<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, 1998

                                       or

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

                For the transition period from _______ to _______

Commission file number 0-19737

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

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

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

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

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

                         Yes X              No
                            ---               ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

           Class                              Outstanding at  May 8, 1998
-------------------------------               ---------------------------
Common Stock - $.10 Par Value                           20,567,757


<PAGE>
 
<PAGE>



                                 NOEL GROUP, INC.

                                      INDEX

<TABLE>
<CAPTION>

                                                                                      Page No.

Part I - FINANCIAL INFORMATION
<S>           <C>                                                                     <C>
Item 1.       Statements of Net Assets in Liquidation (Liquidation Basis)
                 March 31, 1998 and December 31, 1997                                    3

              Statement of Changes in Net Assets in Liquidation (Liquidation Basis)
                 Three Months Ended March 31, 1998                                       4

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

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

              Notes to Financial Statements                                              7

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

PART II - OTHER INFORMATION

Item 1.       Legal Proceedings                                                         17

Item 3.       Defaults upon Senior Securities                                           17

Item 6.       Exhibits and Reports on Form 8-K                                          17
</TABLE>



                                        2


<PAGE>
 
<PAGE>



PART 1 - FINANCIAL INFORMATION

Item 1. - Financial Statements

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



<TABLE>
<CAPTION>

                                                           March 31,    December 31,
                                                             1998          1997
                                                           --------      ----------
                                                          (Unaudited)
<S>                                                         <C>            <C>
ASSETS
Cash and cash equivalents .........................         $    356       $  3,493
Short-term investments.............................            1,886          9,697
                                                            --------      ---------
Total cash and short-term investments .............            2,242         13,190
Investments (Note 2) ..............................           60,122         58,183
Income taxes (Note 4) .............................              695          5,134
Other assets ......................................           11,534         12,405
                                                            --------       --------
Total assets ......................................           74,593         88,912
                                                            --------       --------

LIABILITIES
Accounts payable ..................................               --            281
Accrued expenses (Note 5) .........................            4,016          5,070
                                                           ---------      ---------
Total liabilities .................................            4,016          5,351
                                                           ---------      ---------
Net assets in liquidation .........................          $70,577        $83,561
                                                             =======        =======
Number of common shares outstanding ...............       20,567,757     20,567,757
                                                          ==========     ==========
Net assets in liquidation per outstanding share ...            $3.43         $4.06
                                                               =====         =====

</TABLE>



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


                                        3


<PAGE>
 
<PAGE>



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


<TABLE>
<CAPTION>

                                                                                                        For the Three
                                                                                                         Months Ended
                                                                                                        March 31, 1998
                                                                                                        --------------
<S>                                                                                                   <C>
Net assets in liquidation at January 1 ..........................................................           $83,561
Changes in estimated liquidation values of assets and liabilities (Note 3) ......................             1,413
Distribution to shareholders (Note 6) ...........................................................           (14,397)
                                                                                                            -------
Net assets in liquidation at March 31   .........................................................           $70,577
                                                                                                            =======
</TABLE>




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


                                        4


<PAGE>
 
<PAGE>



                        NOEL GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                              (Going-Concern Basis)
                (Dollars in thousands, except per share amounts)



<TABLE>
<CAPTION>

                                                                        For the Three Months
                                                                          Ended March 31,
                                                                                1997
                                                                        ---------------------
<S>                                                                    <C>
SALES..............................................................            $38,473

Cost and Expense Items:
Cost of sales......................................................             20,711
Selling, general, administrative and other expenses................             17,220
Loss on disposal of Carlyle's thread division......................              4,364
Depreciation and amortization......................................                862
                                                                               -------
                                                                                43,157
                                                                               -------
Operating loss ....................................................             (4,684)
                                                                               -------

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

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

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




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

                                        5


<PAGE>
 
<PAGE>



                        NOEL GROUP, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                              (Going-Concern Basis)
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                       For the Three
                                                                       Months Ended
                                                                      March 31, 1997
                                                                      --------------
<S>                                                                <C>
Net Cash Used for Operating Activities...........................        $(5,949)
                                                                         --------

Cash Flows From Investing Activities:

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

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

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

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

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



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

                                        6


<PAGE>
 
<PAGE>



                                NOEL GROUP, INC.

                          NOTES TO FINANCIAL STATEMENTS

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

LIQUIDATION BASIS STATEMENTS

1.       PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION

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

         As a result of the adoption of the Plan by the shareholders, Noel
adopted the liquidation basis of accounting as of April 1, 1997. Under the
liquidation basis of accounting, assets are stated at their estimated net
realizable values and liabilities are stated at their anticipated settlement
amounts. See Note 2 for a specific discussion of the methods used to determine
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 or other disposition of any of
Noel's assets, the ultimate settlement amounts of Noel's liabilities and
obligations, actual costs incurred in connection with carrying out the Plan,
including administrative costs during the liquidation period and the actual
timing of distributions.

         The valuations presented in the accompanying Statements of Net Assets
in Liquidation represent management's estimates, based on present facts and
circumstances, of the net realizable values of assets and costs associated with
carrying out the provisions of the Plan based on the assumptions set forth in
the accompanying notes, which assumptions management believes to be reasonable,
based on present facts and circumstances. The actual values and costs are
expected to differ from the amounts shown herein and could be higher or lower
than the amounts recorded. Accordingly, it is not possible to predict the
aggregate net values ultimately


                                       7


<PAGE>
 
<PAGE>



distributable to shareholders and no assurance can be given that the amount to
be received in liquidation will equal or exceed the price or prices at which
Noel Common Stock has generally traded or is expected to trade in the future.


2.       INVESTMENTS AND OTHER ASSETS

         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 common 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
estimated liquidation basis amounts shown may materially differ from the actual
amounts which may be received in the future.

         Noel's holding of the common shares of Lincoln Snacks Company
("Lincoln") and Career Blazers Inc. ("Career Blazers", formerly Staffing
Resources, Inc.) are unregistered except for 421,000 shares of Lincoln which are
subject to restrictions under Rule 144. Lincoln trades on the Nasdaq Stock
Market's Small Cap Market under the symbol SNAX.


<TABLE>
<CAPTION>
                                                                                                         Estimated
                                                                       Common                           Liquidation
                                                                       Shares         Price Per        Basis Amount
                                                                       Owned            Share          March 31, 1998
                                                                       -----          ---------       ---------------
                                                                       (Dollars in thousands, except per share amounts)

<S>                                                                      <C>               <C>                     <C>
Career Blazers (a)                                                    2,026,104         $11.000              $22,287
Carlyle Industries, Inc. ("Carlyle") preferred stock (b)                                                      21,000
Ferrovia Novoeste, S.A.  ("Novoeste") (c)                                                                      8,000
Lincoln (d)                                                           3,769,755           2.125                8,011
Other holdings                                                                                                   824
                                                                                                           ---------
Total investments at estimated liquidation basis
   amounts                                                                                                   $60,122
                                                                                                           ---------
</TABLE>

                                       8


<PAGE>
 
<PAGE>


(a)      Recorded based upon Noel's review of an analysis completed by Career
         Blazers and its independent advisors. This analysis determined Career
         Blazers's value based upon actual and projected results in relation to
         comparable companies. Compared to the quoted price on the limited
         trading market for Career Blazers shares, Noel believes that, at the
         present time, this analysis is a better estimate of the value in
         liquidation of its Career Blazers shares at March 31, 1998, because the
         trading market for Career Blazers is so limited, Career Blazers is not
         subject to periodic reporting requirements under the Securities
         Exchange Act of 1934, as amended, and Noel's shares of Career Blazers
         are not registered to trade in this market. This valuation may not be
         reflective of actual amounts obtained when and if this investment is
         distributed or of prices that might be obtained in an actual future
         transaction. The closing over-the-counter bid price on March 31, 1998
         and May 8, 1998, was $6.25 and $6.75 per common share of Career
         Blazers, respectively. Noel management is currently assessing the most
         advantageous way to realize its investment in Career Blazers and does
         not expect a transaction to occur until the second half of 1998, at the
         earliest.

         Subsidiaries of Staffing Resources, Inc. and Career Blazers Personnel
         Services, Inc. and its affiliated companies merged on December 31,
         1997, to form Career Blazers. The merged company was renamed Career
         Blazers effective March 31, 1998. Career Blazers offers training,
         temporary and permanent staffing services across the Northeastern,
         Mid-Atlantic, Southeastern, Southwestern and Rocky Mountain regions
         of the United States, as well as Canada and Puerto Rico.

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

         Noel holds 19,312,837.5 shares of Carlyle series B preferred stock
         which has an annual dividend rate of 6%. As of March 31, 1998, Carlyle
         is in default on its obligation to Noel to redeem $15,450,270 of the
         liquidation preference of its preferred stock plus accumulated unpaid
         dividends of approximately $4,095,000 through March 31, 1998, to the
         extent of its legally available funds. Noel and Carlyle are engaged in
         discussions with a view of satisfying Carlyle's obligations to the
         holders of the preferred stock in accordance with the terms of its
         charter and consistent with Carlyle's resources. Discussions have dealt
         with the amount and timing of payments and possible modifications of
         the terms of the preferred stock. Any such modifications would require
         the agreement of Carlyle and the holders of the preferred stock.
         Carlyle has informed Noel that it intends to fulfill its obligations to
         its preferred shareholders, as required by Carlyle's charter, to the
         extent that Carlyle has cash resources in excess of those required to
         operate its business. Carlyle has also informed Noel that, as Carlyle
         believes that it does not currently have such excess resources, its
         ability to make payments on account of the preferred stock in the
         future will depend on Carlyle's future cash flow, the timing of the
         settlement of the liabilities recorded on its financial statements, the
         outcome of its negotiations with Noel described above and the ability
         of Carlyle to obtain additional financing.


                                       9


<PAGE>
 
<PAGE>


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

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

         In December 1997, Carlyle notified the PBGC that it intends to redeem
         $10 million of preferred stock as soon after year end as is
         practicable, but only to the extent of legally available funds as
         determined by its board of directors and after appropriate bank
         financing has been satisfactorily obtained. Following such notice, the
         PBGC indicated that it would not take any action with respect to such
         payments. Carlyle has engaged an investment bank to assist its board in
         determining the extent of legally available funds and is currently
         exploring the possibility of securing bank financing which would enable
         such payments to be made, assuming the board of directors determines
         that there are sufficient legally available funds.

(c)      Recorded at cost. This investment was made in March and June of 1996.
         Novoeste was organized to acquire a railroad in Brazil via a
         privatization transaction. In the absence of a ready market, or other
         transactional evidence, 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 in
         Brazil and a sale by Noel of its interest in Novoeste and is subject to
         the risks of operations in Brazil, including foreign currency risk. The
         actual amount realized for this investment could be lower or higher
         than the amount recorded.

(d)      Recorded based on the closing market price of the common stock on March
         31, 1998. Using the closing market price of $1.9375 on May 8, 1998,
         this investment would have been valued at $7,304,000.



                                       10


<PAGE>
 
<PAGE>



Other Assets:

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


<TABLE>
<CAPTION>

                                        March 31,                 December 31,
                                          1998                        1997
                                      -------------             ----------------
<S>                                      <C>                         <C>
Note receivable for Curtis sale          $10,454                     $10,454
TDX distribution receivable                   --                         892
Other                                      1,080                       1,059
                                        --------                    --------
                                         $11,534                     $12,405
                                         =======                    ========
</TABLE>


On November 6, 1997, an agreement was signed merging Curtis Industries, Inc.
("Curtis") with a subsidiary of Paragon Corporate Holdings, Inc. Under the
agreement, Noel received $14,712,000 for its entire holding of Curtis,
comprising $4,258,000 in cash and a two-year 7% interest bearing note for
$10,454,000, which is included in other assets in the Statement of Net Assets in
Liquidation. This note was repaid at face value in April, 1998.

3.       CHANGES IN ASSETS IN LIQUIDATION

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

<TABLE>
<S>                                                            <C>
To adjust investments to estimated liquidation value, net      $2,199
To adjust estimated accrued expenses                              122
To adjust estimated income taxes                                 (908)
                                                              -------
Total adjustments                                              $1,413
                                                              =======
</TABLE>

4.       INCOME TAXES

         The income tax asset at March 31, 1998, reflects the liquidation basis
of accounting. Estimated income taxes are calculated at a 35% rate on the
taxable income and losses which would be generated if the assets were realized
and liabilities settled at the amounts shown. This estimate is subject to
significant variation if, among other things, the actual values of assets
distributed, sold or otherwise disposed of varies from current estimates. The
income tax asset is projected to be realized in part through the filing of the
1998 tax return and assumes that the liquidation will be completed by December
31, 1998.


                                       11


<PAGE>
 
<PAGE>


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


<TABLE>
<CAPTION>
                                                     March 31,           December 31,
                                                       1998                 1997
                                                    ----------           ------------
<S>                                                   <C>                 <C>
Net unrealized capital gain                           $(1,029)            $     (222)
Net realized capital gain                                  42                (16,130)
Realized net operating loss carryforwards                  --                  3,280
Loss from the settlement of recorded
   liabilities                                          1,111                  8,442
Estimated taxes paid in 1997 and refund
   carryforwards                                           --                  9,764
Estimated tax refund due for 1997                         571                     --
                                                    ----------            ----------
Net income tax asset                                $     695             $    5,134
                                                    ==========            ==========
</TABLE>

         Noel had additional net operating loss carryforwards of approximately
$8,117,000 at December 31, 1997, which expire from 2003 through 2011. Noel has
undergone "ownership changes" within the meaning of Section 382 of the Internal
Revenue Code of 1986, as amended. Consequently, future utilization of these
Federal tax loss carryforwards is significantly limited. If Noel's assets and
liabilities are realized at the values recorded at March 31, 1998, these
carryforwards will not be realizable because Noel will not generate future
taxable income.

         In February 1998, Noel received $3,531,000 as a partial refund of the
over-payment of estimated taxes paid to the IRS in 1997.

5.       ACCRUED EXPENSES

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

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



<TABLE>
<CAPTION>
                                          March 31,            December 31,
                                            1998                   1997
                                          --------              -----------
<S>                                         <C>                     <C>
Salaries and benefits                       $1,592                  $2,414
Rent and other expenses                        809                   1,147
Professional fees                              855                     823
Other, net                                     760                     686
                                            ------                  ------
                                            $4,016                  $5,070
                                            ======                  ======


                                       12


<PAGE>
 
<PAGE>


      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.



      For the three months ended March 31, 1998, Noel's cash operating expenses
exceeded the return on its cash and cash equivalents and short-term investments
by $573,000.

      Noel's cash operating expenses for the three months ended March 31, 1998,
were as follows (dollars in thousands):


      Salaries and benefits                                   $254
      Rent and other expenses                                  309
      Professional fees                                        185
                                                             -----
                                                              $748
                                                             =====

6.    LIQUIDATING DISTRIBUTIONS

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

      On October 6, 1997, Noel distributed 412,601 shares of HPS common stock
valued at $21.1565 per HPS share for a total value of $8,729,000 to Noel
shareholders of record at the close of business on September 29, 1997. The
distribution rate was 0.02006 of a share of HPS common stock per share of Noel
Common Stock and the value of the distribution was $.4244 per share of Noel
Common Stock.

      On December 1, 1997, Noel distributed 2,205,814 shares of Carlyle common
stock valued at $1.40 per Carlyle share for a total value of $3,088,000 to Noel
shareholders of record at the close of business on November 21, 1997. The
distribution rate was .107246 of a share of Carlyle common stock per share of
Noel Common Stock and the value of the distribution was $.1501 per share of Noel
Common Stock.

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

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



                                       13


<PAGE>
 
<PAGE>


7.    COMMITMENTS AND CONTINGENCIES

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


GOING-CONCERN BASIS STATEMENTS

8.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL

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

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

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



                                       14


<PAGE>
 
<PAGE>



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

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

LIQUIDITY AND CAPITAL RESOURCES:

         On March 31, 1998, Noel had cash and short-term investments of $2.2
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 through the remainder of the liquidation period. Pursuant to the
Plan, subject to the payment or the provision for payment of the Company's
obligations, the cash proceeds of any asset sales together with other available
cash will be distributed from time to time pro rata to the holders of the Common
Stock on record dates selected by the Board of Directors with respect to each
such distribution. Noel believes that its cash and short-term investments are
sufficient to fund its working capital requirements through the completion of
the Plan.

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

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

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

         Sources of potential liquidity include the sale or refinancing of
current holdings, dividends and preferred stock redemptions from current
holdings. Noel does not currently receive, nor expect to receive in the
immediate future, cash dividends from any of its holdings. See Footnote 2 of
Notes to Financial Statements for a discussion of Carlyle. Lincoln is prohibited
from paying dividends by existing borrowing agreements.

STATEMENTS OF NET ASSETS IN LIQUIDATION:

         Cash and short-term investments decreased by $10.9 million. In addition
to funding operating expenses in the quarter, Noel paid a liquidating
distribution of $14.4 million and received a $3.5 million refund of estimated
taxes paid in 1997, and a $.9 million distribution receivable from TDX
Corporation.


                                       15


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         Investments increased $1.9 million primarily because of the increase in
the liquidation value of Lincoln of $2.1 million.

         The income tax asset decreased by $4.4 million primarily as a result of
Noel's receipt of the $3.5 million refund of estimated taxes paid in 1997, and
the increased tax liability of $.7 million related to the higher liquidation
valuation of Lincoln.

STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION:

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



                                       16


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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, 1997.

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 mandatory
         redemption obligations to the holders of such Preferred Stock to the
         extent of its legally available funds. As of March 31, 1998, the
         accrued but unpaid dividends amounted to approximately $4,554,000.

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

a)       Exhibits



</TABLE>
<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)

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

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

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

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

(10)     None.

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

(15)     None.

(18)     None.
</TABLE>


                                       17


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<PAGE>


(19)     None.

(22)     None.

(23)     None.

(24)     None.

(27)     Financial Data Schedule.

(99)     None.

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

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

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

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

b)       Reports on Form 8-K

         None.

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

                                Signature

                                NOEL GROUP, INC.

                                Date:    May 13, 1998

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



                                       18



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