<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, 1996

                                       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 13, 1996
Common Stock - $.10 Par Value                              20,187,705



<PAGE>
<PAGE>



                        NOEL GROUP, INC. AND SUBSIDIARIES

                                      INDEX
<TABLE>
<CAPTION>

                                                                                                  Page No.
                                                                                                  --------
PART I - FINANCIAL INFORMATION

<S>           <C>                                                                                 <C>
Item 1.        Consolidated Balance Sheets
               September 30, 1996 and December 31, 1995                                              3

               Consolidated Statements of Operations
               Three Months Ended September 30, 1996 and 1995                                        4

               Consolidated Statements of Operations
               Nine Months Ended September 30, 1996 and 1995                                         5

               Condensed Consolidated Statements of Cash Flows
               Nine Months Ended September 30, 1996 and 1995                                         6

               Notes to Consolidated Financial Statements                                            7

Item 2.        Management's Discussion and Analysis of Financial Condition and
               Results of Operations                                                                10

PART II - OTHER INFORMATION

Item 1.        Legal Proceedings                                                                    18

Item 3.        Defaults upon Senior Securities                                                      18

Item 6.        Exhibits and Reports on Form 8-K                                                     18

</TABLE>

                                              2



<PAGE>
<PAGE>



                         PART 1 - FINANCIAL INFORMATION

Item 1. - Financial Statements

                        NOEL GROUP, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                    (Dollars in thousands, except par values)


<TABLE>
<CAPTION>

                                                                    September 30,    December 31,
                                                                         1996            1995
                                                                    -------------    ------------
                                                                     (Unaudited)

<S>                                                                 <C>              <C>      
Assets

Current Assets:
  Cash and cash equivalents                                             $   3,974       $  10,446
  Short-term investments                                                    9,384          18,378
  Accounts receivable, less allowances of $2,806 and $2,867                25,345          21,111
  Inventories                                                              34,848          30,460
  Other current assets                                                      3,274           4,294
                                                                        ---------       ---------

                                                                           76,825          84,689

Equity investments                                                         38,762          34,520
Other investments                                                          28,258          20,174
Property, plant and equipment, net                                         37,407          40,563
Intangible assets, net                                                     46,379          44,562
Net assets of discontinued operations                                         268             779
Other assets                                                                5,419          14,470
                                                                        ---------       ---------

                                                                        $ 233,318       $ 239,757
                                                                        =========       =========
Liabilities and Stockholders' Equity

Current Liabilities:
  Short-term debt                                                       $     485       $       -
  Current portion of long-term debt                                        38,816           5,233
  Trade accounts payable                                                   14,040          12,339
  Accrued compensation and benefits                                         6,856           5,769
  Other current liabilities                                                13,012          19,201
                                                                        ---------       ---------

                                                                           73,209          42,542

Long-term debt                                                             29,767          69,197
Other long-term liabilities                                                28,380          28,913
Minority interest                                                           7,070           6,185
                                                                        ---------       ---------

                                                                          138,426         146,837
                                                                        ---------       ---------
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 and 20,203,233 issued, respectively              2,022           2,020
  Capital in excess of par value                                          213,099         204,466
  Accumulated deficit                                                    (118,936)       (112,466)
  Cumulative translation adjustment                                          (602)           (613)
  Treasury stock at cost, 34,937 and 11,000 shares, respectively             (691)           (487)
                                                                        ---------       ---------

                                                                           94,892          92,920
                                                                        ---------       ---------

                                                                        $ 233,318       $ 239,757
                                                                        =========       =========
</TABLE>



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




                                        3



<PAGE>
<PAGE>

                        NOEL GROUP, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                        Three Months Ended September 30,
                                   (Unaudited)
                (dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>

                                                                         1996        1995
                                                                     ----------   ----------


<S>                                                                  <C>          <C>       
Sales                                                                  $ 50,266     $ 44,694

Cost and Expense Items:
  Cost of sales                                                          27,859       25,654
  Selling, general, administrative and other expenses                    18,133       17,424
  Depreciation and amortization                                             902          239
                                                                     ----------   ----------

                                                                         46,894       43,317
                                                                     ----------   ----------

 Operating income                                                         3,372        1,377
                                                                     ----------   ----------

Other Income (Expense):
  Other income                                                              109        6,873
  Income (Loss) from equity investments                                  (7,140)       1,285
  Interest expense                                                       (2,043)      (1,953)
  Minority interest                                                        (477)        (185)
                                                                     ----------   ----------

                                                                         (9,551)       6,020
                                                                     ----------   ----------


Income (Loss) from continuing operations before income taxes             (6,179)       7,397

Provision for income taxes                                               (1,043)        (471)
                                                                     ----------   ----------

Income (Loss) from continuing operations                                 (7,222)       6,926

Loss from discontinued operations                                             -         (517)
                                                                     ----------   ----------


Net income (loss)                                                       ($7,222)     $ 6,409
                                                                     ==========   ==========


Earnings (Loss) per common and common equivalent share from:
  Continuing operations                                                 ($ 0.36)     $  0.33
  Discontinued operations                                                     -        (0.02)
                                                                     ----------   ----------
  Net income (loss)                                                     ($ 0.36)     $  0.31
                                                                     ==========   ==========




Weighted average common and common equivalent shares                 20,187,705   20,991,789
                                                                     ==========   ==========

</TABLE>



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




                                        4



<PAGE>
<PAGE>


                        NOEL GROUP, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                         Nine Months Ended September 30,
                                   (Unaudited)
                (dollars in thousands, except per share amounts)
<TABLE>
<CAPTION
                                                                        1996         1995
                                                                    ----------   ----------

<S>                                                                  <C>           <C>     
Sales                                                                 $140,524     $134,059

Cost and Expense Items:
  Cost of sales                                                         79,624       75,901
  Selling, general, administrative and other expenses                   52,222       54,459
  Depreciation and amortization                                          2,620        3,157
                                                                    ----------   ----------

                                                                       134,466      133,517
                                                                    ----------   ----------

 Operating income                                                        6,058          542
                                                                    ----------   ----------

Other Income (Expense):
  Other income                                                             734        7,562
  Income (loss) from equity investments                                 (4,215)       2,331
  Interest expense                                                      (6,096)      (5,927)
  Minority interest                                                       (875)        (309)
                                                                    ----------   ----------

                                                                       (10,452)       3,657
                                                                    ----------   ----------

Income (Loss) from continuing operations
  before income taxes                                                   (4,394)       4,199

Provision for income taxes                                              (2,408)      (1,967)
                                                                    ----------   ----------

Income (Loss) from continuing operations                                (6,802)       2,232

Income (Loss) from discontinued operations                                 332       (1,310)
                                                                    ----------   ----------

Net income (loss)                                                      ($6,470)        $922
                                                                    ==========   ==========


Earnings (Loss) per common and common equivalent share from:
  Continuing operations                                                 ($0.34)       $0.11
  Discontinued operations                                                 0.02        (0.06)
                                                                    ----------   ----------
  Net income (loss)                                                     ($0.32)       $0.05
                                                                    ==========   ==========




Weighted average common and common equivalent shares                20,187,705   21,003,153
                                                                    ==========   ==========

</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 
                                  (Unaudited) 
                        Nine Months Ended September 30, 
                            (dollars in thousands) 
                                        

<TABLE>
<CAPTION>

                                                                        1996              1995      
                                                                    -------------     -------------
                                                                                                    
                                                                                                    
<S>                                                                 <C>               <C>      
Net cash provided from (used for) operating activities                    $1,300           ($1,331) 
                                                                                                    
Cash Flows from Investing Activities:                                                               
  Payments for companies purchased, net of cash acquired                  (6,495)           (2,800) 
  Cash of deconsolidated subsidiary                                          -              (4,303) 
  Sales of short-term investments, net                                     8,998             4,822  
  Purchases of investments                                                (8,090)             (112) 
  Sales of investments                                                       -                 371  
  Sales of discontinued operations                                         8,190             2,623  
  Purchases of property, plant and equipment                              (2,744)           (3,775) 
  Sales of property, plant and equipment                                   1,799             1,724  
  Other, net                                                              (1,135)             (949) 
                                                                    -------------     -------------
                                                                                                    
Net cash provided from (used for) investing activities                       523            (2,399) 
                                                                    -------------     -------------
                                                                                                    
Cash Flows from Financing Activities:                                                               
  Borrowings from revolving credit line and long-term debt               110,846           105,503  
  Repayments under revolving credit line and long-term debt             (116,476)         (104,383) 
  Reductions of long-term liabilities                                     (1,090)           (2,427) 
  Other, net                                                              (1,576)              -    
                                                                    -------------     -------------
                                                                                                    
Net cash used for financing activities                                    (8,296)           (1,307) 
Effect of exchange rates on cash                                               1                 8  
                                                                    -------------     -------------
                                                                                                    
Net decrease in cash and cash equivalents                                ($6,472)          ($5,029) 
                                                                    =============     =============
                                                                                                    
                                                                                                    
                                                                                                    
Supplemental Disclosure of Cash Flow Information:                                                   
                                                                                                    
   Interest paid                                                          $6,326            $5,247  
                                                                    =============     =============
                                                                                                    
                                                                                                    
   Taxes paid                                                               $685            $1,111  
                                                                    =============     =============

</TABLE>




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


                                        6





<PAGE>
<PAGE>



                        NOEL GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           AS OF SEPTEMBER 30, 1996 AND FOR THE THREE AND NINE MONTHS
                        ENDED SEPTEMBER 30, 1996 AND 1995
                                   (UNAUDITED)

1.      PROPOSED PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION:

        Noel Group, Inc. ("Noel") is proposing  for approval by its shareholders
a Plan of  Complete Liquidation and  Dissolution  (the "Plan").   If the Plan is
approved by the shareholders, 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.  Should  the  Board  of  Directors  determine  that  one  or  more
liquidating  trusts  are  required  by  the  Plan  or are  otherwise  necessary,
appropriate  or  desirable,  adoption  of the Plan will  constitute  shareholder
approval of the appointment by the Board of Directors of one or more trustees to
any such  liquidating  trusts and the execution of liquidating  trust agreements
with the trustees on such terms and conditions as the Board of Directors, in its
absolute discretion, shall determine.

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

GENERAL

        The consolidated  financial  statements for  Noel  and its  subsidiaries
(the "Company")  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  1995  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.

CONSOLIDATION

        The consolidated  financial  statements include the accounts of Noel and
its subsidiaries, Belding Heminway Company, Inc. ("Belding"), Curtis Industries,
Inc. ("Curtis"), and Lincoln Snacks Company ("Lincoln") after the elimination of
significant  intercompany  transactions.   The  September  30,  1995,  financial
statements have been restated to reflect Simmons Outdoor Corporation,  Belding's
home  furnishings  division,  Curtis' retail  division,  and TDX  Corporation as
discontinued  operations due to their sale in 1995 or anticipated or actual sale
in 1996.

                                        7



<PAGE>
<PAGE>



        HealthPlan  Services   Corporation  ("HPS")  was  acquired  by  Noel  on
September 30, 1994.  Following HPS's initial public offering on May 19, 1995 and
Noel's  simultaneous  exchange of its entire holding of HPS preferred  stock and
accrued  dividends into HPS common stock,  Noel's voting interest  dropped below
50%.  Therefore,  Noel has accounted  for HPS's  results of  operations  through
September 30, 1995,  under the equity method of accounting as if HPS had been an
equity investment from January 1, 1995.

        Summarized  income statement  information for HPS is as follows (dollars
in thousands):


<TABLE>
<CAPTION>

                                                   Three Months Ended              Nine Months Ended
                                                       September 30,                 September 30,

                                                   1996            1995         1996             1995
                                                  ------          ------       ------           -----
<S>                                               <C>             <C>          <C>             <C>    
Revenue                                         $  67,006         $24,116     $ 129,876        $70,889
                                                =========         =======     =========        =======
Gross profit                                          n/a             n/a           n/a            n/a
                                                =========         =======     =========        =======
Income from continuing operations               $(19,169)         $ 2,624     $(12,395)        $ 6,551
                                                =========         =======     =========        =======
Net income                                      $(19,169)         $ 2,624     $(12,395)        $ 6,551
                                                =========         =======     =========        =======
Net income available to common
    shareholders                                $(19,169)         $ 2,624     $(12,395)        $ 6,266
                                                =========         =======     =========        =======
Noel's share of net income available to
    common shareholders                         $ (7,194)         $ 1,096     $ (4,652)        $ 2,617
                                                =========         =======     =========        =======
</TABLE>


        HPS' third  quarter  1996  results  include a $38 million  restructuring
charge which comprises  approximately  $4 million for contract  write-offs,  $14
million for integration expenses associated with combining  acquisitions,  and a
$20 million write-off of goodwill incurred through HPS' acquisitions.

SEASONALITY

        The results of operations for the three and nine months ended  September
30, 1996,  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.

                                        8



<PAGE>
<PAGE>



INVENTORIES

        Inventories consist of the following (dollars in thousands):


<TABLE>
<CAPTION>

                                                                    September 30,             December 31,
                                                                         1996                    1995
                                                                    -------------             ------------

<S>                                                                 <C>                       <C>    
               Raw material and supplies                               $ 8,160                  $ 6,088
               Work in process                                           5,231                    6,033
               Finished goods                                           21,457                   18,339
                                                                       -------                  -------
                                                                       $34,848                  $30,460
                                                                       =======                  =======
</TABLE>


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 and
nine months ended September 30, 1996, earnings per share is based on outstanding
shares since the effect of common stock  equivalents  is  antidilutive.  For the
three and nine months ended September 30, 1995, fully diluted earnings per share
is not presented since the additional dilution is immaterial.

3.      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  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.

4.      OTHER INVESTMENTS:

        On March 5, 1996, a consortium  led by Noel and Chase Capital  Partners,
formerly Chemical Venture Partners,  purchased by auction the concession for the
Brazilian federal  railroad's  western network for approximately  $63.6 million.
The purchase of the network consists of a 30-year  concession and a lease of the
federal  railroad's  equipment.  Noel invested  $8.0 million in the  concession,
which  investment  is included in other  investments  on the September 30, 1996,
balance sheet.

                                        9



<PAGE>
<PAGE>



5.      SUBSIDIARY STOCK TRANSACTION:

        Effective July 1, 1996, HPS issued 1,508,090 new shares of common stock,
with a value of approximately  $32.7 million,  in conjunction with acquisitions.
Noel recorded its  proportionate  share of the capital  increase as a subsidiary
stock transaction, with an increase of $8.5 million recorded directly to capital
in excess of par value.  As a result of HPS' share  issuance,  Noel's  ownership
percentage of HPS decreased from approximately 42% to approximately 38%.

6.      DISCONTINUED OPERATIONS:

        On July 31, 1996,  Belding  completed  the sale of its home  furnishings
division for net proceeds of approximately  $8.2 million.  Proceeds  received on
the sale,  adjusted for closing  costs and changes in the net asset value of the
division  subsequent  to the  contract  date,  were  used to pay down  Belding's
revolving  bank loan.  Such net proceeds  approximated  the amount that had been
borrowed under the revolving loan in support of the home furnishings  division's
inventories and receivables. The repayment of bank debt was sufficient in amount
to avoid bank fees that would have been  payable had Belding not  completed  the
sale as  prescribed  by Belding's  credit  agreement  dated October 29, 1993, as
amended.

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

PROPOSED PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION

        Noel Group,  Inc. ("Noel") is proposing for approval by the shareholders
a Plan of Complete  Liquidation  and  Dissolution  (the "Plan").  If the Plan is
approved by the shareholders, 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.

LIQUIDITY AND CAPITAL RESOURCES

Noel Group, Inc.

        On September 30, 1996, Noel had cash and cash equivalents and short-term
investments of $11.2 million. The future cash needs of Noel will be dependent on
the adoption of the Plan. It is  management's  intention  that Noel's  liquidity
will be available to fund Noel's working capital  requirements  and,  subject to
the  restrictions  set forth in the Plan if  approved  by the  shareholders,  to
support Noel's operating companies.

                                       10



<PAGE>
<PAGE>



        Noel  believes  that  its  cash  and  cash  equivalents  and  short-term
investments  are  sufficient to fund its working  capital  requirements  for the
foreseeable  future.  Except as discussed below under Belding Heminway  Company,
Inc. ("Belding"), Noel also expects that its operating companies will be able to
meet their own working capital requirements,  including debt service. Subject to
the  restrictions set forth in the Plan if approved by the  shareholders,  if an
operating  company  requires  additional  funding  for  the  purpose  of  making
acquisitions at the operating  company level 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 and the issuance of debt or equity securities.  Noel does not currently
receive,  nor expect to receive in the immediate future, cash dividends from any
of its subsidiaries.  Noel's  subsidiaries are currently  prohibited from paying
dividends by existing borrowing agreements.

Belding Heminway Company, Inc.

        Belding's Senior Bank Facilities consist of (i) a $25 million amortizing
senior term loan facility (the "Term  Facility")  and (ii) a $29 million  senior
revolving credit facility (the "Revolving Facility").

        At  December  31,  1995,  Belding  was in default on certain of its loan
covenants under the Senior Bank Facilities.  On March 15, 1996, Belding's credit
agreement  was  amended so that (i) the  defaults  at December  31,  1995,  were
waived;  (ii) the maturity of the Senior Bank  Facilities was changed to July 1,
1997,  from December 31, 1999;  (iii) the interest rate on the loans was changed
to NationsBank prime rate plus 1 3/4% (from at Belding's option: (a) 1 3/4% plus
the higher of (1) NationsBank prime rate and (2) the federal funds rate plus 1/2
of 1%, or (b) a rate based on certain rates offered for U.S.  dollar deposits in
the London interbank market plus 2 3/4%);  (iv) if Belding has not refinanced or
repaid the Term Facility in full by December 31, 1996, Belding will be obligated
to  demonstrate  progress  towards  disposition of assets and complete a sale of
those  assets by  December  31,  1996,  at  sufficient  levels to repay the Term
Facility  by the due date in order to avoid the  payment of the fees as follows:
$300,000 on September 30, 1996,  $700,000 on November 15, 1996 and $1,500,000 on
December 31, 1996; (v) the  requirement for Belding to maintain an interest rate
cap agreement was deleted;  (vi) the financial covenant tests were revised;  and
(vii)  the terms of the  Revolving  Facility  were  revised  to reduce  advances
available against work in process inventory, effective September 30 and December
31, 1996.

        On July 31, 1996,  Belding sold its home  furnishings  division and used
the net  proceeds to repay all  existing  Revolving  Facility  advances  against
Belding's home furnishings division receivables and inventories and thus avoided
fees   otherwise   payable  under  the  amended  credit   agreement.  The  banks
participating  in Belding's  credit  facility  have  agreed,  based on Belding's
circumstances,  to postpone  the due date (the  "Deadline")  for payment of $1.0
million of the $2.5 million in fees required by the most recent amendment to the
credit  agreement  to December 31, 1996,  subject to certain  contingencies.  No
assurances can be given  that  circumstances  will  not  change  and  that  such
postponement  will  remain  in force.  In  addition,  Belding  is  currently  in
discussions  with the banks to further  postpone  the Deadline to March 31, 1997
for all of the $2.5 million of fees, however, there can be no assurance that the
Deadline will be further postponed and if it is, at what cost.

        In order to meet the  requirements  of the Term  Facility and thus avoid
fees payable by the Deadline, Belding expects that it will have to refinance the
Term Facility by the Deadline, or sell assets.

                                       11



<PAGE>
<PAGE>



If Belding is not successful in  refinancing  the Term Facility by the Deadline,
it will be  obligated  to  demonstrate  progress  toward  the sale of assets and
complete a sale of these assets at sufficient  levels to repay the Term Facility
by the Deadline,  in order to avoid the payment of fees.  If Belding  refinances
the Term  Facility,  the new  borrowing  arrangements  may carry higher rates of
interest and increased  administrative  costs.  If Belding  raises funds through
assets sales to discharge the Term Facility,  the reduction in interest  expense
resulting  therefrom may not be  sufficient  to offset the  diminution in income
that would result from such asset sales.  There can be no assurance that Belding
will be able to refinance the Term Facility on commercially  acceptable terms or
demonstrate  sufficient  progress toward asset sale(s) by the dates fees are due
and/or  complete a transaction  sufficient to discharge the Term Facility by the
Deadline. If Belding cannot satisfy those conditions, Belding would be obligated
to pay fees under the credit  agreement.  There is no assurance  that  Belding's
cash flow would be sufficient to pay those fees. If Belding is unable to pay any
of the fees when due, it will be in default under the Term Facility. Belding has
engaged a financial advisor in order to assist it in the evaluation of strategic
alternatives.

        Belding's ability to make interest and installment principal payments on
outstanding debt also depends on generating sufficient cash flow from operations
as well as maintaining  certain levels of  receivables  and inventory.  However,
there can be no assurance  that Belding will have  sufficient  cash flow or that
working  capital levels will be sufficient to make such payments.  If Belding is
unable to make installment  principal and interest payments when due, it will be
in default of the credit agreement.

        If Belding is not  successful  in  refinancing  the credit  facility and
thereby does not repay all of the amounts  outstanding under the credit facility
on its final maturity date of July 1, 1997, or meet other  covenant  provisions,
it will be in default under the credit facility.

        Any such  default  or  non-compliance  with the  credit  facility  would
entitle the lender to require immediate payment of the outstanding  indebtedness
and  to  refuse  advances  and  to  exercise  various  rights  against  Belding,
including,  without limitation,  the right to foreclose its security interest in
Belding's  assets.  If such  default or  non-compliance  occurred and the lender
demanded  payment or refused to make  further  loans and  Belding  was unable to
obtain  alternative  financing,  the lack of appropriate  liquidity would have a
material  adverse  effect on Belding's  results of operations and its ability to
continue as a going concern.

        Based  on  discussions   with  several   banks,   Belding  has  received
preliminary  proposals to refinance  all of its  existing  debt at  commercially
acceptable terms.  However,  there can be no assurance that Belding will be able
to  complete  a  refinancing  of the Term  Facility  or  demonstrate  sufficient
progress  towards  asset  sales(s)  by the dates fees are due and or  complete a
transaction sufficient to discharge the Term Facility by the Deadline.

        Pursuant to the terms of Belding's Series B preferred stock, 20% of such
shares  were  scheduled  to be  redeemed  by  Belding  on March 15 of each  year
commencing in 1995 and ending in 1999.  Dividends on the preferred  stock accrue
at an  annual  rate of 6% and are  payable  quarterly  on  March  15,  June  15,
September 15 and  December  15. Both the  preferred  stock  redemptions  and the
quarterly   dividend   payments  are  subject  to  the  approval  of  the  banks
participating in Belding's

                                       12



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<PAGE>



credit facility. Belding was notified on March 15, 1995, that the banks declined
approval of the dividend and redemption  payments and no such payments have been
made. As a result, additional dividends are accruing on the scheduled but unpaid
dividends at a rate of 6% per annum.

        Noel does not  guarantee  any of  Belding's  borrowings  and Noel is not
liable for any of Belding's  obligations.  Noel's  interest in Belding  consists
solely of its holding of shares of preferred  and common stock of Belding  which
is carried at $14.0 million on Noel's books at September 30, 1996.

RESULTS OF OPERATIONS

General

        The results of operations for the three and nine months ended  September
30, 1996, 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.

        The results of operations for the three and nine months ended  September
30, 1995, have been restated to reflect Simmons Outdoor  Corporation,  Belding's
home furnishings division, Curtis Industries, Inc.'s ("Curtis") retail division,
and TDX  Corporation  as  discontinued  operations  due to their sale in 1995 or
their  expected or actual sale in 1996 and to account  for  HealthPlan  Services
Corporation  ("HPS") under the equity method of accounting from January 1, 1995.
Noel's voting  interest in HPS dropped below 50% following  HPS' initial  public
offering on May 19, 1995 and Noel's simultaneous  exchange of its holding of HPS
preferred stock and accrued dividends into HPS common stock.

THREE MONTHS ENDED SEPTEMBER 30, 1996 VERSUS SEPTEMBER 30, 1995

        Sales  increased  by $5.6  million  to $50.3  million  primarily  due to
increased  sales at  Curtis  and  Belding  of $2.9  million  and  $2.3  million,
respectively.  Cost of sales  increased  by $2.2  million to $27.9  million from
$25.7  million in 1995.  Selling,  general,  administrative  and other  expenses
increased  by $.7 million to $18.1  million in 1996 from $17.4  million in 1995.
Other income  decreased by $6.8 million  primarily due to a 1995 gain recognized
by Noel on the receipt of payment for a subordinated note and note interest from
Brae Group, Inc. ("Brae note") in the form of shares of common stock of Staffing
Resources, Inc.

NINE MONTHS ENDED SEPTEMBER 30, 1996 VERSUS SEPTEMBER 30, 1995

        Sales  increased by $6.5 million to $140.5 million due to an increase in
sales at Curtis and Belding of $5.0 million and $1.4 million, respectively. Cost
of sales  increased by $3.7 million to $79.6 million from $75.9 million in 1995,
related to  increases  at Curtis,  Lincoln  and  Belding of $2.1  million,  $1.1
million and $.6 million,  respectively.  Selling,  general,  administrative  and
other  expenses  decreased to $52.2  million in 1996 from $54.5 million in 1995.
The decrease of $2.2 million primarily relates to decreased  expenses at Lincoln
and Belding of $3.2 million and $.9 million,  respectively,  offset by increased
expenses  at  Curtis  of $2.0  million.  Other  income  decreased  $6.8  million
primarily  due to a 1995 gain  recognized  by Noel on the receipt of payment for
the Brae note.

                                       13



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<PAGE>



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 SEPTEMBER 30, 1996 VERSUS SEPTEMBER 30, 1995

INDUSTRIAL THREADS AND BUTTONS (BELDING)

        Sales during the third  quarter of 1996 sales  increased by $2.3 million
to $22.9  million as compared  with $20.6  million  during the third  quarter of
1995.  Sales in the  consumer  product  segment  increased  to $12.9  million as
compared  with $10.5 million  during the same period in 1995.  This increase was
primarily due to improved  sales in Belding's  button  division and  incremental
sales contributed by Culver Textile Company ("Culver") which was acquired in the
third quarter of 1995.  Sales in the industrial  product  segment  totaled $10.0
million as compared with $10.1 million during the second quarter of 1995.

        The gross  margin  during the third  quarter of 1996  increased  by $1.6
million to $7.0  million or 30.5% as compared  with $5.4 million or 26.2% during
the third quarter of 1995.  Gross margin in the consumer product segment totaled
$4.6 million or 35.7% as compared to $3.7 million or 35.0% in the third  quarter
of 1995.  The increase in gross margin  dollars was  primarily  attributable  to
improved  sales in Belding's  button  division and  incremental  sales of Culver
which  was  acquired  during  the third  quarter  of 1995.  Gross  margin in the
industrial  product  segment  totaled  $2.4  million  or 24.0%  during the third
quarter  of 1996 as  compared  with  $1.7  million  or 17.0% % during  the third
quarter of 1995. The  improvement  over 1995 margins is attributable to cost and
headcount reductions implemented beginning in September 1995.

        Selling,  general,  and administrative  expenses totaled $3.5 million as
compared with $3.4 million during the same period in 1995. Selling, general, and
administrative  expenses in the consumer  product  segment  totaled $1.3 million
during the third quarter of 1996 as compared with $1.1 million  during the third
quarter of 1995. Selling,  general and administrative expenses in the industrial
product  segment  totaled  $2.2  million  during  the third  quarter  of 1996 as
compared with $2.3 million during the third quarter of 1995.

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 third quarter of 1996  increased  $2.9 million or 16.5% to
$20.5 million from $17.6  million in the third  quarter of 1995.  Sales from the
Mechanics Choice division accounted for $2.6 million of the increase.

                                       14



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<PAGE>



        The gross  margin  percentage  decreased  to 64.6% in 1996 from 66.4% in
1995.  Lower margins  incurred by the Mechanics  Choice division are responsible
for the majority of the third quarter decline.

        For the third  quarter  of 1996,  selling,  general  and  administrative
expenses  increased $1.7 million from the comparable 1995 quarter.  The majority
of the third quarter increase is due to the added selling and distribution costs
of the Mechanics Choice division.

SNACK FOODS (LINCOLN)

        On  June  6,  1995,  Lincoln  entered  into  an  exclusive  distribution
agreement (the  "Distribution  Agreement") with Planters Company,  a division of
Nabisco,  Inc.  ("Planters"),  commencing  on July 17,  1995,  for the sales and
distribution  of Fiddle Faddle and Screaming  Yellow Zonkers ("the  Products" ).
Under the Distribution Agreement,  which requires Planters to purchase a minimum
number of equivalent cases during each year ending on June 30, Lincoln sells the
Products to Planters at prices which are less than  historical  selling  prices.
Planters in turn is responsible  for the sales and  distribution of the Products
to its customers and therefore Lincoln does not have any selling,  marketing and
distribution  costs on the Products.  The financial  impact of the  Distribution
Agreement versus  historical  results is a reduction in revenue and gross profit
which is offset by reduced selling, marketing and distribution costs.

        Sales increased  approximately 6% or $.4 million to $6.9 million for the
quarter versus $6.5 million in the corresponding period of 1995. The increase in
sales is due to increased sales related to the Distribution  Agreement and sales
of Lincoln's  other branded  product which were  consistent with those of a year
ago.  The  increase  was  offset by  declines  in  Lincoln's  nut  division  and
liquidation  sales.  Sales to Planters  represented 50% and 27% of sales for the
quarter ended September 30, 1996 and 1995, respectively.

        Gross profit  increased $.2 million to $2.2 million for the three months
of 1996 versus $2.0 million in the  corresponding  period of 1995 as a result of
the increase in sales.

        Selling, general, and administrative expenses decreased approximately 7%
or $.1 million to $1.6  million in the quarter  versus $1.7  million in the same
period in 1995.  These expenses  decreased  during this period  primarily due to
cost reductions resulting from the Distribution Agreement.

NINE MONTHS ENDED SEPTEMBER 30, 1996 VERSUS SEPTEMBER 30, 1995

INDUSTRIAL THREADS AND BUTTONS (BELDING)

        Sales during the nine month period ended  September 30, 1996,  increased
$1.4 million to $67.2  million as compared  with $65.8  million  during the same
period of 1995.  Sales in the consumer  product  segment  totaled  $36.0 million
during the first nine months of 1996 as compared with $29.7  million  during the
first nine months of 1995.  The increase in consumer  product  segment sales was
primarily the result of sales  contributed  by Culver.  Sales in the  industrial
product segment

                                       15



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<PAGE>



totaled $31.2 million in 1996 as compared to $36.1 million during the first nine
months of 1995. All of this year to year reduction occurred during the first two
quarters of 1996.

        The gross  margin  during the first nine  months of 1996  totaled  $19.1
million as compared to $18.3 million  during the same period in 1995.  The gross
margin percentage during the first nine months of 1996 was 28.4% versus 27.8% in
1995.  Gross margin in the consumer product segment during the first nine months
of 1996  totaled  $11.6  million as compared  with $10.1  million  during  1995.
Additional  margin  dollars  were  contributed  as  the  result  of  the  Culver
acquisition and increased sales by Belding's button  division.  The gross margin
percentage  during 1996 in the consumer  product segment was 32.3% % as compared
to 33.9%  during  the same  period in 1995.  The  decline  in the  gross  margin
percentage in the consumer  product segment was due to the lower Culver margins.
Gross  margin in the  industrial  segment  during 1996  totaled  $7.5 million as
compared to $8.2  million for the same period in 1995.  The decline in the gross
margin was  directly  attributable  to the  decline in the sales  volume of this
segment.  The gross margin percentage during 1996 for the industrial segment was
24.0% as compared to 22.3% during 1995.

        Selling,  general and administrative  expenses during 1996 totaled $10.5
million as  compared  with $11.7  million  during  1995.  Selling,  general  and
administrative  expenses in the  consumer  product  segment in 1996 totaled $3.9
million as compared to $3.3 million in 1995.  The  increase in selling,  general
and  administrative  expenses in the consumer  product segment was the result of
the additional expenses attributable to Culver operations.  Selling, general and
administrative  expenses in the industrial  segment  totaled $6.6 million during
the nine months ended  September  30,  1996,  as compared to $8.4 million in the
first nine months of 1995.  The decline in selling,  general and  administrative
expenses in the industrial  product  segment was the result of reduced  spending
totaling $1.6 million, principally from headcount reductions.

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.

        For the nine month period in 1996,  Curtis'  sales of $57.0 million were
$5.1  million  or 9.8%  higher  than the same  period in 1995.  Sales by Curtis'
Mechanics Choice division accounted for $4.5 million of the increase. Sales of a
new key code cutting machine  utilizing state of the art technology  contributed
an  additional  $1.0 million of sales in 1996.  The sales gain from the new code
cutter was offset by the loss of the sales of the Puerto Rican  branch  totaling
$.6 million and of an  emergency  key cutting  program of $.3  million.  Both of
these  businesses  were  discontinued  as a  result  of the  sale of the  retail
division and the shutdown of manufacturing operations.

        For the first nine months of 1996,  Curtis'  gross margin  percentage of
65.6%  decreased .7% from the comparable  period in 1995. The decline in margins
can be  attributed  to the lower  margins  recognized  by the  Mechanics  Choice
Division.

                                       16



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<PAGE>



        For the  nine  month  period  of  1996,  Curtis'  selling,  general  and
administrative  expenses,  exclusive of the $.7 million reserve recorded for the
1995  manufacturing  shutdown,  increased by $2.5  million.  The majority of the
increase is selling and distribution costs of the Mechanics Choice division.

SNACK FOODS (LINCOLN)

        Sales  of  $16.4  million  were  unchanged  for the  nine  months  ended
September 30, 1996,  versus the  corresponding  period of 1995. Sales related to
the Distribution  Agreement represented 56% and 47% of sales for the nine months
ended September 30, 1996 and 1995, respectively.

        Gross profit  decreased $1.1 million to $4.4 million for the nine months
ended  September 30, 1996,  versus $5.5 million in the  corresponding  period of
1995.  Gross  profit  decreased  as a result of lower  selling  prices under the
Distribution Agreement.

        Selling,  general and administrative  expenses decreased $2.7 million to
$3.7 million in the nine months ended  September  30, 1996,  versus $6.4 million
the same period in 1995.  These expenses  decreased during this period primarily
due to cost reductions resulting from the Distribution Agreement.

                                       17



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                           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, 1995.

Item 3. - Defaults upon Senior Securities

a)      None

b)      Redeemable  series B preferred stock of Belding Heminway  Company,  Inc.
        Scheduled  dividend  payments totaling  $1,316,018 in 1995,  $330,907 on
        March 15, 1996, $339,548 on June 15, 1996, and $345,533 on September 15,
        1996,  were  subject to the  approval of Belding's  bank  lenders.  Such
        approval was not granted by the banks and the dividend payments were not
        made.  As a result,  additional  dividends are accruing on the scheduled
        but unpaid dividends at a rate of 6% per annum.

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

a)      Exhibits


<TABLE>
<CAPTION>
Item No.       Item Title                                                                 Exhibit No.
--------       ----------                                                                 -----------

<S>            <C>                                                                        <C>
(2)            Not Applicable.

(3)            Articles of Incorporation and By-Laws.

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

               (B)    Composite copy of the Certificate of Incorporation,                     (b)
                      as amended.

               (C)    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.                 (a)

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

(10)           Not Applicable.

(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.
</TABLE>


                                       18



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<PAGE>


(15)           Not Applicable.

(18)           Not Applicable.

(19)           Not Applicable.

(22)           Not Applicable.

(23)           Not Applicable.

(24)           Not Applicable.

(27)           Not Applicable.

(99)           Not Applicable.

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

        (a)    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.

        (b)    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.

        (c)    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.

        (d)    This exhibit was filed as an exhibit to the  Quarterly  Report on
               Form 10-Q of Belding Heminway Company,  Inc. for the period ended
               March 31, 1996, and is incorporated herein by reference.

b)      Reports on Form 8-K

               None.

                                            Signature

                                            NOEL GROUP, INC.

                                            Date: November 14, 1996

                                            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).

                                       19


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