<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 March 31, 1997

                                       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 May 9, 1997
-----------------------------                         --------------------------
Common Stock - $.10 Par Value                                 20,421,039



<PAGE>
<PAGE>




                        NOEL GROUP, INC. AND SUBSIDIARIES

                                      INDEX


<TABLE>
<CAPTION>
                                                                                             Page No.
<S>                                                                                             <C>
PART I - FINANCIAL INFORMATION

Item 1.           Statement of Net Assets in Liquidation (Liquidation Basis)
                  March 31, 1997                                                                3

                  Consolidated Balance Sheet (Going-Concern Basis)
                  December 31, 1996                                                             4

                  Consolidated Statements of Operations (Going-Concern Basis)
                  Three Months Ended March 31, 1997 and 1996                                    5

                  Condensed Consolidated Statements of Cash Flows (Going-Concern
                  Basis) Three Months Ended March 31, 1997 and 1996                             6

                  Notes to Financial Statements                                                 7

Item 2.           Management's Discussion and Analysis of Financial Condition and
                  Results of Operations                                                         15

PART II - OTHER INFORMATION

Item 1.           Legal Proceedings                                                             19

Item 3.           Defaults upon Senior Securities                                               19

Item 4.           Submission of Matters to a Vote of Security Holders                           19

Item 6.           Exhibits and Reports on Form 8-K                                              19
</TABLE>

                                        2



<PAGE>
<PAGE>




                         PART 1 - FINANCIAL INFORMATION

Item 1. - Financial Statements

                                NOEL GROUP, INC.
           STATEMENT OF NET ASSETS IN LIQUIDATION (Liquidation Basis)
                                 MARCH 31, 1997
           (Unaudited, dollars in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                 March 31,
                                                                   1997
                                                               -----------
<S>                                                            <C>        
Assets

Cash and cash equivalents                                      $    22,150
Short-term investments                                              11,739
                                                               -----------
Total cash and short-term investments                               33,889

Investments (Note 2)                                               141,708

Other assets                                                         2,021
                                                               -----------
                                                                   177,618
                                                               -----------
Liabilities

Accounts payable                                                       169
Accrued expenses (Note 4)                                            9,457
Income taxes (Note 3)                                                9,639
                                                               -----------
                                                                    19,265
                                                               -----------

Net assets in liquidation before options and warrants          $   158,353
                                                               ===========

Number of common shares outstanding                             20,421,039
                                                               ===========

Net assets in liquidation per outstanding share                      $7.75
                                                                     =====

Dilution for Options and Warrants (Note 6):

   Net assets in liquidation after options and warrants        $   172,915
                                                               ===========

   Number of diluted common shares outstanding                  23,230,588
                                                               ===========

   Net assets in liquidation per diluted share                       $7.44
                                                                     =====
</TABLE>



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

                                        3



<PAGE>
<PAGE>



                        NOEL GROUP, INC. AND SUBSIDIARIES
                 Consolidated Balance Sheet (Going-Concern Basis)
                    (Dollars in thousands, except par values)

<TABLE>
<CAPTION>
                                                              December 31,
                                                                  1996
                                                              ------------
<S>                                                            <C>      
Assets

Current Assets:
  Cash and cash equivalents                                    $   1,117
  Short-term investments                                           8,983
  Accounts receivable, less allowance of $3,718                   24,023
  Inventories                                                     34,157
  Other current assets                                             4,232
                                                               ---------
Total Current Assets                                              72,512

Equity investments                                                68,026
Other investments                                                    639
Property, plant and equipment, net                                37,671
Intangible assets, net                                            46,015
Other assets                                                       5,658
                                                               ---------
Total Assets                                                   $ 230,521
                                                               =========
Liabilities and Stockholders' Equity

Current Liabilities:
  Current portion of long-term debt                            $   4,719
  Trade accounts payable                                          13,226
  Accrued compensation and benefits                                5,567
  Net liabilities of discontinued operations                       3,597
  Other current liabilities                                        8,417
                                                               ---------
Total Current Liabilities                                         35,526

Long-term debt                                                    60,983
Other long-term liabilities                                       29,085
Minority interest                                                  7,567
                                                               ---------
Total Liabilities                                                133,161
                                                               ---------
Stockholders' Equity:
  Preferred stock, $.10 par value, 2,000,000 shares
    authorized, none outstanding                                     -
  Common stock, $.10 par value, 48,000,000 shares
    authorized, 20,222,642 issued                                  2,022
  Capital in excess of par value                                 211,633
  Accumulated deficit                                           (115,123)
  Cumulative translation adjustment                                 (481)
  Treasury stock at cost, 34,937 shares                             (691)
                                                               ---------
Total Stockholder's Equity                                        97,360
                                                               ---------
Total Liabilities and Stockholder's Equity                     $ 230,521
                                                               =========
</TABLE>

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

                                        4


<PAGE>
<PAGE>


                        NOEL GROUP, INC. AND SUBSIDIARIES
           Consolidated Statements of Operations (Going-Concern Basis)
                          Three Months Ended March 31,
                                   (Unaudited)
                (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                     1997              1996
                                                                 ------------      ------------
<S>                                                               <C>               <C>        
Sales                                                             $    38,473       $    43,119

Cost and Expense Items:
  Cost of sales                                                        20,711            24,595
  Selling, general, administrative and other expenses                  17,201            16,716
  Depreciation and amortization                                           862               984
                                                                   ----------        ----------
                                                                       38,774            42,295
                                                                   ----------        ----------
 Operating income  (loss)                                                (301)              824
                                                                   ----------        ----------
Other Income (Expense):
  Gain on sale of investment                                           15,098               -
  Loss on disposal of Carlyle's thread division                        (4,364)              -
  Other income                                                            218               259
  Income from equity investments                                         (354)            1,369
  Interest expense                                                     (1,670)           (1,935)
  Minority interest                                                       501              (173)
                                                                   ----------        ----------
                                                                        9,429              (480)
                                                                   ----------        ----------

Income from continuing operations before income taxes                   9,128               344

Provision for income taxes                                            (10,437)             (641)
                                                                   ----------        ----------

Loss from continuing operations                                        (1,309)             (297)

Income from discontinued operations                                       -                  42

                                                                   ----------        ----------
Net loss                                                              ($1,309)            ($255)
                                                                   ==========        ==========

Earnings (Loss) per common and common equivalent share from:

  Continuing operations                                                ($0.06)           ($0.01)
  Discontinued operations                                                0.00              0.00
                                                                   ----------        ----------
  Net loss                                                             ($0.06)           ($0.01)
                                                                   ==========        ==========


Weighted average common and common equivalent shares               20,421,039        20,192,233
                                                                   ==========        ==========
</TABLE>

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

                                        5



<PAGE>
<PAGE>


                        NOEL GROUP, INC. AND SUBSIDIARIES
      Condensed Consolidated Statements of Cash Flows (Going-Concern Basis)
                                   (Unaudited)
                          Three Months Ended March 31,
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                  1997          1996
                                                                ---------     ---------
<S>                                                             <C>           <C>      
Net cash used for operating activities                          ($ 5,973)     ($ 4,508)

Cash Flows from Investing Activities:
  Sales (Purchases) of short-term investments, net                (2,752)        4,582
  Sales (Purchases) of investments                                26,400        (3,922)
  Proceeds from sale of Carlyle's thread division                 51,924           -
  Purchases of property, plant and equipment                        (722)         (667)
  Other, net                                                        (148)         (706)
                                                                --------      -------- 
Net cash provided from (used for) investing activities            74,702          (713)
                                                                --------      -------- 
Cash Flows from Financing Activities:
  Borrowings from revolving credit line and long-term debt        41,146        32,107
  Repayments under revolving credit line and long-term debt      (76,659)      (30,329)
  Reductions of long-term liabilities                                (37)         (229)
  Issuance of common stock, net                                      886           -
                                                                --------      -------- 
Net cash provided from (used for) financing activities           (34,664)        1,549
Effect of exchange rates on cash                                     (11)           (3)
                                                                --------      -------- 
Net increase (decrease) in cash and cash equivalents            $ 34,054      ($ 3,675)
                                                                ========      ========

Supplemental Disclosure of Cash Flow Information:

   Interest paid                                                $  1,993      $  2,178
                                                                ========      ========
   Taxes paid                                                        $43          $600
                                                                ========      ========
</TABLE>


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

                                        6



<PAGE>
<PAGE>




                          NOTES TO FINANCIAL STATEMENTS
                              AS OF MARCH 31, 1997

                                   (UNAUDITED)

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 was
adopted by Noel's Board of Directors on May 21, 1996. Under the Plan, Noel will
be 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, Noel has adopted the liquidation basis of accounting as of
March 31, 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 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
distributions 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 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, the amount of income earned on Noel's cash
and cash equivalents and short-term investments during the liquidation period,
and the actual timing of distributions.

         The valuations presented in the accompanying Statement of Net Assets in
Liquidation represent 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. 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 the Common Stock
has generally traded or is expected to trade in the future.

                                        7



<PAGE>
<PAGE>




2.       INVESTMENTS:

         Investments are recorded at their estimated net realizable value in
liquidation. For investments where a public market exists, and the entity is
subject to the periodic reporting requirements of the Securities Exchange Act of
1934, as amended, the estimated liquidation-basis amount is calculated by
multiplying the market price by the number of shares owned without adjustment
for whether the shares owned are registered for sale, any other restriction on
transfer, control premiums, or whether the market has sufficient liquidity to
support the sale of the volume of securities owned at the quoted prices.

         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
amounts shown may materially differ from actual amounts which may be received in
the future.

         Noel's holding of the common shares of Carlyle Industries, Inc.
("Carlyle"), Lincoln Snacks Company ("Lincoln") and Staffing Resources, Inc.
("Staffing") are unregistered except for 421,000 shares of Lincoln which are
subject to restrictions under Rule 144.

         HealthPlan Services Corporation ("HPS") and Carlyle trade on the New
York Stock Exchange under the symbols HPS and CRL, respectively. Lincoln trades
on the Nasdaq Stock Market's Small Cap Market under the symbol SNAX.

<TABLE>
<CAPTION>
                                                                                 Estimated
                                                                              Liquidation-Basis
                                         Common            Price Per               Amount
                                         Shares              Share              March 31,1997
                                         ------              -----             -------------
                                          (Dollars in thousands, except per share amounts)
<S>                                       <C>                <C>                  <C>     
HPS (retained)(a)                         521,171            $16.875              $  8,795
HPS (distributed) (b)                   3,754,675             14.375                53,973
Staffing (c)                            2,026,104              9.100                18,438
Carlyle preferred stock(d)                                                          22,050
Carlyle common stock(a)                 2,205,814              2.109                 4,653
Curtis Industries, Inc. (e)                                                         18,456
Ferrovia Novoeste, S.A.  (f)                                                         8,000
Lincoln (a)                             3,769,755              1.250                 4,712
Other holdings                                                                       2,631
                                                                                  --------
Estimated liquidation-basis amount                                                $141,708
                                                                                  ========
</TABLE>

-------------

                                        8



<PAGE>
<PAGE>




(a)      Recorded based on the closing price of the common stock on March 31,
         1997. Using the closing market prices on May 7, 1997, these investments
         would have been valued as follows (dollars in thousands except per
         share amounts):

<TABLE>
<CAPTION>
                                                            Estimated
                               Closing Price         Liquidation-Basis Amount
                                May 7, 1997                 May 7, 1997
                                -----------                 -----------
<S>                              <C>                          <C>   
HPS (retained)                   $16.125                      $8,404

Carlyle                            1.875                       4,136

Lincoln                            1.125                       4,241
</TABLE>

(b)      Recorded based upon the market price on April 25, 1997, the date of
         distribution to Noel shareholders. See Note 8.

(c)      Staffing is recorded at the closing over-the-counter bid price of
         $13.00 on March 31, 1997, discounted by 30%. The discount for Staffing
         reflects the limited trading market for such shares, the fact that
         Staffing is not subject to periodic reporting requirements under the
         Securities Exchange Act of 1934, as amended, and the fact that Noel's
         shares of Staffing are unregistered. The closing bid price on May 7,
         1997, discounted by 30% was $8.75 per common share.

(d)      Recorded at the liquidation preference of the preferred shares which
         includes accumulated, unpaid dividends of $2,737,000 through March 31,
         1997. Noel management currently estimates that the Carlyle preferred
         stock will be realized at its liquidation preference in connection with
         the execution of the Plan. Realization of the liquidation preference is
         dependent upon the preferred stock being redeemed by the issuer which
         may take more than one year from the date the Plan was approved.

         Carlyle is currently in default of its obligations to the holders of
         its preferred stock to the extent of its legally available funds.
         Carlyle expects to enter into discussions with Noel with a view to
         satisfying its obligations to Carlyle's preferred stockholders in
         accordance with the terms of its charter to the extent consistent with
         Carlyle's resources. Carlyle may also enter into negotiations to modify
         the terms of preferred stock, although Carlyle has not yet determined
         to do so. If such negotiations are commenced, they may result in an
         acceleration of the redemption of the preferred stock or other
         modifications to the terms of the preferred stock.

         Carlyle intends to fulfill its obligation to the preferred stockholders
         as required by Carlyle's charter to the extent that Carlyle has cash
         resources in excess of those required to operate its business. Carlyle
         does not currently have such excess resources. Its ability to make
         payments on its preferred stock obligations in the future will depend
         on Carlyle's future cash flow, the timing of the settlement of its
         liabilities, the outcome of the negotiations with Noel described above,
         and the ability of Carlyle to obtain financing, which it has not yet
         determined to seek. In addition, as Carlyle has agreed to notify the
         Pension Benefit Guarantee Corporation ("PBGC") prior to making any
         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 to its defined
         benefit plan.

                                        9



<PAGE>
<PAGE>




(e)      Recorded at the liquidation preference of the Curtis Industries, Inc.,
         ("Curtis") preferred shares which includes accumulated, unpaid
         dividends of $4,446,000 at March 31, 1997. Noel management currently
         estimates that the Curtis preferred stock will be realized at its
         liquidation preference, in connection with the execution of the Plan.
         However, Curtis' loan covenants currently prohibit any payments on the
         preferred stock. Realization of the liquidation preference is dependent
         upon the preferred stock being redeemed by the issuer which may take
         more than one year from the date the Plan was approved. However, based
         on Curtis' current financial position and results of operations, Noel
         management believes that the loan restrictions will be satisfied and
         that the liquidation value will be realized in a reasonable period of
         time following the approval of the Plan. There can be no assurance that
         a lesser amount will not be realized. If it is not possible to satisfy
         the loan restrictions in a reasonable period of time following approval
         of the plan, it is likely that a lesser amount will be realized.

         No value has been assigned to Noel's holding of approximately 62% of
         the outstanding shares of Curtis common stock. Curtis has a history of
         operating losses, the common stock has a negative book value, and there
         is no public market for Curtis common stock. As a result of these
         factors, management is unable to reliably estimate the value, if any,
         of the Curtis common stock.

(f)      Recorded at cost. This investment was made in March and June of 1996.
         Ferrovia Novoeste, S.A., ("Novoeste") was organized to acquire a
         railroad in Brazil via a privatization transaction. In the absence of a
         ready market, Noel management believes that cost is the best indicator
         of the value of this investment. Realization of this investment is
         dependent upon establishing successful operations as a private company
         in Brazil or sale by Noel of its interest in Novoeste and is subject to
         the risks of operations in Brazil, including foreign currency risks.
         The actual amount realized for this investment could be lower or higher
         than the amount recorded.

3.       INCOME TAXES:

         All income tax accounts have been restated at March 31, 1997, to
reflect the liquidation basis of accounting. The estimated tax liability
reflects income taxes at a 35% rate which would become payable if the assets
were realized and liabilities settled at the amounts shown. The estimate is
subject to significant variation if, among other things, the actual values of
assets distributed or sold varies from current estimates. The components of the
income tax liability at March 31, 1997, are as follows (dollars in thousands):

             Net unrealized gain                         $10,784
             Net realized capital gain                     4,503
             Net operating loss carryforwards             (3,284)
             Net operating loss projected                 (2,364)
                                                        --------
                      Total income tax liability         $ 9,639
                                                        ========



                                       10



<PAGE>
<PAGE>




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 and sale
of Noel's investments including legal and investment banking fees and salaries
and related expenses of officers and employees assigned to effect the sale or
distribution of specific investments.

         The actual costs incurred could vary significantly from the related
accrued expenses due to uncertainty related to the length of time required to
complete the Plan, the exact method by which each of Noel's assets will be
realized and contingencies. Projected operating costs through the completion of
Noel's final liquidation are included in accrued expenses net of estimated
interest income of $750,000 on Noel's cash and cash equivalents and short-term
investments. However, reductions in interest rates, the timing of future
distributions and other factors may reduce the amount of interest and investment
income such that an additional accrual for operating expenses may be required in
the future.

5.       ADJUSTMENTS FROM GOING-CONCERN TO LIQUIDATION BASIS OF ACCOUNTING:

<TABLE>
<S>                                                                               <C>     
         Shareholders' equity at March 31, 1997, (Going-Concern Basis)            $ 98,603
                                                                                  --------
         To increase investments to estimated net realizable values                 71,307
         To increase liabilities to anticipated settlement amounts                  (8,939)
         To adjust other assets                                                     (2,618)
                                                                                  --------
         Total adjustments                                                          59,750
                                                                                  --------
         Net assets in liquidation at March 31, 1997 (Liquidation Basis)          $158,353
                                                                                  ========
</TABLE>

6.       OPTIONS AND WARRANTS:

         At March 31, 1997, there were 2,840,107 options and warrants
outstanding for the purchase of Noel Common Stock.

         The calculation of the fully diluted net assets in liquidation assumes
that the options and warrants, which are currently in the money, are exercised
in accordance with their terms on March 31, 1997. Upon exercise, Noel would
receive $12,569,000 in cash for the net exercise proceeds, issue 2,809,549
shares of Noel Common Stock and generate a $1,993,000 income tax benefit related
to the compensation expense. The Compensation Committee of the Board of
Directors is currently evaluating a number of alternatives for settling the
outstanding options and warrants. The dilutive impact of the alternatives under
consideration on the net asset value per share of Noel Common Stock would be
equal to, or less than the dilution shown.

7.       COMMITMENTS AND CONTINGENCIES:

         The Company is involved in various legal proceedings generally
incidental to its businesses. While the result of any litigation contains an
element of uncertainty, management believes that the

                                       11



<PAGE>
<PAGE>




outcome of any known, pending or threatened legal proceeding or claim, or all of
them combined, will not have a material adverse effect on the Company's
consolidated financial position.

8.       SUBSEQUENT EVENT:

         Pursuant to the Plan, on April 25, 1997, Noel distributed 3,754,675
shares of HPS common stock valued at $14.375 per share for a total value of
$53,973,000 to shareholders of record on April 18, 1997. The distribution rate
was 0.1838631 share of HPS common stock per share of Noel Common Stock.

         On the date of Noel's distribution of its HPS common stock to Noel
shareholders, Noel retained 521,171 shares of HPS common stock, the pro rata
number of HPS common shares which would have been distributed had the
outstanding options and warrants to purchase Noel Common Stock been exercised
prior to the date of the distribution. The shares of HPS common stock were
retained for possible transfer to certain option and/or warrant holders in
connection with the exercise or settlement of the outstanding options and
warrants. The pro forma adjustment to the total net assets in liquidation
includes an additional reduction of $8,717,000 which is the value of the HPS
shares to be issued to option and warrant holders upon the exercise of the
options and warrants.

         The pro forma impact of the HPS distribution on Noel's net asset value
in liquidation at March 31, 1997, is as follows (dollars in thousands, except
per share amounts):

<TABLE>
<CAPTION>
                                                                        Pro Forma,
                                                                   Post-HPS Distribution
                                                                   ---------------------
<S>                                                                       <C>     
         Net assets in liquidation before options and warrants            $104,380
         Net assets in liquidation per outstanding share                     $5.11

         Net assets in liquidation after options and warrants             $110,225
         Net assets in liquidation per diluted share                         $4.74
</TABLE>

GOING CONCERN BASIS STATEMENTS

9.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

GENERAL

         The consolidated financial statements included in this Form 10-Q have
been prepared by Noel without audit. 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 1996 annual report. In the opinion of management, the
information furnished reflects all adjustments which are necessary to present
fairly such information. These adjustments, except as otherwise disclosed,
consist only of normal recurring adjustments.

                                       12



<PAGE>
<PAGE>




CONSOLIDATION

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

SEASONALITY

         The results of operations for the three months ended March 31, 1997,
may not be indicative of the operating results for the full year. Lincoln's
business is seasonal, with the third and fourth calendar quarters historically
showing higher sales.

EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE

         Earnings (Loss) per share is computed based on the weighted average
number of shares of Noel Common Stock and dilutive equivalents outstanding
during the respective periods. When dilutive, stock options and warrants are
included as share equivalents using the treasury stock method. In computing
dilutive equivalents under the treasury stock method, the average price of
common stock during the period is used for primary earnings per share and the
period-end price is used for fully diluted earnings per share. For the three
months ended March 31, 1997 and 1996, earnings per share is based on outstanding
shares since the effect of common stock equivalents is antidilutive.

10. SUBSIDIARIES AND INVESTMENTS:

         On March 26, 1997, pursuant to an asset purchase agreement dated as of
December 12, 1996, Carlyle sold its thread division to Hicking Pentecost PLC for
aggregate cash consideration of approximately $54,900,000, of which
approximately $3,000,000 was placed in escrow subject to certain post-closing
adjustments. The loss on disposal on the sale of this division was $4,364,000.
In connection with this sale, Carlyle repaid all of its outstanding bank debt
using proceeds received in the transaction. No penalties were incurred by
Carlyle in connection with this prepayment. In addition, Carlyle will be
obligated to pay approximately $8,500,000 of income taxes related to the tax
gain resulting from this transaction. Nondeductible goodwill associated with the
thread division amounting to approximately $18,000,000 was written off as of the
date of sale.

                                       13



<PAGE>
<PAGE>




         On February 7, 1997, pursuant to an agreement dated December 18, 1996,
by and among Noel, Automated Data Processing, Inc. ("ADP") and HPS, Noel sold to
ADP 1,320,000 shares of common stock of HPS for an aggregate purchase price of
$26,400,000 in cash. Following the transaction, Noel's ownership percentage of
HPS dropped to approximately 26%.

         Summarized income statement information for HPS for the three months
ended March 31, 1997 and 1996 is as follows (dollars in thousands):

                                         1997            1996
                                       -------          -------
 Revenue from services                 $73,593          $31,008
                                       =======          =======
 Operating costs and expenses          $67,355          $25,527
                                       =======          =======
 Net income                            $ 2,799          $ 3,334
                                       =======          ========

         Summarized income statement information for Novoeste for the three
months ended March 31, 1997 is as follows (dollars in thousands):

 Revenue                               $ 6,858
                                       =======
 Operating costs and expenses          $ 7,877
                                       =======
 Net loss                              $(2,705)
                                       =======

         Summarized income statement information for Staffing for the three
months ended March 31, 1997 is as follows (dollars in thousands):

 Revenue                               $73,711
                                       =======
 Operating costs and expenses          $74,370
                                       =======
 Net loss                              $(1,527)
                                       ======= 

                                       14



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<PAGE>




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

LIQUIDITY AND CAPITAL RESOURCES

Noel Group, Inc.

         On March 31, 1997, Noel had cash and cash equivalents and short-term
investments of $33.9 million. The future cash needs of Noel will be dependent on
the implementation of the Plan. It is management's intention that Noel's
liquidity will be available to fund Noel's working capital requirements and to
meet its other obligations.

         Pursuant to the Plan, subject to the payment or the provision for
payment of the Company's indebtedness and other 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. Noel expects that its operating subsidiaries will be
able to meet their own working capital requirements, including debt service.
Subject to the restrictions set forth in the Plan, if an operating company
requires additional funding for the purpose of making an acquisition or to
otherwise support growth, or suffers operating or cash flow deficits, a portion
of Noel's liquidity may be utilized to fund such requirements.

         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 subsidiaries. Except for
Carlyle Industries, Inc. ("Carlyle"), Noel's subsidiaries are currently
prohibited from paying dividends by existing borrowing agreements. Carlyle's
ability to pay dividends may be adversely affected by an agreement with the
Pension Benefit Guarantee Corporation, which requires at least 30 days advance
notice of any proposed dividend, stock redemption, stockholder buyback or other
distribution to shareholders at any time prior to March 31, 2002.

RESULTS OF OPERATIONS

General

         The results of operations for the three months ended March 31, 1997,
may not be indicative of the operating results for the full year. The business
of Lincoln Snacks Company ("Lincoln") is seasonal, with the third and fourth
calendar quarters historically showing higher sales.

         HealthPlan Services Corporation ("HPS"), Ferrovia Novoeste, S.A.
("Novoeste") and Staffing Resources, Inc. ("Staffing") have no impact on the
Company's liquidity and capital resources, since Noel has no obligation to fund
their operations and they do not anticipate paying cash dividends in the
foreseeable future. While these companies are included in the Company's
financial statements on the equity method of accounting, the Company will record
its proportional share of their income or loss. Noel's share of the income or
losses for HPS, Novoeste and Staffing for the three months ended March 31, 1997
were $1.0 million, $.9 million and $.4 million, respectively.

                                       15



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<PAGE>




         Noel and each of its subsidiaries file a separate federal income tax
return. As a result, the income tax provisions recorded by certain subsidiaries
cannot be offset by the losses reported by other entities on the Company's
consolidated financial statements.

THREE MONTHS ENDED MARCH 31, 1997 VERSUS MARCH 31, 1996

         Sales decreased by $4.6 million to $38.5 million primarily due to
increased sales at Curtis Industries, Inc. ("Curtis") of $2.7 million offset by
decreased sales at Carlyle of $7.4 million. Cost of sales decreased by $3.9
million to $20.7 million from $24.6 million in 1996, primarily due to increased
cost of sales at Curtis of $1.5 million offset by decreased cost of sales at
Carlyle of $5.5 million. Selling, general, administrative and other expenses
increased by $.5 million to $17.2 million in 1997 from $16.7 million in 1996.
Other income increased by $16.6 million primarily due to a gain recognized by
Noel in 1997 on the sale of 1.3 million shares of HPS. Provision for income
taxes increased $9.8 million due to increased tax provisions at Noel and Carlyle
of $4.6 million and $5.2 million, respectively.

COMPARISON OF SEGMENTS:

GENERAL

         Noel and its subsidiaries are collectively referred to as the
"Company". The discussion which follows analyzes the results for each of the
Company's segments.

THREE MONTHS ENDED MARCH 31, 1997 VERSUS MARCH 31, 1996

INDUSTRIAL THREADS AND BUTTONS (CARLYLE)

         As a result of the sale of Carlyle's thread division (See Note 10) on
March 26, 1997, only two months of operating results from Carlyle's thread
division are included in the first quarter results of operations in 1997 as
compared to three full months during this same period in 1996.

         Sales during the first quarter of 1997 totaled $14.7 million as
compared with $22.0 million during the first quarter of 1996. Sales in the
consumer product segment decreased to $8.3 million as compared with $11.7 during
the same period in 1996. Sales in the industrial product segment totaled $6.3
million as compared with $10.3 million during the first quarter of 1996. The
decrease in both segment's sales was attributable to the sale of the thread
division.

         The gross margin during the first quarter of 1997 totaled $4.2 million
or 29.0% as compared with $6.1 million or 27.7% during the first quarter of
1996. Gross margin in the consumer product segment totaled $3.1 million or 36.9%
as compared to $3.7 million or 31.5% in the first quarter of 1996. Gross margin
in the industrial product segment totaled $1.2 million or 18.5% during the first
quarter of 1997 as compared with $2.4 million or 23.4% during the first quarter
of 1996. The decrease in both segment's gross margin dollars was primarily
attributable to the sale of the thread division.

                                       16



<PAGE>
<PAGE>




         Selling, general, and administrative expenses totaled $2.6 million as
compared with $3.6 million during the same period in 1996. Selling, general, and
administrative expenses in the consumer product segment totaled $1.1 million
during the first quarter of 1997 as compared with $1.2 million during the first
quarter of 1996. Selling, general and administrative expenses in the industrial
product segment totaled $1.5 million during the first quarter of 1997 as
compared with $2.5 million during the first quarter of 1996. The decrease in
these expenses was primarily attributable to the sale of Carlyle's thread
division.

FASTENERS AND SECURITY PRODUCTS DISTRIBUTION (CURTIS)

         On May 13, 1996, Curtis acquired the Mechanics Choice business of
Avnet, Inc. for $6.5 million. Mechanics Choice is a distributor, selling
industrial maintenance and repair operations products similar to the existing
Curtis product line offering.

         Sales for the first quarter of 1997 increased $2.7 million or 15.8% to
$19.5 million from $16.8 million in the first quarter of 1996. Sales from the
Mechanics Choice division accounted for approximately $3 million of the
increase.

         The gross margin percentage decreased to 64.6% in 1997 from 68.9% in
1996. Lower margins incurred by the Mechanics Choice division are responsible
for the majority of the first quarter decline.

         For the first quarter of 1997, selling, general and administrative
expenses, net of the IRS settlement discussed below, increased $.9 million from
the comparable 1996 quarter. The majority of the first quarter increase is due
to the added selling and distribution costs of the Mechanics Choice division.

         Following a field examination in 1995, the Internal Revenue Service
("IRS") alleged that as a result of certain tax law changes enacted in 1989 and
1991 Curtis' expense reimbursement policy for the field sales force did not meet
the definition of an accountable plan, and thus contended all reimbursed expense
for 1993 and 1994 should be treated as taxable wages. In April 1997, Curtis
reached a settlement with the IRS in connection with the expense reimbursement
policy requiring the payment of $1.0 million of taxes for 1993 through 1996. A
$.9 million charge to record this settlement, net of reserves, was recorded in
the first quarter of 1997.

SNACK FOODS (LINCOLN)

         On June 6, 1995, Lincoln entered into an exclusive distribution
agreement with Planters Company, a division of Nabisco, Inc., ("Planters"),
commencing on July 17, 1995, for the sales and distribution of Fiddle Faddle'r'
and Screaming Yellow Zonkers'r' ("the Products"). Under the agreement, requires
Planters to purchase a minimum number of cases during each year ending on June
30.

                                       17



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<PAGE>




         On February 28, 1997, this agreement was amended, extending the term
until December 31, 1997, at which time the distribution arrangement will
terminate. Under the amendment, Lincoln will resume sales and distribution of
Screaming Yellow Zonkers on May 1, 1997. Although the amendment and extension
contain provisions designed to effect a smooth transfer of the distribution
business back to Lincoln, there can be no assurance as to the long-term effects
of this transition.

         Sales of $4.3 million for the quarter ended March 31, 1997 were equal
to sales in the corresponding period of 1996. Sales to Planters represented
approximately 68% and 64% of sales for the quarter ended March 31, 1997 and
1996, respectively.

         Gross profit decreased $.1 million to $.9 million for the three months
of 1997 versus $1.0 million in the corresponding period of 1996 due to the mix
of products sold.

         Selling, general, and administrative expenses decreased approximately
13% or $.2 million to $.8 million in the quarter versus $1.0 million in the same
period in 1996. These expenses decreased during this period primarily due to
lower variable selling expenses relating to the mix of products sold.

                                       18



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<PAGE>




                           PART II - OTHER INFORMATION

Item 1. - Legal Proceedings

         There are no pending material legal proceedings to which Noel or 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, 1996.

Item 3. - Defaults upon Senior Securities

a)       None

b)       Noel is the holder of 19,312,837.5 shares (approximately 93%) of Series
         B Preferred Stock of Carlyle. Carlyle is in default of its obligations
         to the holders of such Preferred Stock to the extent of its legally
         available funds. As of March 31, 1997, the accrued but unpaid dividends
         amounted to $3,087,000.

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

         A Special Meeting of Shareholders (the "Meeting") was held on March 19,
1997. At the Meeting the shareholders voted upon the approval of the Plan of
Complete Liquidation and Dissolution of Noel, previously approved by the Board
of Directors on May 21, 1996. At the Meeting the Plan was approved by the
affirmative vote of the holders of a majority of the issued and outstanding
shares of common stock entitled to vote. There were present in person or
represented by proxy the holders of 13,654,765 shares of said common stock.

         The votes were cast as follows:

<TABLE>
<CAPTION>
         Number of Votes For    Number of Votes Against   Number of Votes Abstained
         -------------------    -----------------------   -------------------------
<S>           <C>                       <C>                         <C>   
              13,623,634                13,559                      17,572
</TABLE>

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

a)       Exhibits

<TABLE>
<CAPTION>
Item No.          Item Title                                                                     Exhibit No.
--------          ----------                                                                     -----------
<S>               <C>                                                                                <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)
</TABLE>

                                       19



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<PAGE>


<TABLE>
<S>               <C>                                                                                <C>
                  (B)      Composite copy of the Certificate of Incorporation,                       (c)
                           as amended.

                  (C)      By-Laws, as amended and restated.                                         (d)

(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.                           (d)

(10)              Amendment to the Distribution Agreement dated February 28, 1997,                   (e)
                  between Lincoln Snacks Company and Planters Company (a unit of
                  Nabisco, Inc.).

(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)              Not Applicable.

(18)              Not Applicable.

(19)              Not Applicable.

(22)              Not Applicable.

(23)              Not Applicable.

(24)              Not Applicable.

(27)              Not Applicable.

(99)              Not Applicable.
</TABLE>

-------------------------

         (a)      This exhibit was filed as an exhibit to the Company's Proxy
                  Statement for the Special Meeting of Shareholders held on
                  March 19, 1997.

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

         (c)      This exhibit was filed as an exhibit to the Company's Annual
                  Report on Form 10-K for the fiscal year ended December 31,
                  1992, and is incorporated herein by reference.

                                       20



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<PAGE>



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

         (e)      This exhibit was filed as an exhibit to the Quarterly Report
                  on Form 10-Q of Lincoln Snacks for the period ended March 31,
                  1997, and is incorporated herein by reference.

b)       Reports on Form 8-K

         On February 21, 1997, Noel filed a Current Report on Form 8-K,
         reflecting in Item 2 thereof the sale of 1,320,000 shares of common
         stock, par value $.01 per share of HealthPlan Services Corporation at a
         price of $20 per share or $26.4 million in the aggregate.

                                   Signature

                                   NOEL GROUP, INC.

                                   Date: May 15, 1997

                                   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).

                                       21


                           STATEMENT OF DIFFERENCES
                           ------------------------

    The registered trademark symbol shall be expressed as ..............'r'



<PAGE>