SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-K


                Annual Report Pursuant to Section 13 or 15(d) of
                         Securities Exchange Act of 1934


For the fiscal year ended                                 Commission File Number
December 31, 1995                                                  2-44764

                               BALTEK CORPORATION
             -----------------------------------------------------
             (Exact name of registrant as specified in its charter)



             Delaware                              13-2646117
--------------------------------               ------------------- 
(State or other jurisdiction of                (I.R.S. Employer
 incorporation or  organization)               Identification No.)


          10 Fairway Court, P.O. Box 195, Northvale, New Jersey 07647
          -------------------------------------------------------------
           (Address of principal executive offices)        (Zip Code)


Registrant's telephone number, including area code     201-767-1400
                                                       ------------

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

                                      NONE


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

                          Common Stock $1.00 par value
                          ----------------------------
                                (Title of Class)


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 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   [   ]
<PAGE>
The aggregate  market value of the voting stock held by non  affiliates on March
1, 1996 amounted to $9,876,193.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock as of the latest practicable date, March 1, 1996: 2,523,261 shares,
Common Stock, $1.00 par value.

Documents  incorporated  by  reference:   Portions  of  the  registrant's  proxy
statement  dated  April  26,  1996 for use in  connection  with its 1996  annual
meeting of stockholders are incorporated by reference in Part III of this Annual
Report on Form 10-K to the extent set forth in items 10, 11, and 12 hereof.


                                     PART I
Item 1.     Business.

                               Principal Products

                  The registrant and its subsidiaries  (hereinafter collectively
referred to as the "Company")  mill and sell graded and finished balsa lumber in
standard  sizes and balsa wood  strips  and  blocks.  "Standard  sizes" of balsa
lumber are  measured in  boardfeet  (12" x 12" x 1") for the  English  system of
measure or in cubic  meters  for the  metric  system of  measure.  Shipments  to
Europe,  (except the U.K.) and Japan are made in cubic meters while shipments to
the U.S.  and the  U.K.  are in  boardfeet.  The  Company,  for  production  and
statistical purposes,  converts all metric measurements into boardfeet, thus the
Company's  "standard"  is  boardfeet.  The Company also  manufactures  and sells
custom-made bonded panels,  blocks and beams of balsa wood, and a flexible balsa
wood block mat called "Contourkore ."

                  Glued-up  balsa blocks are marketed in two ways.  Part is sold
directly  to  customers  in block or panel  form,  the balance is shipped to the
Company's factory in Northvale, N.J. for further processing into Contourkore and
other products.  Blocks and  Contourkore are used by the Company's  customers to
manufacture a variety of products by laminating  metal or fiberglass  reinforced
plastic skins to both sides of the balsa,  thereby creating a sandwich structure
in which balsa is the core or center. The products manufactured by the Company's
customers include fiberglass boats,  aircraft cargo pallets,  aircraft flooring,
fiberglass  storage and processing  tanks and fiberglass tub and shower bottoms.
Balsa  lumber  is  used  mostly  by the  hobby  industry  to  manufacture  model
airplanes.

                  In addition,  the Company sells a non-balsa  continuous strand
fabric,   imported   from   Holland  and  Japan  and  resold   without   further
manufacturing.  This product is marketed as  "Coremat"  and  "BaltekMat"  to the
pleasure boat industry.

                  In September  1995 the Company  entered into an agreement with
Airex AG of Sins,  Switzerland,  a division  of A.L.  Alusuisse - Lanza Group to
become the sole North  American  source of Airex(R) (a  registered  trademark of
Aires AG) and  Airlite(TM),  structural PVC foam products.  The Company does not
expect sales or income to be  generated  from these foam  products  until mid to
late 1996. However these additional products,  together with its Balsa products,
should solidify the Company's leadership as a complete supplier to the composite
structural core market and result in growth opportunities for the future.
<PAGE>
                  All the  Company's  balsa and  shrimp  are  produced  in Latin
America,  principally  in Ecuador,  South  America.  The  dependence  on foreign
countries  for raw  materials  represents  some  inherent  risks.  However,  the
Company, or its predecessors,  have maintained operations in Ecuador since 1940.
The Company  does not  consider  its  reliance on Ecuador to  represent an undue
business risk; in fact, the Company believes that operating in Ecuador is one of
its strengths,  where quality raw materials are produced at a reasonable cost in
a politically stable atmosphere.

                  The Company is also in the aquaculture business,  specifically
shrimp farming in Ecuador.  This operation consists of a hatchery,  a farm and a
packing plant.  Shrimp larvae are supplied by the hatchery to the farm and after
harvest,  transferred  to the  packing  plant for  processing  and  shipment  to
customers in the United States and Europe.


                  Principal Markets and Methods of Distribution

                  The Company's  balsa  products are sold  throughout the United
States,  Canada,  Europe,  Japan, and Australia to approximately  1,600 ultimate
users.  The  Company's  salesmen are used  extensively  in the sale of its balsa
products.  Approximately  40% of its balsa product sales are made by the Company
directly.  The remainder of the sales are handled through regional  distributors
in the United  States,  Europe,  Canada,  and  Japan.  Sales of  Contourkore  to
customers  outside the United States are handled through a wholly-owned  Foreign
Sales Corporation.

                  In 1995,  approximately  40% of all the shrimp  production was
sold to the U.S.  market  through  food  brokers;  the  balance  was sold to the
European market.


                             Competitive Conditions

                  As part of  their  overall  business,  other  companies,  with
aggregate facilities and financial resources substantially greater than those of
the Company,  manufacture  and sell various  natural and synthetic  products for
nearly all the  purposes  for which balsa  lumber and  products  are sold by the
Company.  Some of these  competitive  products  are produced and sold at a lower
cost than the Company's balsa lumber and products,  and sales of these competing
products are substantially  greater than the Company's sales of balsa lumber and
products.

                  The Company's  shrimp  business  competes  against many larger
companies  which produce shrimp through  similar  methods in addition to fishing
for shrimp in the traditional method of trawling.


                                Material Customer

                  During the period ended  December  31,  1995,  the Company had
sales to one customer in excess of 10% of the Company's consolidated revenues.
<PAGE>
                                     Backlog

                  As of December 31,  1995,  the Company had a backlog of orders
believed to be firm in the total amount of $5,955,000 all of which is reasonably
expected to be filled within the current fiscal year.

                  As of December 31,  1994,  the Company had a backlog of orders
believed to be firm in the total amount of $9,671,000.


                    Sources and Availability of Raw Materials

                  The  Company  acquires,  partly from its own  plantations  and
partly from others, substantially all of its balsa wood from western and coastal
Ecuador,  accessible  by roads so that the balsa  lumber can be  transported  by
truck to its sawmills.  The Company  considers the timber presently  standing in
this area,  combined with its planned plantation  expansion program, to be ample
to supply all the Company's  requirements in the foreseeable future. The Company
also receives small quantities of balsa from other Latin American countries. The
resins,  fiberglass  and other  materials  used in the  Company's  manufacturing
processes are available from numerous  commercial  sources.  To date the Company
has  experienced  no  difficulty  in  obtaining  such  materials  needed for its
operations.

                  The  Company  owns and  operates  a  shrimp  farm and a shrimp
hatchery  in Ecuador  for the  production  of a steady and  plentiful  supply of
shrimp.  The  hatchery  supplies  substantially  all the larvae  required by the
Company's  ponds.  The Company  also owns a shrimp  packing  company in Ecuador,
thereby achieving complete vertical integration of the shrimp business.


                        Patents, Trademarks and Licenses

                  The Company features its registered trademark  "Belcobalsa(R)"
for lumber,  dimension  stock,  and bonded  panels and blocks,  "Contourkore(R)"
"LamPrep(R)" and "AL-600(R)" for the flexible wood block mat,  "Durakore(R)",  a
balsa hardwood  composite,  "D100(R) " for end-grain panels and  "Decolite(R)" a
balsa  composite  panel  used as an  alternative  to  plywood,  and  low-density
laminate bulkers, marketed as "BaltekMat(R)" and "Firet Coremat(R)".

                  The Company also features  "Airlite(TM)",  a cross-linked  PVC
foam, and "Airex(R)" (registered trademark of Airex AG) a linear foam.

                            Estimated Research Costs

                  The Company has incurred  approximately  $415,000  during 1995
for research and  development,  compared to expenditures of $447,000 in 1994 and
$535,000 in 1993. All expenditures are related to the balsa division and include
customer service activities.  The Company continues to actively explore possible
new applications of balsa, and new manufacturing processes.
<PAGE>
                              Environmental Impact

                  The  Company  has  experienced  no  material  impact  upon its
capital  expenditures,  earnings  or  competitive  position  as a result  of its
compliance with federal, state or local provisions relating to the protection of
the  environment.  Balsa is not a  rainforest  species,  nor does it grow in the
rainforest.  It is usually  harvested  within five  years.  The fast growth rate
makes balsa similar to short-cycle  agricultural crops and an ideal tree species
for forest plantations.

                                    Employees

                  The Company has approximately 956 employees in Ecuador, 125 in
the United States and 10 in Europe, aggregating 1091 employees.

                                   Seasonality

                  The Company's business is not seasonal.

                               Classes of Products

                  The  following  table sets forth the amount and  percentage of
total sales and revenue  represented by each of the Company's product classes in
the three years ended December 31, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
                                                 Balsa and Other
                           Balsa                 Products for
Year                       Lumber              Composite Industries             Shrimp            Total
----                       ------              --------------------             ------            -----
<S>                        <C>                       <C>                        <C>               <C>    
1993                       $3,651                    $23,635                    $5,084            $32,370
                               11%                        73%                       16%               100%

1994                       $3,811                    $29,022                    $7,297            $40,130
                               10%                        72%                       18%                100%

1995                       $4,233                    $32,187                    $9,364             $45,784
                                9%                        70%                        21%               100%
</TABLE>

                               Segment Information

                  The  Company  is  engaged  in two lines of  business,  that of
manufacturing and supplying balsa wood and balsa wood products, laminate bulkers
and PVC foams, used principally as the core material in various industries,  and
in the aquaculture business, namely, shrimp farming in Ecuador.

                  Reference is made to the  information  set forth in Note 11 to
the Notes to Consolidated  Financial  Statements,  Part II, Item 8 hereof,  with
respect to assets and operating results for different business segments.
<PAGE>
                               Foreign Operations

                  The Company,  through its  Ecuadorean  subsidiaries,  owns and
operates five woodworking  plants and approximately  15,346 acres of forest land
in  Ecuador.  In  addition,  the  Company  owns and  operates  a shrimp  farm on
approximately 2,000 acres, a shrimp hatchery and a shrimp packing plant.

                  At the  Company's  woodworking  plants,  rough balsa lumber is
received from  independent  loggers and then processed into finished  lumber and
other manufactured products.

                  The  Company's  shrimp ponds are stocked  with  larvae.  After
feeding,  controlling  the pond  environment  and  monitoring  the growth of the
shrimp for a period of  approximately  six  months,  the  shrimp are  harvested,
frozen, packed and sold for export.

                  The Company, through its European subsidiaries, operates sales
offices in France, the United Kingdom and Denmark.

                  Reference is made to the  information  set forth in Note 11 to
the Notes to Consolidated  Financial  Statements,  Part II, Item 8 hereof,  with
respect to assets and operating results by geographic areas.


                                  Foreign Sales

                  Approximately  29% of the  Company's  net  sales  for the year
ended  December 31, 1995 was derived from sales to customers  outside the United
States.

                  No  prediction  can be  made  as to  any  future  increase  or
decrease  of  the  Company's  foreign  business.  The  Company  has  experienced
differences  in  profitability  between  foreign and  domestic  sales due to the
changing  value of the U.S.  dollar in  relation to the  foreign  currencies  of
countries where its products are sold.
<PAGE>
Item 2.  Properties.

                  The Company  owns or leases the  properties  indicated  in the
following table:
<TABLE>
<CAPTION>
Property and Location                                                                           Status                              
---------------------                                                                           ------
<S>                                                                                             <C>
One story concrete and steel building  containing the Leased Company's principal                      
offices and the plant for  manufacturing  Contourkore(R),  85,000 square feet on                      
4-1/2 acres (Northvale, New Jersey).                                                            Leased
                                                                                                      
Woodworking  plant  housed  in  several  wood,  concrete  and  steel  buildings,
approximately 180,000 square feet (Guayaquil, Ecuador).                                         Owned
                                                                                                      
Woodworking plant housed in several wood and concrete  buildings,  approximately
30,000 square feet on 7 acres of land (Guayaquil, Ecuador).                                     Owned
                                                                                                      
15,346 acres of Timberland in Ecuador.                                                          Owned                              
                                                                                                      
2,000 acres of land for shrimp farming in Ecuador,  including ten wood buildings
and one concrete building totaling approximately 11,000 square feet.                            Owned
                                                                                                      
Shrimp hatchery housed in several  concrete  buildings on 3.7 acres of land (San
Pablo, Ecuador).                                                                                Owned
                                                                                                      
Shrimp packing plant housed in three  concrete and steel  buildings on 2.6 acres
of land (Duran, Ecuador).                                                                       Owned
                                                                                                      
Woodworking  plant housed in four concrete and steel  buildings,  165,000 square
feet  on  approximately  28  acres  of land  (Santo  Domingo  de los  Colorados,
Ecuador).                                                                                       Owned
                                                                                                      
Woodworking plant housed in one concrete and steel building,  62,000 square feet
on approximately 7 acres of land (Manta, Ecuador).                                              Owned
                                                                                                      
Woodworking   plant  housed  in  one  wood  building,   26,000  square  feet  on
approximately 8 acres of land (Quevedo, Ecuador).                                               Owned

Maintenance  facilities for the Balsa Raw Material  Department in a concrete and
wood building, 16,875 square feet (Quevedo, Ecuador).                                           Owned

Office space in concrete building, 7,100 square feet (Guayaquil, Ecuador).                      Owned

Office space in concrete building, 1,000 square feet (Croydon, U.K.).                           Leased

Office space in stone and wood  building,  2,000  square feet  (Paris,  France).                Leased

Approximately 16,000 square feet of wareouse space  (Norwood, N.J.)                             Leased
</TABLE>

All of the above properties except the shrimp farming land, hatchery and packing
plant are used in the balsa wood business.
<PAGE>
                  The lease of the property at Northvale,  New Jersey, continues
until February 28, 2002, at an average annual rental of approximately  $383,000.
The lease of the Company's  office space in Paris continues until March 31, 1998
at an  annual  rental  equivalent  to  approximately  $28,800.  The lease of the
Company's  office in Croydon,  U.K.  runs until  December  25, 2008 at an annual
rental of approximtely $13,200.

                  All of the  Company's  properties,  plants and  equipment  are
considered to be presently sufficient for their respective purposes.


Item 3.     Legal Proceedings.

                  Not Applicable.


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

                  There  was no  submission  of  matters  to a vote of  security
holders during the fourth quarter of 1995.
<PAGE>
                                     PART II

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

                  The Company's  common stock is traded in the  over-the-counter
market (NASDAQ). The following is the bid price range for the last two years.
<TABLE>
<CAPTION>
                                          1995                        1994
                                -----------------------      ----------------------
                                  HIGH           LOW           HIGH          LOW
                                ---------      --------      --------      --------
<C>                             <C>            <C>           <C>           <C>     
1st Quarter ...........         $    8.25      $   6.75      $   9.25      $   7.25
2nd Quarter ...........              9.00          7.00          8.50          7.25
3rd Quarter ...........             10.25          7.50          9.25          7.50
4th Quarter ...........              9.25          8.25          7.75          6.50
</TABLE>

                  The Company had approximately 216 stockholders of record as of
March 1, 1996.


                  No cash dividends were paid during the past two years.
<PAGE>
Item 6.     Selected Financial Data.
<TABLE>
<CAPTION>
                           (Dollars in thousands except per share amounts)

                                       YEAR ENDED DECEMBER 31,



                            1995            1994            1993            1992             1991
                          --------        --------        --------        --------         --------
<S>                     <C>             <C>             <C>             <C>              <C>     
Net Sales ........        $ 45,784        $ 40,130        $ 32,370        $ 28,215         $ 31,101

Income (loss) ....        $  1,962        $  1,212        $    113        $   (543)        $    805

Income (loss) per         $    .78        $    .48        $    .04        $   (.22)        $    .32
common share

Total Assets .....        $ 38,816        $ 34,541        $ 33,385        $ 30,646         $ 29,009

Long Term ........        $  2,298        $  2,388        $  2,616        $  2,715         $    438
obligations (a)

Cash dividends de-            --              --              --              --               --
clared per common
share

Average shares           2,523,261       2,523,261       2,523,261       2,523,261        2,523,261
outstanding


Note (a): Excluding deferred income taxes.
</TABLE>
<PAGE>
                     Management's Discussion and Analysis of
Item 7.           Financial Condition and Results of Operations


                         LIQUIDITY AND CAPITAL RESOURCES

                  The Company's working capital ratio (current assets divided by
current  liabilities)  decreased in 1995 to 2.50:1 from 2.97:1, after increasing
in 1994 from 2.87:1.

                  Cash was provided and used in varying amounts during the three
year  period,  principally  as a result of  changes in the  elements  of current
assets and current liabilities and in the amount of cash provided by net income.
Inventories  increased in 1995 and 1993 but  decreased in 1994.  The increase in
1995 was due to new products and inventory buildup for anticipated  increases in
sales.  The 1994  decrease  was caused by greater  sales than  anticipated.  The
increase in 1993 was due to an  inventory  buildup in  anticipation  of the 1994
sales increase.

                  Cash used in  investing  activities  for the three year period
was due to  increased  investments  in  balsa  plantations,  replacement  of old
equipment,  reconstruction  of the shrimp  ponds and  purchase of new  equipment
required for the  manufacture of the Company's new products.  The Company has no
material commitments for capital expenditures.

                  Debt  increased  in 1995 and 1993 due to working  capital  and
investment  requirements.  In 1994 the company  repaid debt of  $1,887,000  from
funds generated by profits.

                  The Company had unused  lines of credit of $5.0 million with a
domestic bank, $1.8 million with Ecuadorean banks and $1.0 million with European
banks. The Company expects that future operations and its unused lines of credit
will  provide  sufficient  resources  to support  its planned  expansion  and to
maintain its favorable liquid position.

                       RESULTS OF OPERATIONS FOR THE YEARS
                     ENDED DECEMBER 31, 1995, 1994 AND 1993

                  Total sales increased 14%, 24% and 15% in 1995, 1994 and 1993,
respectively.  The gains in all three years were due to  increased  demands from
all industries using our balsa products  together with substantial  increases in
shrimp sales.

                  Balsa sales were favorably affected by the continuing recovery
of  the  pleasure  boat  industry.   The  pleasure  boat  industry   represented
approximately 40% of the Company's 1995 balsa sales.  Fluctuating interest rates
make it  impossible  to  forecast  short or long  range  trends  in the  boating
industry.  The  increases  in balsa  sales in all three years were due to volume
increases,  increased sales of value-added products and to price increases.  The
Company continues to explore and develop alternative  applications for its balsa
products.
<PAGE>
                  Shrimp sales were  $9,364,000,  $7,297,000  and  $5,084,000 in
1995, 1994 and 1993,  respectively.  The substantial increases in 1995 and 1994,
after a decline in 1993,  were the result of increased  world wide market prices
and increased yield at the Company's shrimp farm. The decline in 1993 was due to
unfavorable  weather  conditions  in Ecuador,  where the shrimp farm is located,
during the first nine months of 1993. The Company 's  reconstruction  program to
increase  yields at its  shrimp  farm  commenced  in the  middle of 1993 and has
proved successful. The program should be concluded in 1997.

                  Cost  of  products   sold  as  a   percentage   of  sales  was
approximately  the same in 1995 and 1994 after  increasing 2% in 1993. All three
years were affected in varying  degrees by  inflationary  pressures on operating
expenses  partially  offset by currency  devaluation and operating  efficiencies
resulting from the 1994 and earlier restructuring.  Additionally,  1995 and 1994
benefited  from  increased  absorption  of overhead  expenses  due to  increased
production. The Company recorded a special charge of $323,977 in 1994 associated
with a decision to reduce costs by making  operational and personnel  changes at
the  Company's  factories in Ecuador.  This charge was effected  within the year
with no related reserve balance remaining at year end.

                  Selling,  general and administrative  expenses as a percentage
of sales  remained  approximately  the same in 1995 as in 1994 due mostly to the
addition of sales  personnel  required to market the Company's  existing and new
products  and to support  the  Company's  continuing  search for new markets and
applications  for  its  products.  These  additions  were  offset  by  increased
absorption  of fixed  expenses.  The decline in 1994 by 3% and in 1993 by 4% was
due to a better absorption of fixed expenses as a result of increased sales.

                  Sales and expenses were  slightly  affected in all three years
by the different  exchange rates applied in translating the books of accounts of
the Company's European subsidiaries.

                  Interest  expense  increased  in 1995 and  1994 due to  rising
interest rates and increased  borrowings  after declining in 1993 as a result of
lower interest rates.

                  Translation  losses  varied  greatly  during  the  three  year
period.  Translation losses are caused by the relationship of the U.S. dollar to
the foreign  currencies in the countries where the Company  operates,  and arise
when  translating  foreign currency balance sheets into U.S. dollars in order to
present consolidated financial statements.  Management is unable to forecast the
impact  of   translation   gains  or  losses  on  future   periods  due  to  the
unpredictability in the fluctuation of foreign exchange rates.

                  The effective  income tax rate amounted to 21% in 1995, 39% in
1994,  and 40% in  1993.  Reconciliation  of the  effective  rate  with the U.S.
statutory rate is detailed in footnote 8 to the financial statements.

                  In summary of the foregoing  discussion,  the Company realized
net income of  $1,962,253,  $1,212,459,  and  $112,835  in 1995,  1994 and 1993,
respectively.
<PAGE>

Item 8.     Financial Statements and Supplementary Data.

                  The  consolidated  financial  statements of the registrant and
subsidiaries, and supplemental schedule are annexed hereto and made part hereof.


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

                  None.



                                    PART III

Item 10.     Directors and Executive Officers of the Registrant.

                  Omitted from this Report since a definitive  Proxy  Statement,
pursuant to Regulation 14A containing  the required  information,  will be filed
with the  Commission  not later  than 120 days  after the close of  registrant's
fiscal year.


Item 11.     Executive Compensation.

                  Omitted from this Report since a definitive  Proxy  Statement,
pursuant to Regulation 14A containing  the required  information,  will be filed
with the Commission not later than 120 days after the close of the  registrant's
fiscal year.


               Security Ownership of Certain Beneficial
Item 12.       Owners and Management.

                  Omitted from this Report since a definitive  Proxy  Statement,
pursuant to Regulation 14A containing  the required  information,  will be filed
with the Commission not later than 120 days after the close of the  registrant's
fiscal year.


Item 13.  Certain Relationships and Related Transactions.

                  Inapplicable.
<PAGE>
                                     PART IV

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

(a)(1) and (2)   Consolidated Financial Statements
                    and Financial Statement Schedule

                    See Index to Consolidated Financial Statements and Financial
                    Statement Schedule annexed hereto and made part hereof.

(b)                 Reports on Form 8-K

                    No  reports  on Form 8-K were  filed by or on  behalf of the
                    registrant for the quarter ended December 31, 1995, the last
                    quarter in the period  covered by this Annual Report on Form
                    10-K.

(c)                 List of Exhibits

Exhibit No.                     Item                           Filing
-----------                     ----                           ------
     3                 Articles of Incorporation             Pre-Filed
                                 (Bylaws)

    10                 Material Contracts                    None

    21                 Subsidiaries of Registrant            Filed Herewith

    27                 Financial Data Schedule               Filed Herewith

<PAGE>
                                   SIGNATURES



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



                                                    BALTEK CORPORATION
                                                          Registrant



                                           By /s/ Jacques Kohn
                                              ---------------------------
                                                  Jacques Kohn,
                                                  President



                                           By /s/ Benson J. Zeikowitz
                                              ----------------------------
                                                  Benson J. Zeikowitz,
                                                  Treasurer (Principal
                                                  Financial officer and
                                                  Principal accounting
                                                  officer)

Dated: March 21, 1996
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the date indicated.




By /s Margot W. Kohn                            By /s/ Jacques Kohn
   -----------------------------                   -----------------------------
      Margot W. Kohn,                                  Jacques Kohn,
      Director                                         Director



By /s/ Theodore Ness                            By /s/ Benson J. Zeikowitz
   -----------------------------                   -----------------------------
       Theodore Ness,                                  Benson J. Zeikowitz,
       Director                                        Director


Dated: March 21, 1996
<PAGE>
                       BALTEK CORPORATION AND SUBSIDIARIES









       CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
                      AS OF DECEMBER 31, 1995 AND 1994 AND
        FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995








                       PREPARED FOR FILING AS PART OF THE
                            ANNUAL REPORT (FORM 10-K)
                    TO THE SECURITIES AND EXCHANGE COMMISSION
                      FOR THE YEAR ENDED DECEMBER 31, 1995

                                   **********
<PAGE>
BALTEK CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
  FINANCIAL STATEMENT SCHEDULE
PREPARED FOR FILING AS PART OF THE ANNUAL REPORT
  (FORM 10-K) TO THE SECURITIES AND EXCHANGE COMMISSION
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------------------------------

INDEPENDENT AUDITORS' REPORT                                                    

   Consolidated Balance Sheets as of December 31, 1995 and 1994                 

   Consolidated Statements of Operations for Each of the Three Years
     in the Period Ended December 31, 1995                                      

   Consolidated Statements of Changes in Stockholders' Equity
     for Each of the Three Years in the Period Ended December 31, 1995          

   Consolidated Statements of Cash Flows for Each of the Three Years
     in the Period Ended December 31, 1995                                      

   Notes to Consolidated Financial Statements for Each of the Three
     Years in the Period Ended December 31, 1995                                

FINANCIAL STATEMENT SCHEDULE AS OF AND FOR EACH OF
   THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995:

   II - Valuation and Qualifying Accounts                                       


All other schedules for which provision is made in the applicable regulations of
the Securities and Exchange  Commission have been omitted because of the absence
of the  conditions  under  which  they are  required  or  because  the  required
information called for is set forth in the consolidated  financial statements or
notes thereto.
<PAGE>
Deloitte &
  Touche LLP
[GRAPHIC -- COMPANY LOGO]
                    ____________________________________________________________
                    Two Hilton Court                   Telephone: (201) 631-7000
                    P.O. Box 319                       Facsimile: (201) 631-7459
                    Parsippany, New Jersey 07054-0319


INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
Baltek Corporation and Subsidiaries

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Baltek
Corporation  and its  subsidiaries  as of December  31,  1995 and 1994,  and the
related consolidated statements of operations,  changes in stockholders' equity,
and cash flows for each of the three  years in the  period  ended  December  31,
1995. Our audits also included the financial  statement  schedule  listed in the
accompanying index. These financial  statements and financial statement schedule
are the responsibility of the Corporation's management. Our responsibility is to
express  an  opinion  on these  financial  statements  and  financial  statement
schedule based on our audits.

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

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


/s/Deloitte & Touche LLP

March 11, 1996
<PAGE>
<TABLE>
<CAPTION>
BALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
-----------------------------------------------------------------------------------------------

ASSETS                                                              1995               1994
<S>                                                              <C>                <C>        
CURRENT ASSETS:
  Cash and cash equivalents .............................        $   841,056        $ 1,696,215
  Accounts receivable (less allowance for doubtful
    accounts - 1995, $92,759; 1994, $75,985) ............          5,350,211          4,919,172
  Inventories (Note 3) ..................................         12,875,203          9,403,216
  Prepaid expenses ......................................            287,861            293,936
  Other .................................................          1,374,637          1,156,746
                                                                 -----------        -----------
           Total current assets .........................         20,728,968         17,469,285

PROPERTY, PLANT AND EQUIPMENT - Net (Notes 4 and 10) ....         11,079,132         10,935,665
TIMBER AND TIMBERLANDS (Note 5) .........................          6,338,152          5,509,051
OTHER ASSETS ............................................            670,244            627,288
                                                                 -----------        -----------
TOTAL ASSETS ............................................        $38,816,496        $34,541,289
                                                                 ===========        ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Notes payable (Note 6) ................................        $ 4,424,783        $ 1,716,563
  Accounts payable ......................................          1,910,642          1,889,096
  Income tax payable ....................................              9,952            624,469
  Accrued salaries, wages and bonuses payable ...........            927,739            873,394
  Accrued expenses and other liabilities ................            808,835            573,120
  Current portion of long-term debt .....................             17,558             33,558
  Current portion of obligation under capital lease (Note            188,065            174,517
                                                                 -----------        -----------
           Total current liabilities ....................          8,287,574          5,884,717

OBLIGATION UNDER CAPITAL LEASE (Note 10) ................          1,974,768          2,162,833
LONG-TERM DEBT ..........................................             17,910              7,319
UNION EMPLOYEE TERMINATION BENEFITS (Note 9) ............            305,195            217,624
                                                                 -----------        -----------
           Total liabilities ............................         10,585,447          8,272,493
                                                                 -----------        -----------
STOCKHOLDERS' EQUITY: (Note 7)
  Preferred stock, $1.00 par; 5,000,000 shares
    authorized and unissued .............................                --                 --
  Common stock, $1.00 par; 10,000,000 shares authorized,
    2,523,261 shares issued and outstanding .............          2,523,261          2,523,261
  Additional paid-in capital ............................          2,157,492          2,157,492
  Retained earnings .....................................         23,550,296         21,588,043
                                                                 -----------        -----------
           Total stockholders' equity ...................         28,231,049         26,268,796
                                                                 -----------        -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..............        $38,816,496        $34,541,289
                                                                 ===========        ===========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995
--------------------------------------------------------------------------------------------------

                                                1995                 1994                 1993
                                            ------------         ------------         ------------
<S>                                         <C>                  <C>                  <C>         
NET SALES ..........................        $ 45,783,629         $ 40,129,579         $ 32,369,773

COST OF PRODUCTS SOLD ..............          32,759,376           28,784,739           23,537,855

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES ..........           9,743,221            8,509,343            7,784,070

SPECIAL CHARGE (Note 12) ...........                --                323,977                 --
                                            ------------         ------------         ------------
           Operating income ........               3,281                2,511                1,047
                                            ------------         ------------         ------------
OTHER INCOME (EXPENSES):
  Interest expense (Notes 6 and 10)             (530,231)            (452,352)            (400,787)
  Foreign exchange loss ............            (307,716)             (96,001)            (483,667)
  Interest income ..................              36,669               28,047               17,685
  Other ............................              10,969                 --                  6,442
                                            ------------         ------------         ------------
           Total ...................            (790,309)            (520,306)            (860,327)
                                            ------------         ------------         ------------

INCOME BEFORE INCOME TAXES .........           2,490,723            1,991,214              187,521

INCOME TAX PROVISION (Note 8) ......             528,470              778,756               74,686
                                            ------------         ------------         ------------
NET INCOME .........................        $  1,962,253         $  1,212,458         $    112,835
                                            ============         ============         ============

NET INCOME PER COMMON SHARE (Note 7)        $       0.78         $       0.48         $       0.04
                                            ============         ============         ============


See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995
-----------------------------------------------------------------------------------

                                                      Additional
                                 Common Stock,         Paid-in           Retained
                                     $1 Par            Capital           Earnings
                                  -----------        -----------        -----------
<S>                               <C>                <C>                <C>        
BALANCE, DECEMBER 31, 1992        $ 2,523,261        $ 2,157,492        $20,262,750

  Net income - 1993 ......               --                 --              112,835
                                  -----------        -----------        -----------

BALANCE, DECEMBER 31, 1993          2,523,261          2,157,492         20,375,585

  Net income - 1994 ......               --                 --            1,212,458
                                  -----------        -----------        -----------

BALANCE, DECEMBER 31, 1994          2,523,261          2,157,492         21,588,043

  Net income - 1995 ......               --                 --            1,962,253
                                  -----------        -----------        -----------

BALANCE, DECEMBER 31, 1995        $ 2,523,261        $ 2,157,492        $23,550,296
                                  ===========        ===========        ===========


See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALTEK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995
---------------------------------------------------------------------------------------------------------------------
                                                                     1995                1994                1993
                                                                  -----------         -----------         -----------
<S>                                                               <C>                 <C>                 <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income .............................................        $ 1,962,253         $ 1,212,458         $   112,835
  Adjustments to reconcile net income to net cash
    (used in) provided by operating activities:
    Depreciation and amortization ........................          1,905,415           1,839,453           1,950,960
    Foreign exchange loss ................................            307,716              96,001             483,667
    Deferred taxes .......................................            (68,107)            (20,404)              5,576
    Increase in accounts receivable ......................           (432,057)           (829,872)           (435,727)
    (Decrease) increase in income taxes payable/receivable           (702,623)            854,250              54,076
    (Increase) decrease in inventories ...................         (3,471,987)            844,158          (1,736,704)
    Increase in prepaid expenses and other current assets            (124,577)           (143,782)           (298,734)
    (Increase) decrease in other assets ..................            (12,050)              4,451             (76,892)
    Increase in accounts payable and accrued expenses ....            324,813           1,219,862             141,209
    Other ................................................            100,011             (20,675)             82,668
                                                                  -----------         -----------         -----------
        Net cash (used in) provided by operating activites           (211,193)          5,055,900             282,934
                                                                  -----------         -----------         -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Net acquisitions of property, plant and equipment ......         (1,626,255)           (859,662)         (1,044,683)
  Increase in timber and timberlands .....................         (1,205,006)         (1,055,691)         (1,340,731)
                                                                  -----------         -----------         -----------
           Net cash used in investing activities .........         (2,831,261)         (1,915,353)         (2,385,414)
                                                                  -----------         -----------         -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase (decrease) in notes payable ...................          2,691,892          (1,673,709)          2,506,786
  Payments of long-term debt .............................            (23,863)            (66,134)            (25,532)
  Principal payments under capital lease .................           (174,517)           (147,748)            (68,720)
                                                                  -----------         -----------         -----------
           Net cash provided by (used in)
              financing activities .......................          2,493,512          (1,887,591)          2,412,534
                                                                  -----------         -----------         -----------
Effect of exchange rate changes on cash ..................           (306,217)            (75,538)           (470,392)
                                                                  -----------         -----------         -----------
Net (decrease) increase in cash and cash equivalent ......           (855,159)          1,177,418            (160,338)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR ......................................          1,696,215             518,797             679,135
                                                                  -----------         -----------         -----------
CASH AND CASH EQUIVALENTS,
  END OF YEAR ............................................        $   841,056         $ 1,696,215         $   518,797
                                                                  ===========         ===========         ===========
SUPPLEMENTAL DISCLOSURES OF
  CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest .............................................        $   268,808         $   407,383         $   169,746
                                                                  ===========         ===========         ===========
    Income taxes .........................................        $ 1,388,134         $    56,690         $    57,285
                                                                  ===========         ===========         ===========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
BALTEK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995
--------------------------------------------------------------------------------

1.    NATURE OF OPERATIONS

      Baltek Corporation is a multinational manufacturing and marketing company.
      The Company's lines of business are supplying core materials  (principally
      balsa products) to various  composite  industries,  farming and processing
      shrimp,  and  manufacturing  and selling balsa lumber and other balsa wood
      products.  The Company  reported  its sales in two  segments in 1995:  the
      balsa segment  including all balsa sales and other  materials  sold to the
      composite industry (80%), and the shrimp segment (20%).

      The principal  market for the Company's  core materials and balsa products
      is in the United  States,  while the shrimp market is divided  between the
      United States and Europe.

      The balsa and shrimp products are produced in Ecuador,  South America. The
      supply of raw materials has been without  interruption  for over 50 years.
      The balsa and shrimp  identifiable assets located at various facilities in
      Ecuador are included in the Company's consolidated balance sheet and total
      approximately $23 million at December 31, 1995.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Principles  of  Consolidation  -  The  consolidated  financial  statements
      include the accounts of the Company and its wholly-owned subsidiaries. All
      significant intercompany accounts and transactions have been eliminated in
      consolidation.

      Cash and Cash Equivalents - Cash equivalents  consist of short-term highly
      liquid investments with maturities of three months or less when purchased.
      Investments are carried at cost, which approximates market.

      In accordance  with  Statement of Financial  Accounting  Standards No. 95,
      "Statement of Cash Flows," cash flows from Baltek's  operations in foreign
      countries are calculated based on their reporting currencies.  As a result
      of this, amounts related to changes in assets and liabilities  reported on
      the  consolidated  statement of cash flows will not  necessarily  agree to
      changes in the corresponding  balances on the consolidated balance sheets.
      The  effect of  exchange  rate  changes on cash  balances  held in foreign
      currencies is reported on a separate line below cash flows from  financing
      activities.

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

      Property - Property,  plant and equipment is stated at cost.  Depreciation
      is provided for depreciable assets over their estimated useful lives using
      various accepted depreciation methods. The assets under capital leases and
      leasehold  improvements are amortized over their useful lives, or the life
      of the lease,  whichever  is shorter.  The cost of major  improvements  to
      existing facilities is capitalized.  The cost of repairs,  maintenance and
      replacements which do not significantly  improve or extend the life of the
      respective assets is charged to expense as incurred.
<PAGE>
      Income  Taxes - Taxes on current  income are  provided  by the Company and
      each  subsidiary as prescribed by local tax laws. The Company  follows the
      practice of  comprehensive  interperiod  income tax allocation.  Effective
      January 1, 1993,  the Company  adopted  Statement of Financial  Accounting
      Standards No. 109,  "Accounting  for Income Taxes" ("SFAS 109").  SFAS 109
      required a change from the deferred method's income statement  approach of
      accounting for income taxes under APB Opinion 11 to an asset and liability
      approach of  accounting  for income  taxes.  Under the asset and liability
      approach of SFAS 109,  deferred tax assets and  liabilities are recognized
      for the future tax  consequences  attributable to differences  between the
      financial  statement  carrying  amounts of existing assets and liabilities
      and their respective tax bases.

      Timber  and  Timberlands  -  Timberlands  are  carried  at cost.  Deferred
      cultivation  costs  represent the cost of preparing,  clearing and seeding
      the  Company's  balsa  wood   plantations.   Amortization  of  timber  and
      timberlands is based on units of production.  Timber carrying costs, which
      include  the  regular  maintenance  and  overseeing  of  timberlands,  are
      expensed as incurred.

      Foreign Currency  Translation - The financial  statements of the Company's
      foreign  subsidiaries  are  remeasured  into U.S.  dollars,  the Company's
      functional currency,  in accordance with Statement of Financial Accounting
      Standards  No. 52,  "Foreign  Currency  Translation."  The majority of the
      foreign exchange gains and losses relate to the  manufacturing  process in
      Ecuador,  and such  amounts  are  separately  stated  in the  accompanying
      consolidated statements of operations.

      Research and Development - Research and  development  costs are charged to
      expense as incurred.  Research  and  development  expenditures,  including
      customer service activities, charged to operations were $414,675, $447,311
      and $534,781 in 1995, 1994 and 1993, respectively.

      Concentrations of Credit Risk - Baltek's principal products,  balsa lumber
      and related end products, as well as shrimp products, are sold to a number
      of markets,  including boating,  transportation,  military, hobby, and the
      retail food  industry.  Baltek's  products are sold  throughout the United
      States,  Canada,  Europe,  Japan  and  Australia  to  approximately  1,600
      ultimate  users.  Credit risk  related to Baltek's  trade  receivables  is
      limited due to the large number of customers in differing  industries  and
      geographic areas.

      Income Per Common  Share - Income per common  share  amounts are  computed
      based on the  weighted  average  number of shares  outstanding  during the
      period.

      Foreign  Currency  Risk  Management - The Company  uses  foreign  currency
      forward contracts to reduce currency exchange rate risk on firm commitment
      purchases  denominated in foreign  currencies.  Gains or losses  resulting
      from these  contracts are deferred and are included in the purchase  price
      of the  materials.  The maximum  term of these  contracts is less than one
      year.

      Use of  Estimates  - In  conformity  with  generally  accepted  accounting
      principles,   the  Company's  financial  statements  include  the  use  of
      estimates and assumptions which have been developed by management based on
      available  facts and  information.  Actual results could differ from those
      estimates.
<PAGE>
      Revenue Recognition - The Company generally recognizes revenues when goods
      are shipped.

      Reclassifications  - Certain  amounts in prior year  financial  statements
      have been reclassified to conform with the current year presentation.

3.    INVENTORIES

      Inventories of the balsa and shrimp segments are summarized as follows:
<TABLE>
<CAPTION>
                                                   1995                  1994
                                               -----------           -----------
<S>                                            <C>                   <C>        
Raw materials ......................           $ 3,913,332           $ 2,580,806
Work-in-process ....................             4,075,895             3,582,410
Finished goods .....................             4,885,976             3,240,000
                                               -----------           -----------
Inventories ........................           $12,875,203           $ 9,403,216
                                               ===========           ===========
</TABLE>

      Included in the above  amounts are  inventories  relating to the Company's
      shrimp  operations  of  $1,337,154  and  $976,751 at December 31, 1995 and
      1994, respectively.

4.    PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment is comprised of the following:
<TABLE>
<CAPTION>
                                                         1995         1994
                                                      -----------    -----------
<S>                                                   <C>            <C>        
Land .............................................    $   125,311    $   125,311
Shrimp properties ................................     14,166,327     13,472,624
Buildings and improvements .......................      1,309,330      1,220,998
Machinery and equipment ..........................      9,034,964      8,477,222
Leasehold improvements ...........................        677,817        585,152
Assets under capital leases ......................      2,498,719      2,498,719
Construction-in-progress .........................          5,000           --
                                                      -----------    -----------
Total ............................................     27,817,468     26,380,026

Less accumulated depreciation and amortization ...     16,738,336     15,444,361
                                                      -----------    -----------
Property, plant and equipment - net ..............    $11,079,132    $10,935,665
                                                      ===========    ===========
</TABLE>
      Shrimp  properties  consist  principally of shrimp ponds, a hatchery and a
      packing plant.
<PAGE>
5.    TIMBER AND TIMBERLANDS

      Timber and timberlands are comprised of the following:
<TABLE>
<CAPTION>
                                                      1995               1994
                                                   ----------         ----------
<S>                                                <C>                <C>       
Timberlands ..............................         $2,897,973         $2,664,363
Deferred cultivation costs ...............          3,440,179          2,844,688
                                                   ----------         ----------
Timber and timberlands ...................         $6,338,152         $5,509,051
                                                   ==========         ==========
</TABLE>

6.    NOTES PAYABLE

      Notes  payable  under  various  agreements  at December  31, 1995 and 1994
      consist of the following:
<TABLE>
<CAPTION>
                                                           1995          1994
                                                         ----------   ----------
<S>                                                      <C>          <C>       
Bank loan - France, with interest at 11.5% ...........   $    4,783   $   16,563

Ecuadorean bank loans, payable in dollars,
  due within one year from the origination date,
  with interest rates between 9% and 17% in 1995 and
  9% in 1994 .........................................    4,420,000    1,700,000
                                                         ----------   ----------
Notes payable ........................................   $4,424,783   $1,716,563
                                                         ==========   ==========
</TABLE>

      The Company has an unsecured revolving line of credit with a domestic bank
      for a maximum credit limit of $5,000,000 with interest at the bank's prime
      rate. This line of credit, which is renewable annually, expires on May 31,
      1996. There were no borrowings  outstanding against this line of credit at
      December 31,  1995.  The Company was in  compliance  with all related loan
      covenants at December 31, 1995.

      The  Ecuadorian  bank loans are  unsecured.  At December 31, 1995,  unused
      lines of credit available under Ecuadorian borrowing arrangements amounted
      to approximately  $1,830,000,  and under European  borrowing  arrangements
      amounted to approximately $998,000.

      The credit facilities discussed above do not require compensating balances
      or the payment of commitment  fees. The weighted  average interest rate on
      borrowings  outstanding  at December 31, 1995 and 1994 was 11.3% and 9.8%,
      respectively.  The carrying amount of the notes payable approximates their
      fair  value  based on the  short-term  nature  and the terms of the loans.
      These amounts were paid subsequent to the balance sheet date at par.
<PAGE>
7.    COMMON STOCK AND STOCK OPTIONS

      The  weighted  average  number of common  shares  outstanding  used in the
      calculation of income per common share amounts was 2,523,261 in 1995, 1994
      and 1993.

      The Company has a stock option plan under which  options to purchase up to
      100,000 shares may be granted to certain key employees. As of December 31,
      1995,  2,000  options  were  available  for  grant  and  no  options  were
      outstanding.

8.    INCOME TAXES

      The Company adopted SFAS 109 as of January 1, 1993. Such adoption resulted
      in no net effect on the Company's consolidated statement of operations.

      Income (loss) before income taxes is comprised of:
<TABLE>
<CAPTION>
                                 1995              1994                1993
                             -----------        -----------         -----------
<S>                          <C>                <C>                 <C>        
Domestic ............        $ 1,717,492        $ 2,242,143         $   206,555
Foreign .............            773,231           (250,929)            (19,034)
                             -----------        -----------         -----------
Total ...............        $ 2,490,723        $ 1,991,214         $   187,521
                             ===========        ===========         ===========
</TABLE>

      The provision  (benefit) for income taxes for the years ended December 31,
      1995, 1994 and 1993 consists of the following:
<TABLE>
<CAPTION>
                                     1995             1994              1993
                                  ---------         ---------         ---------
<S>                               <C>               <C>               <C>       
Federal:
  Current ................        $ 519,517         $ 770,788         $  (3,091)
  Deferred ...............          (68,107)          (20,404)            5,576
State ....................           87,885            94,649             5,928
Foreign ..................          (10,825)          (66,277)           66,273
                                  ---------         ---------         ---------
Total ....................        $ 528,470         $ 778,756         $  74,686
                                  =========         =========         =========
</TABLE>
<PAGE>
      The  reconciliation  between  the  Company's  effective  tax  rate and the
      statutory Federal tax rate for 1995, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
                                                          1995     1994     1993
                                                          ----     ----     ---- 
<S>                                                       <C>      <C>      <C>  
Statutory Federal tax rate ..........................     35.0%    35.0%    35.0%
Increase (decrease) in taxes resulting from:
Foreign income - effect of rates
  differing from statutory rates, effect
  of nontaxable exchange gains and losses,
  and foreign losses with no current benefit ........    (11.8)     0.5     40.4
Refunds and reversal of current valuation allowance .     (6.4)    (1.4)   (38.9)
State and local taxes, net of Federal income
  tax benefit .......................................      2.3      3.1      2.2
Other - net .........................................      2.1      1.9      1.1
                                                          ----     ----     ---- 
Effective tax rate ..................................     21.2%    39.1%    39.8%
                                                          ====     ====     ====
</TABLE>

      As a result of various incentives  provided by the Ecuadorian  government,
      the effective  foreign tax rate is lower than the U.S.  Federal  statutory
      tax rate.

      Significant   components  of  the   Company's   deferred  tax  assets  and
      liabilities are as follows:
<TABLE>
<CAPTION>
                                                            December 31,
                                                        1995             1994
                                                     ---------        ---------
<S>                                                  <C>              <C>      
Current
  Inventory capitalization ...................       $  77,448        $  49,071
  Unexpired insurance ........................         (80,171)         (80,943)
  Other - net ................................          24,746           13,895
                                                     ---------        ---------
Total current asset (liability) ..............       $  22,023        $ (17,977)
                                                     =========        ========= 

Noncurrent
  Capital lease ..............................       $ 203,946        $ 175,839
  Foreign tax credit carryforwards ...........            --            140,000
  Less valuation allowance ...................            --           (140,000)
                                                     ---------        ---------
Total noncurrent asset .......................       $ 203,946        $ 175,839
                                                     =========        =========
</TABLE>

      As of  December  31,  1994,  the Company  had a full  valuation  allowance
      recorded  against  the  foreign  tax  credit  carryforwards  of  $140,000.
      Management  believed  that it was more  likely  than not that the  credits
      would expire unutilized.  The Company was, however,  able to utilize these
      credits and has  included  the income from the  reversal of the  valuation
      allowance in the tax provision for the year ended December 31, 1995.
<PAGE>
      The total current and noncurrent  amounts  presented  above, to the extent
      not shown separately on the consolidated  balance sheets,  are included in
      other  assets  (current  and  noncurrent)  and accrued  expenses and other
      liabilities.

      The  Company  does not accrue  Federal  income  taxes on the equity in the
      undistributed  earnings of its  foreign  subsidiaries,  which  amounted to
      approximately  $5,775,000 at December 31, 1995,  because such earnings are
      permanently  reinvested.  It  is  not  practicable  to  estimate  the  tax
      liability that might arise if these earnings were remitted.

9.    EMPLOYEE BENEFIT PLANS

      The Company has a profit-sharing  plan under which an annual  contribution
      may be paid from  accumulated  profits at the  discretion  of the Board of
      Directors  for the benefit of eligible  employees  upon their  retirement.
      Contributions  to this  plan  by the  Company  amounted  to  $327,445  and
      $281,787 in 1995 and 1994,  respectively.  There were no  contributions to
      the plan by the Company in 1993.

      The Company has adopted an amendment to the profit  sharing plan described
      above  providing  an  election  to all  participants,  pursuant to Section
      401(k) of the Internal  Revenue  Code,  to defer  between 2 percent and 10
      percent of salary.  Amounts  deferred are paid to the trustee of the plan.
      The amendment does not provide for matching Company contributions.

      Certain  employees of the Company's  Ecuadorian  subsidiary  companies are
      covered by termination and retirement plans  incorporated  under statutory
      requirements of labor laws and collective bargaining agreements.  Included
      in  the  accompanying  consolidated  balance  sheets  are  union  employee
      termination  benefits which approximate  unpaid vested benefits under such
      plans. The amount of benefits to be received by an employee is established
      by the collective  bargaining agreements and is based on length of service
      and  compensation.  Provisions  of  approximately  $111,000,  $63,000  and
      $106,000 were charged to income during 1995, 1994 and 1993, respectively.

10.   LEASES

      The Company leases its office space and plant facilities in Northvale, New
      Jersey,  under a long-term  capital lease agreement which expires in 2002.
      The lease provides that the Company pay all real estate taxes, maintenance
      and insurance relating to the facilities. Accumulated amortization related
      to the  asset  under  capital  lease  at  December  31,  1995 and 1994 was
      $957,851 and $707,965, respectively.

      Rent  expense  under  operating  leases  relates   principally  to  office
      buildings and amounted to $53,343,  $51,210 and $51,701 in 1995,  1994 and
      1993, respectively.

      Future minimum lease payment obligations, as of December 31, 1995, for the
      capital lease described above, as well as operating leases, are summarized
      below.  The  operating  leases are for space at the  Company's  offices in
      England and France and space in a warehouse  in Norwood,  New Jersey,  for
      which lease payments begin in 1996.
<PAGE>
<TABLE>
<CAPTION>
                                                       Capital         Operating
Year                                                    Lease            Leases
----                                                 ----------        ---------
<C>                                                  <C>               <C>      
1996                                                 $  341,764        $111,3343
1997                                                    430,765           99,779
1998                                                    448,565           20,379
1999                                                    466,365           13,184
2000                                                    469,926           13,184
Remainder                                               569,607          105,472
                                                     ----------       ----------
Total                                                 2,726,992          363,341

Less amounts representing interest                      564,159             --
                                                     ----------       ----------
Capital lease obligation                             $2,162,833       $     --
                                                     ==========       ==========
Operating lease obligations                          $     --         $  363,341
                                                     ==========       ==========
</TABLE>
11.   SEGMENT INFORMATION

      The Company and its subsidiaries  operate primarily in two segments,  as a
      manufacturer  and supplier of balsa wood  products used  principally  as a
      core material in various  industries,  and in the shrimp farming business.
      Information  about the Company's  operations by segment for 1995, 1994 and
      1993 is as follows:
<PAGE>
<TABLE>
<CAPTION>
                                                                      (In Thousands)
                                                          1995             1994             1993
                                                        --------         --------         --------
<S>                                                     <C>              <C>              <C>     
Revenues from unaffiliated customers
Balsa segment ..................................        $ 36,420         $ 32,833         $ 27,286
Shrimp segment .................................           9,364            7,297            5,084
                                                        --------         --------         --------
Total revenues .................................        $ 45,784         $ 40,130         $ 32,370
                                                        ========         ========         ========
Operating income

Balsa segment ..................................        $  2,776         $  2,639         $  2,411
Shrimp segment .................................           2,327            1,572              239
General corporate expenses .....................          (1,822)          (1,699)          (1,602)
                                                        --------         --------         --------
Total operating income .........................        $  3,281         $  2,512         $  1,048
                                                        ========         ========         ========
Income before income taxes

Balsa segment ..................................        $  2,608         $  2,618         $  2,024
Shrimp segment .................................           2,187            1,572              239
General corporate expenses .....................          (1,822)          (1,699)          (1,602)
                                                        --------         --------         --------
Operating income after exchange gain/loss ......           2,973            2,415              564
Interest expense ...............................            (530)            (452)            (401)
Other income - net .............................              48               28               25
                                                        --------         --------         --------
Income before income taxes .....................        $  2,491         $  1,991         $    188
                                                        ========         ========         ========
Identifiable assets

Balsa segment ..................................        $ 29,647         $ 26,048         $ 24,424
Shrimp segment .................................           9,170            8,493            8,961
                                                        --------         --------         --------
Total identifiable assets ......................        $ 38,817         $ 34,541         $ 33,385
                                                        ========         ========         ========
Capital expenditures, net, including timberlands
  and capital leases

Balsa segment ..................................        $  2,169         $  1,424         $  1,977
Shrimp segment .................................             694              492              408
                                                        --------         --------         --------
Total capital expenditures .....................        $  2,863         $  1,916         $  2,385
                                                        ========         ========         ========
Depreciation expense

Balsa segment ..................................        $    778         $    754         $    771
Shrimp segment .................................             736              708              696
                                                        --------         --------         --------
Total depreciation expense .....................        $  1,514         $  1,462         $  1,467
                                                        ========         ========         ========
</TABLE>
<PAGE>
      Information pertaining to the Company's operations in different geographic
      areas is as follows:
<TABLE>
<CAPTION>
                                                        (In Thousands)
                                            1995             1994             1993
                                          --------         --------         --------
<S>                                                <C>           <C>            <C>    
Revenues from unaffiliated sources

United States - domestic .........        $ 32,453         $ 29,780         $ 22,926
United States - export ...........           7,534            5,062            1,353
Ecuador ..........................              87               87               54
Europe ...........................           5,710            5,201            8,037
                                          --------         --------         --------
Total revenues ...................        $ 45,784         $ 40,130         $ 32,370
                                          ========         ========         ========

Transfers between geographic areas

United States ....................        $  2,167         $  1,628         $  1,676
Ecuador ..........................          17,781           13,227           13,241
                                          --------         --------         --------
Total transfers ..................        $ 19,948         $ 14,855         $ 14,917
                                          ========         ========         ========

Operating income (loss)

United States ....................        $  2,422         $  3,412         $  1,083
Ecuador ..........................           1,055             (656)            (205)
Europe ...........................            (196)            (244)             170
                                          --------         --------         --------
Total operating income ...........        $  3,281         $  2,512         $  1,048
                                          ========         ========         ========

Identifiable assets

United States ....................        $ 12,576         $ 10,792         $  9,926
Ecuador ..........................          22,732           20,370           19,584
Europe ...........................           3,509            3,379            3,875
                                          --------         --------         --------
Total identifiable assets ........        $ 38,817         $ 34,541         $ 33,385
                                          ========         ========         ========
</TABLE>

      Transfers between geographic areas are at prices which permit the recovery
      of manufacturing costs and a reasonable  operating profit. The majority of
      export  sales  from  the  Company's  United  States   operations  were  to
      unaffiliated customers in Europe.

      Sales to one customer  from the Balsa  segment  amounted to  approximately
      13%, 13% and 20% of total revenues in 1995, 1994 and 1993, respectively.
<PAGE>
12.   SPECIAL CHARGE

      In 1994,  the Company  recorded a special  charge of $323,977,  associated
      with a  decision  to  reduce  costs by  making  personnel  changes  at the
      Company's  mills in  Ecuador.  This  charge  was  comprised  primarily  of
      severance payments for 68 employees.  This action was effected within 1994
      and no related reserve balance remained by year-end 1994.

                                     ******
<PAGE>
<TABLE>
<CAPTION>
                                                                                 Schedule II
BALTEK CORPORATION AND SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1995, 1994 AND 1993
---------------------------------------------------------------------------------------------
                                                    Additions
                                    Balance at      Charged to                      Balance
                                    Beginning       Costs and                        at End
           Description               of Year         Expenses       Deductions       of Year
                                     --------        --------        --------        --------
<S>                                  <C>             <C>             <C>             <C>     
YEAR ENDED DECEMBER 31, 1995:
  Allowance for doubtful
    accounts receivable .....        $ 75,985        $ 97,176        $ 80,402        $ 92,759
                                     ========        ========        ========        ========

YEAR ENDED DECEMBER 31, 1994:
  Allowance for doubtful
    accounts receivable .....        $145,955        $ 74,312        $144,282        $ 75,985
                                     ========        ========        ========        ========

YEAR ENDED DECEMBER 31, 1993:
  Allowance for doubtful
    accounts receivable .....        $173,751        $ 24,584        $ 52,380        $145,955
                                     ========        ========        ========        ========
</TABLE>