<PAGE>

<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1998

                                       or

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the transition period from _______ to _______

                         COMMISSION FILE NUMBER 0-19737

                                NOEL GROUP, INC.
             -------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                13-2649262                
-------------------------------         -----------------------------------
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
 incorporation or organization)

667 Madison Avenue, New York, New York                  10021-8029
----------------------------------------               -----------
(Address of principal executive offices)                (Zip Code)

                                 (212) 371-1400
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.


                                   Yes [X]   No [ ]
                                         
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

           Class                       Outstanding at November 7, 1998
-----------------------------          -------------------------------
Common Stock - $.10 Par Value                     20,567,757




<PAGE>

<PAGE>



                                NOEL GROUP, INC.

                                      INDEX



<TABLE>
                                                                                 Page No.

<S>        <C>                                                                    <C>
Part I - FINANCIAL INFORMATION

Item 1.    Statements of Net Assets in Liquidation (Liquidation Basis)
              September 30, 1998 and December 31, 1997                              3

           Statement of Changes in Net Assets in Liquidation (Liquidation Basis)
              For the Three and Nine Months Ended September 30, 1998 and 1997       4

           Consolidated Statement of Operations (Going-Concern Basis)
              For the Three Months Ended March 31, 1997                             5

           Condensed Consolidated Statement of Cash Flows (Going-Concern Basis)
              For the Three Months Ended March 31, 1997                             6

           Notes to Financial Statements                                            7

Item 2.    Management's Discussion and Analysis of Financial Condition and
              Results of Operations                                                14


PART II - OTHER INFORMATION

Item 1.    Legal Proceedings                                                       16

Item 3.    Defaults upon Senior Securities                                         16

Item 6.    Exhibits and Reports on Form 8-K                                        16

</TABLE>


                                        2



<PAGE>

<PAGE>



PART I - FINANCIAL INFORMATION

Item 1. - Financial Statements

                                NOEL GROUP, INC.
           STATEMENTS OF NET ASSETS IN LIQUIDATION (Liquidation Basis)
                (Dollars in thousands, except per share amounts)




<TABLE>
<CAPTION>
                                                September 30,   December 31,
                                                    1998           1997
                                                -------------   ------------
                                                 (Unaudited)
<S>                                               <C>           <C>        
ASSETS
Cash and cash equivalents .....................   $     1,224   $     3,493
Short-term investments ........................         2,101         9,697
                                                  -----------   -----------
Total cash and short-term investments .........         3,325        13,190

Investments (Note 2) ..........................        39,498        58,183
Income taxes (Note 3) .........................         2,254         5,134
Other assets (Note 2) .........................           561        12,405
                                                  -----------   -----------
Total assets ..................................        45,638        88,912
                                                  -----------   -----------
LIABILITIES
Accounts payable ..............................          --             281
Accrued expenses (Note 4) .....................         2,891         5,070
                                                  -----------   -----------
Total liabilities .............................         2,891         5,351
                                                  -----------   -----------
Net assets in liquidation .....................   $    42,747   $    83,561
                                                  ===========   ===========

Number of common shares outstanding ...........    20,567,757    20,567,757
                                                  ===========   ===========

Net assets in liquidation per outstanding share   $      2.08   $      4.06
                                                  ===========   ===========
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                        3



<PAGE>

<PAGE>



                                NOEL GROUP, INC.
     STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION (Liquidation Basis)
                        (Unaudited, dollars in thousands)




<TABLE>
<CAPTION>
                                                                               For the Three and Nine
                                                                                    Months Ended
                                                                                   September 30,
                                                                                1998           1997
                                                                               ------         -----

<S>                                                                        <C>            <C>
Net assets in liquidation at January 1 ...................................   $  83,561
Changes in estimated liquidation values of assets and liabilities (Note 5)       1,413
Liquidating distribution (Note 6) ........................................     (14,397)
                                                                             ---------
Net assets in liquidation at March 31 ....................................      70,577    $ 158,353


Changes in estimated liquidation values of assets and liabilities (Note 5)       2,116        3,375
Liquidating distribution (Note 6) ........................................      (9,255)     (53,973)
                                                                             ---------    ---------
Net assets in liquidation at June 30 .....................................      63,438      107,755


Changes in estimated liquidation values of assets and liabilities (Note 5)      (1,769)      (8,739)
Liquidating distribution (Note 6) ........................................     (18,922)        --
                                                                             ---------    ---------
Net assets in liquidation at September 30 ................................   $  42,747    $  99,016
                                                                             =========    =========
</TABLE>





   The accompanying notes are an integral part of these financial statements.

                                        4



<PAGE>

<PAGE>



                        NOEL GROUP, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENT OF OPERATIONS (Going-Concern Basis)
              For the Three Months Ended March 31, 1997 (Dollars in
                      thousands, except per share amounts)




<TABLE>
<S>                                                              <C>         
SALES ........................................................   $     38,473
                                                                 ------------

COST AND EXPENSE ITEMS:
Cost of sales ................................................         20,711
Selling, general, administrative and other  expenses .........         17,220
Loss on disposal of Carlyle Industries, Inc.'s thread division          4,364
Depreciation and amortization ................................            862
                                                                 ------------
                                                                       43,157
                                                                 ------------

Operating loss ...............................................         (4,684)
                                                                 ------------

OTHER INCOME (EXPENSE):
Gain on sale of HealthPlan Services Corporation ..............         15,098
Other income .................................................            237
Loss from equity investments .................................           (354)
Interest expense .............................................         (1,670)
Minority interest ............................................            501
                                                                 ------------
                                                                       13,812
                                                                 ------------
Income from continuing operations before income taxes ........          9,128
Provision for income taxes ...................................        (10,437)
                                                                 ------------
     Net loss ................................................   $     (1,309)
                                                                 ============

BASIC EARNINGS PER SHARE FROM:
     Net loss ................................................   $      (0.06)
                                                                 ============

Weighted average shares outstanding ..........................     20,402,891
                                                                 ============
</TABLE>





    The accompanying notes are an integral part of this financial statement.

                                        5



<PAGE>

<PAGE>



                        NOEL GROUP, INC. AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Going-Concern Basis)
                    For the Three Months Ended March 31, 1997
                             (Dollars in thousands)




<TABLE>
<S>                                                        <C>      
Net Cash Used for Operating Activities .................   $ (5,949)
                                                           --------

Cash Flows From Investing Activities:
Purchases of short-term investments, net ...............     (2,752)
Sales of investments ...................................     26,400
Sales of investments ...................................     51,924
Purchases of property, plant and equipment .............       (787)
Other, net .............................................       (148)
                                                           --------
Net cash provided from investing activities ............     74,637
                                                           --------

Cash Flows Used for Financing Activities:
Borrowings from revolving credit line and long-term debt     41,121
Repayments of revolving credit line and long-term debt .    (76,698)
Issuance of common stock, net ..........................        910
Change in other long-term liabilities ..................         90
Other, net .............................................        (19)
                                                           --------
Net cash used for financing activities .................    (34,596)
                                                           --------

Effect of exchange rates on cash .......................        (38)
                                                           --------

Net increase in cash and cash equivalents ..............   $ 34,054
                                                           ========

Supplemental Disclosure of Cash Flow Information:
Interest paid ..........................................   $  1,993
                                                           ========
Taxes paid .............................................   $     43
                                                           ========
</TABLE>






    The accompanying notes are an integral part of this financial statement.

                                        6



<PAGE>

<PAGE>



                                NOEL GROUP, INC.

                          NOTES TO FINANCIAL STATEMENTS

        This Report on Form 10-Q contains, in addition to historical
information, certain forward- looking statements, including those regarding
valuation of assets and liabilities. Such statements, including, as more fully
set forth below, those relating to management's estimates of the net value of
the Company's assets in liquidation, involve certain risks and uncertainties,
including, without limitation, those risks and uncertainties discussed below.
Should one or more of these risks or uncertainties materialize, actual outcomes
may vary materially from those indicated.

LIQUIDATION BASIS STATEMENTS

1.      PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION

        On March 19, 1997, the shareholders of Noel Group, Inc. ("Noel")
approved a Plan of Complete Liquidation and Dissolution (the "Plan"), which had
been adopted by Noel's Board of Directors on May 21, 1996. Under the Plan, Noel
is being liquidated (i) by the sale of such of its assets as are not to be
distributed in kind to its shareholders, and (ii) after paying or providing for
all its claims, obligations and expenses, by cash and in-kind distributions to
its shareholders pro rata and if required by the Plan or deemed necessary by the
Board of Directors, by distributions of its assets from time to time to one or
more liquidating trusts established for the benefit of the then shareholders, or
by a final distribution of its then remaining assets to a liquidating trust
established for the benefit of the then shareholders.

        As a result of the approval of the Plan by the shareholders, Noel
adopted the liquidation basis of accounting as of April 1, 1997. Under the
liquidation basis of accounting, assets are stated at their estimated net
realizable values and liabilities are stated at their anticipated settlement
amounts. See Note 2 for a specific discussion of the methods used to determine
the estimated net realizable values of investments.

        The valuation of assets and liabilities necessarily requires many
estimates and assumptions and there are substantial uncertainties in carrying
out the provisions of the Plan. The actual value of any liquidating distribution
will depend upon a variety of factors including, but not limited to, the actual
market prices of any securities distributed in-kind when they are distributed,
the actual proceeds from the sale or other disposition of any of Noel's assets,
the ultimate settlement amounts of Noel's liabilities and obligations, actual
costs incurred in connection with carrying out the Plan, including
administrative costs during the liquidation period and the actual timing of
distributions.

        The valuations presented in the accompanying Statements of Net Assets in
Liquidation represent management's estimates, based on present facts and
circumstances, of the net realizable values of assets and costs associated with
carrying out the provisions of the Plan based on the assumptions set forth in
the accompanying notes, which assumptions management believes to be reasonable,
based on present facts and circumstances. The actual values and costs are
expected to differ from the amounts shown herein and could be higher or lower
than the amounts recorded. Accordingly, it is not possible to predict the
aggregate net values ultimately distributable to shareholders and no assurance
can be given that the amount to be received in liquidation will equal or exceed
the price or prices at which Noel Common Stock has generally traded or is
expected to trade in the future.

                                        7



<PAGE>

<PAGE>



2.      INVESTMENTS AND OTHER ASSETS

Investments:

        Investments are recorded at their estimated net realizable value in
liquidation. This valuation may not be reflective of actual amounts obtained
when and if these investments are distributed or of prices that might be
obtained in actual future transactions. Because of the inherent uncertainty of
the valuation of securities both where a public market exists and where it does
not exist, the estimated liquidation basis amounts shown may materially differ
from the actual amounts which may be received in the future.

        Noel's holding of the common shares of Career Blazers Inc.
("Career Blazers", formerly Staffing Resources, Inc.) is unregistered.

<TABLE>
<CAPTION>
                                                                                     Estimated
                                                                                    Liquidation
                                                          Common                    Basis Amount
                                                          Shares      Price Per    September 30,
                                                          Owned         Share           1998
                                                          -----       ---------    -------------
                                                    (Dollars in thousands, except per share amount)

<S>                                                       <C>            <C>                <C>    
Career Blazers (a)                                        2,026,104      $11.000            $22,287
Carlyle Industries, Inc. ("Carlyle") Series B, 6%
   preferred stock (b)                                                                       10,788
Ferronorte Participacoes, S.A. ("Ferronorte") (c)                                             6,302
Other holdings                                                                                  121
                                                                                            -------
Total investments at estimated liquidation basis
   amounts                                                                                  $39,498
                                                                                            =======
</TABLE>

(a)     Recorded based upon Noel's review of an analysis completed by Career
        Blazers and its independent advisors. This analysis determined Career
        Blazers' value based upon actual and projected results in relation to
        comparable companies. Compared to the quoted price on the limited
        trading market for Career Blazers shares, Noel believes that, at the
        present time, this analysis is a better estimate of the value in
        liquidation of its Career Blazers shares at September 30, 1998, because
        the trading market for Career Blazers is so limited, Career Blazers is
        not subject to periodic reporting requirements under the Securities
        Exchange Act of 1934, as amended, and Noel's shares of Career Blazers
        are not registered to trade in this market. This valuation may not be
        reflective of actual amounts obtained when and if this investment is
        distributed or of prices that might be obtained in an actual future
        transaction. The closing over-the-counter bid price on September 30,
        1998 and November 5, 1998, was $6.50 and $5.50 per common share of
        Career Blazers, respectively. Noel management is currently assessing the
        most advantageous way to realize its investment in Career Blazers and
        does not expect a transaction to occur until the first quarter of 1999,
        at the earliest.

        Subsidiaries of Staffing Resources, Inc. and Career Blazers Personnel
        Services, Inc. and its affiliated companies merged on December 31, 1997,
        to form Career Blazers. The merged company was renamed Career Blazers
        effective March 31, 1998. Career Blazers

                                        8



<PAGE>

<PAGE>



        offers training, temporary and permanent staffing services across the
        Northeastern, Mid- Atlantic, Southeastern, Southwestern and Rocky
        Mountain regions of the United States, as well as Canada and Puerto
        Rico.

(b)     Recorded based on management's assessment of a variety of market factors
        including, but not limited to, comparisons to transactions of publicly
        traded preferred stock, and an evaluation of the projected operating
        results of Carlyle. Because of the unique characteristics of the
        investment in Carlyle and the non-marketability of the Carlyle preferred
        stock, the valuation of this investment is highly judgmental and subject
        to an unusual degree of uncertainty. The eventual amount realized in an
        actual transaction may be substantially less than the recorded value.
        Also, for various reasons, included those stated below, there may be
        delays in realizing Noel's holding of Carlyle preferred stock.

        On June 22, 1998, Carlyle redeemed 9,391,929 shares of its preferred
        stock which Noel held along with accrued dividends of $2,211,521 for a
        total payment of $11,603,450. The redeemed shares were valued at
        approximately $10,212,000 on the March 31, 1998, Statement of Net Assets
        in Liquidation. Carlyle financed this redemption with newly obtained
        bank financing. Following the redemption, Noel holds 9,929,908 shares of
        Carlyle preferred stock. As of September 30, 1998, Carlyle is in default
        on its obligation to Noel to redeem $6,059,000 of the liquidation
        preference of its preferred stock as well as accumulated unpaid
        dividends of approximately $2,537,000 to the extent of its legally
        available funds.

        Noel and Carlyle are engaged in discussions with a view of satisfying
        Carlyle's remaining obligations to the holders of the preferred stock in
        accordance with the terms of its charter and consistent with its
        resources. Discussions have dealt with the amount and timing of payments
        and possible modifications of the terms of the preferred stock. Any such
        modifications would require the agreement of Carlyle and the holders of
        the preferred stock. Carlyle has informed Noel that it intends to
        fulfill its obligations to its preferred shareholders, as required by
        Carlyle's charter, to the extent that Carlyle has cash resources in
        excess of those required to operate its business. Carlyle has also
        informed Noel that, as Carlyle believes that it does not currently have
        such excess resources, its ability to make payments on account of the
        preferred stock in the future will depend on Carlyle's future cash flow,
        the timing of the settlement of the liabilities recorded on its
        financial statements, the outcome of its discussions with Noel described
        above, the ability of Carlyle to obtain additional financing and
        compliance with Carlyle's new credit facility which presently permits
        only specified payment amounts, including 25% of "excess cash flow", as
        defined in the agreement.

        The Carlyle board of directors is continuing its review of Carlyle's
        strategic alternatives, including, among other things, the sale of
        Carlyle through merger, sale of stock or otherwise, possible
        acquisitions by Carlyle and possible refinancing. Any such transaction
        and/or the discussions between the companies may result in the
        modification of the terms of the preferred stock or in the acceleration
        of the redemption of the preferred stock and/or the reduction in the
        total amounts eventually received by Noel for this holding.

        In addition, Carlyle has agreed to notify the Pension Benefits Guaranty
        Corporation ("PBGC") prior to making any additional dividend or
        redemption payments. Carlyle's decision to make any such payments will
        depend on the successful resolution of any issues which may arise with
        the PBGC relating to Carlyle's unfunded liability, if any, to its
        benefit plan.


                                        9



<PAGE>

<PAGE>



(c)     Recorded at a 60% discount to the valuation, based on a third party
        appraisal, ascribed to Noel's holding in Ferrovia Novoeste, S.A.
        ("Novoeste") in the reorganization of Novoeste and Ferronorte, S.A.
        Ferrovia Norte Brasil to form Ferronorte in June 1998. The discount
        percentage reflects illiquidity and the risks of operating in Brazil,
        including foreign currency risk, and was increased during the third
        quarter to reflect the current uncertainties of the Brazilian economy.
        While the level of uncertainty related to the Brazilian economy has
        increased, there have been no events at Ferronorte, which Noel is aware
        of, which indicate the need for a revaluation. Noel cannot predict how
        future developments to Brazil's economy would impact the value of this
        investment.

        Ferronorte holds two concessions to operate privatized railroads in
        Brazil. Realization of this investment is dependent upon a sale by Noel
        of its interest in Ferronorte. The actual amount realized for this
        investment could be lower or higher than the amount recorded.

Other Assets:

        The components of other assets are as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                   September 30,        December 31, 
                                                        1998                 1997
                                                   -------------        ------------
<S>                                                       <C>                 <C>  
Note receivable for Curtis Industries, Inc.
   ("Curtis") sale                                          --              $10,454
TDX Corporation distribution receivable                     --                  892
Other                                                     $561                1,059
                                                          ----            ---------
                                                          $561              $12,405
                                                          ====              =======
</TABLE>

        On June 8, 1998, Noel sold 3,569,755 shares of Lincoln Snacks Company
("Lincoln") common stock to Brynwood Partners III, L.P. Under the agreement,
Noel received $4,500,000 in cash and a 6% interest bearing note for $2,639,510.
The payment of the note and accrued interest and proceeds of $400,000 for the
sale of the remaining 200,000 Lincoln shares owned by Noel was received in July
1998.

        On November 6, 1997, an agreement was signed merging Curtis with a
subsidiary of Paragon Corporate Holdings, Inc. Under the agreement, Noel
received $14,712,000 for its entire holding of Curtis, comprising $4,258,000 in
cash and a two-year 7% interest bearing note for $10,454,000. This note was
repaid at face value plus accrued interest in April 1998.

3.      INCOME TAXES

        The income tax asset at September 30, 1998, reflects the liquidation
basis of accounting. Estimated income taxes are calculated at a 35% rate on the
taxable income and losses which would be generated if the assets were realized
and liabilities settled at the amounts shown. This estimate is subject to
significant variation if, among other things, the actual values of assets
distributed, sold or otherwise disposed of varies from current estimates. The
income tax asset is projected to be realized through the filing of the 1998 and
1999 tax returns.


                                       10



<PAGE>

<PAGE>



        The components of the income tax asset are as follows (dollars in
thousands):


<TABLE>
<CAPTION>
                                                     September 30,     December 31,
                                                         1998              1997
                                                     -------------     ------------

<S>                                                     <C>            <C>      
Net unrealized capital loss (gain)                      $    502       $   (222)
Net realized capital gain                                   (158)       (16,130)
Realized net operating loss carryforwards                    456          3,280
Loss from the settlement of recorded
   liabilities                                               936          8,442
Estimated taxes paid in 1997 and refund
   carryforwards                                            --            9,764
Tax refund due for 1997                                      518           --
                                                        --------       --------
Net income tax asset                                    $  2,254       $  5,134
                                                        ========       ========
</TABLE>

        Noel had additional net operating loss carryforwards of approximately
$8,894,000 at December 31, 1997, which expire from 2003 through 2011. Noel has
undergone "ownership changes" within the meaning of Section 382 of the Internal
Revenue Code of 1986, as amended. Consequently, future utilization of these
Federal tax loss carryforwards is significantly limited. If Noel's assets and
liabilities are realized at the values recorded at September 30, 1998, these
carryforwards will not be realizable because Noel will not generate future
taxable income.

        In February 1998, Noel received a $3,531,000 refund of estimated taxes
paid to the Internal Revenue Service in 1997. Noel received the tax refund due
for 1997 in October 1998.

4.      ACCRUED EXPENSES

        Accrued expenses include estimates of costs to be incurred in carrying
out the Plan and provisions for known liabilities. These costs include a
provision for costs to be incurred in connection with the distribution, sale or
other disposition of Noel's investments including legal and investment banking
fees and salaries and related expenses of officers and employees assigned to
effect the distribution, sale or other disposition of specific investments.

       The components of accrued expenses are as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                     September 30,      December 31, 
                                                          1998               1997
                                                     -------------      ------------
<S>                                                 <C>                 <C>
Salaries and benefits                                    $1,383           $2,414
Rent and other expenses                                     491            1,147
Professional fees                                           517              823
Other, net                                                  500              686
                                                         ------           ------
                                                         $2,891           $5,070
                                                         ======           ======
</TABLE>



                                       11



<PAGE>

<PAGE>



        This projection of accrued expenses assumes that Noel will complete its
operations by March 31, 1999. The actual costs incurred could vary significantly
from the related accrued expenses due to uncertainty related to the actual
length of time required to complete the Plan, the exact method by which each of
Noel's assets will be realized and contingencies.

        For the nine months ended September 30, 1998, Noel's cash operating
expenses exceeded the return on its cash and cash equivalents and short-term
investments by $2,170,000.

        Noel's cash operating expenses for the nine months ended September 30,
1998, were as follows (dollars in thousands):

<TABLE>
<S>                                                    <C>   
Salaries and benefits                                  $1,053
Rent and other expenses                                 1,123
Professional fees                                         410
                                                     --------
                                                       $2,586
                                                     ========
</TABLE>

5.      CHANGES IN ESTIMATED LIQUIDATION VALUES OF ASSETS AND LIABILITIES

        The changes in the estimated liquidation values of assets and
liabilities were as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                             Nine Months
                                                       Three Months             Ended
                                                          Ended             September 30,
                                                    September 30,1998            1998
                                                    -----------------       -------------
<S>                                                 <C>                    <C>
To adjust investments to estimated
   liquidation values, net                              $(3,346)               $ 1,311
To adjust estimated accrued
   expenses                                                 773                   (114)
To adjust estimated income taxes                            906                    651
To adjust other assets                                     (102)                   (88)
                                                        -------                -------
Total adjustments                                       $(1,769)               $ 1,760
                                                        =======                =======
</TABLE>

6.      LIQUIDATING DISTRIBUTIONS

        On April 25, 1997, Noel distributed 3,754,675 shares of common stock of
HealthPlan Services Corporation ("HPS") valued at $14.375 per HPS share for a
total value of $53,974,000 to Noel shareholders of record at the close of
business on April 18, 1997. The distribution rate was 0.1838631 of a share of
HPS common stock per share of Noel Common Stock and the value of the
distribution was $2.6430 per share of Noel Common Stock.

        On October 6, 1997, Noel distributed 412,601 shares of HPS common stock
valued at $21.1565 per HPS share for a total value of $8,729,000 to Noel
shareholders of record at the close of business on September 29, 1997. The
distribution rate was 0.02006 of a share of HPS common

                                       12



<PAGE>

<PAGE>



stock per share of Noel Common Stock and the value of the distribution was
$.4244 per share of Noel Common Stock.

        On December 1, 1997, Noel distributed 2,205,814 shares of Carlyle common
stock valued at $1.40 per Carlyle share for a total value of $3,088,000 to Noel
shareholders of record at the close of business on November 21, 1997. The
distribution rate was 0.107246 of a share of Carlyle common stock per share of
Noel Common Stock and the value of the distribution was $.1501 per share of Noel
Common Stock.

        On March 27, 1998, Noel distributed $.70 per outstanding Noel share for
a total amount of $14,397,000 to shareholders of record at the close of business
on March 20, 1998.

        On April 30, 1998, Noel distributed $.45 per outstanding Noel share for
a total amount of $9,255,000 to shareholders of record at the close of business
on April 22, 1998.

        On August 14, 1998, Noel distributed $.92 per outstanding Noel share for
a total amount of $18,922,000 to shareholders of record at the close of business
on July 31, 1998.

7.      COMMITMENTS AND CONTINGENCIES

        Certain of Noel's holdings are involved in various legal proceedings
generally incidental to their businesses. While the result of any litigation
contains an element of uncertainty, management believes that the outcome of any
known, pending or threatened legal proceeding or claim, or all of them combined,
will not have a material adverse effect on Noel's financial position.


GOING-CONCERN BASIS STATEMENTS

8.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL

        Prior to the approval of the Plan, Noel conducted its principal
operations through small and medium-sized companies in which Noel held
controlling or other significant equity interests.

        Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. It is recommended that these
consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in Noel's 1997 annual
report.

        The consolidated financial statements include the accounts of Noel and
its subsidiaries, Carlyle, Curtis, and Lincoln, (collectively the "Company"),
after the elimination of significant intercompany transactions.


                                       13



<PAGE>

<PAGE>



Item 2.-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF  OPERATIONS

        This Quarterly Report on Form 10-Q contains, in addition to historical
information, certain forward-looking statements regarding future financial
condition and results of operations. Such statements involve certain risks and
uncertainties, including, without limitation, those risks and uncertainties
discussed below and in the footnotes to the liquidation basis financial
statements. Should one or more of these risks or uncertainties materialize,
actual outcomes may vary materially from those indicated.


LIQUIDITY AND CAPITAL RESOURCES:

        On September 30, 1998, Noel had cash and cash equivalents and short-term
investments of approximately $3.3 million. The future cash needs of Noel will be
dependent on the implementation of the Plan. It is management's intention that
Noel's existing liquid assets will be available to fund Noel's working capital
requirements and to meet its other obligations through the remainder of the
liquidation period. Pursuant to the Plan, subject to the payment or the
provision for payment of the Company's obligations, the cash proceeds of any
asset sales together with other available cash will be distributed from time to
time pro rata to the holders of the Common Stock on record dates selected by the
Board of Directors with respect to each such distribution. Noel believes that
its cash and cash equivalents and short-term investments are sufficient to fund
its working capital requirements through the completion of the Plan.

        In February 1998, Noel received a $3.5 million refund of estimated taxes
paid during 1997. On March 27, 1998, Noel paid a liquidating distribution of
$.70 per outstanding share of Common Stock to shareholders of record at the
close of business on the March 20, 1998 record date, for a total of $14.4
million.

        On April 1, 1998, Noel was repaid $10.5 million, the face amount of a
note from Paragon Corporate Holdings, Inc. Noel had received this note as
partial payment for the sale of its interest in Curtis in November 1997.

        On April 30, 1998, Noel paid a liquidating distribution of $.45 per
outstanding share of Common Stock to shareholders of record at the close of
business on the April 22, 1998 record date, for a total of approximately $9.3
million.

        On June 6, 1998, Noel received $4.5 million as partial payment for the
sale of its holding in Lincoln.

        On June 23, 1998, Noel received $11.6 million from the redemption of
9,391,929 shares of Carlyle preferred stock and $2.2 million of accrued
dividends.

        On August 14, 1998, Noel paid a liquidating distribution of $.92 per
outstanding share of Common Stock to shareholders of record at the close of
business on the July 31, 1998 record date, for a total distribution of
approximately $18.9 million.

        Sources of potential liquidity include the sale or refinancing of
current holdings, dividends and preferred stock redemptions from current
holdings. Noel does not currently receive, nor expect to receive in the
immediate future, cash dividends from any of its holdings.

                                       14



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STATEMENTS OF NET ASSETS IN LIQUIDATION:

September 30, 1998 versus December 31, 1997

        Cash and cash equivalents and short-term investments decreased by $9.9
million. In addition to funding operating expenses, Noel paid three cash
liquidating distributions totaling $42.6 million. During the nine months ended
September 30, 1998, Noel received $11.6 million from the redemption of Carlyle
preferred stock, $10.5 million as repayment of the note from the sale of Curtis,
$7.5 million from the sale of Lincoln, and a $3.5 million refund of estimated
taxes paid in 1997.

        Investments decreased $18.7 million primarily because of the sale of
Lincoln for cash and a note totaling $7.5 million, and the redemption of Carlyle
preferred stock for $11.6 million. During 1998, the liquidation value of Lincoln
increased by $2.1 million and the valuation of Ferronorte decreased by $1.7
million.

        The income tax asset decreased by $2.9 million primarily as a result of
Noel's receipt of a $3.5 million refund of estimated taxes paid in 1997. The
projected tax asset for 1998 and 1999 increased by $.6 million as a result of
the reduction of the value of investments, an increase in accrued liabilities
and the recognition of the dividend received deduction for accrued dividends on
Carlyle preferred stock.


STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION:

Three Months Ended September 30, 1998

        The decrease in estimated liquidation values of assets and liabilities
of $1.8 million primarily relates to the write-down of Ferronorte by $3.2
million, net of a benefit for income taxes.

Three Months Ended June 30, 1998

        The increase in estimated liquidation values of assets and liabilities
of $2.1 million primarily relates to the increase of $1.4 million in the
liquidation value of Carlyle preferred stock redeemed in June and the write-up
of Ferronorte by $1.5 million.

Three Months Ended March 31, 1998

        The increase in estimated liquidation values of assets and liabilities
of $1.4 million primarily relates to the increase in the liquidation value of
Lincoln of $2.1 million offset by the related increase in the tax liability of
$.7 million.

YEAR 2000 ISSUES

        The Company does not expect to be in existence after 1999 and therefore
has not fully assessed its Year 2000 issues. In the event that Noel operates
beyond 1999, management does not believe that the consequences of its Year 2000
issues would have a material effect on the Company's financial condition.


                                       15



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                           PART II - OTHER INFORMATION

Item 1. - Legal Proceedings

        There are no pending material legal proceedings to which Noel or, to
Noel's knowledge, its subsidiaries is a party or to which any of their property
is subject, other than ordinary routine litigation incidental to their
respective businesses, other than as disclosed in Noel's Form 10-K for the year
ended December 31, 1997.

Item 3. - Defaults upon Senior Securities

a)      None

b)      Noel is the holder of 9,929,908 shares (approximately 93%) of Series B
        Preferred Stock of Carlyle. Carlyle is in default of its mandatory
        redemption obligations to the holders of such Preferred Stock to the
        extent of its legally available funds. As of September 30, 1998, the
        accrued but unpaid dividends amounted to approximately $2.7 million.

Item 6. - Exhibits and Reports on Form 8-K

a)      Exhibits

<TABLE>
<CAPTION>
Item No.   Item Title                                                           Exhibit No.
--------   ----------                                                           -----------
<S>                                                                             <C>   
(2)     Plan of Complete Liquidation and Dissolution of Noel Group, Inc.        (a)

(3)     Articles of Incorporation and By-Laws.

        (A)    Certificate of Incorporation, as amended.                        (b)

        (B)    By-Laws, as amended and restated.                                (c)

(4)     Instruments defining the rights of security holders, including indentures.

        (A)    Excerpts from Certificate of Incorporation, as amended.          (b)

        (B)    Excerpts from By-Laws, as amended and restated.                  (c)

(10)    None.

(11)    Statement re: computation of per share earnings is not required because
        the relevant computations can be clearly determined from the material
        contained in the financial statements included herein.

(15)    None.

(18)    None.

(19)    None.
</TABLE>


                                       16



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(22)    None.

(23)    None.

(24)    None.

(27)    Financial Data Schedule.

(99)    None.
-------------------------

        (a)    This exhibit was filed as an exhibit to Noel's Proxy Statement
               for the Special Meeting of Shareholders held on March 19, 1997,
               which exhibit is incorporated herein by reference.

        (b)    These exhibits were filed as exhibits to Noel's Registration
               Statement on Form S-1, Registration No. 33-44178, effective
               January 29, 1992, and are incorporated herein by reference.

        (c)    These exhibits were filed as exhibits to Noel's Annual Report on
               Form 10-K for the fiscal year ended December 31, 1994, and are
               incorporated herein by reference.

b)      Reports on Form 8-K

        The following reports on Form 8-K were filed by the registrant during
the quarter for which this report is filed:

        (I) None.

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.

                                    Signature

                                    NOEL GROUP, INC.

                                    Date:  November 12, 1998

                                    By:    \s\  Todd K. West
                                           ------------------------
                                           Todd K. West
                                           Vice President - Finance and
                                           Secretary (As both a duly authorized
                                           officer of Registrant and as chief
                                           financial officer of Registrant).

                                       17


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