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, 1998

                                        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, 1998

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



<PAGE>
























                                                       INDEX



Part  I.       Financial information


               Item 1.      Condensed consolidated financial statements:

                            Balance sheet as of February 28, 1998 and
                            May 31, 1997                                   F-2

                            Statement of income (loss) for the nine and
                            three months ended February 28, 1998 and 1997  F-3

                            Statement of cash flows for the nine months
                            ended February 28, 1998 and 1997               F-4

                            Notes to condensed consolidated financial
                            statements                                   F-5-13



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



Part II.       Other information



Signatures


<PAGE>

                            HEALTH-PAK, INC. AND SUBSIDIARY
 
      CONDENSED CONSOLIDATED BALANCE SHEET - FEBRUARY 28, 1998 AND MAY 31, 1997
<TABLE>
<CAPTION>
<S>                              <C>            <C>               <C>                                    <C>           <C>    

                                       ASSETS                                                  LIABILITIES


                                    February 28,       May 31,                                              February 28,     May 31,
                                        1998            1997                                                    1998          1997
                                       ----             ----                                                    ----           ----
Current assets:                                                     Current liabilities:
  Cash                             $  323,488     $   233,330         Current portion of long-term debt    $   14,503    $   16,896
  Receivables, trade, net of                                          Notes payable                           760,840       552,952
   allowance of $6,000                580,319         455,376         Accounts payable                      1,252,435     1,038,686
  Inventory                         1,522,286       1,456,990         Payroll and sales tax payable and
  Note receivable                      89,039          89,039          accrued expenses                        51,781        84,503
                                                                                                           ----------    ----------
  Prepaid expenses                    106,807         100,649
  Prepaid consulting fees                 556           5,556
                                    ----------      ----------

    Total current assets            2,622,495       2,340,940            Total current liabilities          2,079,559     1,693,037
                                   ----------      ----------                                              ----------    ----------

Property and equipment:
 Machinery and equipment              314,698         310,797       Long-term debt, net of current
 Leasehold improvements               119,634         107,460         portion                                  14,332        24,885
                                                                                                           ----------    ----------
 Office equipment                     110,130          99,860
 Automotive equipment                  21,021          21,021
                                   ----------      ----------
                                      565,483         539,138
 Less accumulated depreciation        246,602         209,476       Commitments
                                   ----------      ----------

                                      318,881         329,662
                                      -------         -------
                                                                    Minority interest in consolidated subsidiary   18,897    62,030
                                                                                                                 ---------- -------

Other assets:
  Investments in affiliated Company   135,027         130,637       Shareholders' equity:
  Deposit on building                  28,647          28,400         Common stock, .001 par value 2,000,000
  Security deposits                     6,372           5,241          shares authorized
  Deferred loan acquisition fees                                      Common stock, .002 par value 20,000,000
   and costs                            6,480          18,224          shares authorized                          30,980     30,980
  Deferred offering expenses           99,530          99,530         Common stock purchase warrants:
  Deferred income taxes                83,115          83,115          Class A
  Cash surrender value, officers'                                                    Class B
   life insurance                      26,760          26,760          Class C
  Officer's loan                        1,200           1,200         Additional paid in capital               2,304,334  2,304,334
                                   ----------      ----------
                                                                      Deficit                               ( 1,119,5950)(1,051,557)
                                                                                                              ----------  ----------
                                      387,131         393,107                                                  1,215,719  1,283,757
                                   ----------      ----------                                                  ---------  ----------


                                   $3,328,507      $3,063,709                                                 $3,328,507 $3,063,709
                                   ==========      ==========                                                 ========== ==========

</TABLE>




     See notes to condensed consolidated financial statements.
                                                                             F-2


<PAGE>








                                     HEALTH-PAK, INC. AND SUBSIDIARY

                             CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

                        NINE AND THREE MONTHS ENDED FEBRUARY 28, 1998 AND 1997




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

                                                        Nine months ended                     Three months ended
                                                           February 28,                           February 28,
                                                  1998              1997                1998               1997
                                                  ----              ----                ----               ----

Net sales                                     $2,682,952         $2,299,507         $  925,456         $1,166,224

Cost of sales                                  1,905,704          1,840,495            676,797          1,074,455
                                              ----------         ----------         ----------         ----------

Gross profit                                     777,248            459,012            248,659             91,769

Selling, general and
administrative expenses                          790,923            501,815            286,341            107,721
                                              ----------         ----------         ----------         ----------

Loss from operations                        (    13,675)       (    42,803)       (    37,682)       (    15,952)
                                             ----------         ----------         ----------         ----------

Other income (expense):
  Gain (loss) on investments
   in affiliated company                           4,390       (     5,763)
  Interest expense                          (    95,872)       (    38,790)       (    34,102)       (    20,530)
  Amortization                              (     6,012)       (     5,000)       (     2,679)       (     1,667)
                                             ----------         ----------         ----------         ----------

                                            (    97,494)       (    49,553)       (    36,781)       (    22,197)
                                             ----------         ----------         ----------         ----------

Loss before income taxes                    (   111,169)       (    92,356)       (    74,463)       (    38,149)

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

Minority interest in income
 (loss) of subsidiary                             43,131       (     8,838)              8,618             10,052
                                              ----------        ----------          ----------         ----------

Net loss                                    ($   68,038)       ($   75,895)       ($   65,845)       ($   14,531)
                                              ==========         ==========         ==========         ==========

Earnings per common and
 dilutive common equivalent share:


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

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

Weighted average number
 of common shares and
 dilutive outstanding:

  Primary                                    17,090,159         16,198,003         17,090,159         17,090,159
                                             ==========         ==========         ==========         ==========

  Fully diluted                              17,090,159         16,198,003         17,090,159         17,090,159
                                             ==========         ==========         ==========         ==========




</TABLE>





     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, 1998 AND 1997







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




                                                                                        1998               1997
                                                                                        ----               ----
Operating activities:
  Net loss                                                                          ($ 68,038)         ($ 75,895)
  Adjustments to reconcile net income to cash provided by
   operating activities:
     Depreciation                                                                       37,126             28,467
     Amortization                                                                        5,000              5,000
     Gain on investments in subsidiaries                                            (   4,390)              5,763
     Minority interest in income of subsidiary                                      (  43,133)              8,838
     Changes in other operating assets and liabilities:
       Accounts receivable                                                          ( 124,943)         ( 265,449)
       Inventory                                                                    (  65,296)         ( 689,119)
       Prepaid expenses                                                             (   6,156)         (  10,094)
       Accounts payable                                                                213,749            474,766
       Accrued expenses                                                             (  32,724)         (  15,975)
       Deferred income taxes                                                                           (  26,095)
       Deposits and loan fees                                                           10,366         (  34,618)
                                                                                      --------          --------

       Net cash used in operating activities                                        (  78,439)         ( 594,411)
                                                                                     --------           --------

Investing activities:
  Purchase of property and equipment                                                (  26,345)         (  49,764)
  Loan receivable                                                                                      (      50)
                                                                                      --------          --------

       Net cash used in investing activities                                        (  26,345)         (  49,814)
                                                                                     --------           --------

Financing activities:
  Proceeds from issuance of common stock and paid in
   capital                                                                                                384,960
  Increase in long-term debt                                                                               30,326
  Proceeds from notes payable, bank                                                    220,012            405,521
  Payment of notes payable, bank                                                    (  12,124)         (  10,777)
  Payment of long-term debt                                                         (  12,946)         (  17,659)
  Payment of deferred offering expenses                                                                (     291)
                                                                                      --------          --------

       Net cash provided from financing activities                                     194,942            792,080
                                                                                      --------           --------

Net increase in cash                                                                    90,158            147,855

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

Cash, end of period                                                                   $323,488           $149,231
                                                                                      ========           ========

Supplemental  disclosures and cash flow  information:  Cash paid during the year
  for:
    Interest                                                                          $ 95,872           $ 38,790
                                                                                      ========           ========
    Income taxes                                                                      $      0           $      0
                                                                                      ========           ========

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



</TABLE>






     See notes to condensed consolidated financial statements.
                                                                          F-4


<PAGE>



                                      HEALTH-PAK, INC. AND SUBSIDIARY

                           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS






1.  Organization of the company:

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

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

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

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

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



2. Nature of business:

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

    The Company maintains  manufacturing  facilities in upstate New York, Mexico
    and to a lesser  extent Haiti.  In addition to paper goods,  the Company
    also  manufactures a sporting goods accessory item,  sales of which were
    minimal for the nine months ended February 28, 1998. The Company's sales
    are spread throughout the United States.




                                                                           F-5


<PAGE>



                                   HEALTH-PAK, INC. AND SUBSIDIARY

                         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








3. Summary of significant accounting policies:

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

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

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

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

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

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

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









                                                                           F-6


<PAGE>



                                    HEALTH-PAK, INC. AND SUBSIDIARY

                         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





3. Summary of significant accounting policies (continued):

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

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

      Effect of recently issued accounting standards:
        The Financial  Accounting  Standards Board issued Statement of Financial
         Accounting  Standards ("SFAS") No. 121, "Accounting for the Impaired of
         Long-Lived  Assets and for Long-Lived  Assets to Be Disposed Of. "SFAS"
         No.  121  requires  that  Long-Lived  Assets and  certain  identifiable
         intangibles  to be  held  and  used  by the  Company  be  reviewed  for
         impairment  whenever  events  indicated that the carrying  amount of an
         asset may not be  recoverable.  The Company  has no impaired  assets at
         February 28, 1998.

        The Accounting Standards Board issued Statement of Financial Accounting
         Standards ("SFAS") No. 123, "Accounting for Stock Based Compensation".
         The effective date of SFAS No. 123 is for fiscal years beginning after
         December 15, 1995, and established a method of accounting for stock
         compensation plans based on fair value.  The Company does not believe
         that SFAS No. 123 will have an impact on its financial statements.  The
         Company has not adopted SFAS No. 123 at February 28, 1998 and continues
         to use APB 25 which accounts for stock compensation at the intrinsic
         value.

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


4.  Inventories:

    Inventories consist of:
                                                February 28           May 31
                                                    1998              1997
                                                    ----              ----

        Raw materials                         $  456,686          $  432,771
        Finished goods                         1,065,600           1,024,219
                                               ----------          ----------

                                              $1,522,286          $1,456,990
                                              ==========          ==========





                                                                           F-7


<PAGE>



                                        HEALTH-PAK, INC. AND SUBSIDIARY

                          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








5.  Investment:

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

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



                                                      ASSETS

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

              Security deposits                                      1,500
                                                                     -----

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




                                 LIABILITIES AND MEMBERS' CAPITAL

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

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

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














                                                                          F-8


<PAGE>



                                      HEALTH-PAK, INC. AND SUBSIDIARY

                          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS







6. Note receivable:

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


7. Notes payable:

    The Company has at its disposal a line of credit at Marine Midland Bank.The
    note is due on demand and carries  interest  at prime + 1.5%.  Inventory
    and  accounts  receivable  are  pledged  as  security.  The note is also
    secured by the  personal  guarantees  of Anthony  Liberatore  and Alfred
    Zennamo to the extent of $50,000 in total.  As of February  28, 1998 the
    balance due on the line of credit was $53,884.

    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, 1998 was $706,956.



8. Long-term debt:
                                                 Rate    Amount       Maturity

    Note payable, Key Credit               (a)    12%   $   137       May, 1998
    Note payable, Manifest Group           (b)    10%    14,268      July, 1999
    Note payable, Waste Mgmt. of N.Y.      (c)    10%     3,331  November, 1998
    Note payable, Resource Capital Corp.   (d)    10%     3,805     March, 2000
    Note payable, Resource Capital Corp.   (e)    10%     2,624      July, 1999
    Note payable, Resource Capital Corp.   (f)    10%     4,670     April, 1998
                                                         -------
                                                         28,835
      Less current portion                               14,503
                                                         ------

                                                        $14,332
                                                        =======



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

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










                                                                          F-9


<PAGE>



                                       HEALTH-PAK, INC. AND SUBSIDIARY

                          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS







8.  Long-term debt (continued):

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

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

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

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

      Maturities of long-term debt as of February 28, 1998 are as follows:

                               Year                                Amount

                        February 28, 1999                         $14,503
                        February 28, 2000                          11,449
                        February 28, 2001                           2,883
                                                                  -------
                                                                  $28,835
                                                                  =======


9.    Commitments:

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

      The Company had an option to purchase  the  facility  for  $600,000  which
        expired on April 30, 1994.  The purchase was not  completed by April 30,
        1994, and the lease was  automatically  extended for an additional three
        year period at the same terms and rental.  Rent  expense was $47,250 for
        the nine months ended  February 28, 1998 and $70,800 for the nine months
        ended February 28, 1997.

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










                                                                          F-10


<PAGE>



                                       HEALTH-PAK, INC. AND SUBSIDIARY

                           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS







9.    Commitments (continued):

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

      Inaddition,  the Company also issued  4,500,000  stock  options at various
        exercised prices.  As of February 28, 1998,  2,748,047 options have been
        exercised as follows:


                         Number of options                    Exercise price

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


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



10. Income taxes:

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







                                                                          F-11


<PAGE>



                                     HEALTH-PAK, INC. AND SUBSIDIARY

                        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS










10.     Income taxes (continued):

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

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

           Deferred tax liability:
              Depreciation                                             900
                                                                       ---

           Deferred tax asset                                      113,715

           Valuation allowance                                      30,600
                                                                    ------

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


        As of February 28, 1998,  the Company has  available,  for tax reporting
         purposes, net operating loss carryovers of approximately $647,600 which
         expire through 2011.



11. Employment contracts:

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



12. Deferred offering expense:

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

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











                                                                        F-12


<PAGE>



                                HEALTH-PAK, INC. AND SUBSIDIARY

                        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS






13. Related party transactions:

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


14. Common stock purchase options:

       As of February 28, 1998 the unexercised options held by Silver Lake, Inc.
         are as follows:

           Amount of options          Exercise price             Expiration

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


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


15. Earnings per share:

                                        February 28, 1998     February 28, 1997
                                        -----------------     -----------------

                                               Primary             Primary

    Number of shares:
     Weighted average shares outstanding     15,490,009          14,597,883
     Incremental shares for outstanding
      stock options                           1,600,150           1,600,150
                                             ----------          ----------

                                             17,090,159          16,198,033
                                             ==========          ==========



      Primary  earnings  per share  amounts are  computed  based on the weighted
        average  number of shares  actually  outstanding.  Shares  that would be
        outstanding  assuming  exercise of dilutive stock options , all of which
        are considered to be common stock  equivalents.  Fully diluted  earnings
        per share are the same as primary  earnings  per share for  February 28,
        1998 and February 28, 1997.





                                                                         F-13


<PAGE>


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

I. Financial Condition and Liquidity.

Introduction.

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

(a) Financial Condition.

Assets:

Total assets  increased  by $264,798 at February 28, 1998,  the end of the first
nine months of fiscal 1998,  when  compared to the year end at May 31, 1997,  an
increase of slightly  over 9%, which  reflects a slower  growth rate in terms of
total assets than has been reported for previous periods.  This is an indication
of the fact that the Company's  recent expansion period with the addition of the
PDA  acquisition  has now settled.  For instance,  as previously  reported,  the
Company's  growth in terms of total assets at May 31, 1997  compared to the year
ended May 31, 1996 was 190%.

At February 28, 1998 there were modest  increases in a number of the  components
of the Company's current assets since May 31, 1997. Most significant among these
were cash,  being $90,158 higher at the end of the nine month period compared to
the year end;  receivables,  being $124,943 higher than the year end; inventory,
being $65,296 higher than at year end; and prepaid expenses, being $6,158 higher
than at year end.  These changes,  expressed in terms of percentages  are 38.6%,
25.2%, 4.5% and 6.1%,  respectively.  At February 28, 1998 the only component of
current  receivables  which declined was prepaid  consulting fees, which dropped
from $5,556 at year end to $536. Overall,  the changes to current assets are not
regarded as significant by management. Other changes in the composition of total
assets at February 28, 1998 included (i) machinery and equipment which increased
slightly  to  $314,698  from  $310,797  at  fiscal  year  end:  (ii)   leasehold
improvements which also increased slightly to $119,634,  as compared to $107,460
at fiscal year end; (iii) office  equipment which increased  slightly to 110,130
from 99,860 at year end; and (iv)  investment in  affiliated  company which also
increased slightly to $135,027 as compared to $130,637 at fiscal year end.

Each of the other individual asset accounts when compared with the corresponding
account for the fiscal year ended May 31, 1997 are quite  comparable and reflect
little if any change in the  composition  of assets  for the nine  month  period
ended February 28, 1998.



Liabilities:

Total  current  liabilities  at February 28, 1998  increased to  $2,079,559,  up
$386,522  from May 31, 1997.  This  increase  was due  primarily to increases in
notes  payable,  bank  ($760,840 as compared to $552,952 at fiscal year end) and
accounts payable  ($1,252,435 as compared to $1,038,686 at fiscal year end). The
increase in bank notes payable for the period  reflects the Company's  continued
increase in the use of its credit facility during the period and the increase in
accounts  payable is caused by the  Company's  continued  policy of  temporarily
conserving cash for its pending plant acquisition and some inventory  purchases.
This  policy  has been in effect  since the start of fiscal  1998 and,  in part,
accounts for the increased  inventory,  including  increases in inventory of its
affiliated company,  reflected in the figures at February 28, 1998. Further, the
increase  in  accounts  payable  also  corresponds  to the  Company's  increased
receivables and increased sales revenues during this period.

     None of these changes are regarded as  significant by management and except
for the entries  mentioned  above,  the  liabilities  are comparable to the year
ended May 31, 1997.  This  indicates that the Company has devoted the first nine
months of fiscal 1998 to consolidation of its acquisition of PDA and positioning
itself to make the building and plant acquisition previously mentioned, which is
currently anticipated to be completed during the first quarter of fiscal 1999.



     Liability for payroll taxes  decreased in this period  ($51,781 at February
28,  1998  compared  to  $84,503  at Fiscal  year end).  This  component  of the
Company's  liabilities  was  reduced by  payments  during the period and was not
significantly  increased  because of the addition of new  employees,  as was the
case at the fiscal year end.



The addition to liabilities in this period represented by the increases in notes
payable and accounts  payable are responsible for 55.3% of the increase in Total
Current  Liabilities at February 28, 1998 of approximately  $386,522 compared to
the year ended May 31,  1997.  Current  Liabilities  at February  28, 1998 were,
nevertheless, more than offset by Current Assets of $2,622,495.

The Company's  retained earnings deficit of $1,119,595 for the nine months ended
February  28, 1998 shows an increase  in the total  deficit of $68,038  over the
year  ended  May 31,  1997 due to a  further  net loss in the six  months  ended
February 28, 1998 of a comparable amount.  This loss compares with a net loss of
$89,622  at the year end in 1997  and a net  loss of  $75,895  at the end of the
first  nine  months of  fiscal  1997 at  February  28,  1997.  See  "Results  of
Operations" for further details.

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

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

(b) Liquidity.

     Although  there was a decrease  in working  capital at the end of the first
nine months of fiscal 1998 compared to the year ended May 31, 1997,  the Company
had sufficient  liquid assets to meet its obligations at the end of this period.
Working  capital at February 28, 1998 was  $542,936  compared to $647,903 at May
31, 1997,  the fiscal year end. This  represents a decrease of $104,967 or 16.2%
when  comparing  the end of  fiscal  1997 .  Management  does not view this as a
significant change,  particularly when taking into account the expenses that the
Company has had in assimilating the business of PDA, providing inventory for PDA
accounts and the establishment of a clean room facility for the Company, largely
to accommodate PDA products.



     Principal  short-term  liabilities at February 28, 1998 were  $1,252,435 in
accounts payable,  short term note obligations of $760,840,  the current portion
of long term debt in the amount of $14,503 and taxes and accrued expenses due of
$51,781 for a total of $2,079,559. Against this total, at February 28, 1998, the
Company had liquid current  assets of $323,488 in cash,  inventory of $1,522,286
and trade receivables of $580,319 for a total of $2,426,093 in short term liquid
assets.  In  management's  opinion,  these assets were  sufficient  to cover the
Company's operating expenses and debt for the foreseeable future.


Management  also had at its disposal a credit line of $750,000 (an increase from
the  previous  credit  line of  $600,000)  of which  approximately  $43,000  was
available at February 28, 1998.

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

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

II. Results of Operations.

     In the first nine  months of fiscal  1998 the  Company  had gross  sales of
$2,682,952  compared to gross sales of $2,299,507  for the same period in fiscal
1997.  This is an  increase  of  $383,445  compared  to the first nine months of
fiscal 1997, or a percentage increase of approximately  16.7%. Cost of sales for
the first nine months of fiscal 1998 were $1,905,704 resulting in a gross profit
from operations of $777,248;  compared to $1,840,495 and $459,012,  respectively
for the same  period  in fiscal  1997.  This  represents  an  increase  in gross
operating  profits for this period of $318,236 or slightly  more than 69% higher
than in the first nine months of fiscal 1997.


     Expressed as a percentage  of net sales,  gross profits for the nine months
ended  February  28,  1998 were 29.0% of net sales,  as compared to 24.9% of net
sales for the nine months ended  February 28,  1996.  Gross  profits at the year
ended May 31, 1997 were 26.1% of net sales.  The  comparison  between the period
ended February 28, 1998 and the year ended May 31, 1997 shows a slight  increase
which is primarily due to certain  price  increases  implemented  by the Company
were not in effect during the comparable period of fiscal 1997 and were in place
only for a portion of the first nine months of fiscal  1998.  Nevertheless,  the
obvious increase in net sales for the period ended February 28, 1998 compared to
the same period ended  February 28, 1997 resulted in a  significant  increase in
gross profits for the most recent period.


     During the three  months ended  February  28,  1998,  the Company had gross
sales of  $925,456,  which was less than the  $1,166,224  reported for the three
months ended  February 28,  1997.  After cost of sales of $676,797  (compared to
$1,074,455 for the third quarter of fiscal 1997), the Company had a gross profit
of $248,659 for the third quarter of fiscal 1998,  compared to a gross profit of
only $91,769 for the third quarter of fiscal 1997.  This  represents an increase
of $156,890 or over almost 171% higher than the same period last year.



     As previously  reported,  the Company experienced a substantial increase in
revenues due to the  acquisition of PDA which added its revenues to those of the
Company.  Revenues were also slightly  influenced by a price increase of 3.5% on
all of the  Company's  products  applied on March 1, 1997.  A price  increase of
14.7% on all of PDA's  products in July,  1997 was also in effect for all of the
third quarter of fiscal 1998 and for most of the nine months ended  February 28,
1998.  The  re-alignment  of prices by the Company  contributed to the increased
revenues for that period.



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

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


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

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


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

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

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

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

However,  based on the potential of the new products  mentioned  above,  the new
markets  opened by the  Company and the  addition of PDA's sales and  customers,
management believes the Company will grow significantly in terms of net revenues
for the balance of fiscal 1998 and in fiscal 1999.

Cost of sales for the nine month period  expressed as a percentage  of net sales
decreased  to 71.1%  compared to 80.0% for the nine months  ended  February  28,
1997,  reversing  a trend  which had been  continued  through  the first half of
fiscal 1998. This percentage, decrease from the same period in the prior year,as
well as for the fiscal year ended May 31, 1997,  when cost of sales expressed as
a percentage of net sales was 73.4%.

     As was previously  stated,  cost of sales have increased as a percentage of
net sales because PDA's  products were  assimilated  into the Company's  line of
products  and these  products  were  generally  carried by PDA at a higher  cost
basis.  The  Company  corrected  this  problem  by  (i)  assuming  some  of  the
manufacturing  responsibility for PDA's products,  and thereby controlling costs
on a better basis;  and (ii)  increasing  the prices for PDA's  products to more
accurately reflect costs. Management now believes that the cost differential has
been  corrected by the increase in prices made by the Company in July,  1997, as
stated  above,  and by  manufacturing  some of PDA's  products  in  house.  Now,
approximately 50% of PDA's products are made by the Company. Management believes
that these measures were responsible for the lower percentage experienced during
the first nine months of fiscal 1998.



Selling,  general and  administrative  expenses  were 29.5% of net sales for the
first nine  months of fiscal  1998  compared  to 21.8% of net sales for the same
period in fiscal 1997

While the Company  eliminated its high cost of factoring  receivables during the
last fiscal year,  financing costs in terms of interest  charges for its present
financial  accommodation  for the nine months were  $95,872  compared  with only
$38,790 for the nine months ended February 28, 1997.

     Net income (loss) for the nine months ended February 28, 1998 was ($68,038)
compared to ($75,895) for the nine months ended February 28, 1997, and ($89,622)
for the year ended May 31, 1997.  While  continuing to reflect a modest loss for
the nine months ended  February 28, 1998,  it should be noted that gross profits
from operations for the same period were considerably  higher than gross profits
from  operations  for the same  period in the prior  year.  Cost  factors  which
affected  profitability  in both periods,  however,  were the interest  costs at
February 28, 1998 and factoring  charges  (accounted  for in higher  General and
Administrative costs) in the comparable period ended February 28, 1997.




Most of the loss  experienced  in the current  fiscal year  occurred  during the
third quarter with the Company  reflecting a net operating loss during the three
months  ended  February  28,  1998 of  ($65,845)  as  compared to a loss of only
($14,531) during the third quarter of fiscal 1997.

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

III.  Capital Resources.

     There was no  significant  increase in Property and Equipment in the period
ended  February  28,  1998 and there are at present no  commitments  for capital
purchases  except for the Company's  proposed  purchase of the building which it
presently  occupies.  The determination to purchase this building was made for a
number of reasons  including a favorable  purchase  price and because it will be
saving  money  on  the   difference   between   rental   payments  and  mortgage
amortization.  For this purpose,  the Company has been  accumulating cash as was
stated above for the down payment.


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

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



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


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

IV. Inflation.

Management  anticipates  that inflation  will not have a material  effect on the
Company's  operations  in the future.  This is  principally  due to two factors.
First,  if orders  increase due to inflation the Company  presently has adequate
manufacturing  equipment  and capacity to support not only its present  level of
operations but, with the addition of a second and, if needed,  a third operating
shift,  to support a substantial  increase in production of its present  product
lines.  Second,  although  product pricing would be affected by inflation due to
higher costs,  management  believes that public health and safety concerns would
outweigh any negative impact of price  increases and would not adversely  affect
the  Company's  projected  sales.  Additionally,  the  hospital  and health care
markets have  historically  been best able to pass on increased  costs which are
typically paid by insurance coverage.

V.  Trends Affecting Liquidity, Capital Resources and Operations.

     A number of factors are  expected to impact upon the  Company's  liquidity,
capital  resources  and  future   operations.   Included  among  these  are  (i)
environmental  concerns;  (ii) economic factors  generally  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.




Some  disposable  products  offered by the Company  are made from  plastic-based
materials which have raised concern among environmental groups over their proper
disposal.  Although  management  believes that such concerns are, in many cases,
valid,  it is also  believed  that these  concerns  must be balanced with safety
provided by these products against infectious  diseases such as AIDS,  hepatitis
and others.  This belief has recently been reinforced by the new,  comprehensive
safety regulations issued by the 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 requirements
for  protective  apparel such as that  manufactured  by the Company.  Management
believes that the regulations,  which are now fully  implemented,  will increase
demand  for the  Company's  products  and  significantly  expand  the  Company's
markets.  Based upon recent  increased  orders,  management  believes  that most
significant  among  these new  markets  for its  products  will be the  hospital
looking to comply with the new OSHA regulations,  emergency service  industries,
including police,  fire and ambulance  services,  which routinely are exposed to
unusually high risk of infectious diseases and physicians.

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


Management also believes that perhaps the most  significant  adverse impact upon
its liquidity,  capital resources and future operations may result from economic
pressures to keep health care costs low. 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 will continue to have strong
appeal and demand in the marketplace.

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

     In short,  the above  factors may each have a  significant  impact upon the
Company's  future  operations.  At  present,  management  believes  that  safety
concerns over the spread of infectious diseases such as AIDS and hepatitis will,
at  least  for the  foreseeable  future,  outweigh  economic  and  environmental
concerns.  Consequently,  management does not anticipate any adverse impact upon
its future  operations  for the  foreseeable  future.  Apart from these factors,
management  knows of no  trends or  demands  that  would  adversely  affect  the
financial condition of the Company.
                                            PART II  OTHER INFORMATION


ITEM 6.   Exhibits and Reports on Form 8-K

          (a) Exhibits.

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

          (b) Reports on Form 8-KSB

               None.





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                                                          SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.





                                         HEALTH-PAK, INC.



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

Dated:  July 10, 1998



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

Dated:  July 10, 1998