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 February 28, 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 of shares  outstanding  of each of the  Issuer's  classes of
common stock, as of the latest practicable date.

           Class                              Outstanding at February 28, 1997

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 February 28, 1997 and
                            May 31, 1996                                   F-2

                            Statement of income for nine and three months ended
                            February 28, 1997 and February 29, 1996        F-3

                            Statement of cash flows for nine months
                            ended February 28, 1997 and February 29, 1996  F-4

                            Notes to condensed consolidated financial
                            statements                                  F-5-11



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



Part II.       Other information



Signatures



<PAGE>

<TABLE>


                                HEALTH-PAK, INC. AND SUBSIDIARY

      CONDENSED CONSOLIDATED BALANCE SHEET - FEBRUARY 28, 1997 AND MAY 31, 1996


                                        ASSETS                                                    LIABILITIES


                                               February 28,        May 31,                                    February 28,   May 31,
<CAPTION>
                                                   1997             1996                                          1997        1996
                                                   ----             ----                                          ----        ----
<S>                                                <C>            <C>                                             <C>        <C>

Current assets:                                                               Current liabilities:
  Cash                                             $149,231    $     1,376     Current portion of long term debt $ 17,828  $ 17,105
  Receivables, trade, net of                                                   Notes payable, bank                475,571    80,827
   allowance of $2,000                              552,375        286,926     Accounts payable                   952,454   477,688
  Inventory                                       1,260,738        571,619     Payroll and sales tax payable and
  Income tax refund receivable,                                                accrued expenses                    23,180    39,155
                                                                                                               ----------- ---------
   current                                            1,740          1,740
  Prepaid expenses                                   88,268         92,381
  Current portion of consulting
   agreement                                          6,667          6,667
                                                 ----------      ----------

    Total current assets                          2,059,019         960,709   Total current liabilities         1,469,033   614,775
                                                 ----------      ----------                                    ----------  --------

Property and equipment:
 Machinery and equipment                            308,680         293,783       Long-term debt, net of current
 Leasehold improvements                              94,522          87,546         portion                        28,606    16,662
                                                                                                               ---------- ---------
 Office equipment                                    99,529          71,638
 Automotive equipment                                21,021          21,021
                                                 ----------      ----------
                                                    523,752         473,988
 Less accumulated depreciation                      195,101         180,841     Commitments
                                                 ----------      ----------

                                                    328,651         293,147
                                                    -------         -------
                                                                                Minority interest in consolidated
                                                                                 subsidiary                        8,838
                                                                                                                   -----
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                                            8,041             241     shares authorized, none issued
  Prepaid consulting agreements, net                                            Common stock, .002 par value 20,000,000
   of current portion                                   555           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                             109,210          83,115     Common stock purchase warrants:
  Deferred loan fees and costs                       28,618                      Class A
  Cash surrender value, officers'                                                Class B
   life insurance                                    16,139          16,139      Class C
  Officer's loan                                      1,200           1,150      Additional paid in capital      2,303,53 1,786,011
                                                 ----------      ----------
                                                                                    Retained earnings (deficit) ( 912,411)( 836,516)
                                                                                                                ---------- --------
                                                    541,710         355,019
                                                                                                                1,422,903   977,438
                                                                                                                ---------   -------


                                                 $2,929,380      $1,608,875                                   $2,929,380 $1,608,875
                                                 ==========      ==========                                  ==========  ==========


</TABLE>



     See notes to condensed consolidated financial statements.
                                                                           F-2


<PAGE>



                              HEALTH-PAK, INC. AND SUBSIDIARY

                        CONDENSED CONSOLIDATED STATEMENT OF INCOME

            NINE AND THREE MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996





                         Nine months ended               Three months ended
                     February 28,  February 29,      February 28,   February 29,
                         1997          1996              1997           1996
                         ----          ----             ----            ----

Net sales            $2,299,507    $1,539,693      $1,166,224      $  544,201

Cost of sales         1,840,495     1,143,054       1,074,455         416,844
                      ----------   ----------      ----------       ----------

Gross profit            459,012       396,639          91,769         127,357

Selling, general and
administrative expenses 501,815       369,856         107,721         124,173
                      ----------    ----------      ----------      ----------

Income (loss) from
 operations         (    42,803)       26,783     (    15,952)          3,184
                     ----------     ----------     ----------       ----------

Other income (expense):
Loss on investments in
affiliated company  (     5,763)
Interest expense    (    38,790)  (     6,102)    (    20,530)            182
Amortization        (     5,000)  (    17,000)    (     1,667)    (     5,667)
                     ----------     ----------      ----------      ----------

                    (    49,553)  (    23,102)    (    22,197)    (     5,485)
                     ----------     ----------     ----------       ----------

Income (loss) before
 income taxes      (    92,356)         3,681     (    38,149)    (     2,301)

Income taxes (benefit):
  Current          (    25,299)           736     (    13,566)    (       494)

Minority interest in
 income of subsidiary(   8,838)                        10,052
                      ----------      ----------    ----------       -----------

Net income (loss)  ($   75,895)     $    2,945    ($   14,531)    ($    1,807)
                     ==========       ==========    ==========       ==========

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           14,710,797        13,374,189    15,888,556      13,478,337
                    ==========        ==========    ==========      ==========

  Fully diluted     14,760,947        13,664,948    15,938,706      13,711,095
                    ==========        ==========    ==========      ==========







     See notes to condensed consolidated financial statements.
                                                                           F-3

<PAGE>



                           HEALTH-PAK, INC. AND SUBSIDIARY

                    CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                NINE MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996




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



                                                                                  February 28,       February 29,

                                                                                      1997               1996
                                                                                      ----               ----
Operating activities:
  Net income (loss)                                                               ($ 75,895)           $  2,945
  Adjustments to reconcile net income to cash provided by
   operating activities:
    Depreciation                                                                      28,467             36,323
    Amortization                                                                       5,000             17,000
    Loss on investments in subsidiaries                                                5,763
    Minority interest in subsidiary                                                    8,838
    Changes in operating assets and liabilities:
      Accounts receivable                                                         ( 265,449)         (  93,522)
      Inventory                                                                   ( 689,119)         (  50,121)
      Income tax refund receivable                                                                   (     631)
      Prepaid expenses and interest receivables                                   (  10,094)             15,542
      Accounts payable                                                               474,766             38,107
      Accrued expenses                                                            (  15,975)         (   5,383)
      Deferred income taxes                                                       (  26,095)         (   3,057)
      Deposits and loan fees                                                      (  34,618)         (   1,800)
                                                                                   --------           --------

      Net cash used in operating activities                                       ( 594,411)         (  44,597)
                                                                                   --------           --------

Investing activities:
  Purchase of property and equipment                                              (  49,764)         (  65,699)
  Investment in subsidiaries
  Loan receivable                                                                 (      50)
                                                                                   --------

      Net cash used in investing activities                                       (  49,814)         (  65,699)
                                                                                   --------           --------

Financing activities:
  Proceeds from issuance of common stock and paid in capital                         384,960             70,100
  Increase in long-term debt                                                          30,326             58,054
  Proceeds from notes payable, bank                                                  405,521
  Payment of notes payable, bank                                                  (  10,777)
  Payment of long-term debt                                                       (  17,659)
  Payment of deferred offering expenses                                           (     291)         (  18,612)
                                                                                   --------           --------

      Net cash provided from financing activities                                    792,080            109,542
                                                                                    --------           --------

Net increase in cash                                                                 147,855         (     754)

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

Cash, end of period                                                                 $149,231           $    740
                                                                                    ========           ========

Supplemental  disclosures and cash flow  information:  Cash paid during the year
  for:
    Interest                                                                        $ 34,683           $  6,102
                                                                                    ========           ========
    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
                                                                                    ========           ========








</TABLE>


     See notes to condensed consolidated financial statements.
                                                                           F-4


<PAGE>



                                    HEALTH-PAK, INC. AND SUBSIDIARY

                         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   NINE MONTHS ENDED FEBRUARY 28, 1997
                                            (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  nine  month  period  ended
        February 28, 1997 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

                                    NINE MONTHS ENDED FEBRUARY 28, 1997
                                               (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:


                                          February 28, 1997       May 31, 1996
                                          -----------------      ------------

        Raw materials                        $  525,787            $372,753
        Finished goods                          734,951             198,866
                                              ----------           --------

                                             $1,260,738            $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

                               NINE MONTHS ENDED FEBRUARY 28, 1997
                                        (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 February 28, 1997 the balance due on the
      line of credit was $70,050.

    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 February
      28, 1997 is $405,521.








                                                                         F-7


<PAGE>



                                      HEALTH-PAK, INC. AND SUBSIDIARY

                          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                     NINE MONTHS ENDED FEBRUARY 28, 1997
                                                (Unaudited)





6.  Long-term debt:
                                                  Rate     Amount     Maturity

      Note payable, Key Credit               (a)   12%  $ 2,470       May, 1998
      Note payable, Manifest Group           (b)   10%   19,680      July, 1999
      Note payable, Waste Mgmt. of N.Y.      (c)   10%    5,921  November, 1998
      Note payable, Business Services, Co.   (d)   10%    1,722   January, 1998
      Note payable, Resource Capital Corp.   (e)   10%    5,496     March, 2000
      Note payable, Resource Capital Corp.   (f)   10%    4,299      July, 1999
      Note payable, Resource Capital Corp.   (g)   10%    6,846     April, 1998
                                                         -------
                                                         46,434
      Less current portion                               17,828
                                                         ------

                                                        $28,606
                                                        =======


      (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 $11,923.
              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 $184 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 the debt as of February 28, 1997 are as follows:

                            Year                                     Amount
                            ----                                     ------
                     February 28, 1998                              $17,828
                     February 28, 1999                               15,667
                     February 28, 2000                               10,600
                     February 28, 2001                                2,339
                                                                    -------
                                                                    $46,434





                                                                          F-8


<PAGE>



                                     HEALTH-PAK, INC. AND SUBSIDIARY

                         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   NINE MONTHS ENDED FEBRUARY 28, 1997
                                            (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 nine  months  ended  February  28,  1997 and
        February 29, 1996 was $70,800 and $70,500 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 February 28, 1997,  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

                                   NINE MONTHS ENDED FEBRUARY 28, 1997
                                            (Unaudited)








8.  Income taxes:

    The components  of income tax expense  (benefit)  for  February 28, 1997 and
        February 29, 1996:

    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:
                                                      February 28        May 31
                                                          1997            1996

         Computed (benefit) expense at expected
           statutory rates                            ($34,406)       ($20,012)
         Surtax exemption                               19,226           9,712
         State tax expense (benefit)                  ( 10,119)       (  4,860)
                                                       -------         -------

         Income tax expense (benefit)                 ($25,299)       ($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.













                                                                        F-10


<PAGE>


                                HEALTH-PAK, INC. AND SUBSIDIARY

                     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               NINE MONTHS ENDED FEBRUARY 28, 1997
                                        (Unaudited)








9.  Earnings per share:

                                Nine months ended           Three months ended
                            02/28/97      02/29/96       02/28/97      02/29/96

   Number of shares:
    Weighted average
     shares outstanding   14,710,797     12,883,449    15,888,556    12,987,597

   Incremental shares
    for outstanding
     stock warrants                         490,740                     490,740
                         ----------      ----------    ----------    ----------

    Primary              14,710,797      13,374,189    15,888,556    13,497,337

    Common stock to be
     issued under contractual
     obligation              50,150         290,759        50,150       232,758
                         ----------      ----------    ----------    ----------

     Fully diluted       14,760,947      13,664,948    15,938,706    13,711,095
                         ==========      ==========    ==========    ==========






10. 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-11


<PAGE>



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

Introduction.

         As previously stated in the Company's report on Form 10-QSB for the six
months ended  November 30, 1996,  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,  1966 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.

I. Financial Condition and Liquidity.

(a) Financial Condition.

Assets.

         At February 28, 1997,  the end of the third  quarter of the fiscal year
ending May 31, 1997, total assets increased by $1,320,505 from May 31, 1996, the
end of fiscal  1996,  to  $2,929,380,  an increase  of  approximately  82%,  and
increased by $302,126 or  approximately  11.5% in the quarter ended February 28,
1997 from the six month period ended November 30, 1996.

         The three principal reasons for this substantial increase were: (i) the
acquisition  of the assets and business of PDA, the  partially-owned  subsidiary
purchased in October,  1996;  (ii) receipt of the proceeds  from the exercise of
certain options for up to $384,960;  and (iii) slight  increases in property and
equipment to  accommodate  the increased  business  activity  resulting from the
acquisition of PDA.

         Closer  scrutiny  of these  increases  demonstrates  the more  specific
effect of each of the  foregoing  principal  factors on  various  aspects of the
financial statements of the Company. For instance,  cash increased substantially
from the year end by $147,855. While this was partially due to the fact that the
Company  was  conserving  some cash to meet  expenses of the  construction  of a
"clean room" (see below), the addition of machinery and equipment to accommodate
increased  operations  from the  acquisition of PDA and to cover the increase in
payables  from the PDA  acquisition,  it was also due to the fact that  proceeds
from the sale of  Common  Stock  by the  exercise  of  outstanding  Options  was
received in the period following the year end. Also, the increase in receivables
from the year ended May 31, 1996 of approximately $265,449 primarily arises from
the acquisition of PDA's receivables (with the consequent obligation for certain
of its liabilities as well).

                                                         4

<PAGE>





         Inventory has also substantially increased (by $689,119, an increase of
approximately  120%)  in the  period  since  the  year  ended  at May 31,  1996,
primarily  from the purchase of PDA's  inventory and new inventory  additions to
balance PDA's business.

         In order to accommodate anticipated,  increased operations by reason of
the  acquisition  of PDA, the Company also  acquired  additional  machinery  and
equipment in the period of approximately $14,897.

         Assets also  slightly  increased by reason of the addition to leasehold
improvements  relating  to the  construction  of a "clean  room" to  permit  the
Company to offer  sterilized  products to PDA'a  customers and to certain of the
Company's customers and also by the acquisition of additional office equipment.

         The increase in  Investments  in Affiliated  Company since the year end
arises  from the  Company's  acquisition  of an  interest  of 10% in Silver Lake
Corporation  in exchange for its own Common  Stock  (valued at $0.687 per share)
and the acquisition of PDA in October, 1966.

         The overall  increase in total assets for the  nine-month  period ended
February  28, 1997 was  substantial  in relation to the  Company's  prior growth
history and is primarily  attributable to the factors described above.  However,
management  believes that this  addition to the Company's  business will advance
the  Company's  financial  future and will provide a base from which the Company
can grow once the assimilation problems, discussed below, are corrected.

Liabilities.

         The most significant increases in Liabilities for the nine month period
ended  February 28, 1997  occurred in Notes  Payable Bank and Accounts  Payable.
These  increases  are  primarily  due to the new  financing  established  by the
Company to replace the factoring  arrangements  it  previously  had and also the
obligations incurred with the acquisition of PDA, discussed above.

         The  substantial  increase  in Notes  Payable  - Bank (an  increase  of
$394,744  from the year  ended  May 30,  1996) is due to fact  that the  Company
opened a line of credit with Foothill  Capital  Corporation  in September,  1996
which replaced the Company's former factoring  agreement with another  financial
institution.  The loan ceiling amount on this financing is based on a percentage
formula of  eligible  accounts  receivable  and  inventory.  The  balance due at
February  28, 1997 was  $405,521.  In  addition,  the Company  carried a line of
credit at the Marine Midland Bank which was converted to a note. The balance due
on the note at the end of the third quarter was $70,050.

                                                         5

<PAGE>




         The increase in Accounts  Payable  (about 99% when  compared to May 31,
1996) primarily  results from new  obligations  assumed by the Company after the
year end in  connection  with the  purchase  of PDA and  because of  substantial
increases in inventory  purchases  occurring  during the first six months period
ended November 30, 1996 to balance and to  accommodate  PDA's  business.  Slower
payments by the Company during the same period to conserve cash for construction
costs and equipment  acquisition  also  contributed  to the increase in Accounts
Payable.  Accounts  Payable  increased  by about  $215,922  or 29.3%  during the
quarter  ended  February 28, 1997 when  compared to the  six-month  period ended
November 30, 1996 which accounts for the fact that inventory purchases continued
during  this  quarter  as well  (Inventory  increased  in the third  quarter  by
$216,479 or by 20.7%).

         Total  Current  Liabilities  at  the  end  of the  third  quarter  were
$1,469,033  compared with $614,775 at the end of the fiscal year, an increase of
$813,765 or 132%.  Current  Liabilities  at November  30, 1996 were  $1,133,396,
which shows an increase for the quarter ended February 28, 1997 of approximately
$335,637 or  approximately  29.6%.  This is attributed to the factors  discussed
above.

         The Company  believes that it is now in a more  balanced  position with
respect to  inventory  since  making the  acquisition  and can use, for the most
part,  existing  inventory  to  support  sales for the next few  months  without
substantial inventory acquisition.

         The  Retained  Earnings  deficit  increased  by $75,895 to $912,411 (or
9.1%) in the first nine months of the fiscal year when compared to the 1996 year
end period,  reflecting the fact that the Company experienced a net loss for the
nine month period ended February 28, 1997 of $75,895 compared to a net profit of
$2,945 for the same period last year.  Retained Earnings declined by $21,074 for
the three-month period ended February 28, 1997, also demonstrating the fact that
the Company experienced a substantial loss in the third quarter as well.

         This loss is generally  attributable  to assimilation of PDA's business
into the Company's operations,  particularly selling off undesirable inventories
of PDA at reduced  prices,  inventory  replacement and purchases and the pricing
problems relating to PDA'a products. See "Results of Operations" below.

         The Company's  financial  statements,  particularly  the balance sheet,
have changed rather  substantially as a result of the acquisition of PDA made in
October,  1966 and the changes  necessarily made to accommodate  PDA's business.
This  transaction   influenced  the  increases  in  receivables  and  inventory,
additions to machinery and equipment  and the  substantial  increases in current
liabilities.  Another  significant  factor  was the  Company's  change in credit
facilities by terminating the factoring of its accounts


                                                         6

<PAGE>



to the establishment of a credit line with Foothill Capital
Corporation.

         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.

         Working   capital   increased   slightly  at   February   28,  1997  to
approximately  $389,986  compared to $345,934  at May 31,  1996,  the end of the
fiscal year,  an increase of $44,052 or  approximately  13%.  This  increase was
primarily  due to a cash  increase  for the period and  higher  receivables  and
inventory.  However, working capital declined substantially in the third quarter
when  compared to working  capital of $633,247 for the previous six months ended
November 30, 1996.  Management  attributes the decline to the necessary expenses
for assimilating PDA's business,  primarily inventory  purchases,  as previously
discussed.

         The most significant Current Liabilities affecting liquidity at the end
of February 28, 1997 were $952,454 in Accounts  Payable and Notes Payable - Bank
of  $475,571,  $17828 in the  Current  Portion of Long Term Debt and  $23,180 in
Other  Accrued  Liabilities  for a total of  $1,469,033  (compared  with Current
Liabilities of $1,133,396 at November 30, 1996 and $614,773 at May 31, 1996, the
end of the fiscal  year).  Against  this  total,  the Company had Cash assets at
February  28, 1997 of $149,231,  Inventory  of  $1,260,738  and  Receivables  of
$552,375, for a total of $1,962,344 in cash and cash equivalent assets (compared
with $859,921 at May 31, 1996 and  $1,680,523  at November 30,  1996).  Although
management  believes  there was adequate  liquidity at the end of the first nine
months of fiscal 1997 in terms of working  capital and cash and cash  equivalent
assets to meet its current obligations, because of the heavy expenses associated
with the acquisition of PDA, its ability to pay Accounts Payable was diminished.

         The  Company  also  expects to draw on existing  inventory,  having now
balanced PDA's requirements, to improve liquidity over the next quarter.

         The principal sources of funds for the Company's  operations during the
nine months ended February 28, 1997 were the proceeds  received from the sale of
stock  and  operating   revenues,   as  reflected  in  the  Company's  financial
statements.

         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 and well into  1998,  including
support for its planned expansion of sales.


                                                         7

<PAGE>



II. Results of Operations.

         Net Sales for the nine month  period ended  February 28, 1997  totalled
$2,299,507  and were higher by $759,814  than the  comparative  period in fiscal
1996 (an  increase  of  approximately  49.3%).  A  substantial  portion  of this
increase  results from the additional  sales provided by the  acquisition of PDA
and to a lesser extent from the Company's own growth in sales during the period.
The period also  benefitted  from seasonal sales of fleece  sportswear,  an item
which is principally manufactured in summer and early fall but not shipped until
late fall and early winter.

         Net sales for the three months ended February 28, 1997 were  $1,166,224
compared to only $544,201 for the three  month-period  ended  February 29, 1996.
This represents an increase of $622,023 for the period or over 114%.

         There were no  significant  price  increases  to account for higher net
sales  during the  period;  however,  as of April 1, 1997,  the  Company  made a
general price increase of approximately 6% on most of its products and effective
May 1,  1997,  increased  prices  by 10.9% on  products  offered  by PDA.  These
increases  do not have any effect on the results  reported  for the period ended
February 28, 1997.  Management  believes  these  increases  are within  industry
guidelines and will not have a significant effect on future sales.

         Management  believes  that the  substantial  increase  in sales for the
period clearly  demonstrates the advantages of making the PDA acquisition which;
although,  not without cost and  difficulties in  assimilation,  it is expected,
will make even further  contributions to net sales as its inventory  position is
corrected, products from the Company are offered to its customers and additional
sales efforts are in effect.

         While the acquisition of PDA made record  contributions to net sales as
previously stated,  there has been a period of absorption and dislocation in the
Company's results of operations.  Management believes these difficulties are now
under control and profitability should improve beginning by the next quarter.

         During  the  first  nine  months  of  fiscal  1997,  the  Cost of Sales
expressed  as a  percentage  of Net Sales was 80% compared to 74.2% for the same
period in fiscal 1996,  and 76% for the year ended May 31, 1996.  However,  this
also  compares  with a  percentage  of 92.1% of sales for the three months ended
February 28, 1997 and  indicates  significantly  higher  operating  and material
costs for that period, with a substantial effect on profitability.  This quarter
was the primary period that PDA's inventory was sold at a discount and inventory
acquisitions were made for PDA.  Previously,  the Company's operating costs were
for the most part consistently in the range of 73% to 76% of sales.


                                                         8

<PAGE>



         In  addition to  inventory  liquidation  during the period,  management
attributes  this decline in Costs of Sales to the fact that PDA's costs were not
in line with its pricing and, after a great deal of investigation  and research,
management  has a  better  working  understanding  of these  costs  and has made
adjustments,  including  certain  pricing  changes  effective  May 1, 1997 of an
average of approximately 10.9% across the range of PDA's products.  This decline
was  also  exacerbated  by the  fact  that  the  Company  was  required  to make
substantial  additions  to  inventory  during  the  period  for PDA to provide a
product balance after acquisition.  It is management's expectation that with new
price  increases in effect,  balanced  inventory  and better  knowledge of PDA's
product  costing,  Cost of Sales will be  adjusted  for  improved  profitability
results in the next quarter and after the year end period.

         The Company is also in the process of assimilating a greater portion of
the manufacturing for products sold by PDA which was previously  manufactured in
Haiti  and  Mexico.  Management  believes  that by  taking  this  action it will
actually  reduce  costs  `and at the same time  reduce its own  overhead  costs.
Previously, most of PDA's products were manufactured by others.

         Based on the previous results of the Company's retail outlet store, the
Company  continued 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 make an even greater contribution to net revenues in fiscal 1998.

         During the first  nine  months of fiscal  1997,  Selling,  General  and
Administrative  Expenses were higher at $501,815 or 21.8% of Net Sales, compared
to $369,856 or 24% of Net Sales for the comparable period in 1996. However, as a
percentage of sales, this account actually  declined in the period.  This change
represents  an  increase of  $131,959  in  Selling,  General and  Administrative
Expenses on higher Net Sales of $759,814 for the nine months ended  February 28,
1997 when compared to 1996.  General and  Administrative  Expenses for the three
month  period  ended  February  28, 1997 were  actually  lower on  substantially
increased sales compared to the same period in 1996. These expenses were 9.2% of
net sales for the three months ended February 28, 1997 compared to 22.8% for the
comparative period in 1996.

         This  improvement  is  largely  due  to  the  following  factors:   (i)
previously,  the  Company  factored  its  accounts  receivable  which was a cost
included in the General and Administrative account; while presently, the Company
has eliminated factoring  receivables and has replaced this financing with a new
credit  line,  the expense of which is carried  separately  from the General and
Administrative  account;  (ii) the Company has  instituted  several  measures to
contain costs in the General and  Administrative  area; and (iii) net sales have
been substantially increased over the period by the


                                                         9

<PAGE>



acquisition  of PDA so that  General and  Administrative  costs are now averaged
over a greater number.

         There was a net loss of  $42,803  from  Operations  for the first  nine
months in 1997  compared  with a net profit of $26,783 or 1.74% of Net Sales for
the comparative  period in 1996. As is evident from the Income  Statement,  this
loss was obviously due to the higher Costs of Sales during the period, resulting
from the factors  described  above. A comparison of the three month period ended
February  28,  1997 with the same period in 1996 also shows a loss for the third
quarter of 1997 of $15,952  compared with a profit of $3,184 for the  comparable
period in 1996.  This loss is also a product of higher Cost of Sales in the most
recent period compared to 1996.

         The  decline in Income from  Operations  for this period is regarded by
management as a temporary  situation resulting from the assimilation of PDA into
its business and one which will be cured by the factors already employed such as
price  increases  to be  effective  for  April 1,  1997 and May 1,  1997 and the
orderly  distribution  of PDA's  inventory at list price rather than  discounted
liquidation prices. Management expects an improved picture by not later than the
first quarter of 1998.

         As previously  reported,  among the  Company's  prospects for increased
performance in 1998,  besides the addition of PDA's  business,  is the Company's
move to include a new line of garments in the disposable medical industrial area
for such products as laboratory  coats and hats used  primarily by  laboratories
and  pharmaceutical  companies and the  possibility of new government  contracts
which would have a positive effect on net sales.  Recently, the Company added an
orthopaedic  operating  room  gown to its  line  and a new  line  of  sterilized
products will also be shortly introduced.  The Company is looking forward to the
possibility of additional sales derived from  manufacturing a product called the
"Rigg" as mentioned in other  reports;  however the outlook for this item cannot
be  anticipated  as yet because  marketing  is only  beginning.  The Company has
already begun manufacturing this product.

         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.

         The Company  embarked on a program to offer  sterilized  products as an
addition to its product line. In order to accomplish this addition,  the Company
allocated approximately $6,976 in leasehold improvements for the construction of
a "clean room" and additional  funds for the  acquisition of certain  equipment.
The Company expects to be in position to begin manufacturing sterile items

                                                        10

<PAGE>



within  the near  future  and does not expect  the  expenditure  of  significant
amounts for this project.

         Additional office equipment  expenditures  accounted for an increase of
approximately  $27,891  in  capital  spending  since  the year end,  mainly  for
computer  equipment and  additional  office  equipment  necessary to accommodate
PDA's business.

         Except as stated above,  there were no material changes in property and
equipment during the first nine months of fiscal 1997.

         There also were no material commitments for capital expenditures at the
end of the period.  However,  under a lease  agreement  for the occupancy of its
manufacturing facility at Beechgrove Place, Utica, New York, the Company has the
right 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.

         Except as noted above,  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

                                                        11

<PAGE>



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.

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
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 the items  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 hospitals  looking to comply with the
new OSHA regulations and 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 un-

                                                        12

<PAGE>



necessary  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 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.

         Each of the  above  factors  may  have a  significant  impact  upon the
Company's  future  operations.  At present,  however,  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

          (a) Exhibits.

               11   - Calculation of primary and fully-diluted income (loss) per
                    share.  Reference  is  made  to  Note  9  of  the  financial
                    statements, incorporated herein by reference.

          (b) Reports on Form 8-KSB

               None.


                                                        13

<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.





                                HEALTH-PAK, INC.



                                    /s/ Anthony J. Liberatore
                                        Anthony J. Liberatore
                                        President
                                        Chief Operating Officer
Dated:  May 2, 1997



                                    /s/ Michael A. Liberatore
                                        Michael A. Liberatore
                                           Vice President
                                       Chief Financial Officer
Dated:  May 2, 1997







                                                        14

<PAGE>