form 10-K Annual Report for the fiscal year ended December
        31, 1991 (File No. 0-17458).

10.10   Employment Agreement with John Simonelli dated February 27, 1992,
        incorporated herein by reference to Exhibit 10.10 to the Company's Form
        10-K Annual Report for the fiscal year ended December 31, 1991 (File No.
        0-17458).

10.11   Employment Agreement with Larry E. Howell dated February 27, 1992,
        incorporated herein by reference to Exhibit No. 10.11 to the Company's
        Form 10-K Annual Report for the fiscal year ended December 31, 1991
        (File No. 0-17458).


                                       39



<PAGE>   8


10.12   Employment Agreement with Arthur R. Peterson, Jr. dated February 27, 
        1992, incorporated herein by reference to Exhibit No. 10.12 to the
        Company's Form 10-K Annual Report for the fiscal year ended December 31,
        1991 (File No. 0-17458).

10.13   Omnibus Equity Compensation Plan approved by the Company's shareholders
        on February 27, 1992, incorporated herein by reference to Exhibit No.
        10.13 to the Company's Form 10-K Annual Report for the fiscal year ended
        December 31, 1991 (File No. 0-17458).

10.14   Share Exchange Agreement by and among the Company, MBf America, Inc.
        and MBf International Limited, incorporated herein by reference to
        Exhibit No. 7.2 to the Company's Form 8-K Current Report filed with the
        Commission March 5, 1992 (File No. 0-17458).

10.15   Employment Agreement with William A. Forster dated October 15, 1992,
        incorporated herein by reference to Exhibit No. 10.15 to the Company's
        Form 10-K Annual Report for the fiscal year ended December 31, 1992
        (File No. 0-17458).

10.16   Amendment to Employment Agreement with John Simonelli dated September
        19, 1992, incorporated herein by reference to Exhibit No. 10.16 to the
        Company's Form 10-K Annual Report for the fiscal year ended December 31,
        1992 (File No. 0-17458).

10.17   Amended Employment Agreement with Larry Howell dated September 19, 1992,
        incorporated herein by reference to Exhibit No. 10.17 to the Company's
        Form 10-K Annual Report for the fiscal year ended December 31, 1992
        (File No. 0-17458).

10.18   Option Agreement, dated November 24, 1992, among Frederick P. Heisler 
        and Regina Heisler, Donald E. Bennett and Peggy Bennett, Disposable
        Medical Products, Inc., D.P.I. de Mexico, S.A. de C.V. and American Drug
        Screens, Inc., incorporated herein by reference to Exhibit No. 10.18 to
        the Company's Form 10-K Annual Report for the fiscal year ended December
        31, 1992 (File No. 0-17458).

10.19   Supply and Requirements Agreement, dated November 24, 1992, among 
        Disposable Medical Products, Inc., D.P.I. de Mexico, S.A. de C.V. and
        American Health Products Corporation, incorporated herein by reference
        to Exhibit No. 10.19 to the Company's Form 10-K Annual Report for the
        fiscal year ended December 31, 1992 (File No. 0-17458).

10.20   Asset Purchase Agreement, dated November 25, 1992, among the Company, 
        Premier Latex, Inc. and Premier Laboratories, Inc., incorporated herein
        by reference to Exhibit No. 10.20 to the Company's Form 10-K Annual
        Report for the fiscal year ended December 31, 1992 (File No. 0-17458).

10.21   Revolving Credit Loan Agreement between Bank Bumiputra Malaysia Berhad 
        (New York Branch) and American Health Products Corporation dated as of
        September 23, 1992,



                                       40



<PAGE>   9



        incorporated herein by reference to Exhibit No. 10.21 to the Company's
        Form 10-K Annual Report for the fiscal year ended December 31, 1992
        (File No. 0-17458).

10.22   Lease, dated December 1, 1992, of office space, Boca Raton, Florida,
        incorporated herein by reference to Exhibit No. 10.22 to the Company's
        Form 10-K Annual Report for the fiscal year ended December 31, 1992
        (File No. 0-17458).

10.23   Sublease dated as of February 18, 1994 between the Company and National
        Telecom, U.S.A., Inc. incorporated herein by reference to Exhibit No.
        10.23 to the Company's Form 10-K Annual Report for the fiscal year ended
        December 31, 1993 (File No. 0-17458).

10.24   Lease Agreement dated April 1, 1993 between Water Saver Faucet Co. and 
        American Health Products Corporation incorporated herein by reference to
        Exhibit No. 10.24 to the Company's Form 10-K Annual Report for the
        fiscal year ended December 31, 1994 (File No. 0-17458).

10.25   Employment Termination Agreement dated November 1993 between the Company
        and John Simonelli incorporated herein by reference to Exhibit No. 10.25
        to the Company's Form 10-K Annual Report for the fiscal year ended
        December 31, 1994 (File No. 0-17458).

10.26   Employment Termination Agreement dated November 1993 between the Company
        and Larry E. Howell incorporated herein by reference to Exhibit No.
        10.26 to the Company's Form 10-K Annual Report for the fiscal year ended
        December 31, 1994 (File No. 0-17458).

10.27   Termination and Settlement Agreement dated December 29, 1993 by and 
        among the Company, Samuel E. Dlugatch, Premier Laboratories, Inc., and
        Premier Latex, Inc. incorporated herein by reference to Exhibit No.
        10.27 to the Company's Form 10-K Annual Report for the fiscal year ended
        December 31, 1994 (File No. 0-17458).

10.28   Amended and Restated Revolving Credit Loan Agreement dated as of January
        10, 1994 between Bank Bumiputra Malaysia Berhad (New York Branch) and
        American Health Products Corporation incorporated herein by reference to
        Exhibit No. 10.28 to the Company's Form 10-K Annual Report for the
        fiscal year ended December 31, 1994 (File No. 0-17458).

10.29   Stock Exchange Agreement dated as of February 23, 1994 by and among the
        Company, Laboratory Specialists, Inc. and Arthur R. Peterson, Jr., and
        related agreements and documents incorporated herein by reference to
        Exhibit No. 10.29 to the Company's Form 10-K Annual Report for the
        fiscal year ended December 31, 1994 (File No. 0-17458).

10.30   Letter of cancellation dated January 7, 1994 for Disposable Medical
        Products Option Agreement incorporated herein by reference to Exhibit
        No. 10.30 to the Company's Form 10-K Annual Report for the fiscal year
        ended December 31, 1994 (File No. 0-17458).




                                       41



<PAGE>   10


10.31   Agreement dated as of December 30, 1993 by and between MACC Trading 
        Limited and MBf USA, Inc. incorporated herein by reference to Exhibit
        No. 10.31 to the Company's Form 10-K Annual Report for the fiscal year
        ended December 31, 1994 (File No. 0-17458).

10.32   Employment Agreement dated April 7, 1994, between William C. Willis, Jr.
        and MBf USA, Inc. incorporated herein by reference to Exhibit No. 1 to
        the Company's Form 10-Q Quarterly Report for the quarter ended March 31,
        1994 (File No. 0-17458).

10.33   Consulting Agreement dated March 24, 1994, between Dr. C. Everett Koop
        and MBf USA, Inc. incorporated herein by reference to Exhibit No. 1 to
        the Company's Form 10-Q Quarterly Report for the quarter ended June 30,
        1994 (File No. 0-17458).

10.34   Warrant Purchase Agreement dated March 24, 1994, between Sy Weintraub 
        and MBf USA, Inc. incorporated herein by reference to Exhibit No. 2 to
        the Company's Form 10-Q Quarterly Report for the quarter ended June 30,
        1994 (File No. 0-17458).

10.35   Stock Exchange Agreement dated as of June 30, 1994 by and among the
        Company, Laboratory Specialists of America, Inc. and Arthur R. Peterson,
        Jr., incorporated herein by reference to Exhibit No. 1 to the Company's
        Form 10-Q Quarterly Report for the quarter ended September 30, 1994
        (File No. 0-17458).

10.36   Second Amended and Restated Revolving Credit Loan Agreement dated as 
        of March 29, 1995 between Bank Bumiputra Malaysia Berhad (New York
        Branch) and American Health Products Corporation incorporated herein by
        reference to Exhibit 10.36 included in the Company's Form 10K Annual
        Report for the fiscal year ended December 21, 1994 (File No. 0-17458).

10.37   Debenture and Warrant Purchase Agreement dated October 12, 1994 between
        the Company and Wilmington Trust Company and George Jeff Mennen as
        Co-Trustees U/A dated 11/25/70 with George S. Mennen for Christina M.
        Andrea incorporated herein by reference to Exhibit 10.37 included in 
        the Company's Form 10K Annual Report for the fiscal year ended 
        December 31, 1994 (File No. 0-17458).

10.38   Debenture and Warrant Purchase Agreement dated October 12, 1994 between
        the Company and Wilmington Trust Company and George Jeff Mennen as
        Co-Trustees U/A dated 11/25/70 with George S. Mennen for John Henry
        Mennen Andrea incorporated herein by reference to Exhibit 10.38 included
        in the Company's Form 10K Annual Report for the fiscal year ended
        December 31, 1994 (File No. 0-17458).

10.39   Lease Agreement dated October 4, 1994 between California Public 
        Employee's Retirement System and the Company Andrea incorporated herein
        by reference to Exhibit 10.39 included in the Company's Form 10K Annual
        Report for the fiscal year ended December 31, 1994 (File No. 0-17458).


                                       42


<PAGE>   11



10.40   Lease Agreement dated November 19, 1994 between 400 Kelby Associates and
        the Company Andrea incorporated herein by reference to Exhibit 10.40
        included in the Company's Form 10K Annual Report for the fiscal year
        ended December 31, 1994 (File No.0-17458).

10.41   Stock Acquisition Agreement dated October 31, 1995 between the Company
        and MBf Holdings for the Company to exchange 255,072 shares of the
        Company's Common Stock for a 70% ownership of PT Buana, an Indonesian
        business entity, incorporated herein by reference to Exhibit 10.41
        included in the Company's Form 10-K Annual Report for the fiscal year
        ended December 31, 1995 (File No. 0-17458).

10.42   Articles of Amendment to Certificate of Incorporation incorporated 
        herein by reference to Exhibit 10.42 to the Company's Form 10-K Annual
        Report for the fiscal year ended December 31, 1996 (File No. 0-17458).

10.43   Amended and Restated Omnibus Equity Compensation Plan incorporated by
        reference to Exhibit 10.43 to the Company's Form 10-K Annual Report for
        the fiscal year ended December 31, 1996 (File No. 0-17458).

10.44   Employment Agreement dated April 1, 1994 between Edward J. Marteka and
        American Health Products Corporation.

10.45   Amendment to Employment Agreement between MBf USA, Inc. and Edward J.
        Marteka dated as of June 1, 1995.

10.46   Amendment to Employment Agreement between MBf USA, Inc. and Edward J.
        Marteka dated as of July 22, 1996.

21      Subsidiaries of the Company (1)

23.1    Consent of Arthur Andersen LLP (2)

23.2    Consent of KPMG Hanadi Sudjendra & Rekan (1)

(b)     During the last quarter of 1997, the Company filed the following 
        reports on Form 8-K

(i)     Form 8-K dated October 24, 1997 wherein the Company reported information
        under Item 9.

(c)     Financial Statement Schedules

27.1    Schedule II -- valuation and qualifying accounts schedules not listed
        above have been omitted because they are inapplicable or the information
        required to be set forth there in provided in the consolidated financial
        statements of the Company or notes thereto.

(1)     Previously filed 
(2)     Filed herewith


                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to its Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized.


                                       43


<PAGE>   12




                                  REGISTRANT:
                                 MBf USA, INC.

Date: November 12, 1998           By: /s/ Edward J. Marteka
                                      ---------------------
                                      Edward J. Marteka

Date: November 12, 1998           By: /s/ Lew Kwong Ann
                                      ---------------------
                                      Lew Kwong Ann


                                       44
                                                      
<PAGE>   13
                         MBf USA, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 1997 AND 1996
                         TOGETHER WITH AUDITORS' REPORT


<PAGE>   14




                         MBf USA, INC. AND SUBSIDIARIES


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1997 AND 1996



<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         ----
<S>                                                                      <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                                  F-2

INDEPENDENT AUDITORS' REPORT                                              F-3

CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1997 AND 1996                   F-4

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS
 ENDED DECEMBER 31, 1997, 1996 AND 1995                                   F-6

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS 
 ENDED DECEMBER 31, 1997, 1996 AND 1995                                   F-7

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS 
 ENDED DECEMBER 31, 1997, 1996 AND 1995                                   F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                F-9

</TABLE>





                                      F-1
<PAGE>   15








                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS






To the Shareholders and Board of Directors of 
MBf USA, Inc.:

We have audited the accompanying consolidated balance sheets of MBf USA, INC. (a
Maryland corporation) AND SUBSIDIARIES as of December 31, 1997 and 1996, and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1997. These
consolidated 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 did not audit the financial statements of PT
MBf Buana Multicorpora as of and for the year ended December 31, 1995, which
statements reflect total assets and total revenues of 22% and .02%,
respectively, of the consolidated 1995 totals. Those statements were audited by
other auditors whose report has been furnished to us and our opinion, insofar as
it relates to the amounts included for that entity, is based solely on the
report of the other auditors.

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 and the report of other auditors provide a reasonable
basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of MBf USA, Inc. and Subsidiaries as of December 31, 1997
and 1996, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.





ARTHUR ANDERSEN LLP

Chicago, Illinois
February 27, 1998




                                      F-2
<PAGE>   16









                          INDEPENDENT AUDITORS' REPORT






To the Directors and Shareholders
PT MBf Buana Multicorpora

         We have audited the accompanying balance sheet of PT MBf Buana
Multicorpora (the "Company") as of December 31, 1995, and changes in
shareholders' equity and cash flows for the period from October 17, 1994 (date
of incorporation) to 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 upon our audit.

         We conducted our audits in accordance with generally accepted auditing
standards established by the Indonesian Institute of Accountants, which are
substantially similar to the generally accepted auditing standards in the United
States of America. 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 presentation. We
believe that our audit provides 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 MBf PT Buana
Multicorpora as of December 31, 1995 and the results of its operations and its
cash flows for the period then ended in conformity with accounting principles
generally accepted in the United States of America.



                                              /s/ Drs. Achmad Hidayat
                                              ----------------------------------

                                              Drs. Achmad Hidayat
                                              Registered Accountant No. D-2460
                                              KPMG Hanadi Sudjendra & Rekan


Jakarta, Indonesia
February 14, 1996


This report is a copy of a report originally issued by KPMG Hanadi Sudjendra and
Rekan ("HS&R"). WRP Corporation has been informed that HS&R was dissolved and 
liquidated during 1998 and has discontinued providing audit and accounting 
services.



                                      F-3
<PAGE>   17



                         MBf USA, INC. AND SUBSIDIARIES


             CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1997 AND 1996



<TABLE>
<CAPTION>
                                       ASSETS                               1997            1996
                                                                        ------------    ------------
<S>                                                                     <C>             <C>         
CURRENT ASSETS:
    Cash and cash equivalents                                           $    161,981    $    321,038
    Accounts receivable-trade, net of allowance for doubtful accounts
     of $195,000 in 1997 and $73,000 in 1996                               5,410,843       4,677,490
    Inventories                                                            8,203,861       8,094,649
    Prepaid expenses                                                       1,055,788         999,704
    Investment in LSAI                                                     1,076,496            -- 
    Deferred income taxes                                                    219,951          58,893
    Current assets of discontinued operations                                 44,113         264,520
                                                                        ------------    ------------
                     Total current assets                                 16,173,033      14,416,294
                                                                        ------------    ------------

PROPERTY, PLANT AND EQUIPMENT:
    Land rights and land improvements                                        736,535         694,272
    Construction in progress                                               2,105,263       1,074,092
    Equipment, furniture and fixtures                                      8,780,857       7,183,071
    Building improvements                                                  1,488,485       1,262,248
    Vehicles                                                                 108,127         105,023
                                                                        ------------    ------------
                     Total property, plant and equipment                  13,219,267      10,318,706

    Less-Accumulated depreciation                                         (1,495,868)       (736,858)
                                                                        ------------    ------------
    Property, plant and equipment, net                                    11,723,399       9,581,848
                                                                        ------------    ------------
INVESTMENT IN LSAI                                                              --         1,015,117
                                                                        ------------    ------------

OTHER ASSETS:
    Goodwill, net of accumulated amortization of $405,363 in 1997 and
     $364,305 in 1996                                                      1,344,637       1,385,695
    Due from affiliates                                                      206,885         550,210
    Other assets                                                              83,291         297,209
    Assets of discontinued operations                                           --           267,251
                                                                        ------------    ------------
                    Total other assets                                     1,634,813       2,500,365
                                                                        ------------    ------------
                                                                        $ 29,531,245    $ 27,513,624
                                                                        ============    ============

</TABLE>



           The accompanying notes to consolidated financial statements
                 are an integral part of these balance sheets.


                                      F-4
<PAGE>   18



                         MBf USA, INC. AND SUBSIDIARIES


             CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
                         LIABILITIES AND SHAREHOLDERS' EQUITY                      1997             1996
                                                                                ------------    ------------
<S>                                                                             <C>             <C>         
CURRENT LIABILITIES:
    Accounts payable--trade                                                     $  2,622,541    $  3,291,506
    Trade notes payable to banks                                                   5,449,181       7,010,453
    Notes payable and current portion of long-term obligations                     6,711,659       3,914,914
    Due to affiliates                                                                342,873         382,358
    Accrued expenses                                                               2,366,984       1,219,914
    Current liabilities of discontinued operations                                   258,407         302,416
                                                                                ------------    ------------
                     Total current liabilities                                    17,751,645      16,121,561
                                                                                ------------    ------------

LONG-TERM OBLIGATIONS                                                              5,647,867       7,098,132
                                                                                ------------    ------------

OTHER LONG-TERM OBLIGATIONS:
    Deferred income taxes                                                             67,117         200,286
    Other liabilities                                                                622,045         341,047
                                                                                ------------    ------------
                     Total other long-term liabilities                               689,162         541,333
                                                                                ------------    ------------

COMMITMENTS AND CONTINGENCIES (Note 8)

MINORITY INTEREST IN SUBSIDIARY                                                    1,130,051         221,174
                                                                                ------------    ------------

SHAREHOLDERS' EQUITY:
    Series A common stock, $.01 par value; 1,252,538 shares authorized;
       1,252,538 shares issued and outstanding                                        12,525          12,525
    Common stock, $.01 par value; 10,000,000 shares authorized; 3,191,667 and
       3,188,333 shares issued and outstanding in 1997 and 1996, respectively         31,917          31,883
    Additional paid-in capital                                                    10,876,224      10,875,897
    Accumulated deficit                                                           (5,547,089)     (6,012,811)
    Net unrealized gain on LSAI common stock                                         261,979            --
    Cumulative foreign currency translation adjustment                                  --           (53,034)
    Less-Common stock in treasury, at cost, 130,000 shares in 1997 and 1996       (1,323,036)     (1,323,036)
                                                                                ------------    ------------
                     Total shareholders' equity                                    4,312,520       3,531,424
                                                                                ------------    ------------
                                                                                $ 29,531,245    $ 27,513,624
                                                                                ============    ============

</TABLE>


         The accompanying notes to consolidated financial statements
                are an integral part of these balance sheets.



                                      F-5
<PAGE>   19


                         MBf USA, INC. AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


<TABLE>
<CAPTION>
                                                                                      1997            1996            1995
                                                                                  ------------    ------------    ------------
<S>                                                                               <C>             <C>             <C>         
REVENUES:
    Product sales, net                                                            $ 53,810,060    $ 47,589,421    $ 40,950,968
    Interest-affiliates                                                                   --              --            72,688
    Interest                                                                            37,310          40,737          27,970
    Rental income                                                                      158,517            --              --
    Gain on sales of LSAI common stock                                                  79,483            --              --
    Other                                                                               18,052          81,959         166,317
                                                                                  ------------    ------------    ------------
              Total revenues                                                        54,103,422      47,712,117      41,217,943
                                                                                  ------------    ------------    ------------

COSTS AND EXPENSES:
    Cost of product sales                                                           40,760,146      38,358,756      36,177,651
    Selling, general and administrative                                             10,634,314       8,462,426       6,707,634
    Restructure charge                                                                    --              --         1,808,757
    Interest                                                                         1,481,467       1,117,700         614,506
                                                                                  ------------    ------------    ------------
              Total costs and expenses                                              52,875,927      47,938,882      45,308,548
                                                                                  ------------    ------------    ------------
              Income (loss) from continuing operations before minority
                 interest, benefit from income taxes and loss from discontinued
                 operations                                                          1,227,495        (226,765)     (4,090,605)

MINORITY INTEREST IN INCOME OF SUBSIDIARY                                             (300,145)        (77,732)         (2,174)
                                                                                  ------------    ------------    ------------
              Income (loss) from continuing operations before benefit from
                 income taxes and loss from
                 discontinued operations                                               927,350        (304,497)     (4,092,779)

BENEFIT FROM INCOME TAXES                                                              322,042          56,889            --
                                                                                  ------------    ------------    ------------
              Income (loss) from continuing operations before loss
                 from discontinued operations                                        1,249,392        (247,608)     (4,092,779)

LOSS FROM DISCONTINUED OPERATION:
    Operations                                                                            --          (840,792)       (703,893)
    Disposal                                                                          (783,670)        (76,187)        (67,732)
                                                                                  ------------    ------------    ------------
              Net income (loss)                                                   $    465,722    $ (1,164,587)   $ (4,864,404)
                                                                                  ============    ============    ============
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE:
       Continuing operations                                                      $       0.29    $      (0.07)   $      (1.68)
       Discontinued operations                                                           (0.18)          (0.25)          (0.32)
                                                                                  ------------    ------------    ------------
                                                                                  $       0.11    $      (0.32)   $      (2.00)
                                                                                  ============    ============    ============

</TABLE>



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



                                      F-6
<PAGE>   20


                         MBF USA, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

(RETROACTIVELY RESTATED TO REFLECT THE 10-FOR-1 REVERSE STOCK SPLIT, SEE NOTE 9)



<TABLE>
<CAPTION>
                                                                                                                                 
                                                                                                                                 
                                                                              SERIES A                                           
                                                                            COMMON STOCK                 COMMON STOCK               
                                                                        SHARES         AMOUNT        SHARES        AMOUNT           
                                                                      ------------------------      ------------------------
<S>                                                                   <C>         <C>               <C>         <C>         
BALANCE, December 31, 1994                                            1,252,538   $     12,525      1,224,248   $     12,242

    Issuance of common stock upon exercise of stock options
                                                                           --             --              495              5
    Issuance of common stock for loan conversion                           --             --          250,980          2,510
    Issuance of common stock for 70% interest in PT Buana
                                                                           --             --          255,072          2,551
    Net loss                                                               --             --             --             --   
    Foreign currency translation adjustment                                --             --             --             --   
                                                                      ---------   ------------      ---------   ------------

BALANCE, December 31, 1995                                            1,252,538         12,525      1,730,795         17,308

    Issuance of common stock to MBf International for $1,402,528
                                                                           --             --          488,973          4,889
    Issuance of common stock to PIE Healthcare for $1,000,000
                                                                           --             --          296,296          2,963
    Issuance of common stock to MBf International for $1,000,000
                                                                           --             --          672,269          6,723
    Net loss                                                               --             --             --             --   
    Foreign currency translation adjustments                               --             --             --             --   
                                                                      ---------   ------------      ---------   ------------

BALANCE, December 31, 1996                                            1,252,538         12,525      3,188,333         31,883

    Issuance of common stock upon exercise of stock options
                                                                           --             --            3,334             34
    Net income                                                             --             --             --             --   
    Foreign currency translation adjustment                                --             --             --             --   
    Indonesian paid-in capital adjustment                                  --             --             --             --   
    Unrealized gain on LSAI common stock                                   --             --             --             --   
                                                                      ---------   ------------      ---------   ------------

BALANCE, December 31, 1997                                            1,252,538   $     12,525      3,191,667   $     31,917
                                                                      =========   ============      =========   ============

<CAPTION>

                                                                                                    CUMULATIVE     UNREALIZED 
                                                                                                     FOREIGN        GAIN ON   
                                                                    ADDITIONAL      RETAINED         CURRENCY        LSAI    
                                                                     PAID-IN        EARNINGS        TRANSLATION      COMMON   
                                                                     CAPITAL        (DEFICIT)       ADJUSTMENT       STOCK    
                                                                   ------------    ------------    ------------    ------------ 
<S>                                                                 <C>            <C>              <C>             <C>         
BALANCE, December 31, 1994                                         $  5,193,205    $     16,180    $       --      $       --   

    Issuance of common stock upon exercise of stock options
                                                                          2,945            --              --              --   
    Issuance of common stock for loan conversion                      1,197,490            --              --              --   
    Issuance of common stock for 70% interest in PT Buana
                                                                      1,094,304            --              --              --   
    Net loss                                                               --        (4,864,404)           --              --   
    Foreign currency translation adjustment                                --              --           (26,856)           --   
                                                                   ------------    ------------    ------------    ------------ 

BALANCE, December 31, 1995                                            7,487,944      (4,848,224)        (26,856)           --   

    Issuance of common stock to MBf International for $1,402,528
                                                                      1,397,639            --              --              --   
    Issuance of common stock to PIE Healthcare for $1,000,000
                                                                        997,037            --              --              --   
    Issuance of common stock to MBf International for $1,000,000
                                                                        993,277            --              --              --   
    Net loss                                                               --        (1,164,587)           --              --   
    Foreign currency translation adjustments                               --              --           (26,178)           --   
                                                                   ------------    ------------    ------------    ------------ 

BALANCE, December 31, 1996                                           10,875,897      (6,012,811)        (53,034)           --   

    Issuance of common stock upon exercise of stock options
                                                                          9,135            --              --              --   
    Net income                                                             --           465,722            --              --   
    Foreign currency translation adjustment                                --              --            53,034            --   
    Indonesian paid-in capital adjustment                                (8,808)           --              --              --   
    Unrealized gain on LSAI common stock                                   --              --              --           261,979
                                                                   ------------    ------------    ------------    ------------ 

BALANCE, December 31, 1997                                         $ 10,876,224    $ (5,547,089)   $       --      $    261,979
                                                                   ============    ============    ============    ============

<CAPTION>

                                                                     TREASURY      SHAREHOLDERS'
                                                                      STOCK           EQUITY   
                                                                   ------------    ------------
<S>                                                                <C>             <C>         
BALANCE, December 31, 1994                                         $ (1,323,036)   $  3,911,116

    Issuance of common stock upon exercise of stock options
                                                                           --             2,950
    Issuance of common stock for loan conversion                           --         1,200,000
    Issuance of common stock for 70% interest in PT Buana
                                                                           --         1,096,855
    Net loss                                                               --        (4,864,404)
    Foreign currency translation adjustment                                --           (26,856)
                                                                   ------------    ------------

BALANCE, December 31, 1995                                           (1,323,036)      1,319,661

    Issuance of common stock to MBf International for $1,402,528
                                                                           --         1,402,528
    Issuance of common stock to PIE Healthcare for $1,000,000
                                                                           --         1,000,000
    Issuance of common stock to MBf International for $1,000,000
                                                                           --         1,000,000
    Net loss                                                               --        (1,164,587)
    Foreign currency translation adjustments                               --           (26,178)
                                                                   ------------    ------------

BALANCE, December 31, 1996                                           (1,323,036)      3,531,424

    Issuance of common stock upon exercise of stock options
                                                                           --             9,169
    Net income                                                             --           465,722
    Foreign currency translation adjustment                                --            53,034
    Indonesian paid-in capital adjustment                                  --            (8,808)
    Unrealized gain on LSAI common stock                                   --           261,979
                                                                   ------------    ------------

BALANCE, December 31, 1997                                         $ (1,323,036)   $  4,312,520
                                                                   ============    ============

</TABLE>


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


                                      F-7




<PAGE>   21


                         MBf USA, INC. AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
                                                                                   1997          1996           1995
                                                                               -----------    -----------    ----------- 
<S>                                                                            <C>            <C>            <C>  
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                                                          $   465,722    $(1,164,587)   $(4,864,404)
    Adjustments to reconcile net income (loss) to net cash provided by (used
       in) operating activities-
           Depreciation                                                            898,831        532,148        101,990
           Amortization                                                             41,058         57,778         51,207
           Provision for doubtful accounts                                         122,000         16,900         15,500
           Loss from discontinued operations                                          --          840,792        703,893
           Loss from disposal of discontinued operations                           783,670         76,187         67,732
           Loss on disposal of property, plant and equipment                        15,606          8,883         53,405
           Gain on sales of LSAI common stock                                      (79,483)          (998)          --
           Write-off of trademarks                                                    --             --           50,425
           Changes in certain assets and liabilities-
              Accounts receivable--trade                                          (855,353)      (576,029)      (701,300)
              Inventories                                                         (109,212)     1,937,014     (3,108,000)
              Prepaid expenses                                                     (56,084)      (551,594)      (218,966)
              Other assets                                                          52,860        (69,636)        (9,929)
              Accounts payable--trade                                             (668,965)    (3,845,331)     2,267,348
              Accrued expenses                                                   1,147,070        432,090         27,702
              Deferred income taxes                                               (133,169)       200,286           --
              Net assets of discontinued subsidiary                                   --             --          141,379
              Net assets of condom discontinued operations                        (340,021)      (518,099)       (79,887)
              Amounts due (from) to affiliates                                     303,840      1,285,070     (2,144,010)
                                                                               -----------    -----------    -----------
                     Net cash provided by (used in) operating activities         1,588,370     (1,339,126)    (7,645,915)
                                                                               -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                        (3,063,735)    (4,675,556)      (873,636)
    Proceeds on sales of LSAI common stock                                         280,083         45,248           --
    Proceeds on sales of property, plant and equipment                               7,747           --             --
    Minority interest in subsidiary                                                900,070         76,616         30,497
                                                                               -----------    -----------    -----------
                     Net cash used in investing activities                      (1,875,835)    (4,553,692)      (843,139)
                                                                               -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net borrowings (payments) on trade notes payable to banks                   (1,561,272)     4,709,818      3,722,426
    Net borrowings from notes payable                                            2,846,480      2,533,046      4,384,081
    Net proceeds from stock option exercises                                         9,168           --            2,950
    Proceeds from issuance of stock                                                   --        3,402,528           --
    Proceeds from issuance of note payable to Parent                                  --             --        1,200,000
    Net advances from Indonesian minority interest shareholders                    280,998           --             --
    Payments on notes payable                                                   (1,500,000)    (4,011,666)      (183,334)
    Payments on debt to affiliate                                                     --       (1,100,000)          --
                                                                               -----------    -----------    -----------
                     Net cash provided by financing activities                      75,374      5,533,726      9,126,123
                                                                               -----------    -----------    -----------
IMPACT OF EXCHANGE RATES ON CASH                                                    53,034        (26,179)       (26,856)
                                                                               -----------    -----------    -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              (159,057)      (385,271)       610,213
CASH AND CASH EQUIVALENTS, beginning of year                                       321,038        706,309         96,096
                                                                               -----------    -----------    -----------
CASH AND CASH EQUIVALENTS, end of year                                         $   161,981    $   321,038    $   706,309
                                                                               ===========    ===========    ===========

</TABLE>



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


                                      F-8
<PAGE>   22



                                  MBf USA, INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1997 AND 1996


1.       DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

      DESCRIPTION OF BUSINESS

      MBf USA, Inc. and Subsidiaries (the "Company") is a manufacturer of high
      quality, disposable latex medical examination gloves and markets medical
      examination gloves in the United States. The Company sells its gloves
      primarily to the medical, dental and food service markets.

      In November, 1996, the Company adopted a plan to discontinue the Playboy
      (R) condom operations and has reflected it as such in the accompanying
      consolidated financial statements. The Company continued to distribute
      Playboy(R) condoms through June 30, 1997 (Note 3).

      The Company's factory in Indonesia, which manufactures medical examination
      gloves, was in the start-up phase of operations as of December 31, 1995,
      began production in April, 1996, and began shipping product in May, 1996.

      PRINCIPLES OF CONSOLIDATION

      The accompanying consolidated financial statements include the accounts of
      the Company and its wholly owned subsidiaries, American Health Products
      Corporation ("AHPC") and MBf America, Inc. (an inactive holding company),
      as well as its 70% owned Indonesian glove manufacturing subsidiary, PT MBf
      Buana Multicorpora ("PT Buana"). Accordingly, PT Buana's assets,
      liabilities, equity and minority interest are included in the consolidated
      financial statements of the Company. All significant intercompany
      transactions have been eliminated.

      MBf International Ltd., a Hong Kong corporation ("MBf International"),
      which holds the Series A common stock of the Company and is the majority
      shareholder of the Company, is a wholly owned subsidiary of MBf Holdings
      Sdn. Bhd. ("MBf Holdings"), a publicly traded company listed on the Kuala
      Lumpur Stock Exchange.

      MBf Holdings is committed and believes that it has the resources to
      provide the necessary level of financial support to the Company to enable
      it to pay its debts as they become due through December 31, 1998, or until
      the date when Wembley Rubber Products (M) Sdn. Bhd. ("Wembley") (Note 13)
      becomes the major shareholder of the Company, whichever is earlier.
      Wembley has agreed to assume the MBf Holdings corporate guarantees (see
      Notes 6 and 7).



                                      F-9
<PAGE>   23

      CASH AND CASH EQUIVALENTS

      The Company considers cash in banks and highly liquid debt instruments
      with a maturity of three months or less to be cash equivalents.

      INVENTORIES

      Inventories are valued at the lower of average cost or market.

      PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment are recorded at cost. Depreciation is
      provided by both the straight-line and accelerated methods over lives
      ranging from 3 to 20 years. PT Buana's construction in progress is stated
      at cost. The accumulated costs are reclassified to the appropriate
      property, plant, and equipment account when construction is completed.

      REVENUES

      Revenues from product sales are recognized at the time the product is
      shipped from the Company's warehouse, or upon the customer's receipt of
      the goods, depending upon the terms of the sale.

      INCOME TAXES

      The Company records income taxes in accordance with Statement of Financial
      Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109").
      SFAS 109 utilizes the liability method and deferred taxes are determined
      based on the estimated future tax effects of differences between the
      financial statement and tax basis of assets and liabilities given the
      provisions of enacted tax laws. Deferred income tax provisions and
      benefits are based on the changes in the deferred tax asset or tax
      liability from period to period.

      NET INCOME (LOSS) PER SHARE

      Effective December 15, 1997, the Company adopted Statement of Financial
      Accounting Standards No. 128, "Earnings Per Share (EPS)" ("SFAS 128"),
      which requires dual presentation of basic and diluted earnings per common
      share for all periods presented. Basic EPS amounts are based on the
      weighted-average number of shares of common stock outstanding during each
      year while diluted EPS amounts are based on the weighted-average number of
      shares of common stock outstanding during the year and the effect of
      dilutive stock options and warrants. The weighted-average number of common
      shares and common share equivalents outstanding for each year are as
      follows:


                                      F-10
<PAGE>   24


<TABLE>
<CAPTION>
                                                        1997            1996            1995
                                                     ---------        ---------       ---------  
<S>                                                  <C>              <C>             <C>          
Basic weighted-average number of common
    shares outstanding                               4,312,132        3,661,052       2,432,462    
                                                                                                 
Dilutive effect of common share                                                                  
    equivalents                                         49,077             --              --    
                                                     ---------        ---------       ---------  
                                                                                                 
Diluted weighted-average number of                                                               
    common shares outstanding                        4,361,209        3,661,052       2,432,462  
                                                     =========        =========       =========  
</TABLE>




                                      F-11
<PAGE>   25




      Also, the Company had additional stock options and warrants of 229,324,
      291,824 and 422,948 at December 31, 1997, 1996 and 1995, respectively,
      which were not included in the computation of diluted earnings per share
      because the exercise price was greater than the average market price of
      the common shares.

      All share and per share information in the accompanying financial
      statements give retroactive effect of the 10-for-1 reverse stock split
      which occurred on December 18, 1995.

      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.

      FAIR VALUE OF FINANCIAL INSTRUMENTS

      The following methods and assumptions were used to estimate the fair value
      of each class of financial instrument held by the Company:

      a.    CURRENT ASSETS AND CURRENT LIABILITIES--The carrying amount 
            approximates fair value due to the short maturity of these items;

      b.    LONG-TERM DEBT--The fair value of the Company's long-term debt is
            based on secondary market indicators. Since the Company's debt is
            not quoted, estimates are based on each obligation's
            characteristics, including maturities, interest rate, credit rating,
            collateral, amortization schedule and liquidity. The carrying amount
            approximates fair value; and

      c.    AMOUNTS DUE TO/DUE FROM AFFILIATES AND SHAREHOLDERS--Amounts due
            to/due from affiliates and shareholders are non-interest-bearing and
            do not specify maturity dates and, therefore, it is not practicable
            to estimate the fair value of these financial instruments.

      RECLASSIFICATIONS

      Certain prior-year items have been reclassified to conform with
      current-year presentations.

      FOREIGN CURRENCY TRANSLATION

      PT Buana's financial statements have been prepared from the records
      maintained in the Republic of Indonesia, the country in which PT Buana was
      established and operates. On July 1, 1997, the Company determined and
      changed its functional currency from the Indonesia rupiah to the United
      States dollar. This change in functional currency is primarily the result
      of the PT Buana operations becoming more dependent on US dollar
      denominated transactions and economic trends. In accordance with Statement
      of Financial 




                                      F-12
<PAGE>   26

      Accounting Standards No. 52, "Foreign Currency Translation" ("SFAS 52"),
      the Company recorded a gain of $277,035 during 1997 as a result of the
      remeasuring the foreign currency of record (rupiah) into the functional
      currency (US dollar).



      Gains and losses from foreign currency transactions are included in net
      income (loss) in the period in which they occur. For the years ended
      December 31, 1997, 1996 and 1995, the foreign exchange gain (loss)
      included in the determination of net income (loss) is $205,457, $(69,294)
      and $0, respectively.

      The Company did not use any derivative or financial instruments to manage
      its foreign-exchange exposures during 1995, 1996 and 1997. The Company is
      subject to foreign currency fluctuation risk in the regular course of
      business on sales, raw materials and fixed asset purchase transactions
      denominated in a foreign currency.

2.       COMMON STOCK

      The terms of the Series A common stock are substantially the same as the
      Company's common stock except:

      a.    Each share of Series A common stock is convertible into one share of
            the Company's common stock, $.01 par value. The Company has reserved
            1,252,538 shares of common stock for issuance upon conversion of the
            Series A common stock.

      b.    Series A common stock entitles MBf International, the majority
            shareholder of the Company, to elect all Class A directors, which
            represent a majority of the Company's Board of Directors and to vote
            with the holders of common stock as a single class with respect to
            any matters subject to a vote of the shareholders.

      On December 5, 1996, the shareholders approved an increase in the
      authorized common stock from 4,000,000 to 10,000,000 shares to allow the
      Company to have sufficient shares for issuance in connection with
      employees stock options, business acquisitions, the conversion of Series A
      common stock for common stock, public offerings, as well as other
      purposes.

3.       CORPORATE DEVELOPMENT

      DISTRIBUTION AGREEMENT

      The Company and MBf Health Products Sdn. Bhd. ("MBf Health") and MBf 
      Rubber Products Sdn. Bhd. ("MBf Rubber") were parties to a distributor
      agreement. The agreement provided that the Company would have exclusive 
      marketing rights in North America and South America for latex gloves
      manufactured and supplied by MBf Health and MBf Rubber through February, 
      1997. MBf Rubber ceased operations in 1995 and the distributor agreement 
      was terminated. Effective July 12, 1995, the Company entered into a new 
      five-year distributor agreement with MBf Health (now known as PIE 
      Healthcare), which was a subsidiary of MBf International. On August 16, 
      1995, MBf International sold MBf Health to Perusahaan Intan Emas Sdn. Bhd.
      ("PIE"), with the option to repurchase the 



                                      F-13
<PAGE>   27

      company. During October, 1995, PIE changed the name from MBf Health to PIE
      Healthcare Products Sdn. Bhd. ("PIE Healthcare"). The distributor
      agreement requires the Company to purchase a certain quantity of gloves
      each year. Revenues from product sales include sales of latex examination
      gloves sold under the terms of this agreement.


      DISCONTINUED OPERATIONS

      Effective December 31, 1993, the Company adopted a plan to discontinue
      operations of its wholly owned subsidiary, Disposable Garments, Inc.
      ("DGI"). DGI, through a supply and requirements agreement, distributed
      disposable medical garments to unaffiliated customers. Accordingly, DGI is
      reported as a discontinued operation in the accompanying consolidated
      financial statements. At December 31, 1995, there were no assets of DGI,
      and it was subsequently dissolved on December 2, 1996.

      In November, 1996, the Company reached an amicable settlement with Playboy
      Enterprises, Inc. to terminate their license agreement under which MBf
      USA, Inc. distributed Playboy(R) brand condoms in 15 countries. Under the
      negotiated agreement, MBf USA, Inc., until June 30, 1997, continued to
      sell Playboy(R) condoms in the countries where it had launched the
      product. Subsequent to June 30, 1997, MBf USA, Inc., is entitled to
      receive royalty revenues on sales of Playboy(R) condoms in these countries
      through June 30, 2000, and through June 30, 1998, for Playboy(R) condom
      sales in Japan. The Company does not anticipate that these royalties will
      be significant.

      In accordance with the termination agreement with Playboy Enterprises,
      Inc., the Company's Playboy(R) condom operations ceased June 30, 1997. As
      such, the Company has accounted for the Playboy(R) condom business as a
      discontinued operation effective December 31, 1996, and the disposal
      period through June 30, 1997.

      The loss from discontinued operations and loss from disposal of
      discontinued operations of DGI and the Playboy(R) condom business for the
      years ended December 31, 1997, 1996 and 1995, are summarized below:


<TABLE>
<CAPTION>
                                                    1997         1996         1995
                                                 ---------    ---------    --------- 
<S>                                              <C>          <C>          <C>       
Loss from discontinued operations-
    Playboy(R)Condoms                            $    --      $(840,792)   $(703,893)
                                                 =========    =========    ========= 
Loss from disposal of discontinued operations-
       DGI                                       $    --      $    --      $ (67,732)

       Playboy(R)Condoms                          (783,670)     (76,187)        --
                                                 ---------    ---------    --------- 
                                                 $(783,670)   $ (76,187)   $ (67,732)
                                                 =========    =========    ========= 

</TABLE>

                                      F-14
<PAGE>   28


      Effective on November 12, 1996, the Company adopted a plan to discontinue
      its Playboy(R) condom business. The accompanying financial statements
      include assets and liabilities of the discontinued condom operations which
      is detailed below:


<TABLE>
<CAPTION>
                                            1997             1996
                                         ---------         --------
<S>                                      <C>               <C>      
Assets-
    Current assets-
       Prepaid expenses                  $ 11,752          $   --         
       Trade accounts receivable, net      32,361           262,551       
       Inventories                           --               1,969       
                                         --------          --------       
                                           44,113           264,520       
    Other assets-                                                         
       Trademarks and license rights         --             267,251       
                                         --------          --------       
                     Total assets        $ 44,113          $531,771       
                                         ========          ========       
Liabilities-                                                              
    Current liabilities-                                                  
       Accounts payable                  $ 73,273          $302,416       
       Accrued returns                    185,134              --         
                                         --------          --------       
                     Total liabilities   $258,407          $302,416       
                                         ========          ========       
                                                                          
</TABLE>                                                  


      In 1995, trademarks and license rights were amortized on a straight-line
      basis over the period of the underlying agreement. Due to the exit of the
      condom business in 1996, the trademarks and license rights were amortized
      through June 30, 1997. Amortization expense of trademarks and license
      rights was $267,251 in 1997 and $37,722 in 1996.

      Revenues from the Playboy(R) condom business were $376,422, $1,380,435 and
      $2,078,096, for the years ended December 31, 1997, 1996 and 1995,
      respectively.

      During 1997, the Company changed its estimate of costs to dispose of its
      condom operations. This change resulted in the Company recording
      additional costs of $783,670 ($0.18) basic and diluted loss per share for
      the year ended December 31, 1997.

      RESTRUCTURE CHARGE

      In the second quarter of 1995, the Company incurred a restructuring charge
      which included the resignation of and severance payments to the
      Chairman/CEO, President/COO and CFO. The Board of Directors directed the
      Company to focus on its core businesses and to exit the nutritional
      product business, where sales were negligible and the entry costs were
      very high, which contributed to significant losses.

      The restructuring resulted in a one-time charge totaling $1,808,757, which
      primarily related to executive severance pay of approximately $570,000,
      inventory write-offs of approximately $440,000, other assets and
      intangible asset write-offs of approximately $200,000 and other costs of
      approximately $599,000. Substantially all such costs had been paid by
      December 31, 1995.




                                      F-15



<PAGE>   29

      INVESTMENT IN LSAI

      At December 31, 1997, the Company's investment in LSAI includes LSAI
      common stock, valued at its market value of $723,373 and a note receivable
      from LSAI of $353,123 for a total investment of $1,076,496. The Company
      believes the note receivable, which is carried at cost, approximates fair
      value. The Company has been subject to an agreement not to dispose of its
      shares of LSAI stock prior to July 8, 1997. Subsequent to that date, such
      shares of common stock are eligible for sale under Rule 144. During 1997,
      the Company sold 68,000 shares of LSAI which resulted in a gain of
      $79,483.

      The Company has adopted Statement of Financial Accounting Standards No.
      115, "Accounting for Certain Investments in Debt and Equity Securities"
      ("SFAS 115"), which requires that equity securities that have readily
      determinable fair values shall be classified as "available-for-sale" if
      not held for the objective of generating profits on short-term differences
      in price. Accordingly, the Company's common stock investment in LSAI is
      classified and treated as available for sale.

      SFAS No. 115 further requires that unrealized holding gains and losses
      related to available-for-sale securities shall be excluded from earnings
      and reported as a net amount in a separate component of shareholders'
      equity until realized. At December 31, 1997, the LSAI common stock had a
      market value of $723,373, which is $261,979 over its cost basis of
      $461,394. The unrealized gain of $261,979 is recorded as a separate
      component of shareholders' equity at December 31, 1997. At December 31,
      1996, there was not a material difference between the cost and market
      value of the Company's investment in LSAI common stock.

      INVESTMENT IN PT BUANA

      The Company entered into a Stock Acquisition Agreement with MBf
      International dated October 31, 1995, whereby MBf International exchanged
      its beneficial interest in common stock representing 70% of the
      outstanding common stock of PT Buana and a non-interest-bearing demand
      note in the principal amount of $737,769 ("Note"), for 255,072 shares of
      the Company's common stock having an aggregate value of $1,219,563.
      Because the Company and PT Buana are under common control, the assets and
      liabilities acquired were recorded at PT Buana's historical cost (see Note
      12).

      During June, 1997, the Company and the minority shareholders of PT Buana
      approved the increase in the capital stock of PT Buana from $500,000 to
      $2,500,000. To achieve this objective, PT Buana converted debt to equity
      which was owed to the Company and minority shareholders of $737,769 (the
      Note) and $316,187, respectively. Also, the Company and minority
      shareholders contributed cash to PT Buana in their proportionate share to
      bring the capital stock of PT Buana to $2,500,000.

      The factory had not begun production as of December 31, 1995, and was in
      the start-up phase of operation at that time. Accordingly, the factory had
      capitalized certain start-up costs incurred and began amortizing these
      costs over a one-year period upon commencement of operations in April,
      1996.



                                      F-16
<PAGE>   30





      At December 31, 1997 and 1996, the Company has recorded a minority
      interest in the PT Buana subsidiary of $1,130,051 and $221,174,
      respectively, as reflected in the consolidated balance sheets,
      representing the non-owned 30% interest in the factory. The minority
      interest of PT Buana is owned by two Indonesian banks financing its
      construction and operations.

4.       RELATED-PARTY TRANSACTIONS

      At December 31, 1997 and 1996, amounts due from/to affiliates consist of
the following:

<TABLE>
<CAPTION>
                                         1997         1996
                                       ---------    ---------
<S>                                    <C>          <C>      
Due from affiliates-
    Long term-
       MBf International               $ 200,000    $ 200,000
       MACC Partners                        --        348,707
       MBf Education                       2,286        1,503
       MBf Unit Trust                      4,599         --
                                       ---------    ---------
                     Total long term   $ 206,885    $ 550,210
                                       =========    =========
Due to affiliates-
    Current-
       MBf Rubber                      $  (8,008)   $ (10,145)
       MBf International                (170,198)     (57,916)
       MBf Holdings                         --         (4,432)
       MBf Insurans                         --            (66)
       MBf Management                    (50,666)     (39,984)
       MBf Finance                          --           (120)
       MBf Media                            --         (1,566)
       MBf Personal Care                 (55,297)    (119,146)
       MBf Printing                      (58,019)    (148,765)
       MBf Academy                          --           (218)
       MBf Leasing                          (685)        --
                                       ---------    --------- 
                     Total current     $(342,873)   $(382,358)
                                       =========    ========= 

</TABLE>


      Amounts due to MBf Personal Care Sdn. Bhd. ("MBf Personal Care") represent
      the liabilities owed for Playboy condom inventory purchases. MBf Personal
      Care is a subsidiary of MBf Capital Berhad, a publicly traded company on
      the Kuala Lumpur Stock Exchange, and owned approximately 32% by MBf
      Holdings. MBf Personal Care was granted the exclusive rights to
      manufacture Playboy(R) brand condoms for the Company.

      The amounts due from MBf International represent costs associated with the
      acquisition of AHPC in February, 1992. As the timing of repayment of the
      due from affiliate amounts is uncertain, the receivables from affiliates
      have been classified as long-term.



                                      F-17

<PAGE>   31


      The amounts due to MBf Printing, an MBf Holdings' affiliate, represent the
      cost of packaging materials and printing costs incurred for the condom and
      glove businesses.

      The Company has entered into a management contract with MBf Management, an
      affiliate of MBf Holdings. MBf Management charged the Company $10,682,
      $3,977 and $0 in 1997, 1996 and 1995, respectively, for their secretarial
      and other services.

      The amounts due to MBf Insurans, an MBf Holdings' affiliate, represent the
      cost of insuring inventories in transit. Amounts paid to MBf Insurans for
      this coverage were $35,516, $45,056 and $18,915 in 1997, 1996 and 1995,
      respectively.

      During 1994, the Company provided consulting services to MACC Partners, a
      subsidiary of MBf Holdings, for which MACC Partners agreed to pay
      $350,000; this amount was reduced to $348,707 at December 31, 1996, due to
      incidental expenses incurred by MBf USA, Inc. and the balance was fully
      settled during 1997.

      In October, 1995, the Company received a $1,200,000 loan from MBf
      International, which was subsequently converted into 250,980 shares of the
      Company's common stock (see Note 9).

      In January, 1997, the Company entered into a consulting and services
      agreement with Healthcare Alliance, Inc. ("Alliance"), a company owned by
      a director of the Company. The agreement engaged Alliance to assist the
      Company in marketing its products with the expressed purpose of
      negotiating and executing a purchase agreement with various healthcare
      group purchasing organizations. The Company paid Alliance $48,000 in 1997
      for its services.

5.       GOODWILL

      The excess purchase price over the value of the net assets of AHPC
      acquired in February, 1992, was recorded as goodwill in the accompanying
      consolidated balance sheets and is being amortized using the straight-line
      method over 40 years.

6.       TRADE NOTES PAYABLE TO BANKS

      Trade notes payable to banks consists of amounts financed through
      letter-of-credit arrangements which totaled $5,449,181 and $7,010,453 at
      December 31, 1997 and 1996, respectively. The Company's subsidiary, AHPC,
      has two bank letter-of-credit facilities available, one of these banks is
      an affiliated entity, MBf Bank of Tonga, a subsidiary of MBf Holdings. The
      letter-of-credit liabilities due to the nonaffiliated bank at December 31,
      1997 and 1996, totaled $3,087,547 and $3,849,826, respectively. The
      letter-of-credit liabilities due to MBf Bank of Tonga totaled $2,361,634
      and $3,160,627 at December 31, 1997 and 1996, respectively. All
      letter-of-credit liabilities are guaranteed by MBf Holdings. The
      unaffiliated bank facility is secured by inventory and accounts receivable
      of AHPC.

      In June, 1995, the Company entered into the letter-of-credit banking
      facility agreement with MBf Bank of Tonga, in the amount of Tonga dollars
      T$1,000,000 or approximately U.S. $800,000. On August 24, 1996, MBf Bank
      of Tonga approved an additional T$2 million letter-of-credit facility,
      bringing the total facility to T$3 million or approximately U.S. $2.4
      million. During 1996, the facility was increased to T$5.75 million or
      approximately U.S. $4.6 million. This facility is unsecured and guaranteed
      by MBf Holdings.


                                      F-18

<PAGE>   32

      As of December 31, 1997 and 1996, the Company was contingently liable for
      outstanding letters of credit totaling $2,182,726 and $1,725,414,
      respectively.


7.       NOTES PAYABLE

      Notes payable and long-term obligations as of December 31, 1997 and 1996,
consist of the following:


<TABLE>
<CAPTION>
                                                                                      1997            1996
                                                                                  ------------    ------------
<S>                                                                               <C>             <C>         
Borrowings under a bank revolving line-of-credit agreement with available
    borrowings up to $2,500,000 at December 31, 1997, and December 31, 1996,
    bearing interest at the prime rate plus 3% (11.50% at December 31, 1997),
    secured by inventories and accounts receivable, guaranteed by MBf Holdings    $  2,450,000    $  2,405,000
PT  Buana syndicated term loan, bearing interest at the Indonesian prime rate
    (approximately 13.4% at December 31, 1997) secured by land, machinery and
    equipment, accounts receivable and the common stock equity of PT Buana,
    guaranteed by MBf Holdings and the minority shareholders of PT Buana,
    payable in six semiannual installments, due November, 2000                       5,075,000       6,500,000
PT  Buana short-term bank loan, bearing interest from 11% to 15%, due November,
    1997, plus penalty interest of 2% per month subsequent to due date, secured
    by a corporate guarantee of the Company                                          2,000,000            --
Subordinated debentures convertible into warrants to purchase 80,000 shares of
    common stock at $25.00 per share, interest payable quarterly at prime plus
    1.5% (10.0% at December 31, 1997) due November, 2001                             2,000,000       2,075,000
Automobile installment bank loan, bearing interest at 8.25%, secured by an
    automobile, final installment due in May, 2000                                      25,564          33,046
Insurance premium financing loans, bearing interest at 7% to 8.5%,
    payable in monthly installments through October, 1999                              808,962            --
                                                                                  ------------    ------------
                                                                                    12,359,526      11,013,046

Less-Current portion                                                                (6,711,659)     (3,914,914)
                                                                                  ------------    ------------
                     Long-term obligations                                        $  5,647,867    $  7,098,132
                                                                                  ============    ============
</TABLE>


      The bank revolving line-of-credit agreement noted above contains covenants
      which require, among other things, maintenance of financial ratios,
      limitation on additional 


                                      F-19

<PAGE>   33


      borrowings, investments and capital expenditures. At December 31, 1997,
      the Company was in compliance with all debt covenants.

      On December 31, 1997, the Company renewed its bank facility for three
      years through December 31, 2000, with a yearly commitment renewal option.
      The new facility maintains the existing borrowing levels for
      letters-of-credit and line of credit borrowings in the aggregate amount of
      $7,900,000.



      The PT Buana debt consisted of a syndicated loan facility with three
      Indonesian banks amounting to a total credit facility of $6.5 million. At
      December 31, 1997 and 1996, $5,075,000 and $6,500,000, respectively, was
      outstanding on this debt, which was used for the purchase of assets,
      construction and start-up operation of the Indonesian factory.

      PT Buana obtained a six-month bridging loan in the amount of $2.0 million
      in April, 1997. PT Buana was unable to repay the loan when due in
      November, 1997, and a penalty interest rate of an additional 2% per month
      was instituted.

      The principal portion of long-term debt becomes due as follows:
     
<TABLE>     
<S>                                       <C>       
           Fiscal year ending-                        
           1999                           $2,069,029  
           2000                            1,578,838  
           2001                            2,000,000  
                                          ----------  
                                          $5,647,867  
                                          ==========  
</TABLE>


      OTHER LIABILITIES

      During 1997, PT Buana borrowed funds from its minority shareholders to
      make payment on its syndicated term loan. At December 31, 1997 and 1996,
      PT Buana owes $608,814 and $322,660, respectively, to its minority
      shareholders. These shareholder loans are interest bearing at 13.5% and
      are classified as long-term liabilities since a formal repayment plan has
      not been scheduled.

8.       COMMITMENTS AND CONTINGENCIES

      LITIGATION

      Over the last several years, numerous product liability lawsuits have been
      filed against suppliers and manufacturers of latex gloves alleging, among
      other things, adverse allergic reactions. AHPC is one of numerous
      defendants that have been named in such lawsuits. At December 31, 1997,
      there were seven lawsuits outstanding against AHPC. During November, 1997,
      AHPC fully settled thirteen claims for a nominal sum. The said claimants
      alleged adverse reactions to latex glove products allegedly distributed by
      AHPC. AHPC carries product liability insurance. Management believes all
      legal claims are adequately provided for, and if not provided for, are
      without merit, or involve such amounts that would not materially adversely
      affect the Company's results of operations or financial condition.



                                      F-20
<PAGE>   34


      SIGNIFICANT CONTRACTS

      In March, 1994, the Company entered into a contract with an individual to
      serve as a spokesman for the Company which required annual payments
      totaling approximately $250,000 through April, 1998. As of December 31,
      1996, the Company had paid $456,250 of the $1,000,000 total contracted
      amount, and had accrued for $206,250 of past-due amounts owed to the
      spokesman in anticipation of a settlement agreement with such spokesman.
      In February, 1997, the Company reached an agreement with this individual
      to pay $200,000 as final settlement and termination of all future
      contractual obligations.


      SIGNIFICANT CUSTOMERS

      During 1997, two of the Company's customers accounted for 37.6% and 31.0%
      of net sales, respectively. These customers together accounted for 66.8%
      of accounts receivable at December 31, 1997. During 1996, two of the
      Company's customers accounted for 34.1% and 29.2% of net sales,
      respectively. These customers together accounted for 63.3% of accounts
      receivable at December 31, 1996. During 1995, two of the Company's
      customers accounted for 28.8% and 24.8% of net sales, respectively. These
      customers together accounted for 38.6% of accounts receivable at December
      31, 1995.

      OPERATING LEASES

      The Company conducts all of its operations in leased facilities. Total
      rent expense, net of rental income, included in the accompanying
      statements of income for 1997, 1996 and 1995 was $296,358, $348,227 and
      $385,477, respectively. The following summary presents future minimum
      rental payments required under the terms of present operating leases:


<TABLE>
<CAPTION>
          Fiscal year-
<S>                                  <C>     
              1998                   $353,908
              1999                    235,015
              2000                     66,477
                                     --------
                                     $655,400
                                     ========

</TABLE>


      The Company subleases office space in New Jersey and Florida. Under these
      sublease agreements, the Company will receive rental income in an amount
      equal to the Company's rental expense. The Company's lease and sublease
      agreements on the New Jersey and Florida office space expire in November
      1999 and February 1999, respectively. The following summary presents
      future rental income under the two sublease agreements:


<TABLE>
<CAPTION>
            Fiscal year-
<S>                           <C>     
                 1998         $159,216
                 1999           85,838
                              --------
                              $245,054
                              ========
</TABLE>


                                      F-21
<PAGE>   35



9.       SHAREHOLDERS' EQUITY

      In December, 1995, the Board of Directors approved that the Company
      re-incorporate in Maryland. In connection with the re-incorporation, the
      Board approved and the Company effected a 10-for-1 reverse stock split of
      its Series A common stock and common stock. As a result, each shareholder
      received one share of Series A common stock or common stock of the Company
      successor, a Maryland corporation, subsequent to the merger, for every 10
      shares of Series A common stock or common stock held by such shareholder.
      Additionally, the common stock underlying all of the Company's outstanding
      warrants and options were adjusted to reflect the 10-for-1 reverse stock
      split.



      In October, 1995, the Company issued 250,980 shares of common stock to MBf
      International in exchange for $1,200,000. MBf International loaned the
      Company $1,200,000 to pay for AHPC's 7% cumulative preferred stock having
      a value of $1,200,000 which the Company had purchased on September 29,
      1995. MBf International agreed to accept shares of the Company's common
      stock having a value of $1,200,000 in satisfaction of the Company's
      indebtedness to MBf International.

      In October, 1995, the Company issued 255,072 shares of common stock in
      exchange for a 70% equity interest in PT Buana, an Indonesian glove
      manufacturing factory, and a note receivable in the amount of $737,769.

      On June 17, 1996, the Company issued (a) 488,953 shares of common stock to
      MBf International, Ltd. for cash consideration of Malaysian ringgit
      3,500,000 which approximated U.S.$1.4 million; and (b) 296,296 shares of
      common stock in satisfaction of trade payables of $1,000,000 due to PIE
      Healthcare.

      On August 20, 1996, the Company issued an additional 672,269 shares of
      common stock to MBf International Ltd. for a cash consideration of U.S.$1
      million.

      As of December 31, 1994, there were warrants outstanding to purchase 2,300
      units at $30.00 (the "$30.00 Units") per unit through October, 1996. Each
      unit consisted of four shares of common stock and, until January 5, 1993,
      each unit included two warrants, with each warrant exercisable to purchase
      one share of common stock at $15.00. All of these unexercised warrants
      expired in 1995.

      In November, 1994, warrants were issued to purchase 7,500 shares of the
      Company's common stock at an exercise price of $22.20. These warrants are
      exercisable through November, 1999.

      In 1994, warrants to purchase 185,000 shares of the Company's common stock
      were issued at an exercise price of $15.00. During 1997 and 1995, 50,000
      and 10,000, respectively, of these warrants, convertible into shares of
      common stock, expired. The remaining warrants are currently exercisable at
      December 31, 1997, and expire in March, 1999.



                                      F-22
<PAGE>   36

      A summary of warrant activity since December 31, 1994, is as follows:

<TABLE>
<CAPTION>
                                                           $15.00        $30.00        $22.20
                                                          WARRANTS        UNITS       WARRANTS
                                                          --------       ------       --------
<S>                                                       <C>            <C>          <C>  
Balance, December 31, 1994                                 185,000        2,300        7,500
    Expirations                                            (10,000)      (2,300)           -
                                                           -------       ------        -----
Balance, December 31, 1995 and 1996                        175,000            -        7,500
    Expirations                                            (50,000)           -            -
                                                           -------       ------        -----
Balance, December 31, 1997                                 125,000            -        7,500
                                                           =======       ======        =====

</TABLE>


      At December 31, 1997, the Company had outstanding debt which is
      convertible at any time at the noteholder's option (see Note 7) into
      warrants to purchase 80,000 shares of common stock at $25.00 per share.
      These convertible debentures expire in November, 2001.

      The Company has reserved common stock for issuance upon conversion of all
      outstanding warrants.

10.      STOCK OPTION PLAN

      On December 5, 1996, the Board of Directors approved an amendment and
      restatement of the Company's Omnibus Equity Compensation Plan (the
      "Plan"), which authorized and adjusted the number of shares issuable to
      400,000. Effective on July 23, 1996, the Board of Directors approved the
      repricing of all current director and employee options to $2.75, the
      closing market price on the date the repriced options were granted.





                                      F-23
<PAGE>   37


      A summary of options outstanding under the Plan is as follows:


<TABLE>
<CAPTION>
                                                      OUTSTANDING           EXERCISE
                                                        OPTIONS              PRICE           EXPIRATION
                                                      ------------       -------------       ----------
<S>                                                   <C>                 <C>                 <C>   
    Balance, December 31, 1994                            288,755         $5.90-$25.00

        Grants                                             62,675          2.63-16.80            2005
        Rescissions/expirations                          (200,981)         9.40-22.80         2002-2005
        Exercises                                            (500)            5.90               2001
                                                         --------         ------------

    Balance, December 31, 1995                            149,949          2.63-25.00

        Grants                                             35,000             2.75               2006
        Rescissions/expirations                            (3,500)        13.40-22.80         2003-2005
        Repricing of options                              127,624             2.75            2003-2005
        Rescission of repriced options                   (127,624)         7.80-25.00         2003-2005
                                                         --------         ------------

    Balance, December 31, 1996                            181,449          2.63-14.40

        Grants                                             92,500             3.66               2007
        Rescissions/expirations                           (24,833)         2.75-3.66          2004-2007
        Exercises                                          (3,334)            2.75               2006
                                                         --------         ------------

    Balance, December 31, 1997                            245,782         $2.63-$14.40
                                                         ========         ============
</TABLE>


      The exercise price of the stock options granted in 1997, 1996 and 1995 was
      established at the market price on the date of the grants. Of the 245,782
      options outstanding at December 31, 1997, 195,309 are currently
      exercisable, 29,695 become exercisable in 1998, and 20,778 become
      exercisable in 1999. The Company has reserved common stock for issuance
      upon conversion of these options.

      The Company accounts for employee stock options under APB Opinion 25, as
      permitted under generally accepted accounting principles. Accordingly, no
      compensation cost has been recognized in the accompanying financial
      statements related to these options. Had compensation costs for these
      options been determined consistent with Statement of Financial Accounting
      Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"),
      which is an accounting alternative that is permitted but not required, the
      Company's net income (loss) and net income (loss) per share (basic and
      diluted) would have been $397,292 and $(1,409,603) and $.09 and $(.39),
      for 1997 and 1996, respectively.

      Since SFAS 123 does not apply to options granted prior to 1995, the pro
      forma disclosure is not likely to be indicative of pro forma results which
      may be expected in future years. This primarily relates to the fact that
      options vest over several years and pro forma compensation cost is
      recognized as the options vest; another factor is that additional awards
      may also be granted in those years.



                                      F-24
<PAGE>   38

      The fair value of each option is estimated on the date of grant based on
      the Black-Scholes option pricing model assuming, among other things, a
      risk-free interest rate of 6.12% and 7.5% for 1997 and 1996, respectively;
      a 0.00% distribution yield; expected volatility of 90% and 78% in 1997 and
      1996, respectively, and an expected life of three years. The options
      granted to employees in 1997 and 1996 vest ratably over three years. The
      Company has estimated the value of these options assuming a single
      weighted-average expected life of three years for each award granted.

      Options outstanding at December 31, 1997:

<TABLE>
<CAPTION>
                                                               WEIGHTED                            WEIGHTED
      RANGE OF              NUMBER                             AVERAGE            NUMBER            AVERAGE
      EXERCISE          OUTSTANDING AT        REMAINING        EXERCISE       EXERCISABLE AT       EXERCISE
       PRICES           DEC. 31, 1997           LIFE            PRICE         DEC. 31, 1997          PRICE
      --------          -------------         ---------        --------      -------------         --------
<S>                     <C>                   <C>              <C>           <C>                   <C>  
   $2.63 - $2.75             136,458          6-9 years          $2.75             141,040           $2.75
       $3.66                  92,500           9 years           $3.66              37,445           $3.66
       $5.90                  10,000          1.5 years          $5.90              10,000           $5.90
       $14.40                  6,824          1.5 years         $14.40               6,824          $14.40
    ------------    ----------------         -----------        ------      --------------         --------
    $2.63-$14.40             245,782         1.5-9 years         $3.54             195,309           $3.49
    ============    ================         ===========        ======      ==============         =======

</TABLE>

11.      INCOME TAXES

      The effective income tax rates differ from the statutory federal income
      tax rate of 34% for the years ended December 31, 1997, 1996 and 1995. A
      reconciliation of the statutory rate with the effective rate follows:

<TABLE>
<CAPTION>
                                                          1997           1996           1995
                                                      -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>   
Tax expense (benefit) at statutory rate of 34%        $    48,851    $  (104,000)   $(1,653,897)
Goodwill amortization                                      15,602         57,778         51,207
Refundable income taxes/tax benefit                      (322,042)      (198,282)          --
Increase (decrease) in deferred tax asset valuation
    allowance                                               6,702        211,411      1,602,690
Utilization of loss carryforwards                         (82,890)          --             --
Other                                                      11,735        (23,796)          --
                                                      -----------    -----------    -----------
                     Total                            $  (322,042)   $   (56,889)   $      --
                                                      ===========    ===========    =========== 
</TABLE>

      The Company has net operating loss carryforwards at December 31, 1997, of
      approximately $4,300,000 which are available to reduce federal taxable
      income in future periods and will begin expiring in 2004. In accordance
      with federal tax regulations, usage of the net operating loss
      carryforwards are subject to limitations in future years if certain
      ownership changes occur. Because of these factors, the utilization of the
      net operating loss at December 31, 1997, may be significantly limited.

 


                                     F-25
<PAGE>   39
     Significant components of the Company's deferred tax assets and
liabilities are as follows:


<TABLE>
<CAPTION>
                                                                     1997           1996
                                                                 -----------    -----------
<S>                                                              <C>            <C>        
Current-
    Accruals not deductible until paid                           $   411,000    $   229,701
    Net operating loss carryforwards                               1,650,000      2,000,000
    Net operating loss carryforwards--PT Buana                       220,000        105,400
    Other current liabilities--PT Buana                                 --          (46,507)
    Inventory                                                        133,000           --
    Allowance for doubtful accounts                                   81,000         27,710
    Valuation allowance                                           (2,275,049)    (2,257,411)
                                                                 -----------    -----------
                     Total net current deferred tax assets       $   219,951    $    58,893
                                                                 ===========    =========== 
Noncurrent-
    Difference between book and tax basis of
       property, plant and equipment                             $   (96,864)   $  (187,000)

    Other noncurrent assets--PT Buana                                 29,747           --
    Other noncurrent liabilities--PT Buana                              --          (13,286)
                                                                 -----------    ----------- 
                     Total noncurrent deferred tax liabilities   $   (67,117)   $  (200,286)
                                                                 ===========    =========== 
</TABLE>


      The Company establishes valuation allowances in accordance with the
      provisions of SFAS 109. The Company continually reviews the adequacy of
      the valuation allowance and is recognizing these benefits only as
      reassessment indicates that it is more likely than not that the benefits
      will be realized.




                                     F-26

<PAGE>   40


12.   SUPPLEMENTAL CASH FLOW INFORMATION

      The acquisition of PT Buana on October 31, 1995, involved the issuance of
      the Company's common stock and was accounted for as follows:

<TABLE>
<S>                                                               <C>        
Assets acquired-
    Note receivable                                                $   737,769
    Prepaid expenses and other current assets                           43,785
    Land, land improvements and construction in progress             4,556,984
    Other assets                                                        11,208
    Accounts payable and accrued expenses assumed                     (156,375)
    Other current liabilities assumed                               (2,940,919)
    Other noncurrent liabilities assumed                            (1,155,597)
                                                                   -----------
                                                                   $ 1,096,855
                                                                   ===========
Common stock issuance allocated to-
    Common stock                                                   $     2,551
    Additional paid-in capital                                       1,094,304
                                                                   -----------
                                                                   $ 1,096,855
                                                                   ===========
Other noncash investing and financing activities are as follows-
    Repayment of note receivable                                   $ 1,500,000
    Conversion of loan to common stock                               1,200,000
                                                                   ===========
</TABLE>


      Cash paid for interest on debt outstanding for the years ended December
      31, 1997, 1996 and 1995 was $1,488,211, $1,493,782, and $730,405,
      respectively.

      Cash paid for income taxes during the year ended December 31, 1995, was
      approximately $75,000. There were no income taxes paid during 1997 or
      1996.

      During June, 1997, the Company's 70% owned subsidiary, PT Buana, converted
      debt obligations, owed to its minority shareholders, to equity in the
      amount of $316,187.

      At December 31, 1997, the Company recorded an unrealized gain in
      shareholders' equity on the market value of the common stock in LSAI
      exceeding its cost in the amount of $261,979.

      The following represents significant related-party operating transactions
      during the years ended December 31, 1997, 1996 and 1995, which are
      included in the consolidated statements of cash flows as amounts due
      (from) to affiliates under the cash flows from operating activities.





                                     F-27
<PAGE>   41

<TABLE>
<CAPTION>
                                                      1997             1996              1995
                                                    --------        ----------       ------------ 
<S>                                                 <C>             <C>              <C>         
Operating cash transactions-
    Purchases from affiliates                       $240,654        $2,938,793       $  8,696,520
    Cash payments                                   (796,317)       (1,653,723)       (10,840,530)
    Cash receipts                                    859,503                 -                  -
                                                    --------        ----------       ------------ 
Amounts due (from) to affiliates                    $303,840        $1,285,070       $ (2,144,010)
                                                    ========        ==========       ============ 

</TABLE>


13.      SHAREHOLDER TRANSACTION

      In May, 1997, the Company announced that its majority shareholder, MBf
      International, had entered into two separate agreements with its latex
      powder-free supplier, Wembley, which called for the following:

      a.    MBf International selling all of the Company's Series A common stock
           (1,252,538 shares) to Wembley for approximately $6.27 million; and

      b.    The purchase of 2,500,000 shares of the Company's unregistered
            common stock by Wembley at a price of $2.70 per share.

      Currently, the date of closure has been extended to the end of March,
      1998, due to the nonfulfillment of certain conditions precedent to
      closing.

14.      GEOGRAPHIC SEGMENT INFORMATION (CONSOLIDATED)

      The United States is considered the country of origin for all of the
      Company's revenues for the three years presented herein, including exports
      from the U.S. Identifiable assets at December 31, 1997, consist of the
      following:


<TABLE>
<CAPTION>
                                               UNITED STATES         INDONESIA           TOTAL
                                               -------------        -----------       -----------
<S>                                             <C>                <C>                <C>        
   Current assets                               $14,771,693        $  1,401,340       $16,173,033
   Fixed assets                                     177,802          11,545,597        11,723,399
   Other assets                                   1,590,253              44,560         1,634,813
                                                -----------         -----------       -----------
   Consolidated total                           $16,539,748         $12,991,497       $29,531,245
                                                ===========         ===========       ===========
</TABLE>


      Identifiable assets at December 31, 1996, consist of the following:


<TABLE>
<CAPTION>
                                               UNITED STATES         INDONESIA           TOTAL
                                               -------------        -----------       -----------
<S>                                             <C>                <C>                <C>        
   Current assets                               $13,118,338        $  1,297,956       $14,416,294
   Fixed assets                                     258,859           9,322,989         9,581,848
   Other assets                                   3,339,992             175,490         3,515,482
                                                -----------         -----------       -----------
   Consolidated total                           $16,717,189         $10,796,435       $27,513,624
                                                ===========         ===========       ===========
</TABLE>


15.      ASIAN ECONOMIC EVENTS

      The Asian Pacific region is currently experiencing an economic situation
      that has been characterized by reduced activity, illiquidity in certain
      sectors, volatile foreign currency 





                                     F-28
<PAGE>   42


      exchange, interest rates, and stock markets. The Company will likely be
      affected by the region's unstable economy and it is not possible to
      determine the effect a continuation of the economic crisis may have. The
      ultimate outcome of this matter cannot presently be determined. The
      financial statements do not include any adjustment that might result from
      these uncertainties. Related effects will be reported in the financial
      statements as they become known and estimable.



16.      NEW ACCOUNTING PRONOUNCEMENTS

      COMPREHENSIVE INCOME

      In June, 1997, the Financial Accounting Standards Board issued Statement
      of Financial Accounting Standards No. 130 ("SFAS No. 130"), "Reporting
      Comprehensive Income," which establishes standards for reporting of
      comprehensive income. This pronouncement requires that all items
      recognized under accounting standards as components of comprehensive
      income, as defined in the pronouncement, be reported in a financial
      statement that is displayed with the same prominence as other financial
      statements. Comprehensive income includes all changes in equity during a
      period except those resulting from investments by shareowners and
      distributions to shareowners. The financial statement presentation
      required under SFAS No. 130 is effective for all fiscal years beginning
      after December 15, 1997. The Company will adopt SFAS No. 130 in 1998. The
      impact of adopting this pronouncement has not been determined.

      SEGMENT REPORTING

      In June, 1997, the Financial Accounting Standards Board issued Statement
      of Financial Accounting Standards No. 131 ("SFAS No. 131"), "Disclosure
      About Segments of an Enterprise and Related Information," which
      establishes standards of reporting by publicly held business enterprises
      and disclosure of information about operating segments in annual financial
      statements issued to shareowners. Operating segments, as defined in the
      pronouncement, are components of an enterprise about which separate
      financial information is available that is evaluated regularly by the
      Company in deciding how to allocate resources and in assessing
      performance. The financial information is required to be reported on the
      basis that is used internally for evaluating segment performance and
      deciding how to allocate resources to segments. The disclosures required
      by SFAS No. 131 are effective for all fiscal years beginning after
      December 15, 1997. The Company will adopt SFAS No. 131 in 1998. This
      pronouncement will have an effect on the Company's reporting in the
      subsequent periods; however, the impact of adopting this pronouncement has
      not been determined.




                                      F-29