SECURITIES AND EXCHANGE COMMISSION

                                              Washington, D.C. 20549





                                                   FORM  10-QSB

                                    Quarterly Report Under Section 13 or 15(d)
                                      of the Securities Exchange Act of 1934




                                          Quarter Ended November 30, 1997

                                        Commission File Number 33-24483-NY





                                     HEALTH-PAK, INC.
                     (Exact name of Registrant as specified in its Charter)



      Delaware                              11-2914841
(State or other jurisdiction of            (I.R.S. Employer
incorporation or organization)             Identification Number)

1208 Broad Street, Utica, NY               13501
(Address of principal executive offices)   (Zip Code)

Same
(Former Address)                           (Zip Code)

                                        (315) 724-8370
                          (Registrant's telephone number, including area code)



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 the number os Shares  outstanding  of each of the  Issuer's  classes of
common stock, as of the latest practicable date.

           Class                             Outstanding at November 30, 1997

Common stock, $0.002 par value                            15,490,009



<PAGE>
























                                                       INDEX



Part  I.       Financial information


               Item 1.      Condensed consolidated financial statements:

                            Balance sheet as of November 30, 1997 and
                            May 31, 1997                                   F-2

                            Statement of income (loss) for the six and
                            three months ended November 30, 1997 and 1996  F-3

                            Statement of cash flows for the six months
                            ended November 30, 1997 and 1996               F-4

                            Notes to condensed consolidated financial
                            statements                                   F-5-13



               Item 2.      Management's discussion and analysis of
                            financial condition



Part II.       Other information



Signatures



<PAGE>



                           HEALTH-PAK, INC. AND SUBSIDIARY

      CONDENSED CONSOLIDATED BALANCE SHEET - NOVEMBER 30, 1997 AND MAY 31, 1997


<TABLE>
<CAPTION>
<S>                             <C>           <C>              <C>                               <C>                    <C>  


                                       ASSETS                                                     LIABILITIES
            


                                 November 30,        May 31,                                              November 30,      May 31,
                                     1997             1997                                                   1997           1997
Current assets:                                                  Current liabilities:
  Cash                           $ 203,207     $   233,330       Current portion of long-term debt       $   15,158       $ 16,896
  Receivables, trade, net of                                     Notes payable                              599,742        552,952
   allowance of $6,000             489,790         455,376       Accounts payable                         1,199,274      1,038,686
  Inventory                      1,568,863       1,456,990       Payroll and sales tax payable and
  Note receivable                   89,039          89,039        accrued expenses                           46,524         84,503
                                                                                                          ----------    ----------
  Prepaid expenses                 126,931         100,649
  Prepaid consulting fees            2,222           5,556
                                 ----------      ----------

    Total current assets         2,480,052       2,340,940      Total current liabilities                 1,860,698     1,693,037
                                 ----------      ----------                                              ----------    ----------

Property and equipment:
 Machinery and equipment           312,106         310,797       Long-term debt, net of current
 Leasehold improvements            116,878         107,460         portion                                   17,791        24,885
                                                                                                         ----------    ----------
 Office equipment                   99,860          99,860
 Automotive equipment               21,021          21,021
                                  ----------     ----------
                                   549,865         539,138
 Less accumulated depreciation     234,066         209,476       Commitments
                                  ----------     ----------

                                   315,799         329,662
                                   -------         -------
                                                                Minority interest in consolidated subsidiary   27,517     62,030
                                                                                                           ----------    ----------

Other assets:
 Investments in affiliated Company   135,027       130,637       Shareholders' equity:
 Deposit on building                  28,647        28,400         Common stock, .001 par value 2,000,000
 Security deposits                     6,371         5,241          shares authorized
 Deferred loan acquisition fees                                    Common stock, .002 par value 20,000,000
  and costs                           11,069        18,224          shares authorized                        30,980        30,980
 Deferred offering expenses           99,530        99,530         Common stock purchase warrants:
 Deferred income taxes                83,115        83,115          Class A
 Cash surrender value, officers'                                    Class B
   life insurance                     26,760        26,760          Class C
  Officer's loan                       1,200         1,200         Additional paid in capital             2,304,334     2,304,334
                                  ----------     ----------
                                                                   Deficit                              ( 1,053,750)  ( 1,051,557)
                                                                                                         ----------    ----------
                                     391,719       393,107                                                1,281,564     1,283,757
                                  ----------    ----------                                               ----------    ----------


                                  $3,187,570    $3,063,709                                               $3,187,570    $3,063,709
                                  ==========    ==========                                               ==========    ==========

</TABLE>



     See notes to condensed consolidated financial statements.
                                                                            F-2


<PAGE>



                                       HEALTH-PAK, INC. AND SUBSIDIARY

                             CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

                          SIX AND THREE MONTHS ENDED NOVEMBER 30, 1997 AND 1996





                           Six months ended                  Three months ended
                              November 30,                       November 30,
                          1997           1996               1997        1996
                         ----            ----               ----        ----

Net sales             $1,998,923     $1,133,283        $  985,417    $ 512,997

Cost of sales          1,470,334        766,040           733,022      366,650
                      ----------     ----------         ----------    ----------

Gross profit             528,589        367,243           252,395      146,347

Selling, general and
administrative expenses  504,582        438,005            254,219     228,487
                       ----------    ----------         ----------   ----------

Income (loss) from
 operations               24,007       ( 70,762)       (     1,824   (  82,140)
                       ----------     ----------         ----------  ----------

Other income (expense):
 Loss on investments in
  affiliated company       4,390    (     5,763)                        35,082
 Interest expense    (    61,770)   (    18,260)       (    28,703)   ( 11,309)
 Amortization        (     3,333)   (     3,333)       (     1,666)   (  1,666)
                      ----------     ----------         ----------   ----------

                     (    60,713)   (    27,356)       (    30,369)     22,107
                      ----------     ----------         ----------   ----------

Loss before income taxes( 36,706)      ( 54,207)          ( 32,193)  (  60,033)

Income taxes (benefit):
  Current                             (  18,275)                     (  15,009)

Minority interest in
 income of subsidiary     34,513       ( 18,890)            40,143
                       ----------     ----------          ---------- ----------

Net income             ($  2,193)   ($   54,822)        $    7,950   ($ 45,024)
                       ==========     ==========         ==========  =========

Earnings per common and dilutive common equivalent share:

  Primary            $     0.00          $ 0.00             $ 0.00     $  0.00
                      ===========      ==========          ========= ==========

  Fully diluted         $  0.00          $ 0.00             $ 0.00      $ 0.00
                      ===========      ==========          ========= ==========

Weighted average number of common shares and dilutive outstanding:

  Primary            17,090,159      15,759,283         17,090,159   15,249,721
                     ==========      ==========         ==========   ==========

  Fully diluted      17,090,159      15,759,283         17,090,159   15,249,721
                     ==========      ==========         ==========   ==========







     See notes to condensed consolidated financial statements. 
                                                                            F-3


<PAGE>



                             HEALTH-PAK, INC. AND SUBSIDIARY

                      CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                         SIX MONTHS ENDED NOVEMBER 30, 1997 AND 1996








<TABLE>
<CAPTION>
<S>                                                                                 <C>               <C>


                                                                                        1997               1996
                                                                                        ----               ----
Operating activities:
  Net loss                                                                          ($  2,193)         ($ 54,822)
  Adjustments to reconcile net income to cash provided by
   operating activities:
     Depreciation                                                                       24,590             18,934
     Amortization                                                                        3,334              8,653
     Gain on investments in subsidiaries                                            (   4,390)             24,653
     Changes in other operating assets and liabilities:
       Accounts receivable                                                          (  34,414)         ( 297,462)
       Inventory                                                                    ( 146,386)         ( 472,640)
       Prepaid expenses and interest receivables                                    (  26,281)         (   5,196)
       Accounts payable                                                                160,588            258,844
       Accrued expenses                                                             (  37,979)         (   7,694)
       Deferred income taxes                                                                           (  19,071)
       Deposits and loan fees                                                            5,777         (  31,118)
                                                                                      --------          --------

       Net cash used in operating activities                                        (  57,354)         ( 576,919)
                                                                                     --------           --------

Investing activities:
  Purchase of property and equipment                                                (  10,727)         (  39,050)
                                                                                     --------           --------

       Net cash used in investing activities                                        (  10,727)         (  39,050)
                                                                                     --------           --------

Financing activities:
  Proceeds from issuance of common stock                                                                  384,960
  Increase in long-term debt                                                                               31,083
  Proceeds from notes payable, bank                                                     46,790            269,078
  Payment of notes payable, bank                                                                       (   6,736)
  Payment of long-term debt                                                         (   8,832)         (  11,625)
  Payment of deferred offering expenses                                                                (     291)
                                                                                      --------          --------

       Net cash provided from financing activities                                      37,958            666,469
                                                                                      --------           --------

Net increase (decrease) in cash                                                     (  30,123)             50,500

Cash, beginning of period                                                              233,330              1,376
                                                                                      --------           --------

Cash, end of period                                                                   $203,207           $ 51,876
                                                                                      ========           ========

Supplemental  disclosures and cash flow  information:  Cash paid during the year
  for:
    Interest                                                                          $ 61,770           $ 18,259
                                                                                      ========           ========
    Income taxes                                                                      $      0           $      0
                                                                                      ========           ========

Supplemental schedule of non-cash investing and financing activities:
   Issuance of common stock for equity interest
    in Silver Lake Holding, Ltd.                                                      $      0           $136,400
                                                                                      ========           ========


</TABLE>







     See notes to condensed consolidated financial statements.
                                                                            F-4


<PAGE>



                                    HEALTH-PAK, INC. AND SUBSIDIARY

                        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS






1.  Organization of the company:

    The Company  originally  "Morgan Windsor Ltd," was incorporated in the State
    of Delaware on December 28, 1987 as a "blind pool".  The only operations
    of the Company at that time were to  structure a public  offering of its
    securities. Thereafter the company began to search for a viable business
    opportunity.

    On  May 15,  1989,  the  Registration  Statement  containing  the  Company's
    original  prospectus was declared  effective by the Securities  Exchange
    Commission. Pursuant to the original prospectus the Company was offering
    up to 4,000,000 units, at $.10 per unit, each consisting of one share of
    common stock, one Class A warrant and one Class B warrant. No securities
    were sold pursuant to original prospectus.

    The Company subsequently amended its public offering to consist of a minimum
    of 15,000  units to a maximum  50,000  units to be  offered at $6.00 per
    unit.  Each unit consists of six shares of common stock (.002 par value)
    and eighteen  Class A  redeemable  common  stock  purchase  warrants and
    twelve B redeemable  common  stock  purchase  warrants.  On September 7,
    1990, the Company sold 16,358 units  receiving gross proceeds of 98,148.
    Between  October  and  November  of  1989  the  Company  repurchased  an
    aggregate of 178,583  shares of the Company from  nineteen  stockholders
    for an aggregate  price paid for these shares.  As a result of the above
    transactions   as  of  April  30,  1991,  the  date  of  acquisition  of
    Health-Pak,  Inc, the Company had  outstanding  shares of 387,648 to the
    public.

    On  April 30, 1991, the Company  acquired 100% of the issued and outstanding
    capital stock of Health-Pak,  Inc, a New York  corporation,  in exchange
    for 4,996,352 shares of which 4,756,077 shares were exchanged for 97.54%
    of the  outstanding  shares of Health-Pak,  Inc. and 240,275 shares were
    retained to acquire the remaining outstanding shares of Health-Pak, Inc.

    Thereafter,  the  Company,  "Morgan  Windsor,  Inc."  changed  its  name to
    "Health-Pak,   Inc"  and  increased  its  authorized  capitalization  to
     20,000,000 shares.



2. Nature of business:

    Health-Pak,  Inc. is a  manufacturer  and  distributor  of disposable  paper
    products for use in serviced-related  industries,  primarily the medical
    and  hospital  industry.  The  industry  is  highly  competitive  and is
    serviced by several large  national and  multi-national  companies  with
    greater  financial  resources in comparison  to the financial  resources
    available  to the Company.  There is no guarantee  that this market will
    continue to develop since the incorporation of government  intervention,
    economic conditions and other unforeseen situations may occur.

    The Company maintains  manufacturing  facilities in upstate New York, Mexico
    and to a lesser  extent Haiti.  In addition to paper goods,  the Company
    also  manufactures a sporting goods accessory item,  sales of which were
    minimal for the six months ended November 30, 1997. The Company's  sales
    are spread throughout the United States.




                                                                          F-5


<PAGE>



                                 HEALTH-PAK, INC. AND SUBSIDIARY

                     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








3. Summary of significant accounting policies:

    Principles of organization:
      The acquisition  of the Company's  subsidiary on April 22, 1991 has been
       accounted for as a reverse  purchase of the assets and  liabilities  of
       the  Company  by Morgan  Windsor  Ltd.  Accordingly,  the  consolidated
       financial  statements  represent assets,  liabilities and operations of
       Health-Pak,  Inc.  prior to April  30,  1991 and the  combined  assets,
       liabilities,  and  operations  for the ensuing  period.  The  financial
       statements  reflect the purchase of the stock of Morgan Windsor Ltd. by
       Health-Pak,  Inc.,  the value being the  historical  cost of the assets
       acquired.   All  significant   intercompany  profits  and  losses  from
       transactions  have  been  eliminated.  Pursuant  to  the  purchase  the
       Company's 387,648 shares were issued to the public for $60,000.

    Revenue recognition:
      The Company  maintains  its books and  records on the  accrual  basis of
      accounting,  recognizing  revenue  when goods are shipped and  expenses
      when they are incurred.

    Inventories:
     Inventories  are  stated  at the  lower  of  cost  or  market.  Cost  is
      determined by the first-in, first-out method (FIFO).

    Property and equipment:
     Property and equipment are stated at cost.  Depreciation of property and
      equipment is provided using the straight line method over the following
      useful lives:
                                                Years
            Machinery and equipment              10
        Leasehold improvements              19, 31-1/2 and 39
        Automotive equipment                      5
        Office equipment                         10

    Expenditures for major renewals and betterments that extend the useful
    lives of the property and equipment are capitalized.  Expenditures for
     maintenance and repairs are charged to expense as incurred.

    Per share amounts:
     Net earnings  per share are  computed by  dividing  net  earnings by the
     weighted  average number of shares of common stock  outstanding  during
     the period. Fully diluted and primary earnings per common share are the
     same amounts for the period presented.

    Cash and cash equivalents:
     For purposes of the statement of cash flows, cash equivalents  include time
      deposits,   certificates  of  deposit,   and  all  highly  liquid  debt
      instruments with original maturities of three months or less.









                                                                         F-6


<PAGE>



                               HEALTH-PAK, INC. AND SUBSIDIARY

                  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





3. Summary of significant accounting policies (continued):

   Principles of consolidation:
      The  accompanying  consolidated  financial  statements  also include the
      accounts  of the  Company  and its  65%  owned  subsidiary,  Protective
      Disposal  Apparel,  LLC.  Inter-company  transactions and balances have
      been eliminated in consolidation (see Note 5).

     Use of estimates:
      The  preparation  of financial  statements in conformity  with generally
       accepted  accounting  principles  requires management to make estimates
       and  assumptions  that  effect  the  reported  amounts  of  assets  and
       liabilities and disclosure of contingent  assets and liabilities at the
       date of the financial  statements and the reported  amounts of revenues
       and expenses during the reporting  period.  Actual results could differ
       from these estimates.

     Effect of recently issued accounting standards:
      The Financial  Accounting  Standards Board issued Statement of Financial
       Accounting  Standards ("SFAS") No. 121, "Accounting for the Impaired of
       Long-Lived  Assets and for Long-Lived  Assets to Be Disposed Of. "SFAS"
       No.  121  requires  that  Long-Lived  Assets and  certain  identifiable
       intangibles  to be  held  and  used  by the  Company  be  reviewed  for
       impairment  whenever  events  indicated that the carrying  amount of an
       asset may not be  recoverable.  The Company  has no impaired  assets at
       November 30, 1997.

      The Accounting Standards Board issued Statement of Financial Accounting
       Standards ("SFAS") No. 123, "Accounting for Stock Based Compensation".
       The effective date of SFAS No. 123 is for fiscal years beginning after
       December 15, 1995, and established a method of accounting for stock
       compensation plans based on fair value.  The Company does not believe
       that SFAS No. 123 will have an impact on its financial statements.  The
       Company has not adopted SFAS No. 123 at November 30, 1997 and continues
       to use APB 25 which accounts for stock compensation at the intrinsic
       value.

    Investments:
     Investments in certain less than 20% owned companies are carried at cost
      and are accounted for on the equity method.  The investment  account is
      adjusted for the Company's  proportionate  share of their undistributed
      earnings or losses. Because the Company exercises significant influence
      over the investees' operating and financial activities,  management has
      considered the equity method of accounting as proper.


4.  Inventories:

    Inventories consist of:
                                            November 30             May 31
                                               1997                 1997
                                               ----                 ----
        Raw materials                      $  972,695           $  432,771
        Finished goods                        596,168            1,024,219
                                            ----------          ----------

                                           $1,568,863           $1,456,990
                                            ==========          ==========





                                                                          F-7


<PAGE>



                                        HEALTH-PAK, INC. AND SUBSIDIARY

                           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








5.  Investment:

        A)   The  Company  purchased  a 10%  equity  interest  in  Silver  Lake
             Corporation  in exchange  for its own common stock valued at $.682
             per  share.  This  investment  is  accounted  for under the equity
             method of accounting with a fair value of the stock contributed of
             $136,400. Health Pak, Inc., being a significant influence over the
             operations  and  finance  of the joint  ventures  activities  with
             Silver Lake  Corporation,  has elected to use the equity method of
             accounting for the investment.

        B)   In October  1996,  the Company  formed and  purchased a 65% equity
             interest in  Protective  Disposable  Apparel  Co.,  LLC, a company
             operating in the disposable apparel business.  Protective Disposal
             Apparel Co., LLC in turn purchased a continuing business,  Scherer
             Healthcare,  Ltd, d/b/a Protective Disposal Apparel. As of October
             28, 1996 the balance sheet of the entity to be acquired just prior
             to the purchase was as follows:



                                        ASSETS

         Current assets:
           Accounts receivable                                    $263,371
           Inventory                                               308,469
                                                                   -------
             Total current assets                                  571,840
                                                                   -------

          Security deposits                                          1,500
                                                                     -----

              Total assets                                        $573,340
                                                                  ========




                                   LIABILITIES AND MEMBERS' CAPITAL

          Current liabilities:
            Accounts payable                                      $318,943
                                                                  --------
              Total current liabilities                            318,943
                                                                   -------

            Members' capital                                       254,397
                                                                   -------

                Total liabilities and members' equity             $573,340
                                                                  ========














                                                                         F-8


<PAGE>



                                      HEALTH-PAK, INC. AND SUBSIDIARY

                           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS







6. Note receivable:

    The Company  is  due  $89,039  from  the  minority  interest  owner  of  its
    subsidiary,   Protective   Disposable  Apparel  Co.,  LLC.  This  amount
    represents the  subsidiary  portion of the purchase cost of the business
    which the Company paid on behalf of the minority  shareholder.  The note
    receivable  is  non-interest   bearing,   unsecured  and  indefinite  in
    maturity.


7. Notes payable:

    The Company has at its disposal a line of credit at Marine Midland Bank.The
    note is due on demand and carries  interest  at prime + 1.5%.  Inventory
    and  accounts  receivable  are  pledged  as  security.  The note is also
    secured by the  personal  guarantees  of Anthony  Liberatore  and Alfred
    Zennamo to the extent of $50,000 in total.  As of November  30, 1997 the
    balance due on the line of credit was $57,926.

    The Company  opened a line of credit with Foothill  Capital  Corporation  in
    September 1996. The loan ceiling amount is based on a percentage formula
    of  eligible  accounts  receivable  and  inventory.  The  balance due at
    November 30, 1997 was $541,816.



8. Long-term debt:
                                                 Rate   Amount   Maturity

      Note payable, Key Credit             (a)    12%  $  624    May, 1998
      Note payable, Manifest Group         (b)    10%  15,744    July, 1999
      Note payable, Waste Mgmt. of N.Y.    (c)    10%   4,195    November, 1998
      Note payable, Business Services, Co. (d)    10%      78    January, 1998
      Note payable, Resource Capital Corp. (e)    10%   4,227    March, 2000
      Note payable, Resource Capital Corp. (f)    10%   3,028    July, 1999
      Note payable, Resource Capital Corp. (g)    10%   5,053    April, 1998
                                                       -------
                                                       32,949
      Less current portion                             15,158
                                                       ------

                                                      $17,791
                                                      =======



      (a)    Note  payable  is  collateralized  by  equipment  with a cost  of
             $5,690.  The note is payable in  installments  of $241 per month,
             including interest.

      (b)    Note  payable  is  collateralized  by  equipment  with a cost  of
             $20,064.  The note is payable in  installments  of $492 per month
             including interest.









                                                                          F-9


<PAGE>



                                       HEALTH-PAK, INC. AND SUBSIDIARY

                          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS







8.  Long-term debt (continued):

      (c)   Note  payable  is  collateralized  by  equipment  with a cost  of
            $11,923.  The note is payable in  installments  of $240 per month
            including interest.

      (d)   Note  payable  is  collateralized  by  equipment  with a cost  of
            $7,688.  The note is  payable in  installments  of $199 per month
            including interest.

      (e)   Note  payable  is  collateralized  by  equipment  with a cost  of
           $6,796.  The note is  payable in  installments  of $170 per month
            including interest.

      (f)   Note  payable  is  collateralized  by  equipment  with a cost  of
            $5,296.  The note is  payable in  installments  of $155 per month
            including interest.

      (g)   Note  payable  is  collateralized  by  equipment  with a cost  of
            $9,053.  The note is  payable in  installments  of $251 per month
            including interest.

      Maturities of long-term debt as of November 30, 1997 are as follows:

                          Year                                      Amount

                    November 30, 1998                              $15,158
                    November 30, 1999                               13,124
                    November 30, 2000                                4,667
                                                                   -------
                                                                   $32,949
                                                                   =======


9.    Commitments:

      Commencing August 1, 1993, the Company entered into a lease agreement with
      the Utica  Industrial  Development  Corporation  for  manufacturing  and
      office space of  approximately  43,500 square feet.  The initial term of
      the lease was from August 1, 1993 to April 30, 1994 at a monthly  rental
      of $7,500.

      The Company had an option to purchase  the  facility  for  $600,000  which
      expired on April 30, 1994.  The purchase was not  completed by April 30,
      1994, and the lease was  automatically  extended for an additional three
      year period at the same terms and rental.  Rent  expense was $31,500 for
      the six months  ended  November  30, 1997 and $54,150 for the six months
      ended November 30, 1996.

      The Company is  currently  renegotiating  to purchase the facility for the
      original  asking price of $600,000.  Rental of the building is currently
      on a month to month  basis at the rate of $7,500 per  month.  Should the
      purchase of the building be  consummated,  approximately  $50,000 of the
      past rent will go toward the  purchase  price if the down payment on the
      revised purchase agreement is paid within a specified time frame.






                                                                          F-10


<PAGE>



                                  HEALTH-PAK, INC. AND SUBSIDIARY

                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS







9.    Commitments (continued):

      Consultant contracts:
       The Company  entered  into a three year  investment  banking  consulting
       agreement on December 31, 1994. The Company issued  1,000,000 shares of
       $.002 par  common  shares and used a  discount  valuation  of $.002 per
       share.  The consultant is to act as a placement  agent for  Health-Pak,
       Inc.  on  all  private  placements  or  secondary  offerings.  Services
       commenced as of April 1, 1995.  The agreement is being  amortized  over
       thirty six months.

     In addition,  the Company also issued  4,500,000  stock  options at various
     exercised prices.  As of November 30, 1997,  2,748,047 options have been
     exercised as follows:


                      Number of options                    Exercise price

                           600,000                               .10
                           233,333                               .15
                         1,914,714                               .26


     The Company entered into a public relations  consulting agreement on March
     10, 1995.  The agreement has a thirty month term and services  commenced
     on June 11, 1995. The Company issued  1,750,000  shares of $.002 par per
     common shares plus an additional 17,242 shares of the original agreement
     that in  addition  to the  1,750,000  shares,  250,000  shares are to be
     issued at a rate of 8,621  shares  per month over the next  twenty  nine
     months.  A valuation  of $.02 per share was used.  The Company  withdrew
     from the consulting agreement in August and no other shares were issued.
     In  addition,  advances  made to the Company and on the books as a notes
     payable,  other,  were  reclassified as payment for common stock already
     issued.



10. Income taxes:

     Effective  June 1,  1993,  the  Company  has  adopted  the  Statements  of
     Financial Accounting Standards No. 109 ("SFAS No. 109"),  Accounting for
     Income  Taxes,"  which  applies a balance  sheet  approach to income tax
     accounting.  The new  standard  required  the  Company to reflect on its
     balance sheet the  anticipated  tax impact of future  taxable  income or
     deductions  implicit  in the  balance  sheet  in the  form of  temporary
     differences.  The Company has reflected  certain  future tax benefits on
     its balance sheet from the  realization  of the carryover of the current
     years net operating loss to anticipated future earnings.  The cumulative
     effect as of June 1, 1993, the date of the adoption of SFAS No. 109, was
     immaterial.  As  permitted  by SFAS  No.  109,  prior  year's  financial
     statements have not been restated.







                                                                          F-11


<PAGE>



                                      HEALTH-PAK, INC. AND SUBSIDIARY

                         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS










10.     Income taxes (continued):

        The components of deferred tax assets and liabilities are as follows:

           Deferred tax assets:
              Bad debt allowances                                 $    500
              Net operating loss carryfoward                       114,115
                                                                   -------
                                                                   114,615
                                                                   -------

           Deferred tax liability:
              Depreciation                                             900
                                                                    ------

           Deferred tax asset                                      113,715

           Valuation allowance                                      30,600
                                                                    ------

           Net deferred tax asset                                 $ 83,115
                                                                   ========


      As of November 30, 1997,  the Company has  available,  for tax reporting
      purposes, net operating loss carryovers of approximately $647,600 which
      expire through 2011.



11. Employment contracts:

      The Company has no employment contracts.  Further, it has no retirement,
       pension or profit sharing plan covering its officers or directors.



12. Deferred offering expense:

      The value  stated is the amount  that has been paid by the  Company  for
      expenses  incurred for the public  offering of  warrants.  The deferred
      offering  expenses on the issued or expired warrants have been deducted
      from the proceeds of the offering. The offering of the Class C warrants
      is expected to be completed in 1997. In the event the offering does not
      take  effect,  the  deferred  offering  expenses  will  be  charged  to
       operating expenses.

      All deferred  offering expense pertain to the Class C warrants which had
      not been issued as of the statement date.











                                                                         F-12


<PAGE>



                          HEALTH-PAK, INC. AND SUBSIDIARY

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS






13. Related party transactions:

     Officers  loans are  unsecured  and  non-interest  bearing.  Officers  have
     indicated  that  they  will  not be  repaid  in the  current  year.  In
     addition,  the  Company has  advanced  funds to its  minority  interest
     partner, Protective Disposal Apparel, in the amount of $89,039.


14. Common stock purchase options:

     As of November 30, 1997 the unexercised options held by Silver Lake, Inc.
         are as follows:

           Amount of options           Exercise price         Expiration

                    500,000                 .75            October 31, 1998
                    600,150                1.25            October 31, 1998
                    500,000                2.00            October 31, 1998


      The Company  has elected to  continue  use of the methods of  accounting
      described by APB-25 "Accounting for Stock Issued to Employees" which is
      based on the intrinsic value of equity  instruments and has not adopted
      the principles of SFAS-123  "Accounting  for Stock Based  Compensation"
      effective for fiscal years beginning after December 15, 1995,  which is
      based  on  fair  value.  There  is no  significant  difference  between
      compensation  cost  recognized  by APB-25 and the fair value  method of
      SFAS-123.  The Company has not recognized  compensation on the granting
      of the options and warrants to employees and consultants since the fair
      value  of the  warrants  or  options  is the  same as or less  than the
      exercise price.


15. Earnings per share:

                                         November 30, 1997    November 30, 1996
                                         -----------------   -----------------

                                              Primary             Primary

  Number of shares:
   Weighted average shares outstanding      15,490,009          14,159,133
    Incremental shares for outstanding
     stock options                           1,600,150           1,600,150
                                            ----------          ----------

                                            17,090,159          15,759,283
                                            ==========          ==========



    Primary  earnings  per share  amounts are  computed  based on the weighted
    average  number of shares  actually  outstanding.  Shares  that would be
    outstanding  assuming  exercise of dilutive stock options , all of which
    are considered to be common stock  equivalents.  Fully diluted  earnings
    per share are the same as primary  earnings  per share for  November 30,
    1997 and November 30, 1996.





                                                                         F-13


<PAGE>







ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

I. Financial Condition and Liquidity.

Introduction.

As previously  stated in the Company's filed reports,  the financial  statements
and the discussion which follows includes,  on a consolidated basis, the assets,
liabilities and operating results for Protective Disposable Apparel Company, LLC
("PDA")  which was  acquired  by the  Company  in  October,  1996 as a 65% owned
subsidiary.  Since adjustments were not made for prior periods,  comparisons may
not completely reflect the actual results. Inter company balances have also been
eliminated in the consolidation.

(a) Financial Condition.

Assets:

Total assets  increased  by $123,861 at November 30, 1997,  the end of the first
half of fiscal 1998,  when compared to the year end at May 31, 1997, an increase
of  slightly  over 4%,  which  reflects a slower  growth  rate in terms of total
assets than has been reported for previous periods. This is an indication of the
fact that the  Company's  recent  expansion  period with the addition of the PDA
acquisition  has now settled.  For instance,  the  Company's  growth in terms of
total assets at May 31, 1997 compared to the year ended May 31, 1996 was 190%.

There is also very little change in the composition of assets since May 31, 1997
with cash being  $30,523 lower at the end of the first half compared to the year
end;  receivables  are only $34,414 higher than the year end and inventory being
$111,873  higher  than  the  year  end.  These  changes,  expressed  in terms of
percentages are (13.1%),  7.5% and 7.7%,  respectively,  and are not regarded as
significant  by  management.  Other  changes  in the  composition  of  assets at
November 30, 1997 included (i) prepaid expenses which increased to $126,931,  as
compared to $100,649 at fiscal year end;  (ii)  machinery  and  equipment  which
increased  slightly to  $312,106  from $310,  797 at fiscal year end:  leasehold
improvements which also increased slightly to $116,878,  as compared to $107,460
at fiscal  year end;  and (iii)  investment  in  affiliated  company  which also
increased slightly to $135,027 as compared to $130,637 at fiscal year end.

Each of the other individual asset accounts when compared with the corresponding
account for the fiscal year ended May 31, 1997 are quite  comparable and reflect
little if any change in the composition of assets for the six month period ended
November 30, 1997.

Liabilities:

Total  current  liabilities  at November 30, 1997  increased to  $1,860,700,  up
$167,663  from May 31, 1997.  This  increase  was due  primarily to increases in
notes  payable,  bank  ($599,742 as compared to $552,952 at fiscal year end) and
accounts  payable  ($1,199,274 as compared to $1,038,686 at fiscal year end. The
increase in bank notes payable for the period  reflects the Company's  continued
increase in the use of its credit facility during the period and the increase in
accounts  payable is caused by the  Company's  continued  policy of  temporarily
conserving cash for a proposed plant  acquisition and some inventory  purchases.
This  policy  has been in effect  since the start of fiscal  1998 and,  in part,
accounts for the increased  inventory,  including  increases in inventory of its
affiliated company, reflected in the figures at November 30, 1997.

None of these changes are regarded as  significant  by management and except for
the entries  mentioned  above,  the liabilities are comparable to the year ended
May 31, 1997. This indicates that the Company



<PAGE>



devoted the first half of fiscal 1998 to consolidation of its acquisition of PDA
and  positioning  itself to make the building and plant  acquisition  previously
mentioned.

Liability  for payroll taxes  decreased in this period  ($46,526 at November 30,
1997 compared to $84,503 at Fiscal year end) as this item was reduced by payment
during the period and was not significantly increased because of the addition of
new employees, as was the case at the fiscal year end.

The additions to liabilities in the first half of fiscal 1998 represented by the
increases in notes  payable and accounts  payable are  responsible  for the 9.9%
increase in Total  Current  Liabilities  at November  30, 1997 of  approximately
$167,663  compared to the year ended May 31, 1997  ($1,860,700  at November  30,
1997 compared to $1,693,037 at the year ended May 31, 1997). Current Liabilities
at the end of the first half  were,  nevertheless,  more than  offset by Current
Assets of $2,480,052.

The Company's  retained  earnings deficit of $1,053,750 for the six months ended
November  30, 1997 shows an  increase  in the total  deficit of $ 2,193 over the
year  ended  May 31,  1997 due to a  further  net loss in the six  months  ended
November 30, 1997 of a comparable amount.  This loss compares with a net loss of
$89,622  at the year end in 1997  and a net  loss of  $54,822  at the end of the
first half of fiscal 1997 at November 30,  1996.  However,  more  significantly,
during the three months ended November 30, 1997, the Company's operations showed
a net profit for the period of $7,950,  as compared to a loss of $45,024 for the
three months ended November 30, 1996.  See "Results of  Operations"  for further
details.

Management  believes  that,  overall,  there  was no  significant  change in the
financial  condition  of the  Company  in the  first  half of  fiscal  1998 when
compared to the year end.

See  "Results  of  Operations"  for  additional  information.   For  information
regarding  liquidity,  see  Subparagraph  (b) "Liquidity"  below. For additional
information  relating  to the  financial  condition  of the  Company,  also  see
"Inflation" and "Trends Affecting Liquidity, Capital Resources and Operations."

(b) Liquidity.

Although there was a decrease in working capital at the end of the first half of
fiscal 1998 compared to the year ended May 31, 1997,  the Company had sufficient
liquid assets to meet its obligations at the end of this period. Working capital
at November  30, 1997 was  $619,352  compared to $647,903 at May 31,  1997,  the
fiscal year end.  This  represents a decrease of $28,551 or 4.4% when  comparing
the first half of 1998 with the fiscal year end.  Management  does not view this
as a significant change, particularly when taking into account the expenses that
the Company has had in assimilating the business of PDA, providing inventory for
PDA accounts  and the  establishment  of a clean room  facility for the Company,
largely to accommodate PDA products.

Principal  short-term  liabilities  at  November  30,  1997 were  $1,199,274  in
accounts payables,  short term note obligations of $599,742, the current portion
of long term debt in the amount of $15,158 and taxes and accrued expenses due of
$46,524 for a total of $1,860,698. Against this total, at November 30, 1997, the
Company had liquid current  assets of $203,207 in cash,  inventory of $1,568,863
and trade receivables of $489,790 for a total of $2,261,860 in short term liquid
assets.  In  management's  opinion,  these assets were  sufficient  to cover the
Company's operating expenses and debt for the foreseeable future.

Management  also had at its disposal a credit line of $650,000 (an increase from
the  previous  credit  line of  $600,000)  of which  approximately  $58,000  was
available at November 30, 1997.  This credit line was increased in February 1998
to $750,000.

In  combination,  management  believes  that the  Company  will have  sufficient
liquidity and adequate  working  capital and sufficient  credit  alternatives to
fund the Company's  operations during the current fiscal year, including support
for its planned expansion of sales.




<PAGE>



The  principal  source of funds for the  Company's  operations  during the first
quarter of 1998  continued to be from  operating  revenues and proceeds from its
credit line, as reflected in the Company's financial statements.

II. Results of Operations.

In the first  half of fiscal  1998 the  Company  had gross  sales of  $1,998,923
compared to gross sales of $1,133,283  for the same period in fiscal 1997.  This
is an  increase  of  $865,640  compared  to the first  half of fiscal  1997 or a
percentage increase of approximately  76.4%. Cost of sales for the first half of
fiscal 1998 were  $1,470,334  resulting  in a gross  profit from  operations  of
$528,589; compared to $766,040 and $367,243, respectively for the same period in
fiscal 1997.  This  represents an increase in gross  operating  profits for this
period of $161,  346 or slightly  less than 44% higher than in the first half of
fiscal 1997.

Expressed as a percentage  of net sales,  gross profits for the six months ended
November  30,  1997  were  26.4% of net sales and 32.4% of net sales for the six
months ended  November 30,  1996.  Gross  profits at the year ended May 31, 1997
were 26.1%.  The  comparison  between the period ended November 30, 1997 and the
year  ended May 31,  1997 shows only a slight  increase  which,  like the larger
increase  experienced  in the first half of fiscal 1998, is primarily due to the
integration  of the PDA  products,  which were not a factor in the first half of
fiscal 1997. The price increases were not in effect for the entire first half of
fiscal  1997 and were in place  only for a portion  of the first  half of fiscal
1998.  Nevertheless,  the obvious  increase  in net sales for the quarter  ended
November 30, 1997  compared to the same period ended  November 30, 1996 resulted
in a significant increase in gross profits for the most recent period.

More  significantly,  however,  during the three months ended November 30, 1997,
the Company had gross sales of  $985,417,  as compared to $512,997 for the three
months ended  November 30,  1996.  After cost of sales of $733,022  (compared to
$366,650 for the second quarter of fiscal 1997),  the Company had a gross profit
of $252,395 for the second quarter of fiscal 1998, compared to a gross profit of
$146,347 for the second quarter of fiscal 1997.  This represents and increase of
$106,048 or over 72% higher than the same period last year.

As previously  reported,  the substantial  increase in revenues when compared to
the prior period results  primarily from the  acquisition of PDA which added its
revenues to those of the Company. Revenues were also very slightly influenced by
a price  increase of 3.5% on all of the Company's  products  applied on March 1,
1997. A price increase of 14.7% on all of PDA's products in July,  1997 was also
in effect for part of most the period  ended  November  30,  1997 and  increased
revenues for that period.

The price  increases  on PDA  products  were made as the  result of a cost study
conducted by the Company to insure that PDA's pervious  costing was in line with
pricing.  Management  discovered from the study that many of PDA's products were
not correctly  priced,  which resulted in the price increase as of July 1, 1997.
This study took longer than anticipated or the price adjustments would have been
implemented sooner.

During the fiscal year ended May 31, 1997,  the Company  introduced new products
which are  expected by  management  to make more  significant  contributions  to
revenues in the current  fiscal year than in 1997.  These new  products  include
sterile garments used in "clean room" operations in industry,  where a germ free
objective is maintained.  These products  include sterile lab coats,  coveralls,
hoods and boots and are a product of the Company's new "clean room" facilities.

The Company also introduced  "sonic sealed" garments which are garments produced
by a sonic sealing or welding  process,  manufactured  by  ultrasonic  equipment
which essentially  changes the molecular structure of the material being made to
form a complete and impenetrable  seal at the point of closure.  No heat is used
or necessary for this process.  These garments are fluid and chemical  resistant
and are used primarily in chemical and nuclear work.




<PAGE>



The Company opened  important new customers for its products during fiscal 1997,
including  Boeing,  Grumman  Aircraft,  Bristol Meyers,  Johnson and Johnson and
Mitsubishi.  It is  anticipated  that serving  these  customers  will  influence
revenues in a positive way during the current year.

The  shift,  beginning  in 1996,  to  private  label  work has been  essentially
discontinued  as  the  Company  assumed   additional   responsibility   for  the
manufacture of PDA's products and required additional manufacturing capacity for
its own products.

Under  new  agreements  for  manufacturing  private  label  goods  with  two new
principal  customers,  the Company will sustain  sufficient profits to warrant a
continuation of this work at a reduced rate.

The Company's production of operating gowns did not achieve the results expected
and were essentially  discontinued;  however,  the Company is manufacturing such
gowns  presently to the  specifications  of a new customer and will  continue to
offer this product mainly through the orders received from its customer.

There were no significant  contributions to revenues from the sale of the "Rigg"
(a sling designed to hold basketballs,  soccer balls and baseballs,  among other
things,  allowing free use of the hands and arms) a non-medical  product offered
for consumer use beginning in 1995, and the Company is still awaiting  marketing
efforts of others to see important revenues from this product.

However,  based on the potential of the new products  mentioned  above,  the new
markets  opened by the  Company and the  addition of PDA's sales and  customers,
management believes the Company will grow significantly in terms of net revenues
for 1998.

As stated  above,  cost of sales for the six  months  ended  November  30,  1997
increased  when compared to the six months ended  November 30, 1996, as would be
expected from the significant  increase in revenues for the current period. Cost
of sales for the period  expressed  as a  percentage  of net sales  increased to
73.6%  compared  to 67.6% for the six  months  ended  November  30,  1996.  This
increase, however, is only slightly higher than at the fiscal year ended May 31,
1997, when cost of sales expressed as a percentage of net sales was 73.4%.

As was  previously  stated,  cost of sales have increased as a percentage of net
sales  because  PDA's  products  were  assimilated  into the  Company's  line of
products  and these  products  were  generally  carried by PDA at a higher  cost
basis.  The  Company  corrected  this  problem  by  (i)  assuming  some  of  the
manufacturing  responsibility for PDA's products,  and thereby controlling costs
on a better basis;  and (ii)  increasing  the prices for PDA's  products to more
accurately reflect costs. Management now believes that the cost differential has
been  corrected by the increase in prices made by the Company in July,  1997, as
stated  above,  and by  manufacturing  some of  PDA's  products  in  house.  Now
approximately 50% of PDA's products are made by the Company.

Selling,  general and  administrative  expenses  were 25.2% of net sales for the
first half of fiscal 1998  compared to 38.6% of net sales for the same period in
fiscal  1997.  When  examining  this  comparison  it should be noted that in the
period ended November 30, 1996, the cost of the Company's  factoring charges was
still  attributable to this account while in the period ended November 30, 1997,
the Company  changed its method of financing  operations  and the interest costs
for this purpose is shown in the interest expense  account.  Since this cost has
been shifted out of selling,  general and administrative expenses this year, the
effect has been to lower this cost in the six months  ended  November  30,  1997
compared to November 30, 1996.

Other charges are up for the same reason,  i.e. because interest charges for the
Company's  credit line are  included in the interest  account,  which is part of
"other charges."




<PAGE>



While the Company  eliminated its high cost of factoring  receivables during the
last fiscal year,  financing costs in terms of interest  charges for its present
financial  accommodation  for the six months  were  $61,770  compared  with only
$18,260 for the six months ended November 30, 1996.

Net income  (loss) for the six  months  ended  November  30,  1997 was  ($2,193)
compared to ($54,822) for the six months ended  November 30, 1996, and ($89,622)
for the year ended May 31, 1997.  While continuing to reflect a very modest loss
for the six  months  ended  November  30,  1997,  it should be noted  that gross
profits from operations for the same period were considerably  higher than gross
profits from  operations  for the same period at August 31,  1996.  Cost factors
which affected  profitability in both periods,  however, were the interest costs
at November 30, 1997 and factoring charges  (accounted for in higher General and
Administrative costs) in the comparable period ended November 30, 1996.

However, during the three months ended November 30, 1997, the Company operations
resulted  in a net  operating  profit  of  $7,950,  compared  to a net  loss  of
($45,024) during the first six months of fiscal 1996.  Management  believes that
this renewed  profitability  is the  culmination  of several  years of effort to
streamline  the  Company's  operations  and bring costs and pricing in line with
current market conditions.

For  information  with  respect  to the  possible  effect  of  future  trends on
operations,  see the discussion under the caption "Trends  Affecting  Liquidity,
Capital Resources and Operations."

III.  Capital Resources.

There was no significant  increase in Property and equipment in the period ended
November 30, 1997 and there are at present no commitments for capital  purchases
except for the Company's  proposed  purchase of the building  which it presently
occupies.  The  determination to purchase this building was made for a number of
reasons including a favorable purchase price and because it will be saving money
on the difference  between rental payments and mortgage  amortization.  For this
purpose, the Company has been accumulating cash as was stated above for the down
payment.

The Company does not anticipate that this purchase will involve significant cash
demands in excess of the funds already conserved.

The Company also does not presently  anticipate  the  allocation of  significant
resources for machinery and equipment  purchases.  Any such  commitments will be
dependent on demand for the delivery of products  under new or increased  orders
and will  primarily be purchased in  cooperation  with New York State  financing
programs, leasing programs or bank financing without committing substantial cash
assets.  Future  conditions,  such as successful equity financing  efforts,  may
change this position.

The  Company  constructed  a "clean  room" to provide  the basis for the sale of
sterilized  products which is now complete.  This was not a significant  cost to
the Company.

Current  conditions  indicate,  however,  that some funds will be  required  for
additional  capital  expenditures in the foreseeable future which coincides with
management's sales expansion program; however, as explained above, financing for
purchasing  these resources will be obtained from sources which will not require
a  substantial  outlay  of cash  and  will  be in  proportion  to the  Company's
resources.



IV. Inflation.

Management  anticipates  that inflation  will not have a material  effect on the
Company's  operations  in the future.  This is  principally  due to two factors.
First,  if orders  increase due to inflation the Company  presently has adequate
manufacturing  equipment  and capacity to support not only its present  level of
operations but, with the addition of a second and, if needed,  a third operating
shift, to support a



<PAGE>



substantial  increase  in  production  of its  present  product  lines.  Second,
although  product  pricing  would be affected by inflation  due to higher costs,
management  believes that public health and safety  concerns  would outweigh any
negative impact of price increases and would not adversely  affect the Company's
projected  sales.  Additionally,  the  hospital  and health  care  markets  have
historically  been best able to pass on increased costs which are typically paid
by insurance coverage.

V.  Trends Affecting Liquidity, Capital Resources and Operations.

A number of factors are expected to impact upon the Company's liquidity, capital
resources  and future  operations.  Included  among these are (i)  environmental
concerns;  (ii) economic factors  generally af fecting the health care industry;
(iii)  governmental  regulation of the  Company's  products and (iv) the growing
concern in many industries about controlling the spread of infectious disease.

Some  disposable  products  offered by the Company  are made from  plastic-based
materials which have raised concern among environmental groups over their proper
disposal.  Although  management  believes that such concerns are, in many cases,
valid,  it is also  believed  that these  concerns  must be balanced with safety
provided by these products against infectious  diseases such as AIDS,  hepatitis
and others.  This belief has recently been reinforced by the new,  comprehensive
safety regulations issued by the Occupation al Safety and Health  Administration
(OSHA) which  require  extensive  new measures to combat the spread of infection
and disease in many industries which had not previously  required such measures.
Most im portantly,  from the point of view of the Company,  are the requirements
for  protective  apparel such as that  manufactured  by the Company.  Management
believes that the regulations,  which are now fully  implemented,  will increase
demand  for the  Company's  products  and  significantly  expand  the  Company's
markets.  Based upon recent  increased  orders,  management  believes  that most
significant  among  these new  markets  for its  products  will be the  hospital
looking to comply with the new OSHA regulations,  emergency service  industries,
including police,  fire and ambulance  services,  which routinely are exposed to
unusually high risk of infectious diseases and physicians.

Nevertheless,  the  requirements  relating to proper  disposal of  plastic-based
garments is still in question and the Company  cannot predict the outcome of any
future  regulations  relating to these matters.  Any changes in manufacturing or
disposal  requirements  could  result  in  higher  manufacturing  costs and less
profitability for the Company or, possibly,  complete  elimination,  which could
have a substantially  negative impact on liquidity and capital  resources in the
future.

Management also believes that perhaps the most  significant  adverse impact upon
its liquidity,  capital resources and future operations may result from economic
pressures to keep health care costs low.  Spear  headed by health care  insurers
and now the federal  government,  the entire  health care industry in the United
States has come under increasing pressure and scrutiny to reduce unnecessary and
wasteful  costs.  To meet the  criticism in recent years over the higher cost of
disposable  products,  the Company  has intro  duced a line of limited  reusable
products.  These  products  are designed to be washed and reused from between 25
and 100 times before being replaced. Management believes that such products will
not only address the  economic  concerns  but also the  environmental  issues by
reducing the amount of products which are being discarded.  However,  as already
mentioned,  in  situations  where there is a high risk of  spreading  infection,
management  believes that the  disposable  products will continue to have strong
appeal and demand in the marketplace.

As new  Company  manufactured  products,  such as the  "Rigg,"  car  covers  and
sterilized products are introduced, management believes that sales revenues will
increase  and,  over the long term,  will result in more stable sales and higher
profit margins for the Company. In addition,  the existence of the Occupa tional
Safety and Health  Administration (OSHA) regulations are expected to continue to
have a positive influence on the demand for the Company's products.

In  short,  the  above  factors  may each  have a  significant  impact  upon the
Company's  future  operations.  At  present,  management  believes  that  safety
concerns over the spread of infectious diseases such as AIDS and



<PAGE>



hepatitis  will,  at least for the  foreseeable  future,  outweigh  economic and
environmental concerns. Consequently, management does not anticipate any adverse
impact upon its future operations for the foreseeable  future.  Apart from these
factors,  management  knows of no trends or demands that would adversely  affect
the financial condition of the Company.


         PART II  OTHER INFORMATION


ITEM 6.   Exhibits and Reports on Form 8-K

          (a) Exhibits.

11 - Calculation of primary and fully-diluted income (loss) per share. Reference
is made to Note 15 the financial statements, incorporated herein by reference.

          (b) Reports on Form 8-KSB

               None.



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                  SIGNATURES



Pursuant  to 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 thereunto duly authorized.





                                       HEALTH-PAK, INC.



                                      /s/ Anthony J. Liberatore
                                      Anthony J. Liberatore,President
                                      Chief Operating Officer

Dated:  February 10, 1998



                                    /s/ Michael A. Liberatore
                                        Michael A. Liberatore,Vice President
                                        Chief Financial Officer

Dated:  February 10, 1998






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