FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

(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, 1995

         (   )    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 1-5292

                                MEM COMPANY, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

            NEW YORK                                            13-5546930
-------------------------------                          -----------------------
(State or other jurisdiction of                             (I. R. S. Employer
 incorporation or organization)                           Identification Number)

         UNION STREET EXTENSION
         NORTHVALE, NEW JERSEY                                          07647
----------------------------------------                              ----------
(Address of principal executive offices)                              (Zip Code)

Registrant's telephone number, including area code: (201) 767 - 0100

Securities registered pursuant to Section 12 (b) of the Act:

                                                          Name of each exchange
    Title of each class                                    on which registered
----------------------------                             -----------------------
Common stock, $.05 par value                             American Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act:       NONE
<PAGE>
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                          YES  [ X ]         NO [  ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  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.

There were  2,583,184  shares of the  Registrant's  Common Stock  outstanding at
March  13,  1996.  The  aggregate  market  value  of the  Common  Stock  held by
non-affiliates  of the Registrant  (based upon the closing price of the stock on
the American Stock Exchange as reported in the Wall Street Journal) on March 13,
1996 was $2,955,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

The following documents,  or portions thereof,  have been incorporated herein by
reference:

(i) portions of the  Registrant's  definitive proxy statement to be furnished in
connection  with its Annual  Meeting of  Shareholders  to be held April 23, 1996
(the "Definitive  Proxy  Statement") have been incorporated by reference in Part
III hereof.

                                     PART I

Item 1.   Business

         (a)  General Development of Business

         MEM Company,  Inc. (the "Company" or the "Registrant") was incorporated
in 1948 under the laws of the State of New York.  The  business  of the  Company
principally  consists of  manufacturing,  selling and distributing a diversified
line of toiletries in several  fragrance  groups.  These are marketed  under the
nationally  advertised  trademarks  English  Leather(R)  , British  Sterling(R),
Heaven Sent(R), LOVE'S(R), and Tinkerbell(R).  The Company also markets Acqua di
Selva(R),  a  premium  priced  imported  line of  men's  toiletries,  through  a
subsidiary.

         In May  1994,  the  Company  acquired  the  trademark  and  inventories
relating to the British  Sterling(R)  fragrance line of men's  products.  In mid
1994, the Company  introduced the Timberline(R)  fragrance line for young men in
the  "Generation X" category and in the women's  product  category,  the Company
began  marketing  its Heaven Sent  Vanilla line and also  introduced  the Love's
Frenzy(R) and Love's Clean & Natural  product lines.  In 1995, the Company began
marketing its Love's White Vanilla line.
<PAGE>
         The Company  manufactures and markets Heaven Sent(R), a line of women's
fragrance  items,  in the United  States  and  Canada and owns the  distribution
rights in Puerto Rico and elsewhere in the Western Hemisphere.  The Company also
manufactures  and  distributes,   under  the  trademark  LOVE'S(R),  a  line  of
toiletries,  cosmetics and  accessories  for teenage girls which are distributed
through franchised  dealers  consisting  primarily of chain and independent drug
stores,  mass  merchandisers  and  department  stores in the  United  States and
Canada.

         Tom Fields,  Ltd. ("Tom Fields") operates as a division of the Company.
Tom  Fields  manufactures  and  markets  a  line  of  children's  cosmetics  and
accessories  principally under the trademark  Tinkerbell(R).  A subsidiary,  Tom
Fields  (U.K.)  Ltd.,  markets  this line of  children's  products in the United
Kingdom and in Europe.

         The  principal  market  for all of the  above  products  is the  United
States.  No significant  change occurred during the fiscal year 1995 in kinds of
products, markets or methods of distribution.

         (b)  Financial Information About Industry Segments

         The Company  operates  in one  industry  segment:  the  production  and
distribution of toiletries and accessories for men, women and children.

         Consolidated  financial information relating to product lines, domestic
and foreign  operations  and export sales for the years ended  December 31 is as
follows ($000 omitted):
<TABLE>
<CAPTION>
                                                 1995        1994        1993
                                               --------    --------    --------
<S>                                            <C>         <C>         <C>     
Sales by product lines:
     English Leather and other men's .......   $ 22,226    $ 29,484    $ 17,287
     Women's ...............................     11,452      12,623      11,171
     Tinkerbell ............................     11,147      10,987       9,996
                                               --------    --------    --------
                                               $ 44,825    $ 53,094    $ 38,454
                                               ========    ========    ========

Sales to unaffiliated customers:
     United States .........................   $ 37,130    $ 46,029    $ 31,798
     Canada ................................      2,884       2,894       2,709
     United Kingdom ........................      3,907       3,144       2,502
     Export sales to other countries .......        904       1,027       1,445
                                               --------    --------    --------
                                               $ 44,825    $ 53,094    $ 38,454
                                               ========    ========    ========

Income (loss) before interest and taxes:
     United States .........................   $ (1,390)   $   (169)   $ (1,665)
     Canada ................................       (133)        (15)       (316)
     United Kingdom ........................        143         (32)       (100)
                                               --------    --------    --------
                                               $ (1,380)   $   (216)   $ (2,081)
                                               ========    ========    ========

Identifiable assets:
     United States .........................   $ 40,205    $ 42,772    $ 29,983
     Canada ................................      3,057       2,763       2,881
     United Kingdom ........................      2,562       1,726       1,418
                                               --------    --------    --------
                                               $ 45,824    $ 47,261    $ 34,282
                                               ========    ========    ========
</TABLE>
<PAGE>
         (c)  Narrative Description of Business

         The  Company  is  principally  engaged  in the  manufacture,  sale  and
distribution  of a diversified  line of  toiletries  and  accessories  under the
nationally  advertised  trademarks  English  Leather(R),   British  Sterling(R),
Timberline(R), Love's(R), Heaven Sent(R) and Tinkerbell(R). The principal market
for these products is the continental United States with a distribution  service
network consisting of three warehouse locations.

         The primary  shipping  location is Northvale,  New Jersey and two other
distribution  warehouses  are located in Texas and  California.  The  toiletries
industry is highly  competitive and, based on available  industry  sources,  the
Company believes that it is among the leading  producers of products sold within
the same price range as its products.

         Although  the Company and its  subsidiaries  are not  dependent  upon a
single  customer  or a very few  customers  for  their  business,  one  national
customer  represented  13% of net sales in 1995 and 14% in 1994. The Company has
done  substantial  business  with this customer for several years and feels they
have a good business relationship.  Although the total loss of business with the
customer  would have a material  adverse  effect,  the  Company  considers  that
possibility  to be remote.  Due to the  seasonal  nature of the business and the
heavy  volume  of  shipments  made in the last  half of the  year,  there was no
significant  backlog of orders as of December 31, 1995 or 1994. In 1995 and 1994
the last  half of the  calendar  year  accounted  for 75% and 79% of net  sales,
respectively.  The related  inventory  requirements and accounts  receivable are
financed by the Company's revolving credit agreement. Present supply sources are
adequate for the requirements of the business and several  alternate sources are
available if needed. For the protection against misuse by others, the trademarks
under which most of the toiletry and accessory  products are sold by the Company
have been  registered  in the  United  States  Patent  Office  and in many other
countries.  At December 31, 1995, the Company and its subsidiaries  employed 391
persons.

         The  Company's  terms of sale do not provide the purchaser any right to
return merchandise to the Company. Returns of merchandise which has been damaged
and of seasonal  merchandise must be approved by the Company before the customer
receives credit,  which the Company does not unreasonably  withhold.  Orders are
generally shipped promptly after receipt and cancellations have been negligible.

         The Company  owns the majority of the  trademarks  under which it makes
its products for which it pays no royalties. It uses certain trademarks pursuant
to licensing  agreements which generally  provide for royalties based on the net
sales volume of trademarked  products.  In 1993 the Company exercised its option
to make a one time  $500,000  payment  under a  licensing  agreement  in lieu of
making any future royalty  payments  under the  agreement.  Royalties were not a
material  portion of the Company's  costs during the Company's last three fiscal
years. All the licenses are of perpetual duration.

         The Company's expenditures for research and development were immaterial
during the years ended December 31, 1995, 1994 and 1993.
<PAGE>
Item 1A.  Executive Officers of the Registrant   (See Item 10 herein)

     All of the  officers  set forth below have been  elected to serve until the
next  Annual  Meeting  of the  Company's  Board  of  Directors  or  until  their
successors are elected and qualified.
<TABLE>
<CAPTION>
                                                                                               Officer
Name                                Office Held                                 Age             Since
----                                -----------                                 ---            -------
<S>                                 <C>                                         <C>              <C> 
Gay A. Mayer                        Chairman of the Board,                      53               1966
                                    President, Chief Executive Officer

Michael G. Kazimir, Jr.             Executive Vice President,                   52               1990
                                    Chief Operating Officer,
                                    Chief Financial Officer

Brian C. McNally                    Senior Vice President, Sales                39               1995

Steven M. Feigenbaum                Vice President, Sales                       48               1991

Robert O. Hurry                     Vice President, Finance and Treasurer       57               1966

Donald E. Jensen                    Vice President, Operations                  51               1994

Nicholas J. Marinacci               Vice President, Marketing                   48               1994

Nicholas A. Villanova               Vice President, Purchasing &                48               1995
                                    Package Development

Margaret A. Powers                  Secretary                                   61               1983
</TABLE>

     All officers  serve at the pleasure of the Board of  Directors.  All of the
above  executive  officers  have  served as such for the past five years  except
Messrs. Kazimir, McNally, Feigenbaum, Jensen, Marinacci and Villanova.

         Mr. Kazimir was elected  Executive  Vice President and Chief  Operating
Officer in March, 1993. Previously, he had been Senior Vice President of Finance
and  Administration,  Chief Financial Officer since November,  1990. He had been
the  President  of his own  consulting  firm for two years prior to joining MEM.
Before that he was with Elizabeth Arden, Inc. in various financial and operating
capacities.

     Mr.  McNally  previously  had been Director of National  Accounts and Trade
Relations at Church & Dwight, Inc., a consumer packaged goods company, from 1994
to 1995.  From 1988 to 1994, he was Director of Field Sales USA for  Beiersdorf,
Inc., also a consumer packaged goods company.

         Mr.  Feigenbaum,  before  becoming Vice President of Sales in 1991, was
National Sales Manager since 1989.

         Mr. Jensen,  before  becoming Vice President of Operations in 1994, was
Director  of  Operations   since  1993.  Prior  to  that,  he  was  Director  of
Manufacturing since his employment in 1986.
<PAGE>
         Mr.  Marinacci,  prior to becoming Vice President of Marketing in 1994,
had been  employed by Houbigant,  Inc.  since 1989 in various  capacities.  From
March 1993 to April 1994, he was Vice  President of  Operations  and in 1992 and
1993 he was  Vice  President,  Corporate  Marketing.  From  1989 to 1992 he held
various marketing positions.  Houbigant,  Inc. entered Chapter 11 proceedings in
November,  1993, and Mr. Marinacci also served as acting Chief Operating Officer
from December, 1993 to April, 1994.

         Mr.  Villanova  previously  had been Vice  President of Purchasing  and
Package Development at Dawson Home Fashions, a manufacturer of bath accessories,
from  1993 to  1995.  Prior  to that he was  Vice  President  of  Operations  at
Perfumers  Workshop,  Ltd., a  manufacturer  of  fragrances,  from 1991 to 1992.
Previously he held several positions at Cosmair, a manufacturer of hair care and
cosmetics,  from  1983 to  1991,  the  most  recent  of which  was  Director  of
Logistics.

Item 2.  Properties

         The facilities and plant  machinery and equipment  owned by the Company
and its subsidiaries are, in the opinion of management, adequate for the conduct
of its business, and are well maintained and in good condition.

         The Company's executive offices and main plant are located in a 206,000
square foot building located on 16.3 acres in Northvale, New Jersey and owned by
the Company. The Tom Fields plant is located in a 53,000 square foot building in
Northvale, New Jersey and is owned by a subsidiary of the Company. Manufacturing
facilities in Canada are located in a 32,000 square foot plant in  Boucherville,
Quebec which is owned by MEM Company  (Canada) Ltd. Tom Fields (U.K.)  assembles
products in leased facilities in Folkestone, Kent.

Item 3.  Legal Proceedings

         No material legal  proceedings,  other than ordinary routine litigation
incidental  to the  business,  are  pending  to which the  Company or any of its
subsidiaries is a party or of which any of their property is the subject.

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

         Not applicable

<PAGE>
                                     PART II

Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters

        Quarterly Market and Dividend Information

         The  common  stock of the  Company  is  traded  on the  American  Stock
Exchange  under the ticker symbol MEM. As of March 6, 1996, the number of record
holders of common stock was 416. The quarterly high and low sales prices for the
past two years are as follows:
<TABLE>
<CAPTION>
                                                Price Range of Common Stock
                                                1995                    1994
                                          -----------------       -----------------
                                          High         Low        High         Low
                                          -----       -----       -----       -----
<S>                                       <C>         <C>         <C>         <C>  
First Quarter ..................          $4.63       $3.13       $4.50       $3.88
Second Quarter .................           4.00        3.25        4.50        3.88
Third Quarter ..................           3.75        3.25        6.38        3.88
Fourth Quarter .................           3.75        2.75        5.63        3.75
</TABLE>

The Company has not declared  any cash  dividends  for the past five years,  and
does not  anticipate  that  dividends  will be paid in the  foreseeable  future.
Restrictions on dividend payments contained in the Company's financing agreement
currently  prohibit the  declaration  of dividends if the Company  operates at a
loss.

Item 6.  Selected Financial Data.  (In thousands, except per share figures)
<TABLE>
<CAPTION>
                                                        Years Ended December 31,
                                    1995           1994           1993           1992           1991
                                  --------       --------       --------       --------       --------
<S>                               <C>            <C>            <C>            <C>            <C>     
Summary of Operations:
Net sales ..................      $ 44,825       $ 53,094       $ 38,454       $ 44,751       $ 57,949
Net income (loss) ..........      $ (2,982)      $ (1,328)      $ (2,570)      $ (4,300)      $     44
    Per share ..............      $  (1.16)      $   (.52)      $  (1.00)      $  (1.67)      $    .02
Dividends declared .........      $   --         $   --         $   --         $   --         $   --
Weighted average shares
    outstanding ............         2,581          2,576          2,572          2,571          2,570

Year-End Financial Position:
Working capital ............      $ 11,971       $ 15,602       $ 18,068       $ 19,636       $ 24,471
Property, plant and
    equipment-net ..........      $  5,181       $  5,324       $  5,513       $  6,084       $  6,685
Total assets ...............      $ 45,824       $ 47,261       $ 34,282       $ 39,514       $ 43,626
Long term notes ............      $  3,370       $  4,907       $    699       $   --         $    838
Stockholders' equity .......      $ 24,657       $ 27,496       $ 28,919       $ 31,589       $ 36,310
Stockholders' equity
    per share ..............      $   9.55       $  10.66       $  11.24       $  12.29       $  14.13
Shares outstanding at end
    of year ................         2,583          2,580          2,573          2,571          2,570
</TABLE>
<PAGE>
Item 7.  Management's Discussion and Analysis of Financial Condition and Results
              of Operations

1995 Compared to 1994

         Consolidated net sales in 1995 were 16% lower than in 1994.  Almost all
of the decline  occurred in the men's product  lines.  Net sales of  Timberline,
which was introduced in 1994, declined by $4,200,000, reflecting the decision by
several major  customers not to re-purchase  the line in 1995.  Sales of English
Leather fragrance  products declined  $1,300,000 and British Sterling sales were
$900,000  lower than in 1994.  Sales of women's  products  declined  $1,200,000,
principally  due to lower  sales of Heaven Sent  products.  Sales of Love's Baby
Soft  products  were about the same as in 1994.  Sales of Love's White  Vanilla,
introduced  in 1995,  offset sales  declines in Love's Frenzy and Love's Clean &
Natural product lines.  Overall  Tinkerbell  sales  increased  modestly over the
prior year,  with a 24% sales growth in the United  Kingdom.  This was partially
offset by lower sales to a large customer in the United States.  The decrease in
overall  sales was  primarily  the result of lower unit sales.  Unit sales price
increases in 1995 were not significant.

         Sales in the United  States were 19% lower than in 1994,  half of which
was the decline in Timberline sales. The retail environment continued to be very
nervous,  with most major  retailers  continuing to reduce their  commitments to
inventories  of  fragrance  products.  This,  coupled  with the loss of sales to
customers who had filed for bankruptcy  protection earlier in the year, resulted
in a 26%  decline  in  fourth  quarter  shipments.  Sales of men's  and  women's
fragrances  also  continued  to be impacted by  competition  from higher  priced
"prestige" fragrances being sold in the Company's distribution channels and from
larger  companies with greater  resources to commit to advertising and marketing
programs.

         Canadian  sales were the same in 1995 as in 1994,  but higher  costs of
goods sold resulted in a higher operating loss than in 1994. Tinkerbell sales in
the  United  Kingdom  continued  their  growth  pattern  and as a  result,  this
subsidiary  produced  a modest  profit  for the year.  Overall,  the  effects of
inflation  and  exchange  rate  fluctuations  were  not  material.  The  Company
continues to  investigate  opportunities  to develop or acquire  contra-seasonal
brands or products to compensate for the current seasonality of its business.

         Retailers  continue  to  consider  fragrance  merchandise  to be highly
promotional and seasonal,  and request permission to return unsold goods. During
the past several years,  management has worked closely with customers concerning
their level of anticipated sales. However, the generally weak retail environment
during  1995  resulted  in an  increase  in actual  and  anticipated  returns of
$250,000  compared  to 1994  despite  the  lower  sales  level in 1995,  and the
percentage of returns to gross sales increased to 18% in 1995 from 15% in 1994.

         Cost of sales rose in relation to sales from 54% to 57%  primarily as a
result of lower 1995 sales of Timberline  products,  which have a  substantially
lower  cost of  goods  than  other  products.  In  addition,  the  cost of goods
percentage  was adversely  affected by the higher per unit  manufacturing  costs
resulting  from  lower  production  levels in 1995.  Shipping  and  distribution
expenses were slightly lower in relation to sales in 1995 than in 1994.  Selling
expenses,  which are relatively fixed in nature, declined modestly in amount but
rose in relation to sales. Marketing expenses declined significantly from 23% to
19% of  sales  in 1995.  This  reduction  is  primarily  due to the  substantial
expenditures  incurred in 1994 in the  introduction of the Timberline  fragrance
line  which were not  repeated  in 1995.  Marketing  expenses  for other  brands
increased by approximately  $750,000 in 1995. General and administrative expense
was at the same level as in 1994.  A decrease  of $77,000 in the  provision  for
doubtful accounts was offset by increases in personnel and consulting expenses.

         Royalty income  increased as a result of higher  amounts  received from
both English  Leather and Tinkerbell  licensing  arrangements.  Interest  income
declined as a result of the  collection of a note  receivable  which was paid in
full in October, 1994.  Amortization of intangibles increased as a result of the
inclusion of amortization of the British  Sterling  trademark for a full year in
1995 compared to seven months in 1994.  Interest expense  increased $43,000 as a
result of the long term notes (net of repayments)  issued in connection with the
British  Sterling  acquisition in May,  1994,  and also increased  $447,000 as a
result of higher  short term loans  outstanding  during  1995 to finance  higher
receivables and inventories during the year and for funds utilized to repay long
term notes.  Interest rates on borrowings  were  approximately  100 basis points
higher in 1995 than in 1994.  The Company has over  $11,150,000  of domestic and
foreign income tax loss carryforwards and accordingly does not anticipate paying
income taxes until future earnings exceed the carryforwards.

1994 Compared to 1993

         Consolidated net sales in 1994 were 38% higher than in 1993. This sales
increase resulted primarily from the acquisition of the British Sterling line of
men's  toiletries  in May, 1994 from the Speidel  Division of Textron,  Inc. and
from the introduction of the Timberline  fragrance line for "Generation X" young
men.  In  addition,  the Company  introduced  its Heaven  Sent  Vanilla  line of
fragrance  products,  the Love's  Frenzy  product  line and the  Love's  Clean &
Natural  environmentally  sensitive  product  line.  All of these new brands and
products were sold through the Company's  existing  channels of  distribution by
its regular salesforce.  Sales of English Leather fragrances  increased modestly
over 1993,  and sales of Love's  Baby Soft and Heaven Sent were  slightly  lower
than in 1993, excluding the new products. Sales of Tinkerbell products increased
almost  $1,000,000,  of which  $642,000  came  from the  United  Kingdom.  Lower
domestic  Tinkerbell  sales of $1,090,000  were  primarily the result of no 1994
sales to a customer  with a sizable 1993 volume,  and this decline was more than
offset  by  a  decline  in  returns  of  $1,250,000.  The  increase  in  overall
consolidated  sales was primarily the result of higher unit sales, as unit sales
price increases in 1994 were not significant.

         Sales in the United  States  increased 45% as the result of new product
sales.  This sales growth was achieved in spite of the fact that some  retailers
continued  to reduce  their  commitments  to  fragrance  products,  and most all
continued their efforts to minimize their inventory investment.  Fragrance sales
were  impacted  by  competition  from  "prestige"  fragrances  being sold to the
Company's  customers  and from  companies  with  larger  resources  to commit to
advertising and marketing programs.

         Canadian  sales were up 13% in local  currency  and 7% in U. S.  dollar
equivalent,  and the  operating  loss was sharply  reduced  from the prior year.
Tinkerbell  sales in the United Kingdom  increased over 25% and are  approaching
the volume necessary to achieve profitable operations.  The effects of inflation
and exchange rate fluctuations were not material.

         During  the past few years,  management  has  worked  closely  with the
customers  concerning their level of anticipated sales. As a result,  actual and
anticipated  returns  decreased by $100,000 in 1994 compared to 1993 despite the
significantly higher sales level in 1994, and the percentage of returns to gross
sales decreased to 15% in 1994 from 20% in 1993.

         Cost of sales  declined  in relation to sales from 59% of sales in 1993
to 54% in 1994.  The primary  reason for this  improvement  was the higher gross
margins  on the new  brands  introduced  in  1994,  principally  Timberline.  In
addition,  production  costs  were  lower  in 1994 due to  higher  manufacturing
volume.  Selling and shipping expense increased from 34% of sales in 1993 to 37%
in 1994.  Shipping and distribution  expenses were slightly lower in relation to
sales in 1994 than in 1993. Selling expenses remained the same despite the large
sales  increase,  reflecting  the  relatively  fixed  nature of these  expenses.
Marketing  expenses rose  significantly from 17% of sales in 1993 to 23% in 1994
principally  as a result of  expenditures  incurred in the  introduction  of the
Timberline   fragrance  line.  General  and  administrative   expense  increased
$311,000,  which  resulted  from an  increase  in the  provision  for  losses on
accounts  receivable.  Personnel and other administrative costs were the same as
in 1993.

         Royalty income  decreased in 1994 due to lower amounts  received from a
Tinkerbell licensee.  Amortization of intangibles increased due to the inclusion
of amortization of the British  Sterling  trademark since June,  1994.  Interest
expense  increased  $429,000 as the result of new long term debt incurred during
the year and  increased  $193,000  as the  result of  higher  short  term  loans
outstanding  during  the year and a modest  increase  in  interest  rates  paid.
Financing costs decreased in 1994 due to certain  non-recurring charges in early
1993 in connection with a prior financing agreement.

Liquidity and Capital Resources

         The Company's business is highly seasonal.  In the first nine months of
the year, cash is required to buy and manufacture inventories. The peak shipping
months  are from  August  through  November  and funds are  required  to finance
accounts receivable from shipment date to December and January, when the Company
receives significant cash collections.  To finance these needs, the Company uses
its working  capital,  which was $11,971,000 at the end of 1995, and a revolving
credit agreement with a financial  institution  expiring in 1999, which provides
for a $17,500,000  line of credit,  based on eligible  collateral.  This line of
credit may be increased to $20,000,000  during peak seasonal  periods.  In 1995,
the maximum amount  outstanding on short-term  borrowings  was  $16,590,000.  At
December 31, 1995,  short-term loans of $10,296,000  were outstanding  under the
agreement.  The borrowings were  subsequently  reduced to $3,880,000 in February
1996. The revolving  credit  agreement  contains a prohibition on the payment of
dividends if the Company  operates at a loss,  and considers a material  adverse
change as a potential  event of default.  There are no material  commitments for
capital expenditures.

         Net  cash  used in  operating  activities  in 1995 was  $2,071,000  and
resulted  primarily  from the  loss  incurred  for the  year.  Depreciation  and
amortization  increased  $175,000  due  to  a  full  year  of  British  Sterling
amortization in 1995 and a decrease in depreciation expense of $96,000. Accounts
receivable  increased  $2,072,000  due to a reduction  in  allowances  for sales
returns and advertising from 1994 levels and decreased $1,171,000 as a result of
lower  business  activity in 1995. The decline in second half sales exceeded the
decline in  receivables,  reflecting  slower  payments by vendors.  Inventories,
other current assets,  accounts payable and other accrued expenses all decreased
as a result  of the  lower  volume  of  business  in 1995.  The net cash used in
operations,  for  additions to plant and equipment and for payments of long-term
notes was mainly financed by an increase in short-term  borrowings of $4,263,000
at December 31, 1995.

Item 8.  Financial Statements and Supplementary Data

         The  Company's  consolidated   financial  statements,   the  Report  of
Independent  Auditors  thereon and related schedule appear on pages F-2 to F-14.
See  Index  to  Consolidated   Financial   Statements  and  Financial  Statement
Schedules, page F-1.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         Not Applicable.
<PAGE>
                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

         Information   with   respect  to  the   directors  of  the  Company  is
incorporated  by reference  to the  information  under the caption  "Election of
Directors -  Information  Concerning  Nominees for Election as Directors" of the
Definitive Proxy Statement.  Information with respect to the executive  officers
of the Company is set forth in Item 1A of this Form 10-K.

Item 11.  Executive Compensation

         Information with respect to Item 11 is incorporated by reference to the
information under the caption  "Election of Directors - Executive  Compensation"
of the Definitive Proxy Statement.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

         Information with respect to Item 12 is incorporated by reference to the
information  under the caption  "Election of Directors - Information  Concerning
Nominees  for  Election as  Directors"  and  "Election  of  Directors  Principal
Shareholders" of the Definitive Proxy Statement.

Item 13.  Certain Relationships and Related Transactions

         Not Applicable

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)      Financial Statements, Financial Statement Schedules and Exhibits.

         (1)  Financial  Statements  - See  accompanying  Index to  Consolidated
Financial Statements and Financial Statement Schedules, Page F-1.

         (2)  Financial   Statement   Schedules  -  See  accompanying  Index  to
Consolidated Financial Statements and Financial Statement Schedules, Page F-1.

         (3) See Exhibit Index on page 16.

(b)      Reports on Form 8-K

                  The Registrant did not file any reports on Form 8-K during the
quarter ended December 31, 1995.
<PAGE>
                                   SIGNATURES

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


                                              MEM COMPANY, INC.


Date:   March 19, 1996                         By: /S/ Michael G. Kazimir, Jr.
                                                   ---------------------------
                                                     Michael G. Kazimir, Jr.
                                                     Executive Vice President
                                                     Chief Operating Officer
                                                     and Chief Financial Officer



         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.



/S/  Michael G. Kazimir, Jr.                         /S/ Michael G. Kazimir, Jr.
----------------------------                         ---------------------------
Michael G. Kazimir, Jr.                              Michael G. Kazimir, Jr.
as Attorney-in-Fact for:                             Executive Vice President
Gay A. Mayer, Chairman,                              Chief Financial and
      President, Chief Executive                     Accounting Officer
      Officer and Director                           March 19, 1996
Robert E. Mulcahy, III, Director
Paul Hallingby, Jr., Director
Laurette M. Beach, Director
Derek B. Van Dusen, Director
Bruce J. Klatsky, Director
March 19, 1996
<PAGE>
                                  Exhibit Index
<TABLE>
<CAPTION>
Exhibit No.          Document
-----------          --------
<S>                  <C>
3 (A)                Certificate of Incorporation. Incorporated by reference
                     from the Registrant's Form 10-K for the fiscal
                     year ended December 31, 1980

3 (B)                Amendment to the Certificate of Incorporation dated April 28, 1988.
                     Incorporated by reference from the Registrant's Form 10-K for the fiscal
                     year ended December 31, 1988.

3 (C)                Amendment to the Certificate of Incorporation dated June 19, 1988.
                     Incorporated by reference from the Registrant's Form 10-K for the fiscal
                     year ended December 31, 1988.

3 (D)                Amendment to the Certificate of Incorporation dated April 28, 1987.
                     Incorporated by reference from the Registrant's Form 10-K for the fiscal
                     year ended December 31, 1987.

3 (E)                Amendment to the Certificate of Incorporation dated April 28, 1994.
                     Filed herewith.

3 (F)                By-Laws. Incorporated by reference from the Registrant's Form 10-K for
                     fiscal year ended December 31,1986.

10                   Purchase and sale agreement, dated as of May 5, 1994, between
                     Textron, Inc. and MEM Company, Inc. Incorporated by reference
                     from the Registrant's Form 8-K dated May 20, 1994.

21                   Subsidiaries of Registrant. Incorporated by reference from the
                     Registrant's Form 10-K for the fiscal year ended December 31,1992.

23                   Consent of Accountants. Filed herewith.

24                   Power of Attorney. Filed herewith.

27                   Financial Data Schedule. Filed herewith.
</TABLE>
<PAGE>
                                MEM COMPANY, INC.

            Index to Consolidated Financial Statements and Financial
                               Statement Schedules


The  following  consolidated  financial  statements  of MEM  Company,  Inc.  are
included in Item 8:

Report of Independent Auditors

Consolidated Statements of Operations for the years ended
    December 31, 1995, 1994 and 1993

Consolidated Balance Sheets as of December 31, 1995 and 1994

Consolidated Statements of Changes in Stockholders' Equity for the
    years ended December 31, 1995, 1994 and 1993

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

Notes to Consolidated Financial Statements



The following consolidated financial statement schedule of MEM  Company, Inc. is
included in Item 14 (d):

II   Valuation and Qualifying Accounts


All other  schedules for which  provision is made in the  applicable  accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
<PAGE>
Report of Independent Auditors
------------------------------

The Board of Directors and Stockholders
MEM Company, Inc.


We have audited the  accompanying  consolidated  balance  sheets of MEM Company,
Inc.  and  subsidiaries  as of  December  31,  1995 and  1994,  and the  related
consolidated statements of operations,  stockholders' equity, and cash flows for
each of the three years in the period ended  December 31, 1995.  Our audits also
included the  financial  statement  schedule  listed in the Index at Item 14(a).
These financial  statements and schedule are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of MEM
Company,  Inc.  and  subsidiaries  at  December  31,  1995  and  1994,  and  the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity  with generally
accepted  accounting  principles.  Also, in our opinion,  the related  financial
statement  schedule,   when  considered  in  relation  to  the  basic  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.


ERNST & YOUNG LLP

Hackensack, New Jersey
February 21, 1996
<PAGE>
                       MEM COMPANY, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations
<TABLE>
<CAPTION>
                                                    Years Ended December 31,
                                            1995               1994               1993
                                            ----               ----               ----
<S>                                     <C>                <C>                <C>         
Net sales ........................      $ 44,825,314       $ 53,094,217       $ 38,453,774
Costs and expenses:
Cost of sales ....................        25,618,098         28,541,205         22,622,236
Selling and shipping expense .....        15,108,538         19,612,873         13,281,251
General and administrative expense         5,215,135          5,202,902          4,892,234
                                        ------------       ------------       ------------
    Total costs and expenses .....        45,941,771         53,356,980         40,795,721
                                        ------------       ------------       ------------
                                          (1,116,457)          (262,763)        (2,341,947)


Other income (expense):
Royalty income ...................           361,085            264,535            409,119
Interest income ..................            18,726            226,226            247,245
Amortization of intangibles ......          (477,460)          (306,326)           (57,936)
Other income (expense) ...........             5,124             11,816            (48,617)
Interest expense .................        (1,602,038)        (1,112,403)          (489,363)
Financing expense ................          (170,957)          (149,362)          (288,407)
                                        ------------       ------------       ------------


Net (loss) .......................      $ (2,981,977)      $ (1,328,277)      $ (2,569,906)
                                        ============       ============       ============


Per share, based on weighted
   average shares outstanding ....      $      (1.16)      $       (.52)      $      (1.00)
                                        ============       ============       ============


                             See accompanying notes.
</TABLE>
<PAGE>
                       MEM COMPANY, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                           December 31, 1995 and 1994
                                     Assets
<TABLE>
<CAPTION>
                                                            1995                1994
                                                         ------------       ------------
<S>                                                      <C>                <C>         
Current assets:
Cash ..............................................      $    957,562       $  1,128,897
Accounts receivable, less allowance for
  doubtful accounts of $680,319 in 1995 and
  $661,654 in 1994 ................................        13,381,468         12,843,943
                                                                              
Inventories, at lower of cost (first-in, first-out)
    or market:
    Finished goods ................................         6,021,947          6,095,908
    Raw materials & work in process ...............         8,582,573          9,228,083
Prepaid expenses ..................................           825,377          1,163,589
                                                         ------------       ------------
Total current assets ..............................        29,768,927         30,460,420


Property, plant & equipment, at cost:
Land ..............................................           341,752            340,829
Buildings & improvements ..........................         4,466,224          4,250,376
Machinery & equipment .............................        11,812,562         11,174,123
Furniture & fixtures ..............................         2,485,590          2,347,180
                                                         ------------       ------------
                                                           19,106,128         18,112,508
Less accumulated depreciation .....................       (13,924,996)       (12,788,644)
                                                         ------------       ------------
Net property, plant & equipment ...................         5,181,132          5,323,864


Other assets:
Advance royalty payments & license
    agreements - net of accumulated amortization
    of $747,050 in 1995 and $604,490 in 1994 ......           567,450            710,010
Net cash value of life insurance and other assets .           208,132            193,729
Intangible assets - net of accumulated amortization
   of $1,240,107 in 1995 and $761,765 in 1994 .....        10,098,702         10,572,940
                                                         ------------       ------------

Total assets ......................................      $ 45,824,343       $ 47,260,963
                                                         ============       ============

                             See accompanying notes.
</TABLE>
<PAGE>
                       MEM COMPANY, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                           December 31, 1995 and 1994
                      Liabilities and Stockholders' Equity
<TABLE>
<CAPTION>
                                                   1995                1994
                                               ------------        ------------
<S>                                            <C>                 <C>         
Current liabilities:
Loans payable ..........................       $ 10,791,385        $  6,528,016
Accounts payable .......................          3,523,504           4,488,160
Accrued expenses .......................            853,001           1,004,720
Accrued advertising and promotion ......          1,075,988           1,303,667
Notes payable-current portion ..........          1,553,990           1,534,066
                                               ------------        ------------
Total current liabilities ..............         17,797,868          14,858,629

Long-term notes:
 8%    -  payable to 1997 ..............            644,000           1,288,000
 8.19% -  payable to 1998 ..............            620,521             642,039
10.5%  -  payable to 1999 ..............          2,105,292           2,976,585
                                               ------------        ------------
Total long-term notes ..................          3,369,813           4,906,624

Commitments and contingencies

Stockholders' equity:
Common stock, $.05 par value;
   shares authorized:  6,000,000;
   issued:  3,000,000 ..................            150,000             150,000
Additional paid-in capital .............          3,090,110           3,090,110
Retained earnings ......................         26,460,779          29,442,756
                                               ------------        ------------
                                                 29,700,889          32,682,866

Less common stock in treasury,
   at cost  (1995 - 416,816 shares;
   1994 - 419,816) .....................         (4,597,430)         (4,607,180)
Cumulative translation adjustment ......           (446,797)           (579,976)
                                               ------------        ------------
Total stockholders' equity .............         24,656,662          27,495,710
                                               ------------        ------------

Total liabilities and stockholders'
   equity ..............................       $ 45,824,343        $ 47,260,963
                                               ============        ============

                             See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                 MEM COMPANY, INC. AND SUBSIDIARIES
                                     Consolidated Statements of Changes in Stockholders' Equity
                                            Years Ended December 31, 1995, 1994 and 1993

                                                         Additional
                                            Common        Paid-in        Retained       Treasury       Translation
                                            Stock         Capital        Earnings         Stock         Adjustment         Total
                                         ------------   ------------   ------------    ------------    ------------    ------------
<S>                                      <C>            <C>            <C>             <C>             <C>             <C>         
Balance December 31, 1992 ............   $    150,000   $  3,090,110   $ 33,340,939    $ (4,644,010)   $   (348,135)   $ 31,588,904

Issuance of treasury shares ..........           --             --             --             6,500            --             6,500
Translation adjustment ...............           --             --             --              --          (106,859)       (106,859)
Net income (loss) ....................           --             --       (2,569,906)           --              --        (2,569,906)
                                         -------------------------------------------------------------------------------------------

Balance December 31, 1993 ............        150,000      3,090,110     30,771,033      (4,637,510)       (454,994)     28,918,639

Issuance of treasury shares ..........           --             --             --            30,330            --            30,330
Translation adjustment ...............           --             --             --              --          (124,982)       (124,982)
Net income (loss) ....................           --             --       (1,328,277)           --              --        (1,328,277)
                                         -------------------------------------------------------------------------------------------

Balance December 31, 1994 ............        150,000      3,090,110     29,442,756      (4,607,180)       (579,976)     27,495,710

Issuance of treasury shares ..........           --             --             --             9,750            --             9,750
Translation adjustment ...............           --             --             --              --           133,179         133,179
Net income (loss) ....................           --             --       (2,981,977)           --              --        (2,981,977)
                                         -------------------------------------------------------------------------------------------


Balance December 31, 1995 ............   $    150,000   $  3,090,110   $ 26,460,779    $ (4,597,430)   $   (446,797)   $ 24,656,662
                                         ===========================================================================================

                                                       See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                      MEM COMPANY, INC. AND SUBSIDIARIES
                                    Consolidated Statements of Cash Flows

                                                                   Years Ended December 31,
                                                         1995                 1994                 1993
                                                     ------------         ------------         ------------
<S>                                                  <C>                  <C>                  <C>          
Cash Flows from Operating Activities
Net income (loss) ...........................        $ (2,981,977)        $ (1,328,277)        $ (2,569,906)
Depreciation and amortization ...............           1,719,514            1,640,308            1,451,331
Provision for losses on accounts receivable .             368,330              445,065              119,098
(Increase) decrease in accounts receivable ..            (901,284)          (4,762,020)           1,705,326
(Increase) decrease in inventory ............             748,628           (3,512,810)           2,079,755
(Increase) decrease in other current assets .             337,909               20,741              270,840
Increase (decrease) in accounts payable .....            (964,631)           2,205,017             (377,412)
Increase (decrease) in other accrued expenses            (383,047)             980,500             (315,929)
(Increase) decrease in other assets .........             (14,403)             (15,253)             (27,941)
                                                     ------------         ------------         ------------

Net cash (used in ) provided by operating
   activities ...............................          (2,070,961)          (4,326,729)           2,335,162

Cash Flows from Investing Activities
Additions to plant and equipment ............            (946,333)          (1,023,003)            (719,030)
Payment in lieu of future royalties .........                --                   --               (500,000)
Acquisition of intangibles ..................                --             (6,409,215)                --
Collection of note receivable ...............                --              2,635,989              240,473
                                                     ------------         ------------         ------------

Net cash (used in) investing activities .....            (946,333)          (4,796,229)            (978,557)

Cash Flows from Financing Activities
Short-term borrowings .......................          16,894,091           14,709,272            7,326,415
(Repayments of) short-term borrowings .......         (12,622,580)          (9,209,825)          (9,121,954)
Proceeds from long-term notes ...............                --              7,050,000                 --
(Payments of) long-term notes ...............          (1,535,260)          (3,220,833)             (12,691)
Issuance of treasury stock ..................               9,750                8,250                6,500
                                                     ------------         ------------         ------------

Net cash provided by (used in) financing
   activities ...............................           2,746,001            9,336,864           (1,801,730)

Effect of exchange rate changes on cash .....              99,958              (77,028)             (11,643)
                                                     ------------         ------------         ------------
Net increase (decrease) in cash .............            (171,335)             136,878             (456,768)
Cash at the beginning of the year ...........           1,128,897              992,019            1,448,787
                                                     ------------         ------------         ------------
Cash at the end of the year .................        $    957,562         $  1,128,897         $    992,019
                                                     ============         ============         ============
Supplemental cash flow data:
   Interest paid ............................        $  1,581,743         $    995,727         $    530,488
                                                     ============         ============         ============

                                           See accompanying notes.
</TABLE>
<PAGE>
                       MEM COMPANY, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        December 31, 1995, 1994 and 1993


Note 1.  Accounting Policies

Nature of business:  The Company's  business consists of manufacturing,  selling
and  distributing a diversified  line of toiletries and accessories to retailers
of all sizes.  The  Company  operates  in one  industry  segment.  One  national
customer  represented  13% of net  sales in 1995 and 14% in  1994.  The  Company
performs periodic credit evaluations of its customers'  financial  condition and
generally does not require  collateral.  Financial  information about geographic
data is disclosed in Item 1(b) of the Company's 1995 Form 10-K.

Consolidation: The consolidated financial statements include the accounts of the
Company's  subsidiaries.  All material  intercompany items have been eliminated.
The assets and liabilities of foreign  subsidiaries  have been translated at the
exchange rate at the balance sheet date.  Revenues,  expenses,  gains and losses
are  translated  at the average rate for the year,  determined  by averaging the
rates at the end of each calendar quarter.

Deferred  financing  costs:  Deferred  financing  costs are  included in prepaid
expenses and are being amortized over the life of the loans.

Intangible  assets:  Intangible assets arising from the excess of purchase price
of  subsidiaries  acquired  prior to 1971 over the fair  value of the net assets
acquired have not been amortized. Other intangible assets are being amortized on
a  straight-line  basis over twenty to forty years.  Impairments  are recognized
whenever events or changes in circumstances indicate that the carrying amount of
intangible assets may not be recoverable and the future  undiscounted cash flows
attributable to the asset are less than its carrying value. In 1995, the Company
adopted Statement of Financial  Accounting Standards (SFAS) No. 121 and utilized
its provisions in the evaluation of intangible and other long-lived  assets. The
adoption of SFAS No. 121 had no effect on the financial statements.

Depreciation: For financial accounting purposes, depreciation is provided on the
straight-line  basis as follows:  buildings  and  improvements  - 3 to 25 years;
machinery and equipment - 5 to 12 years; furniture and fixtures - 4 to 10 years.
For income tax purposes, the Company generally uses accelerated depreciation.

Advance  royalty  payments  and  license  agreements:   License  agreements  and
nonrefundable  royalty  payments in  connection  with a licensing  agreement are
being  amortized  as selling  expense on a  straight-line  basis which  averages
seventeen years.

Royalty  income:  Royalty  income  represents  amounts  earned by licensing  the
English Leather and Tinkerbell trademarks for use by various third parties.

Revenue  recognition:   Revenues  are  recorded  at  the  time  of  shipment  of
merchandise.

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 in the financial statements and
accompanying  notes.  These estimates  principally  include provisions for sales
returns and allowances. Actual results could differ from those estimates.
<PAGE>
Note 2.  British Sterling Asset Purchase

On May 20, 1994, the Company  acquired  certain  assets  relating to the British
Sterling  fragrance line of products from the Speidel Division of Textron,  Inc.
for  $9,182,000,  of  which  $8,145,000  was  for  intangibles,  $1,029,000  for
inventories  and $8,000 for other assets.  Other direct costs of the acquisition
were $196,215. The purchase was financed by a term loan of $7,050,000 and a note
for  $1,932,000  payable to Textron.  The balance of $396,215  was paid from the
Company's working capital.

Note 3.  Credit Arrangements and Notes Payable

In March,  1993, the Company obtained a three year secured  financing  agreement
with a financial institution which provided for a revolving line of credit of up
to $15,000,000 based on eligible collateral,  for working capital purposes.  The
agreement  contains  certain  covenants  generally  associated with this type of
financing  including the pledging of substantially  all assets as collateral,  a
prohibition on the payment of dividends and considers a material  adverse change
as a  potential  event of  default.  Interest  on  borrowings  is at the Bank of
America  prime rate (8 1/2% at December 31, 1995) plus 2% and an unused line fee
of 1/4% is payable at various levels of borrowing.  Previous to June,  1995, the
interest rate had been prime plus 2.5%.

In connection with the acquisition  described in Note 2 above, the agreement was
amended in May, 1994 to provide for a five year term loan of $7,050,000,  extend
the maturity of the agreement by two years to April, 1998 and increase the total
permitted borrowings at any time to $17,500,000  (including the outstanding term
loan). During peak seasonal periods, this limit may be increased to $20,000,000.
The term loan was reduced by $2,465,076 in October,  1994 from the collection of
a note receivable held by the Company.  Principal of the term loan is payable in
equal monthly  installments  over five years,  and interest is determined on the
same basis as the revolving  line of credit.  The agreement was amended in June,
1995 to lower the  interest  rate and extend the  maturity by one year to April,
1999.

Under the terms of the  acquisition,  the  seller  received  an  unsecured  note
payable  for  $1,932,000  at 8%  interest.  This note is payable in three  equal
annual installments which began June 1, 1995.

The Company's Canadian  subsidiary has pledged its land and building as security
for a 8.19% note payable which is payable in monthly  principal  installments of
$3,233 until October, 1998 when the balance is due.

The  aggregate  payments due on all long-term  notes payable  during each of the
three years  subsequent  to December  31, 1996 are:  1997 -  $1,553,990;  1998 -
$1,452,931; 1999 - $362,892.

The Company's  United  Kingdom  subsidiary  has a line of credit of $932,000 for
short  term  financing  at  various   interest  rates,  of  which  $494,935  was
outstanding  at  December  31,  1995.  This line is secured by the  subsidiary's
accounts receivable and inventory.

The weighted  average  interest rate on  short-term  borrowings  outstanding  at
December 31, 1995 and 1994 was 10.4% and 11%, respectively.
<PAGE>
Note 4.    Income Taxes

At December 31, 1995, the Company had loss  carryforwards for U. S. tax purposes
of  approximately  $9,609,000 of which $679,000  expires in 2006,  $3,834,000 in
2007,  $1,703,000 in 2008,  $625,000 in 2009 and $2,768,000 in 2010. The Company
also had  approximately  $1,541,000  of  foreign  tax loss  carryforwards  as of
December  31,  1995.  Approximately  $751,000 of these loss  carryforwards  will
expire between 1998 and 2002 while the remaining $790,000 can be carried forward
indefinitely.  Under the  provisions  of SFAS No. 109, a valuation  allowance is
established  if,  based on the weight of available  evidence,  it is more likely
than  not  that  a  portion  of  the  deferred   asset  will  not  be  realized.
Consequently,  at December 31,  1995,  the Company has  established  a valuation
allowance against a portion of the above loss carryforwards.

Income (loss) before income taxes is as follows:
<TABLE>
<CAPTION>
                                 1995                1994               1993
                                 ----                ----               ----
<S>                           <C>                <C>                <C>         
Domestic ..............       $(2,892,596)       $(1,151,029)       $(1,974,147)
Foreign ...............           (89,381)          (177,248)          (595,759)
                              -----------        -----------        -----------
                              $(2,981,977)       $(1,328,277)       $(2,569,906)
                              ===========        ===========        ===========
</TABLE>

The  components  of the net  deferred  tax asset and  liability  as of  December
31,1995 and 1994, were as follows:
<TABLE>
<CAPTION>
                                                       1995             1994
                                                   -----------      -----------
<S>                                                <C>              <C>        
Deferred tax liabilities:
     Property, plant and equipment ...........     $   419,000      $   443,000
                                                   -----------      -----------
     Total deferred tax liability ............     $   419,000      $   443,000
                                                   ===========      ===========
Deferred tax assets:
     Net operating loss carryforwards ........     $ 4,460,000      $ 3,360,000
     Valuation allowance for deferred
          tax assets .........................      (4,041,000)      (2,917,000)
                                                   -----------      -----------
     Net deferred tax asset ..................         419,000          443,000
                                                   -----------      -----------
     Net deferred tax liability ..............     $         0      $         0
                                                   ===========      ===========
</TABLE>
<PAGE>
The  reconciliation  of the  (benefit)  for federal  income tax in the financial
statements and the (benefit) computed at the statutory rates are as follows:
<TABLE>
<CAPTION>
                                             1995            1994           1993
                                             ----            ----           ----
<S>                                      <C>              <C>            <C>       
(Benefit) at statutory rate ........     $(l,013,872)     $(451,614)     $(873,768)
Limitation on utilization of
     domestic losses ...............         937,583        347,150        632,110
Limitation on utilization of
     foreign losses ................          30,389         60,264        202,558
Other - Net ........................          45,900         44,200         39,100
                                         -----------      ---------      --------- 
                                         $         0      $       0      $       0
                                         ===========      =========      =========
</TABLE>

Note 5.  Leases

The Company  rents  warehouse  and office  space under a lease which  expires in
2003. The Company is also  responsible  for the payment of insurance,  taxes and
maintenance of the property. The future minimum rental commitment for this lease
is as follows:  1996 - $62,000;  1997 - $62,000; 1998 - $62,000; 1999 - $62,000;
2000 - $62,000;  thereafter - $186,000.  Rental expense  amounted to $305,000 in
1995, $351,000 in 1994 and $342,000 in 1993.

Note 6.  Stock Options

Under the 1987  Non-Qualified  Stock Option Plan, 240,000 shares were authorized
for issuance. No options have been granted under the Plan.

Under the 1991  Stock  Incentive  Plan,  200,000  shares of  common  stock  were
authorized  for  issuance to key  employees at an option price which is the fair
market value on the date of the grant. Awards made under the Plan may be options
or contingent options. Contingent options will become exercisable in whole or in
part based upon an evaluation of the employee's  performance  during the year in
which the option is granted.

Under the 1993 Non-Employee  Stock Incentive Plan, 50,000 shares of common stock
were authorized for issuance to  non-employee  members of the Board of Directors
and certain  individuals  who provide  consulting  services to the Company at an
option price which is the fair market value on the date of grant.

Options issued under the Plans to date are exercisable in various  installments,
and are exercisable in full after two years from grant.
<PAGE>
Information with respect to options is as follows:
<TABLE>
<CAPTION>
                                                                       Option Price
                                                Number of Shares         per Share
                                                ----------------       -------------
<S>                                                 <C>                <C>          
Outstanding - December 31, 1992                      43,375                $5.00
Granted                                              35,750            $4.13 - $5.00
Exercised                                              (500)               $5.00
Cancelled                                            (7,000)               $5.00
                                                    -------
Outstanding - December 31, 1993                      71,625            $4.13 - $5.00
Granted                                              20,700                $4.13
Cancelled                                           (10,000)           $4.13 - $5.00
                                                    -------
Outstanding - December 31, 1994                      82,325            $4.13 - $5.00
Granted                                              31,000            $3.50 - $3.88
Cancelled                                            (4,000)           $3.50 - $5.00
                                                    -------
Outstanding - December 31, 1995                     109,325            $3.50 - $5.00
                                                    =======
</TABLE>

Options on 74,275 shares were exercisable at December 31, 1995.

Note 7.  Postretirement Benefits

The Company does not provide any  postretirement  health care, life insurance or
other welfare benefit  programs to current or former  employees  except that the
Company  maintains a defined benefit pension plan for employees who meet certain
eligibility requirements.  Benefits under the plan are based on salary and years
of service. For the past three years, no contributions have been required.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                            1995          1994         1993
                                         ---------     ---------     ---------
<S>                                      <C>           <C>           <C>      
Service cost-benefits earned
     during the period ...............   $ 190,300     $ 182,915     $ 226,383
Interest cost on projected
     benefit obligation ..............     291,383       291,992       308,755
Investment return on plan assets .....    (929,056)      204,838      (471,152)
Other ................................     452,161      (710,709)      (31,352)
                                         ---------     ---------     ---------
Net pension cost  (benefit) ..........   $   4,788     $ (30,964)    $  32,634
                                         =========     =========     =========
Assumptions:
     Discount rate ...................           8%            8%            8%
     Compensation increases ..........           5%            5%            5%
     Rate of return on assets ........           8%            8%            8%
--------------------------------------------------------------------------------
</TABLE>
<PAGE>
A  reconciliation  between the plan's  funded  status and the  pension  asset as
recorded in the Company's balance sheet is presented below:

<TABLE>
<S>                                        <C>                 <C>                 <C>        
Plan's assets at fair value,
   primarily stocks and bonds .....        $ 5,115,894         $ 4,295,427         $ 5,121,274
Plan's projected benefit obligation         (3,676,167)         (3,699,488)         (3,898,265)
                                           -----------         -----------         -----------
Funded status .....................          1,439,727             595,939           1,223,009
Unrecognized net asset to be
   amortized over 13 years ........           (565,624)           (676,531)           (787,438)
Unrecognized prior service cost ...             85,093              95,864             106,635
Unrecognized asset (gain)
   over expected return ...........           (947,985)                727            (557,171)
                                           -----------         -----------         -----------
Prepaid (accrued) pension cost ....        $    11,211         $    15,999         $   (14,965)
                                           ===========         ===========         ===========
Actuarial present value of
   accumulated benefit obligation:
   Vested .........................        $ 2,557,886         $ 2,636,587         $ 2,532,562
   Not yet vested .................            160,700             148,055             175,622
                                           -----------         -----------         -----------
Accumulated benefit obligation ....        $ 2,718,586         $ 2,784,642         $ 2,708,184
                                           ===========         ===========         ===========
</TABLE>

Note 8.  Quarterly Financial Data (Unaudited)

Following is a schedule of key financial  data by quarter for the years 1995 and
1994.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                Gross                                    Average shares
Quarters       Net sales        profit       Net income     Net income    outstanding
Ended            (000)          (000)          (000)         per share       (000)
--------        -------        -------        -------         -------        -----
<S>             <C>            <C>            <C>             <C>            <C>  
03/31/94        $ 5,241        $ 2,159        $(1,087)        $  (.42)       2,573
06/30/94        $ 5,647        $ 1,870        $(2,129)        $  (.83)       2,573
09/30/94        $19,057        $ 9,797        $ 1,162         $   .45        2,575
12/31/94        $23,149        $10,727        $   726         $   .28        2,576
03/31/95        $ 6,282        $ 2,813        $  (994)        $  (.39)       2,580
06/30/95        $ 4,704        $ 1,970        $(2,202)        $  (.85)       2,580
09/30/95        $16,699        $ 7,804        $   554         $   .22        2,580
12/31/95        $17,140        $ 6,620        $  (340)        $  (.14)       2,581
---------------------------------------------------------------------------------------
</TABLE>

Since the Company's  business is seasonal in nature,  comparisons among quarters
of the  year  are not  necessarily  indicative  of a  trend  in the  results  of
operations, but principally reflect this seasonality.
<PAGE>
<TABLE>
<CAPTION>
================================================================================================

                               MEM COMPANY, INC. AND SUBSIDIARIES
                         Schedule II - Valuation and Qualifying Accounts
                          Years Ended December 31, 1995, 1994 and 1993

                                            Additions           Deductions
                       Balance at           charged to         write-off of            Balance
                       beginning            costs &            uncollectible           at end
Description            of year              expenses             accounts              of year
----                   --------             --------             --------              --------
<C>                    <C>                  <C>                  <C>                   <C>     
Allowance for
doubtful
accounts:
1995                   $661,654             $368,330             $349,665              $680,319
1994                   $450,136             $445,065             $233,547              $661,654
1993                   $496,368             $119,098             $165,330              $450,136
</TABLE>

         Accounts receivable are stated net of a gross provision for merchandise
returns  and  other  items in the  amounts  of  $4,200,000  and  $5,600,000  and
$3,700,000 for the years ended December 31, 1995, 1994 and 1993, respectively.

         The net  deferred tax asset is stated net of  valuation  allowances  of
$4,041,000,  $2,917,000  and  $2,467,000  for the years ended December 31, 1995,
1994 and 1993, respectively. After deducting the deferred tax liability, the net
deferred tax asset was $-0- in each of the three years.