<PAGE>


                  U. S. SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C.  20549

                               FORM 10-QSB
Mark one

/X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
     THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997

/ /  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 33-96882-LA

                 CARING PRODUCTS INTERNATIONAL, INC.
   -----------------------------------------------------------------
   (Exact name of small business issuer as specified in its charter)

Delaware                                               98-0134875
--------                                               ----------
(State or other jurisdiction                           (IRS Employer
of incorporation or organization)                      Identification No.)

200 First Avenue West, Suite 200, Seattle, Washington                 98119
-----------------------------------------------------                 -----
(Address of principal executive offices)                       (Zip Code)

(206) 282-6040
--------------
(Issuer's telephone number, including area code)


None
----
(Former name, former address and former fiscal year, if changed since last
report)

Check whether the issuer (1) 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      / /


APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
            DURING THE PRECEDING FIVE YEARS


Not applicable.

                 APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of 
common equity, as of the latest practicable date:  As of February 10, 1998, 
the Registrant had 2,781,343 shares of Common Stock outstanding.

Traditional Small Business Disclosure Format (check one):

               Yes     /X/             No      / /
<PAGE>

     CARING PRODUCTS INTERNATIONAL, INC.


                              FORM 10-QSB
                 For The Quarter Ended December 31, 1997


                                                                       PAGE
                    INDEX                                             NUMBER

PART I    FINANCIAL INFORMATION                                         3

Item 1    Financial Statements.                                         3

          Consolidated Balance Sheet as of December 31, 1997            3
          Consolidated Statements of Operations
           For each of the three and nine month periods ended
           December 31, 1996 and 1997                                   4
          Consolidated Statement of Stockholders' Equity
           For the nine month period ended December 31, 1997            5
          Consolidated Statements of Cash Flows
           For each of the nine month periods ended
           December 31, 1996 and 1997                                   6
          Notes to Consolidated Financial Statements                    7

Item 2    Management's Discussion and Analysis of
           Financial Condition and Results of Operations.              11

PART II   OTHER INFORMATION


Item 1    Legal Proceedings.                                           16
Item 2    Changes in Securities                                        16
Item 3    Defaults Upon Senior Securities                              16
Item 4    Submission of Matters to a Vote of Security Holders          16
Item 5    Other Information                                            16
Item 6    Exhibits and Reports on Form 8-K                             16

<PAGE>

                                PART I
                        FINANCIAL INFORMATION
                    ITEM 1.  FINANCIAL STATEMENTS

                  CARING PRODUCTS INTERNATIONAL, INC.
                           AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEET
                           DECEMBER 31, 1997
                               UNAUDITED

<TABLE>
<CAPTION>
                                                                  December 31,
                                                                     1997
                       ASSETS                                     ------------
<S>                                                               <C>
Current assets:
Cash                                                              $  4,176,408
Accounts receivable, less allowance for doubtful
   accounts of $49,499 at December 31, 1997                            216,625
Inventories                                                          2,806,453
Prepaid expenses                                                         8,567
                       ASSETS                                     ------------

          Total current assets                                       7,208,053

Equipment, net                                                         223,160
Intangible assets, net                                                 209,812
Other assets                                                            23,795
                       ASSETS                                     ------------

          Total assets                                            $  7,664,820
                                                                  -------------
                                                                  -------------


          LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                                  $    454,712
Accrued liabilities                                                     82,506
Current portion of lease obligations                                     8,770
                       ASSETS                                     ------------
          Total current liabilities                                    545,988

Lease obligations, less current portion                                 12,116
                       ASSETS                                     ------------

          Total liabilities                                            558,104

Stockholders' equity:
   Preferred stock, no shares outstanding                                 -
   Common stock, 2,781,343 shares outstanding
      at December 31, 1997                                              27,814
   Additional paid-in capital                                       19,703,089
   Accumulated deficit                                             (12,624,187)
                       ASSETS                                     ------------

          Total stockholders' equity                                 7,106,716
                       ASSETS                                     ------------

          Total liabilities and stockholders' equity              $  7,664,820
                       ASSETS                                     ------------
                       ASSETS                                     ------------
</TABLE>

See accompanying notes to consolidated financial statements.

                                 3

<PAGE>

                   CARING PRODUCTS INTERNATIONAL, INC.
                           AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF OPERATIONS
     THREE AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997
                             UNAUDITED

<TABLE>
<CAPTION>
                                                    Nine-month periods               Three-month periods
                                                     ended December 31                ended December 31
                                                    ------------------               -------------------
                                                   1996            1997             1996              1997
                                                   ----            ----             ----              ----
<S>                                           <C>              <C>                <C>              <C>
Revenues                                      $  1,403,822     $  1,442,929       $  509,179       $  245,976

Cost of sales                                    1,386,383          804,083          337,311          151,921
                                              ------------     ------------       ----------      -----------

Gross profit/(loss)                                 17,439          638,846          171,868           94,055

Operating expenses:
   Selling                                       1,130,515        1,546,564          378,452          434,680
   General and administrative                    1,085,630          868,416          464,273          369,045
   Amortization and depreciation                    68,969           47,556           21,793           15,814
                                              ------------     ------------       ----------      -----------

          Total operating expenses               2,285,114        2,462,536          864,518          819,539
                                              ------------     ------------       ----------      -----------

          Loss from operations                  (2,267,675)      (1,823,690)        (692,650)        (725,484)

Other income (expense):
   Interest income                                 190,561           54,569          101,257            7,921
   Interest expense                               (134,644)        (386,210)         (44,337)        (164,834)
   Other, net                                       87,343          162,307          106,220          233,218
                                              ------------     ------------       ----------      -----------
                                                   143,260         (169,334)         163,140           76,305
                                              ------------     ------------       ----------      -----------

Net loss                                      $ (2,124,415)    $ (1,993,024)      $ (529,510)     $  (649,179)
                                              ------------     ------------       ----------      -----------
                                              ------------     ------------       ----------      -----------

Net loss per common share                     $      (2.13)    $      (1.49)      $    (0.55)     $     (0.49)

Weighted average common shares and common
   equivalent shares outstanding                   999,255        1,335,691          967,440        1,335,691

</TABLE>


See accompanying notes to consolidated financial statements


                                       4
<PAGE>

                      CARING PRODUCTS INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                  NINE-MONTH PERIOD ENDED DECEMBER 31, 1997
                                  UNAUDITED

<TABLE>
<CAPTION>

                                                                            Additional                            Total
                                                          Common Stock       paid-in       Accumulated         Stockholders'
                                               Shares        Amount          capital         Deficit              Equity
                                               ------     ------------      ----------     -----------         -------------
<S>                                           <C>          <C>           <C>               <C>                 <C>
Balance at March 31, 1997                     1,031,343    $  10,314     $  12,716,051     $  (10,631,163)     $ 2,095,202

Fair value of warrants issued with line
of credit guarantee                                                            163,592                             163,592

Net proceeds from Offering                    1,750,000       17,500         6,823,446                           6,840,946

Net loss                                                                                       (1,993,024)      (1,993,024)

--------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997                  2,781,343    $  27,814     $  19,703,089     $  (12,624,187)     $ 7,106,716
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                        December 31, 1997
                     -----------------------
                     Preferred        Common
                       stock           stock
                       -----           -----
<S>                 <C>             <C>
Par value           $     0.01      $      0.01
Authorized           1,000,000       75,000,000
Issued                   -            2,781,343
Outstanding              -            2,781,343
</TABLE>

See accompanying notes to consolidated financial statements


                                       5
<PAGE>

                     CARING PRODUCTS INTERNATIONAL, INC.
                              AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
             NINE MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997
                                  UNAUDITED

<TABLE>
<CAPTION>
                                                                           Nine-month periods
                                                                            ended December 31
                                                                           ------------------
                                                                         1996               1997
                                                                         ----               ----
<S>                                                                 <C>                 <C>
Cash flows from operating activities:
Net loss                                                           $  (2,124,415)       $  (1,993,024)
Adjustments to reconcile net loss to net cash                                        
   used in operating activities:                                                     
      Amortization and depreciation                                       90,823               77,459
      Deemed interest                                                          0              163,592
      Gain on sale of fixed asset                                              0               (1,311)
      Change in operating assets and liabilities:                                    
           Decrease (increase) in accounts receivable                     11,219              408,460
           Decrease (increase) in inventories                           (203,195)            (373,870)
           Decrease in prepaid expenses                                   96,338               10,474
           Increase in other assets                                            0              (14,860)
           Decrease in accounts payable                                   60,016             (999,249)
           Decrease in accrued liabilities                               (38,341)             (54,586)
                                                                    ------------        -------------
Net cash used in operating activities                                 (2,107,555)          (2,776,915)
                                                                    ------------        -------------

Cash flows from investing activities:
      Purchase of capital assets                                        (137,097)             (20,782)
      Proceeds from sale of fixed asset                                        0                1,311
                                                                    ------------        -------------
Net cash used in investing activities                                   (137,097)             (19,471)
                                                                    ------------        -------------

Cash flows from financing activities:
      Proceeds from issuance of common stock and capital
         contributions                                                 1,508,684            7,822,051
      Decrease (increase) in restricted cash, net                          4,823            2,694,671
      Proceeds from lines of credit                                    2,500,000                    0
      Repayment of lines of credit                                             0           (2,500,000)
      Repayment of long term debt                                         (9,344)             (17,611)
      Proceeds from long term debt                                             0                    0
      Proceeds from notes payable to related parties                           0            1,994,650
      Repayment of notes payable to related parties                   (2,500,000)          (2,565,950)
      Repayment of lease obligations                                      (9,194)             (17,028)
      Increase in deferred financing costs                                     0             (556,562)
                                                                    ------------        -------------
Net cash provided by financing activities                              1,494,969            6,854,221
                                                                    ------------        -------------

Increase (decrease) in cash                                             (749,683)           4,057,835
Cash at beginning of period                                            1,082,419              118,573
                                                                    ------------        -------------
Cash at end of period                                               $    332,736        $   4,176,408
                                                                    ------------        -------------
                                                                    ------------        -------------

Supplemental disclosure of cash flow
   information - cash paid during the period for interest           $     53,627        $     401,085

Supplemental schedule of noncash investing and financing
   activities:
      Capital expenditures included in accounts payable at end
         of period                                                        68,849                    0
      Deferred offering costs included in accounts payable at
         end of period                                                         0              424,543
</TABLE>


See accompanying notes to consolidated financial statements


                                       6
<PAGE>

                      CARING PRODUCTS INTERNATIONAL, INC.
                                AND SUBSIDIARIES
            NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
            NINE-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997

(1)  PRESENTATION OF INTERIM INFORMATION

     The consolidated financial statements and related notes are presented as 
     permitted by Form 10-QSB, and do not contain certain information 
     included in the Company's audited consolidated financial statements and 
     notes for the fiscal year ended March 31, 1997. The accompanying 
     consolidated financial statements and related notes should be read in 
     conjunction with the audited consolidated financial statements of Caring 
     Products International, Inc. and its subsidiaries (the "Company") and 
     notes thereto, for its fiscal year ended March 31, 1997.

(2)  FINANCIAL STATEMENTS

     The consolidated financial statements include the accounts of the 
     Company. All significant intercompany balances and transactions have 
     been eliminated.  The information furnished reflects, in the opinion of 
     management, all adjustments, consisting of normal recurring accruals, 
     necessary for a fair presentation of the results of the interim periods 
     presented.

(3)  LIQUIDITY

     The Company has experienced net losses since its inception and has an 
     accumulated deficit of $12,624,187 at December 31, 1997.

     On December 15, 1997, the Company completed a public offering ("the 
     Offering") of 1,750,000 units at $5.00 per unit, each unit consisting of 
     one share of the Company's common stock and a five-year warrant to 
     purchase one additional share at a price equivalent to 150% of the unit 
     price. Proceeds from the Offering were $6,840,946, net of deferred 
     financing costs.

     All of the Company's outstanding debt was repaid in December 1997 with 
     proceeds from the Offering.

     In April 1997, the Company obtained a line of credit with Toronto 
     Dominion Bank in the amount of Cdn. $1,750,000. Borrowings bore 
     interest at the Canadian prime rate plus .25%.  The Company issued to 
     the guarantor Bradstone Equity Partners, Inc., f/k/a H.J. Forest 
     Products, Inc. ("Bradstone") warrants to purchase 31,667 shares of the 
     Company's Common Stock. The warrants were recorded on issuance at their 
     estimated fair market value of $163,592 with a corresponding reduction 
     in the recorded value of the line of credit.  The debt discount was 
     being amortized to interest expense over the term of the line of credit.

     The Company repaid borrowings under the line of credit in December 1997,
     which were $1,252,715, net of deemed interest of $163,592.  


                                       7
<PAGE>

                      CARING PRODUCTS INTERNATIONAL, INC.
                               AND SUBSIDIARIES
      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED:
             NINE-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997


(3)  LIQUIDITY, CONTINUED:

     In May and July 1997, the Company borrowed a total of $1,250,000 under a 
     note payable to Bradstone.  Interest on the note was payable monthly at 
     the Canadian prime rate plus 3%.

     In December 1997, the note payable to Bradstone was repaid, including 
     accrued interest of $65,983.

     In October and November 1997, Paulson Investment Company, Inc. 
     ("Paulson"), one of the representatives of the underwriters of the 
     Offering, loaned the Company a total of $550,000.  The loans were 
     non-interest bearing and were to be repaid by the Company out of the net 
     proceeds of the Offering. The Company repaid these loans in December 
     1997.

     As of December 31, 1997, the Company's principal sources of liquidity 
     included cash of $4,176,408, net accounts receivable of $216,625, and 
     inventories of $2,806,453.  The Company's operating activities used cash 
     of $2,776,915 during the nine month period ended December 31, 1997.  The 
     Company anticipates that the levels of inventories and accounts 
     receivable will vary commensurate with the Company's sales and, if sales 
     increase, may negatively impact cash resources.


                                       8
<PAGE>

                      CARING PRODUCTS INTERNATIONAL, INC.
                                AND SUBSIDIARIES
     NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED:
           NINE-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997


(4)  CONCENTRATION OF RISK

     The Company maintains cash equivalents with various financial 
     institutions located in the United States ("U.S.") and Canada.  The 
     Company's policy is to limit the exposure at any one financial 
     institution and to invest solely in highly liquid investments that are 
     readily convertible to cash.

     The Company sells its products to various customers located in the U.S. 
     and Canada.  The Company performs ongoing credit evaluations of its 
     customer's financial condition, and generally requires no collateral as 
     security against accounts receivables. Revenues from Canadian customers 
     represented approximately 30% for the nine month period ended December 
     31, 1996 and 5% for the three month period ended December 31, 1996.  
     Revenues from Canadian customers for the nine and three month periods 
     ended December 31, 1997 were 9% and 5% of total sales, respectively.  

     Approximately 52% of revenues were from one customer for the nine month 
     period ended December 31, 1997 representing a 2,000 store initial 
     roll-out, and approximately 42% of revenues were from three customers 
     for the nine month period ended December 31, 1996.  During the three 
     month period ended December 31, 1997, approximately 36% of revenues were 
     from three customers and approximately 67% of revenues were from three 
     customers for the three month period ended December 31, 1996.

     The Company currently purchases its products from a limited number of 
     suppliers, some of which are located in Canada or Mexico.  As there are 
     other manufacturers of products similar to those of the Company, 
     management believes that other suppliers could provide the Company's 
     products on comparable terms.   Management does not believe a change in 
     suppliers would cause a significant delay in obtaining sufficient 
     product quantities or result in a significant loss of sales.

(5)  DEFERRED FINANCING COSTS

     Costs relating to the Offering were deferred until the proceeds were 
     received by the Company on December 15, 1997, at which time they were 
     charged against the proceeds.

(6)  INVENTORIES

     As of December 31, 1997, inventories consisted of the following:

<TABLE>
<CAPTION>
     <S>                                <C>
     Finished goods                     $ 2,544,963
     Raw materials                          226,922
     Packaging                               34,568
                                        -----------
                                        $ 2,806,453
                                        -----------
                                        -----------
</TABLE>

                                          
                                       9
<PAGE>

                      CARING PRODUCTS INTERNATIONAL, INC.
                               AND SUBSIDIARIES
      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED:
            NINE-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997


(7)  LITIGATION

     The Company is subject to various claims and contingencies related to 
     lawsuits, taxes and other matters arising in the normal course of 
     business.  Management believes the ultimate liability, if any, arising 
     from such claims or contingencies is not likely to have a material 
     adverse effect on the Company's results of operations or financial 
     condition.

     In September 1997, the Company agreed with certain plaintiffs to settle 
     their litigation in consideration of the payment by the Company of 
     $25,000 on the earlier of the completion of the Offering or December 1, 
     1997, and the issuance to the plaintiffs of warrants to purchase an 
     aggregate of 8,000 shares of the Company's common stock at an exercise 
     price of Cdn. $5.04 per share, subject to Vancouver Stock Exchange 
     ("VSE") approval.  In October 1997, the VSE approved the settlement and 
     the warrants were issued on October 22, 1997.  The warrants expire on 
     October 21, 1999.  The payment of $25,000 was made in December 1997.

     In March 1996, the Company's Canadian pant subcontractor, LeGenereux 
     Clothing Company, Ltd. ("LeGenereux"), filed a lawsuit against the 
     Company claiming breach of its pant assembly agreement and claiming 
     liquidated damages in the amount of $913,607. In November 1997, the 
     Company was advised by LeGenereux that it had dropped its lawsuit 
     against the Company. No financial consideration was given to LeGenereux 
     as part of the settlement. LeGenereux returned raw materials provided by 
     the Company and no penalty was charged against LeGenereux for its 
     failure to assemble the remaining pants under the terms of the assembly 
     agreement. All returned raw materials have been sent to the Company's 
     Mexico-based subcontractor for assembly.

(8)  REVERSE STOCK SPLITS

     In June 1997, the Company completed a one-for-six reverse stock split of 
     its issued and outstanding common stock.  In October 1997, the Company 
     completed an additional one-for-four reverse stock split of its issued 
     and outstanding common stock. These consolidated financial statements 
     have been restated to reflect the reverse stock splits.

(9)  EARNINGS PER SHARE

     In February 1997, the Financial Accounting Standards Board (FASB) issued 
     SFAS No. 128, EARNINGS PER SHARE.  SFAS 128 establishes standards for 
     computing and presenting earnings per share ("EPS") and applies to 
     entities with publicly held common stock or potential common stock.  
     This statement is effective for financial statements issued for periods 
     ending December 15, 1997, including interim periods, and requires dual 
     presentation of basic and diluted earnings per share on the face of the 
     income statement.

     In accordance with SFAS No. 128, the computation of diluted EPS shall 
     not assume conversion, exercise, or contingent issuance of securities 
     that would have an antidilutive effect on earnings per share.  SFAS No. 
     128 also states that although including those potential common shares in 
     the other diluted per-share computations may be dilutive to their 
     comparable basic per-share amounts, no potential common shares shall be 
     included in the computation of any diluted per-share amount when a loss 
     from continuing operations exists, even if the entity reports net income.

     Due to the net loss position of the Company, only the net loss per 
     common share is presented on the face of the consolidated statements of 
     operations for the three and nine-month periods ended December 31, 1997.
     
     
                                       10
<PAGE>

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


OVERVIEW

     Caring Products International, Inc. (the "Company") has designed and 
     markets a line of proprietary urinary incontinence products that are 
     sold under the Rejoice brand name in the United States and Canada. 

     Historically, the Company's customer base has consisted primarily of 
     drug store chains and retail stores. The Company is now beginning to 
     enter certain healthcare markets through hospital supply companies and 
     other distributor relationships.

     Quarter to quarter, the Company's sales can fluctuate with the 
     introduction of a large retail or drugstore chain, with higher initial 
     product requirements to stock store shelves.  Additionally, gross 
     margins can fluctuate based on the mix of sales to healthcare and retail 
     products, as well as the type of products sold.  Gross profit margins 
     are also affected by the type of product sold as the Company sells down 
     higher costed inventory produced in Canada.  All of the Company's pants 
     are now being produced in Mexico, where Rejoice pants can be produced at 
     a significant savings compared to Rejoice pants which had been produced 
     in Canada.

RESULTS OF OPERATIONS

     Revenues increased from $1,403,822 for the nine month period ended 
     December 31, 1996 to $1,442,929 for the nine month period ended December 
     31, 1997, an increase of  3%.  Revenues decreased from $509,179 in the 
     three month period ended December 31, 1996 (the "1996 Period") to 
     $245,976 in the three month period ended December 31, 1997 (the "1997 
     period"), a decrease of 52%. The decrease in revenues during the 1997 
     Period was primarily the result of a spike in sales during the 1996 
     Period from initial orders from two drug store chains and a healthcare 
     distributor.  The Company did not ship any initial orders to large 
     chains or healthcare distributors during the 1997 Period. The increase 
     in revenues during the nine month period ended December 31, 1997 
     compared to the nine month period ended December 31, 1996 was primarily 
     attributable to new account roll-outs and the maintenance of pricing and 
     volume levels with existing customers. Re-order activity was 
     significantly affected by lack of cash available for advertising.

     Cost of sales decreased from $1,386,383 for the nine month period ended 
     December 31, 1996 to $804,083 for the nine month period ended December 
     31, 1997, a decrease of 42%.  Cost of sales decreased from $337,311 in 
     the 1996 Period to $151,921 in the 1997 Period, a decrease of 55%. The 
     decrease for both periods was primarily the result of the introduction 
     of retail pants produced by the Company's lower unit priced pant 
     subcontractor in Mexico during the latter part of the Company's fiscal 
     year ended March 31, 1997, the realization of a significant reduction in 
     Canadian-based production staff and facility costs during the nine 
     months ended December 31, 1997, and a lower cost per liner obtained from 
     the Company's liner subcontractor in the United States during the nine 
     month period ended December 31, 1997.  The cost of sales for the 1997 
     Period was also impacted by the net sales decrease for this period 
     compared with the 1996 Period.


                                       11
<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
          CONDITION AND RESULTS OF OPERATIONS, CONTINUED:

RESULTS OF OPERATIONS, CONTINUED:

     Gross profit on sales increased from $17,439 for the nine months ended 
     December 31, 1996 to $638,846 for the nine months ended December 31, 
     1997, an increase of 3,563%. The improvement of gross profit margins for 
     the nine month period ended December 31, 1997 primarily reflected the 
     lower unit priced pant produced in Mexico and the significant reduction 
     in Canadian-based staff and facility costs.  In addition, the Company 
     paid a lower cost per liner from its liner subcontractor in the United 
     States. Gross profit on sales decreased from $171,868 for the 1996 
     Period to $94,055 for the 1997 Period, a decrease of 45%.  The decrease 
     in gross profit margin in the 1997 Period compared to the 1996 Period 
     was primarily attributable to the product mix between healthcare and 
     retail and lower sales in the 1997 period.  Gross profit margins may 
     fluctuate in the future depending on changes in the mix of products 
     sold, the mix of sales by distribution channels and other factors such 
     as the sale of inventory with lower gross profit margins

OPERATING EXPENSES

     Total operating expenses decreased 5% from $864,518 in the 1996 Period 
     to $819,539 in the 1997 Period.  The decrease was primarily attributable 
     to an increase in selling expenses offset by a decrease in general and 
     administrative expenses.  Total operating expenses increased 8% from 
     $2,285,114 for the nine month period ended December 31, 1996 to 
     $2,462,536 for the nine month period ended December 31, 1997. Total 
     selling expenses increased 15% from $378,452 in the 1996 Period to 
     $434,680 in the 1997 Period, and 37% from $1,130,515 for the nine month 
     period ended December 31, 1996 to $1,546,564 for the nine month period 
     ended December 31, 1997.  The increase was primarily attributable to 
     increased promotional expenses to support large retail customers, 
     absorption of certain set-up costs for new customers, as well as 
     expenses associated with the Company's commencement of sales training 
     and initial market testing activities within the healthcare market.

     General and administrative expenses decreased 21% from $464,273 for the 
     1996 Period to $369,045 for the 1997 Period.  General and administrative 
     expenses decreased 20% from $1,085,630 for the nine month period ended 
     December 31, 1996 to $868,416 for the nine month period ended December 
     31, 1997.  These decreases are primarily attributable to the 
     consolidation of duplicate administrative functions in the Company's 
     offices in Canada and the United States, resulting in a related 
     reduction in administrative salaries, wages, and employee benefits, as 
     well as in various expenses required to support the Canadian office 
     including rent, telephone and office supplies.  In addition, the Company 
     utilized outside consulting and contract personnel during the 1996 
     Period, which were also eliminated with the consolidation of the 
     Canadian and U.S. offices.  
     

                                      12
<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
          CONDITION AND RESULTS OF OPERATIONS, CONTINUED:

OTHER INCOME (EXPENSE), NET

     The Company generated $101,257 in interest income during the 1996 Period 
     as compared to $7,921 in the 1997 Period.  The Company generated 
     $190,561 in interest income during the nine month period ended December 
     31, 1996 as compared to $54,569 during the nine month period ended 
     December 31, 1997.  The decrease in interest income is attributable to 
     lower average deposit balances.  Interest income was offset by interest 
     expense of $44,337 during the 1996 Period as compared to $164,834 for 
     the 1997 Period, and $134,644 for the nine month period ended December 
     31, 1996 as compared to $386,210 for the nine month period ended 
     December 31, 1997.  The increase in interest expense related to the 
     increase in short-term and long-term borrowings, as well as the 
     recognition of the unamortized deemed interest as expense upon the 
     repayment of borrowings under the Company's line of credit in December 
     1997. 

REVERSE STOCK SPLITS

     In June 1997, the Company completed a one-for-six reverse stock split of 
     its issued and outstanding common stock, and in October, 1997 the 
     Company completed an additional one-for-four reverse stock split of its 
     issued and outstanding common stock.  These consolidated financial 
     statements have been restated to reflect the reverse stock splits.

LIQUIDITY AND CAPITAL RESOURCES

     The Company has historically financed its operations through private 
     placements of its equity securities as well as various debt financing 
     transactions.

     On December 15, 1997, the Company completed a public offering ("the 
     Offering") of 1,750,000 units at $5.00 per unit, each unit consisting of 
     one share of the Company's common stock and a five-year warrant to 
     purchase one additional share at a price equivalent to 150% of the unit 
     price. Proceeds from the Offering were $6,840,946, net of deferred 
     financing costs.

     All of the Company's outstanding debt was repaid in December 1997 with 
     proceeds from the Offering.

     In April 1997, the Company obtained a line of credit with Toronto 
     Dominion Bank in the amount of Cdn. $1,750,000. Borrowings bore 
     interest at the Canadian prime rate plus .25%. The Company issued to the 
     guarantor Bradstone Equity Partners, Inc., f/k/a H.J. Forest Products, 
     Inc. ("Bradstone") warrants to purchase 31,667 shares of the Company's 
     Common Stock. The warrants were recorded on issuance at their estimated 
     fair market value of $163,592 with a corresponding reduction in the 
     recorded value of the line of credit.  The debt discount was being 
     amortized to interest expense over the term of the line of credit.

     The Company repaid borrowings under the line of credit in December 1997, 
     which were $1,252,715, net of deemed interest of $163,592. 

                                      13
<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
          CONDITION AND RESULTS OF OPERATIONS, CONTINUED:


LIQUIDITY AND CAPITAL RESOURCES, CONTINUED:

     In May and July 1997, the Company borrowed a total of $1,250,000 under a 
     note payable to Bradstone.  Interest on the note was payable monthly at 
     the Canadian prime rate plus 3%.

     In December 1997, the note payable to Bradstone was repaid, including 
     accrued interest of $65,983.

     In October and November 1997, Paulson Investment Company, Inc. 
     ("Paulson"), one of the representatives of the underwriters of the 
     Offering, loaned the Company a total of $550,000.  The loans were 
     non-interest bearing and were to be repaid by the Company out of the net 
     proceeds of the Offering. The Company repaid these loans in December 
     1997.

     As of December 31, 1997, the Company's principal sources of liquidity 
     included cash of $4,176,408, net accounts receivable of $216,625, and 
     inventories of $2,806,453.  The Company's operating activities used 
     cash of $2,776,915 during the nine month period ended December 31, 1997. 
     The Company anticipates that the levels of inventories and accounts 
     receivable will vary commensurate with the Company's sales and, if sales 
     increase, may negatively impact cash resources.


                                      14
<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
          CONDITION AND RESULTS OF OPERATIONS, CONTINUED:


FORWARD LOOKING STATEMENTS
     
     This Form 10-QSB and other reports and statements filed by the Company 
     from time to time with the Securities and Exchange Commission 
     (collectively, the "Filings") contain or may contain forward-looking 
     statements and information that are based upon beliefs of, and 
     information currently available to, the Company's management, as well as 
     estimates and assumptions made by the Company's management.

     When used in the Filings, the words "anticipate", "believe", "estimate", 
     "expect", "future", "intend", "plan" and similar expressions, as they 
     relate to the Company or the Company's management, identify 
     forward-looking statements.  Such statements reflect the current view of 
     the Company with respect to future events and are subject to risks, 
     uncertainties and assumptions relating to the Company's operations and 
     results of operations, competitive factors and pricing pressures, shifts 
     in market demand, the performance and needs of the industries which 
     constitute the customers of the Company, the costs of product 
     development and other risks and uncertainties, including, in addition to 
     any uncertainties with respect to management of growth, increases in 
     sales, the competitive environment, hiring and retention of employees, 
     pricing, new product introductions, product productivity, distribution 
     channels, enforcement of intellectual property rights, possible 
     volatility of stock price and general industry growth and economic 
     conditions.  Should one or more of these risks or uncertainties 
     materialize, or should the underlying assumptions prove incorrect, 
     actual results may differ significantly from those anticipated, 
     believed, estimated, expected, intended or planned.

                                          
                                        15
<PAGE>

                                      PART II
                                 OTHER INFORMATION

Item 1.  Legal Proceedings.

         The Company is subject to various claims and contingencies related 
         to lawsuits, taxes and other matters arising in the normal course of 
         business.  Management believes the ultimate liability, if any, 
         arising from such claims or contingencies is not likely to have a 
         material adverse effect on the Company's results of operations or 
         financial condition.

         In September 1997, the Company agreed with certain plaintiffs to 
         settle their litigation in consideration of the payment by the 
         Company of $25,000 on the earlier of the completion of the Offering 
         or December 1, 1997, and the issuance to the plaintiffs of warrants 
         to purchase an aggregate of 8,000 shares of the Company's common 
         stock at an exercise price of Cdn. $5.04 per share, subject to 
         Vancouver Stock Exchange ("VSE") approval.  In October 1997, the VSE 
         approved the settlement and the warrants were issued on October 22, 
         1997.  The warrants expire on October 21, 1999. The payment of 
         $25,000 was made in December 1997.

         In March 1996, the Company's Canadian pant subcontractor, 
         LeGenereux Clothing Company, Ltd. ("LeGenereux"), filed a lawsuit 
         against the Company claiming breach of its pant assembly agreement 
         and claiming liquidated damages in the amount of $913,607. In 
         November 1997, the Company was advised by LeGenereux that it had 
         dropped its lawsuit against the Company. No financial consideration 
         was given to LeGenereux as part of the settlement. LeGenereux 
         returned raw materials provided by the Company and no penalty was 
         charged against LeGenereux for its failure to assemble the 
         remaining pants under the terms of the assembly agreement. All 
         returned raw materials have been sent to the Company's Mexico-based 
         subcontractor for assembly.

Item 2.  Changes in Securities.

         During the quarter ended December 31, 1997, the Company completed a 
         one-for-four reverse stock split of its issued and outstanding 
         common stock which was effected on October 20, 1997.

         On December 15, 1997, the Company completed a public offering, 
         consisting of 1,750,000 units which are exercisable for one share 
         of the Company's common stock and a five-year warrant to purchase 
         one additional share at a price equivalent to 150% of the unit price.

Item 3.  Defaults Upon Senior Securities.

         None.

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

         None.

Item 5.  Other Information.

         None.

Item 6.   Exhibits and Reports on Form 8-K.

          (a)  Exhibits:
                    27.1 - - Financial Data Schedule

          (b)  Reports on Form 8-K:

                    None.


                                      16
<PAGE>

                                   SIGNATURES


     In accordance with the requirements of the Securities Exchange Act of 
1934, the Registrant has duly caused this Report to be signed on its behalf 
by the undersigned, hereunto duly authorized.

                                       CARING PRODUCTS INTERNATIONAL, INC.
                                                  (REGISTRANT)


DATE:  FEBRUARY 17, 1998               BY: /S/ SUSAN A. SCHRETER
                                           -------------------------
                                                 SUSAN A. SCHRETER
                                                 PRESIDENT


                                      17