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, 1996

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

           Class                             Outstanding at November 30, 1996

Common stock, $0.002 par value                            15,888,556



<PAGE>
























                                                       INDEX



Part  I.       Financial information


               Item 1.   Condensed consolidated financial statements:

                         Balance sheets as of November 30, 1996 and
                         May 31, 1996                                      F-2

                         Statement of income for six and three months ended
                         November 30, 1996 and 1995                        F-3

                         Statement of cash flows for six months
                         ended November 30, 1996 and 1995                  F-4

                         Notes to condensed consolidated financial
                         statements                                      F-5-10



               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, 1996 AND AUGUST 31, 1996

<TABLE>

                                    ASSETS                                                                       LIABILITIES



<CAPTION>
<S>                                          <C>             <C>                                                     <C>         <C>
                                    November 30,         May 31,                                            November 30,     May 31,
                                       1996               1996                                                  1996           1996
                                       ----               ----                                                 ----           ----
Current assets:                                                                 Current liabilities:
  Cash$                                51,876        $    1,376                  Current portion of long term debt $ 22,236  17,105
  Receivables, trade, net of                                                     Notes payable, bank (Note 5)       343,169  80,827
   allowance of $2,000                584,388           286,926                  Accounts payable                   736,532 477,688
  Inventory (Note 3)                1,044,259           571,619                  Payroll and sales tax payable and
  Income tax refund receivable,                                                        accrued expenses              31,461  39,155
                                                                                                                  ---------- ------
   current                              1,740             1,740
  Prepaid expenses                     77,713            92,381
  Current portion of consulting
   agreement                            6,667             6,667
                                     ----------        ----------

    Total current assets             1,766,643          960,709                  Total current liabilities     1,133,398    614,775
                                     ----------        ----------                                             ----------  ----------

Property and equipment (Note 2):
   Machinery and equipment             313,197          293,783                    Long-term debt, net of current
   Leasehold improvements               89,335           87,546                     portion (Note 6)              30,989     16,662
                                                                                                               ----------  ---------
   Office equipment                     89,485           71,638
   Automotive equipment                 21,021           21,021
                                      ----------      ----------
                                       513,038          473,988
   Less accumulated depreciation       185,231          180,841                    Commitments (Note 7)
                                      ----------      ----------

                                       327,807          293,147
                                       -------          -------
                                                                                  Minority interest in consolidated  18,890
                                                                                   subsidary
Other assets:
  Investments in affiliated Company     130,637                                  Shareholders' equity:
  Deposit on building                    21,600        23,400                     Common stock, .001 par value 2,000,000
  Deposits                                4,541           241                     Common stock, .002 par value 20,000,000
   of current portion (Note 7)            2,222         5,555                     shares authorized, 15,888,556 shares 31,776 27,943
  Deferred offering expenses            225,710       225,419                     issued and outstanding
  Deferred income taxes (Note 8)        102,187        83,115                     Common stock purchase warrants:
  Deferred loan fees and costs           28,618                                    Class A (Note 7)
  Cash surrender value, officers'                                                  Class B (Note 7)
   life insurance                        16,139        16,139                      Class C (Note 7)
  Officer's loan (Note 9)                 1,150         1,150                     Additional paid in capita  2,303,538     1,786,011
                                       ----------   ----------
                                                                                  Retained earnings (deficit)( 891,337)  (  836,516)
                                                                                                            ----------   ----------
                                        532,804       355,019
                                        -------       -------
                                                                                                             1,443,977      977,438


                                     $2,627,254     $1,608,875                                              $2,627,254   $1,608,875
                                     ==========      ==========                                            ==========    ==========


</TABLE>


     See notes to condensed consolidated financial statements.
                                                                           F-2


<PAGE>



                           HEALTH-PAK, INC. AND SUBSIDIARY

                     CONDENSED CONSOLIDATED STATEMENT OF INCOME

                SIX AND THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995





                           Six months ended                Three months ended
                             November 30,                      November 30,
                          1996        1995               1996           1995
                          ----         ----              ----           ----

Net sales             $1,133,283   $  995,492       $  512,997      $  559,927

Cost of sales            766,040      726,210          366,650         421,106
                      ----------    ----------       ----------      ----------

Gross profit             367,243      269,282          146,347         138,821

Selling, general and
administrative expenses  438,005      245,683          228,487         134,880
                      ----------    ----------      ----------       ----------

Income (loss) from
 operations         (    70,762)       23,599     (    82,140)           3,941
                      ----------    ----------      ----------       ----------

Other income (expense):
  Loss on investments in
   affiliated company (   5,763)       35,082
  Interest expense  (    18,260)  (     6,284)    (    11,309)    (     4,962)
  Amortization      (     3,333)  (    11,333)    (     1,666)    (     5,666)
                      ----------   ----------      ----------       ----------

                    (    27,356)  (    17,617)       ( 22,107)    (    10,628)
                      ----------   ----------       ----------      ----------

Income (loss) before
 income taxes       (    54,207)        5,982     (    60,033)    (     6,687)

Income taxes (benefit):
  Current           (    18,275)        1,230     (    15,009)    (     1,305)

Minority interest in
 income of subsidiary (  18,890)
                      ----------

Net income (loss)   ($   54,822)   $    4,752     ($   45,024)    ($    5,382)
                     ==========    ==========      ==========       ==========

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            14,930,298     13,104,797     15,013,011       13,104,797
                     ==========     ==========     ==========       ==========

  Fully diluted      14,930,298     13,104,797     15,013,011       13,104,797
                     ==========     ==========     ==========       ==========







     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, 1996 AND 1995








                                                          1996            1995
                                                          ----            ----
Operating activities:
  Net income (loss)                                  ($ 54,822)       $  4,752
  Adjustments to reconcile net income to cash provided by
   operating activities:
    Depreciation                                        18,934          20,120
    Amortization                                         8,653          11,333
    Gain on investments in subsidiaries                 24,653
  Changes in operating assets and liabilities:
    Increase in accounts receivable                  ( 297,462)      (  12,547)
    Increase in inventory                            ( 472,640)      (  93,624)
    Increase in income tax refund receivable                         (     631)
    Increase in prepaid expenses and interest receivables( 5,196)    (   3,238)
    Increase in accounts payable                         258,844        93,915
    Increase (decrease) in accrued expenses            (   7,694)        6,131
    Increase in deferred income taxes                  (  19,071)
    Increase in deposits and loan fees                 (  31,118)
                                                        --------

    Net cash provided from (used in) operating
       activities                                      ( 576,919)      26,211
                                                        --------      --------

Investing activities:
  Use of cash:
    Purchase of property and equipment                 (  39,050)   (  40,721)
    Investment in subsidiaries                                      (  18,262)
                                                        --------      --------

    Net cash used in investing activities              (  39,050)   (  58,983)
                                                        --------     --------

Financing activities:
  Sources of cash:
    Proceeds from issuance of common stock               384,960
    Increase in long-term debt                            31,083      20,000
    Proceeds from notes payable, bank                    269,078      20,064
  Use of cash:
    Payment of notes payable, bank                     (   6,736)   (  1,750)
    Payment of current portion of long-term debt       (     967)
    Payment of long-term debt                          (  10,658)   (  3,286)
    Payment of deferred offering expenses              (     291)   (  1,800)
                                                         --------    --------

    Net cash provided from financing activities          666,469      33,228
                                                        --------      --------

Net increase in cash                                      50,500         456

Cash, beginning of period                                  1,376       1,494
                                                        --------      --------

Cash, end of period                                     $ 51,876    $  1,950
                                                         ========     ========

Supplemental  disclosures and cash flow  information: Cash paid during the year
  for:
    Interest                                            $ 18,259     $ 6,284
                                                        ========      ========
    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.                         $136,400    $     0
                                                         ========     ========







     See notes to condensed consolidated financial statements.
                                                                            F-4


<PAGE>



                             HEALTH-PAK, INC. AND SUBSIDIARY

                  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                            SIX MONTHS ENDED NOVEMBER 30, 1996
                                  (Unaudited)






     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information and with the  instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial statements. In the opinion of management,  all adjustments (consisting
of only normal recurring accruals)  considered necessary for a fair presentation
have been  included.  Operating  results for the six month period ended November
30, 1996 are not necessarily  indicative of the results that may be expected for
the year ending May 31, 1997. For further  information refer to the consolidated
financial  statements  and footnotes  thereto  incorporated  by reference in the
Company's Annual Report on Form 10-K for the year ended May 31, 1996.

1.  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.


2.  Summary of significant accounting policies:

     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.

    Use of estimates:
        The  preparation  of financial  statements in conformity  with generally
         accepted accounting  principles required management to make 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 those
         estimates.

    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).








                                                                           F-5


<PAGE>



                                  HEALTH-PAK, INC. AND SUBSIDIARY

                        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                 SIX MONTHS ENDED NOVEMBER 30, 1996
                                            (Unaudited)






2.  Summary of significant accounting policies (continued):

    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 and 31-1/2
           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.

    Cash and cash equivalents:
        Cash and cash equivalents include financial  instruments with maturities
         of three months or less.


3.  Inventories:

    Inventories consist of:


                                            November 30, 1996      May 31, 1996
                                            -----------------      ------------

        Raw materials                        $  824,296              $372,753
        Finished goods                          219,963               198,866
                                              ----------             --------

                                             $1,044,259              $571,619
                                              ==========             ========



4.  Principles of consolidation:

    The accompanying  consolidated  financial statements 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.














                                                                          F-6


<PAGE>



                                   HEALTH-PAK, INC. AND SUBSIDIARY

                         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   SIX MONTHS ENDED NOVEMBER 30, 1996
                                             (Unaudited)




4.  Investment:

    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.

    In  October 1996, the Company formed and purchased a 65% equity  interest in
        Protective  Apparel,  LLC, a company operating in the disposable apparel
        business.  The 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 LLC 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' EQUITY

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

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

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



5.  Notes payable, bank:

    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, 1996 the
        balance due on the line of credit was $74,091.

    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, 1996 is $269,078.








                                                                           F-7


<PAGE>



                                 HEALTH-PAK, INC. AND SUBSIDIARY

                      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                SIX MONTHS ENDED NOVEMBER 30, 1996
                                          (Unaudited)



6.  Long-term debt:
                                                Rate       Amount      Maturity

      Note payable, Key Credit            (a)   12%      $ 2,748      May, 1998
      Note payable, Manifest Group        (b)   10%       21,648     July, 1999
      Note payable, H.E.P Leasing Co.     (c)   10%          832 February, 1997
      Note payable, Waste Mgmt. of N.Y.   (d)   10%        6,571 November, 1998
      Note payable, Business Services, Co.(e)   10%        2,270  January, 1998
      Note payable, Resource Capital Corp. (f)  10%        5,988    March, 2000
      Note payable, Resource Capital Corp. (g)  10%        4,617     July, 1999
      Note payable, Resource Capital Corp. (h)  10%        8,551    April, 1998
                                                          -------
                                                          53,225
      Less current portion                                22,236
                                                          ------

                                                         $30,989
                                                         =======


      (a)     Note payable is collateralized by equipment with a cost of $5,690.
               The note is payable in installments of $223 per month, including
               interest.

      (b)    Note payable is collateralized by equipment with a cost of $20,064.
               The note is payable in installments of $410 per month including
               interest.

      (c)    Note payable is collateralized by equipment with a cost of $11,279.
               The note is payable in installments of $580 per month including
               interest.

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

      (e)     Note payable is collateralized by equipment with a cost of $7,688.
               The note is payable in installments of $184 per month including
               interest.

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

      (g)     Note payable is collateralized by equipment with a cost of $5,296.
               The note is payable in installments of $167 per month including
               interest.

      (h)     Note payable is collateralized by equipment with a cost of $9,053.
               The note is payable in installments of $503 per month including
               interest.

      Maturities of the debt as of November 30, 1996 are as follows:

                            Year                                     Amount
                            ----                                     ------
                     November 30, 1997                              $22,236
                     November 30, 1998                               16,161
                     November 30, 1999                                9,972
                     November 30, 2000                                4,856
                                                                    -------
                                                                    $53,225
                                                                    =======
                                                                           F-8

                                                                           
                                         


<PAGE>



                                   HEALTH-PAK, INC. AND SUBSIDIARY

                         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                 SIX MONTHS ENDED NOVEMBER 30, 1996
                                           (Unaudited)






7.  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 term of this lease
        was from  August  1, 1993 to April 30,  1994 at a  monthly  $7,500.  The
        Company  had an option to  purchase  the  facility  for  $600,000  which
        expired on April 30, 1994. The lease was  automatically  extended for an
        additional  three year period for $9,500,  with  payments  beginning  in
        August, 1995.

    Rentcharged to expense in the six months  ended  November  30, 1996 and 1995
        was $54,150 and $42,000 respectively.

    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, 1996,  2,716,517 options have been
        exercised as follows:


                            Number of options               Exercise price

                               600,000                            .10
                               200,000                            .25
                               300,000                            .35
                             1,616,517                            .22


      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
        common  shares plus 17,242  shares per the  original  agreement  that an
        additional  250,000  shares 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.











                                                                         F-9


<PAGE>


                                HEALTH-PAK, INC. AND SUBSIDIARY

                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               SIX MONTHS ENDED NOVEMBER 30, 1996
                                      (Unaudited)






8.  Income taxes:

    The components  of income tax expense  (benefit)  for  November 30, 1996 and
        1995:

    A   reconciliation  of income tax expense (benefit) at the statutory rate to
        income tax  expense  (benefit)  at the  Company's  effective  rate is as
        follows:
                                                    November 30         May 31
                                                       1996              1996

         Computed (benefit) expense at expected
           statutory rates                         ($24,853)          ($20,012)
         Surtax exemption                            13,888              9,712
         State tax expense (benefit)               (  7,310)          (  4,860)
                                                    -------             -------

         Income tax expense (benefit)              ($18,275)           ($15,160)
                                                    =======             =======


    The effective statutory rate for 1996 was 34% for federal tax purposes.

    As  of May 31, 1996, the Company has available,  for tax reporting purposes,
        net operating loss carryovers of approximately  $394,000 which expire in
        2009.

    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.

    Deferred  income  taxes  are a result  of timing  differences  arising  from
        depreciation reported for tax purposes in periods different than for tax
        purposes.


9.  Related party transactions:

    Officers  loans  are  unsecured  and  non-interest  bearing.  Officers  have
        indicated that they will not be repaid in the current year.









                                                                          F-10


<PAGE>






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

         Preliminary  Note:  In  reading  the  following  discussion  it must be
remembered  that the statement  presented for the period ended November 30, 1996
includes,  on a  consolidated  basis,  the  assets,  liabilities  and  operating
statements  for Protective  Disposable  Apparel  Company LLC ("PDA"),  which was
acquired by the Company in October 1996 as a 65% owned  subsidiary  corporation.
Since  adjustments  for  the  acquisition  were  not  made  for  prior  periods,
comparisons may not completely  reflect the actual results.  Also, the Company's
operating  statements  for the period ended  November 30,  1996,  includes  only
approximately five weeks of activity by PDA.

I. Financial Condition and Liquidity.

(a) Financial Condition.

         At November 30, 1996,  the end of the first half of fiscal 1997,  total
assets  increased by  $1,018,379  from May 31, 1996,  the end of fiscal 1996, to
$2,627,254,   of  which  approximately  $710,292  is  attributable  to  the  PDA
acquisition. The principal reasons for this increase were (i) the acquisition by
the Company in October 1996 of a 65%  interest in PDA, a company  based in North
Carolina  operating in the disposable  apparel business  primarily for the clean
room market; (ii) the Company's  investment of $130,637 in Silver Lake Holdings,
Ltd.; (iii) an increase of $297,462 in trade receivables, of which approximately
$247,600 is attributable to the PDA acquisition; (iv) an increase of $472,640 in
inventory at November 30, 1996, of which approximately  $393,600 is attributable
to the PDA acquisition;  (v); an increase of $34,660 in machinery and equipment,
after accumulated  depreciation,  of which approxi mately $9,053 is attributable
to the PDA  acquisition;  (vi) an increase of $19,072 in deferred  income taxes;
(vii)  $28,618  in  deferred  loan  fees,  of  which  approximately   $2,700  is
attributable to the PDA  acquisition;  (viii) an increase of $50,491 in cash, of
which approximately $45,839 is attributable to the PDA acquisition;  and (ix) an
increase in deposits of $4,300, of which approximately $1,500 is attributable to
the PDA acquisition. These increases in the aggregate were offset in part by (i)
a  decrease  of  $14,668  in prepaid  expenses;  (ii) a  reduction  of $1,800 in
deposits on building;  and (iii) a reduction in prepaid consulting agreements of
$3,333, none of these decreases were attributable to the PDA acquisition.  Other
changes to the composition of total assets were  insignificant  during the first
six months of fiscal 1997.

         Of the foregoing  changes in the  composition of the Company's  assets,
the investment in PDA represents the only new factor of significance  during the
second quarter of fiscal 1997. As previously reported by the Company,  effective
October 28, 1996,  the Company  entered into an Asset  Purchase  Agreement  (the
"Agreement") with Scherer Healthcare,  Ltd.  ("Scherer") and PDA, a newly formed
New York limited  liability  company and a 65% owned  subsidiary of the Company.
Pursuant to this Agreement, PDA acquired certain of the assets of the protective
apparel  division of Scherer  including  inventory  on hand  (consisting  of raw
materials,  goods in progress and finished goods),  certain  equipment,  product
designs and  specifications,  customer  lists and  pre-paid  security  deposits,
including the use of the name

                                                         

<PAGE>



"Protective  Disposable  Apparel," and including also certain specified accounts
receivable  subject to certain specified  liabilities,  all as reconciled by the
parties  as of the close of  business  on  October  18,  1996.  PDA was  formed,
together with a former part-owner of the protective apparel division of Scherer,
as a 65% owned subsidiary of the Company  expressly for the purpose of acquiring
these assets and conducting the business of this former division of Scherer. The
remaining  35%  continues to be owned by the same,  unaffiliated  party as was a
part-owner with Scherer.

         Operational  management of the former  Scherer  division has elected to
remain with the Company and are now employees of PDA.

         During the first  quarter of fiscal 1997,  the Company also acquired an
interest in Silver Lakes Holding Ltd. ("Silver").  As previously reported in the
Company's  Annual  Report on Form 10-KSB,  Silver  holds an exclusive  worldwide
license for the manufacture and  distribution  of a new  sports-related  product
known as "The  Rigg." The Company has been  granted an  exclusive  manufacturing
license from Silver for the  production  of The Rigg. As part of the granting of
this license,  the Company purchased a 10% equity interest in Silver in exchange
for shares of the  Company's  common stock valued by the parties in the exchange
at $0.682 per share. The acquisition of Silver has not had a significant  effect
on the Company's financial statements as of this date.

         The increase in inventory  during the first half of fiscal 1997,  apart
from that portion which can attributed to the PDA acquisition, was reflective of
the Company's seasonal  production and shipment of its line of fleece sportswear
products  which usually  occurs during the first half. In addition,  the Company
had  relatively  stable  receivables  in  this  period  if  the  effect  of  the
acquisition is not considered.  However, the increase in trade receivables shown
in the balance  sheet  reflects the  purchase of accounts  from PDA and the fact
that significantly fewer receivables were financed during the current periods.

         Apart from the effects of the PDA  acquisition,  property and equipment
for the first six months  increased  slightly  due to the purchase of new office
equipment,  consisting  primarily of new computer equipment,  and did not have a
significant  effect on the  Company's  financial  condition in the first half of
fiscal 1997.

         The overall increase in total assets  experienced by the Company during
the first half of fiscal 1997 amounted to approximately  29.5% (or approximately
51% including the effects of the PDA acquisition) and is primarily  attributable
to the factors  described  above.  Management  believes  that this  process will
continue to improve during the balance of fiscal 1997  primarily  because of the
corrective  measures  previously  taken to improve sales and reduce cost factors
and also due to the completion of the Company's  acquisition of certain  assets,
including  inventory and customer  lists of the  protective  disposable  apparel
division of Scherer  Healthcare,  Ltd. following the end of the first quarter of
fiscal 1997. However,  the full impact of this acquisition is not expected to be
realized until the third quarter of fiscal 1997. As stated above,  the operating
results for the Company include only approximately five weeks of PDA operations.

         With  respect  to the  Company's  total  liabilities,  due  to the  PDA
acquisition,  increases  occurred in all components except for payroll and sales
taxes and accrued expenses and in notes

                                                         

<PAGE>



payable, bank which increased due to other factors as discussed below. There was
a $258,844 increase in accounts payable which is consistent with the increase in
trade  receivables and inventory during the first half of fiscal 1997, as stated
above.  However,  it is important to note that without the PDA acquisition,  the
Company had experienced a reduction in accounts payable of $56,256.  The Company
also  experienced a slight  increase in the current portion of long term debt at
November 30, 1996 when compared to the end of fiscal 1996.  Long-term  debt, net
of current portion, increased to $30,989, $14,327 above the fiscal year end.

         As mentioned above, "notes payable,  bank" increased by $262,342.  This
substantial  increase was not due to the PDA  acquisition  but,  rather,  to the
opening of a new credit  facility.  The new credit facility has been utilized by
the Company principally for the purpose of eliminating the Company's receivables
factoring program.  At November 30, 1997 there remained due and owing under this
the sum of $262,078.

         It should be noted that the retained  earnings deficit increased during
the  first  half of  fiscal  1997 when  compared  to the 1996  year end  period,
reflecting  lower than expected  revenues by the Company  during this period.  A
part of this decrease is attributable to marketing delays  experienced by Silver
in connection  with the new  sports-related  item,  The Rigg,  which resulted in
lower than expected  production of this product by the Company.  This  situation
has served to highlight the fact that, despite  management's  belief in the long
term potential for this new product,  it is still too early to project the level
of revenues or profits,  if any, which can be expected as the marketing  efforts
for this product are only in their early stages.

         Except for  differences  discussed  above,  the  composition  of assets
remained  substantially  the same  during the first half of fiscal  1997.  While
there were changes in the  components  of assets and  liabilities  for the first
half of fiscal 1997 when compared with the year ended May 31, 1996, as indicated
above,  management  believes  that  all  of  these  changes,  except  for  the a
cquisition of PDA and the investment in Silver,  were reflective of its previous
corrective  action and of its replacement of its receivables  financing  program
with a coordinated financing and credit program.

         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.

         Principal  current  debt at  November  30,  1996 was  $736,532 in trade
payables,  short term bank  obligations  of  $343,169,  $22,236  in the  current
portion of long term debt and $31,461 in other accrued liabilities or a total of
$1,133,461  (compared  with $614,775 at May 31, 1996).  Against this total,  the
Company had cash assets of $51,876,  inventory  of  $1,044,259,  receivables  of
$584,388,  an income tax refund  receivable of $1,740 and various  prepaid items
aggregating $84,380 for a total of $1,766,643 (compared with $960,709 at May 31,
1996).  Although  there was  adequate  liquidity at the end of the first half of
fiscal 1997 in terms of total current assets,  because of the continued  reduced
cash position,  the Company's ability to pay its short term accounts payable was
diminished.


                                                         

<PAGE>



         In combination, management believes that the Company will have adequate
working  capital  and  sufficient  credit  alternatives  to fund  the  Company's
operations during the balance of fiscal 1997,  including support for its planned
expansion of sales and including the needs of its Protective  Disposable Apparel
Division  which  was  established  at the end of  October,  1996  following  the
Company's  acquisition of certain assets by PDA from Scherer Healthcare Ltd., as
discussed above.

         As previously  reported in the Company's  annual report on Form 10-KSB,
the  principal  source of funds for the  Company's  operations to date have been
invested capital and operating revenues, as reflected in the Company's financial
statements. This continues to be true as of the date of this report.

         At November  30, 1996,  working  capital was  $633,247,  an increase of
approximately  $309,313 from the year end. This increase  largely  resulted from
the sale of common stock  through the  exercise of  outstanding  stock  purchase
options  during the six months ended  November 30, 1996 and the purchase of PDA,
with  substantial  increases in receivables and inventory.  At November 30, 1996
the Company also had adequate resources to pay its current liabilities.

II. Results of Operations.

         Net sales for the first half of fiscal 1997,  ended  November 30, 1996,
totalled  $1,133,283 and, if we do not consider the  contribution to revenues by
PDA of $222,218,  revenues during this period were somewhat lower (by $84,417 or
8.5%) than the comparative period in fiscal 1996.  Despite this decrease,  which
management  attributes  to the  Company's  seasonal  gearing  up for its  fleece
sportswear sales, which is principally manufactured in summer and early fall but
not shipped until late fall and early winter, and the disappointing sales during
this  period  for the new  sports  related  item,  The  Rigg,  discussed  above,
management believes that the factors contributing to this downturn are temporary
factors  and do  not  represent  any  downward  trend  affecting  the  Company's
operations.  During  the first six  months  of  fiscal  1997,  the cost of sales
expressed as a percentage of net sales  decreased to 72.0%, as compared to 72.9%
for the same  period in fiscal  1996,  representing  the first  reversal of this
ratio  since  fiscal  1995.  Although  cost of sales  continued  above the 71.5%
experienced  for all of fiscal 1996, it  represents a substantial  decrease from
76% experienced for all of fiscal 1995.

         Based on the previous results of the Company's retail outlet store, the
Company  continues to expand the product  lines being  offered in the store with
the  expectation  that the store will continue the trend  experienced  in fiscal
1995 and 1996 and make an even greater contribution to net sales in fiscal 1997.
Presently, however, the retail store makes only an insignificant contribution to
revenues.

         During  the first  six  months of fiscal  1997,  Selling,  General  and
Administrative  expenses  showed an  increase to  $335,137  (excluding  $102,868
attributable to PDA),  compared to $ 245,683 for the same period last year. This
represents 36.8% of gross revenues,  as compared to 24.7% for the same period in
fiscal  1996.  Management  attributes  this  shift  primarily  to  extraordinary
production  costs  which did not  generate  the  expected  revenues.  Management
expects  that this ratio will  correct  during  the  balance of fiscal  1997 and
remain at approximately

                                                         

<PAGE>



the levels experienced during fiscal 1996. At present, management is not able to
predict the impact upon this ration of the  Company's  new  financing and credit
facility  program  which  has  substantially  reduced  its  dependence  upon its
previous receivables financing program.

         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 were no material  changes in property  and  equipment  during the
first six  months of fiscal  1997,  ended  November  30,  1996,  except  for the
addition of some new office equipment which was not significant.

         There were no material  commitments for capital expenditures at the end
of the first half of fiscal 1997.  However,  under an agreement for the lease of
its manufacturing  facility,  the Company has an option to purchase the property
for an option price of $600,000.  The Company has not yet made any determination
whether or not it will  exercise its option,  which if  exercised,  will require
separate  financing.  Because of the value of the building,  management does not
anticipate that a substantially large down payment would be required and monthly
amortization charges should not substantially exceed rentals now being paid.

         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, including its proposed warrant offering, may change this position.

         Current conditions indicate,  however, that some funds will be required
for  additional  capital  expenditures  in the near 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 its expansion program.

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,  third,
operating shift, to support a 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 typically
paid by insurance coverage.

                                                         

<PAGE>



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  affecting 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.

         Many  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 Occupational  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 importantly,  from the point of view of the Company, are the
new  requirements  for  protective  apparel  such  as that  manufactured  by the
Company.  Management  believes that these new  regulations,  which are now fully
implemented,  will increase demand for the Company's  products and significantly
expand the Company's  markets.  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, perhaps,  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.  Spearheaded  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 introduced 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  which  are the
mainstay of its business  will  continue to have strong appeal and demand in the
marketplace.

         In the  interests  of higher  profitability,  management  continues  to
de-emphasize the sale of third party products while  concentrating upon the sale
of Company manufactured  products.  Also, as new Company manufactured  products,
such as the  line of  limited  reusable  products,  are  introduced,  management
believes that sales revenues will increase and, over the long term, will

                                                         

<PAGE>



result in more  stable  sales and higher  profit  margins  for the  Company.  In
addition,  the existence of the  Occupational  Safety and Health  Administration
(OSHA)  regulations are expected 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 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

                  None.





                                                        

<PAGE>





                                                    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.


Dated:  March 10, 1997


                                                         HEALTH-PAK, INC.



                                                 By:  /s/Anthony Liberatore
                                                     Anthony Liberatore,
                                                     President