<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

                Quarterly report under Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                  For the quarterly period ended March 31, 1997
                         Commission file number 0-15148

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

                          SCIENTIFIC NRG, INCORPORATED
             (Exact name of registrant as specified in its charter)

                                    Minnesota
         (State or Other Jurisdiction of Incorporation or Organization)

                                2246 Lindsay Way
                           Glendora, California 91740
                    (Address of Principal Executive Offices)

                                   41-1457271
                      (I.R.S. Employer Identification No.)


       Registrant's telephone number, including area code: (909) 305-0322

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

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
    ---     ---

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. At May 15, 1997 the
registrant had 4,203,423 shares of common stock, no par value, issued and
outstanding.



<PAGE>   2
                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
                                     PART I
<S>                                                                         <C>
ITEM 1.  FINANCIAL STATEMENTS.                                                3

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.           3

                                     PART II

ITEM 1.  LEGAL PROCEEDINGS.                                                   6

ITEM 2.  CHANGES IN SECURITIES.                                               6

ITEM 3.  DEFAULT UPON SENIOR SECURITIES.                                      6

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.                 6

ITEM 5.  OTHER INFORMATION.                                                   7

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.                                    8
</TABLE>



                                       2
<PAGE>   3
                                     PART I

ITEM 1.  FINANCIAL STATEMENTS.

         The Company's unaudited condensed balance sheet as of the end of the
Company's most recent quarter, March 31, 1997 and unaudited condensed statements
of operations for the three and nine month period and statements of cash flow
for the nine month period up to the date of the balance sheet and the comparable
period of the preceding fiscal year are attached hereto as pages F-1 through F-8
and are incorporated herein by this reference.

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

         The following discussion and analysis should be read in conjunction
with the Company's audited financial statements and management's Discussion and
Analysis of Financial Condition and results of Operations included in the
Company's Annual Report on Form 10-KSB, filed with the Securities and Exchange
Commission on December 23, 1996.

         The following discussion includes "forward looking statements" ("FLS")
that represent management's assessment of future performance and its goals.
There are no assurances that the forward looking statements will be achieved.

RESULTS OF OPERATIONS

         The three and nine month period ended March 31, 1997 compared to the
three and nine month period ended March 31, 1996.

         The Company realized a net gain of $474,566, or $.13 per share for the
three month period ended March 31, 1997, compared to a net loss of $97,028 or
$(.05) per share for the corresponding period of the prior fiscal year. The
Company realized a net gain of $362,591, or $.12 per share for the nine month
period ended March 31, 1997, compared to a net loss of $227,653, or $(.11) per
share for the corresponding period of the prior fiscal year. Management
generally attributes these decreased losses to the Company's reduced overhead
and reduced interest expense and to the recognition of an extraordinary gain, as
further discussed below.

         Net sales of the Company during the three months ended March 31, 1997
increased $72,683 or 89.9%. Accordingly for the third quarter ended March 31,
1997 the Company has realized an increase in sales from the corresponding period
of the prior fiscal year. Net sales of the Company during the nine months ended
March 31, 1997 decreased $54,470 or 12.3% from the corresponding period of the
prior fiscal year. The sales decrease for the nine months is attributable to a
decrease in volume during the first six months of the fiscal year caused by reps
not selling products due to the Company's inability to pay their commissions in
a timely manner. Management believes it has made substantial progress by mending
relationships with sales reps. At March 31, 1997 all liabilities are within
terms. Having made payments on past due amounts, management plans for sales from
reps to increase (FLS).

         Gross profit from operations during the three months ended March 31,
1997 increased $54,714 or 209.0% from the gross profit from the corresponding
period of the prior fiscal year. This increase is a result of the third
quarter's increase in sales, as discussed above. Gross profit from operations
during the nine months ended March 31, 1997 decreased $26,304 or 15.2% from the
gross profit from the corresponding period of the prior fiscal year. Management
attributes this decrease to the Company's decrease in sales for the first six
months of the fiscal year, as discussed above.


                                       3
<PAGE>   4
         General, administrative and selling costs for the three months ended
March 31, 1997 decreased by $14,773, and decreased as a percentage of sales
from 125.3% of sales to 56.1% of sales in comparison to the corresponding period
of the prior fiscal year. General, administrative and selling costs for the nine
months ended March 31, 1997 decreased by $47,574, and decreased as a percentage
of sales from 75.0% of sales to 73.3% of sales in comparison to the
corresponding period of the prior fiscal year.The reduction in overhead for the
three months ended March 31, 1997is a result of management's efforts to reduce
costs.

         Other income for the three and nine months, respectively ended March
31, 1997 increased by $22,177 and $63,565 in comparison to the corresponding
period of the prior fiscal year. The increase of $63,565 is net of $85,819
discounts negotiated with vendors, (see Note 5, "Common Stock"), less the $
22,254 loss from the disposal of the Company's outdated computer equipment.

         On February 4, 1997 the related party debt and accrued interest
totaling $652,179, (see Item 5, "Other Information"), was converted to equity
for 382,373 shares of common stock. At the time of conversion the Company was
offering shares at $.50 per share through a private placement (see Note 6,
"Private Placement"). The Company recorded the debt conversion during the
quarter ended March 31, 1997 as an issuance of common stock for $191,187 and
recognized the difference between the carrying value of the debt in such stock
issuance as an extraordinary gain on relief of indebtedness totaling $460,992.

LIQUIDITY AND CAPITAL RESOURCES

         The nine month period ended March 31, 1997 compared to the nine month
period ended March 31, 1996.

         The Company had a negative cash flow from operating activities for the
nine month period ended March 31, 1997 of $209,546 compared to a negative cash
flow of $147,052 for the nine month period ended March 31, 1996. The increase
in negative cash flow compared to the previous period can be attributed to a
reduction of outstanding liabilities to vendors and sales reps.

         At March 31, 1997, the Company had net working capital of $174,659,
compared to a net working capital deficit of $256,250 at June 30, 1996. The
increase in working capital of $430,909, is primarily the result of the 
"Conversion of the related party debt to common stock", as noted below. Also see
Note 7 to the unaudited condensed financial statements at Part I - Item 1.

         On February 4, 1997 the related party debt and accrued interest
totaling $652,179, (see Item 5, "Other Information"), was converted to equity
for 382,373 shares of common stock. At the time of conversion the Company was
offering shares at $.50 per share through a private placement (see Note 6,
"Private Placement"). The Company recorded the debt conversion during the
quarter ended March 31, 1997 as an issuance of common stock for $191,187 and
recognized the difference between the carrying value of the debt in such stock
issuance as an extraordinary gain on relief of indebtedness totaling $460,992.


                                       4
<PAGE>   5
         The Company issued 723,000 shares of common stock at $.50 per share.
The offering closed March 31, 1997. At March 31, 1997 the Company had
subscriptions receivable of $71,500. These subscriptions were paid in full in
April 1997. The proceeds will be used for working capital. The Company received
cash of $299,000 for 598,000 shares. Further the Company issued 25,000 shares
in connection with legal services rendered and 20,000 shares in connection with
future legal services. Additionally the Company issued 80,000 shares for eight
months of services to be rendered under the administrative services agreement.
These shares were exempt from registration under Section 4(2) of the Securities
Act. See "Private Placement", (Note 6).

         Management believes its plans will be sufficient to support operations
during the year ending June 30, 1997 (FLS). Part of management's operational
strategy include expanding product lines and related sales. Management intends
to augment working capital via profit from operations. However, there are no
assurances that such efforts to improve operating results will be successful.
The Company may be unable to continue operations and there can be no assurances
regarding the recoverability of assets or their values upon liquidation.

                                       5
<PAGE>   6
                                     PART II

ITEM 1.  LEGAL PROCEEDINGS.

         None.

ITEM 2.  CHANGES IN SECURITIES.

         During the quarter ended March 31, 1997, the Company issued 382,373
shares of its common stock, no par value, in exchange for the cancellation of
certain Subordinated Cash Flow Promissory Notes dated September 30, 1996. See
Exhibit 10.60 attached hereto.

         Further during the quarter ended March 31, 1997, the Company sold
723,000 shares of its common stock, no par value, at a price of $0.50 per share,
in a private placement, exempt from registration under Section 4(2) of the
Securities Act. See "Private Placement", (Note 6).


ITEM 3.  DEFAULT UPON SENIOR SECURITIES.

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.

         At the Special Meeting of Shareholders of the Company held on October
24, 1996, the following persons were nominated and elected as directors of the
Company; Daniel Parke, Jonathan Forgy, and Oliver Washburn.

         The board reviewed the results from the Special Meeting of Shareholders
and announced that the following resolutions were approved by a majority of the
voting power of the shares present and entitled to vote.

         Amend the Articles of Incorporation to increase the number of
authorized shares of common stock to 40,000,000 shares of no par value common
stock, up from the current 15,000,000 authorized shares of no par value common
stock.

         Amend the Articles of Incorporation to decrease the number of
outstanding shares of common stock through the implementation of a 5:1 reverse
split of all issued and outstanding shares of common stock.

         The directors appointed the following persons to serve as officers of
the Company at the pleasure of the board: Daniel Parke, Chief Executive Officer;
Jonathan Forgy, President; Tami Miller, Secretary; and Oliver Washburn,
Treasurer.


                                       6
<PAGE>   7
ITEM 5.  OTHER INFORMATION.



         Below is a description of the "Workout Agreement" dated September 11,
1996. On February 4, 1997 the long-term debt and accrued interest of $652,179
was coverted to equity, see Conversion of related party debt to common stock,
(Note 7).

         On September 11, 1996, the board of directors of the Company approved a
formal Workout Agreement (the "Workout Agreement") which provided a method to
[1] restructure outside of bankruptcy existing debt payable to certain related
parties, [2] provide for a change in the Company's officers and directors, and
[3] issue additional notes payable and additional shares of common stock of the
Company in order to finance operations.

         On September 11, 1996, two of the Company' s Board of Directors,
Malcolm L. Fickel who was the Company's chief executive officer and Thomas C.
Moceri who was the Company's chief financial officer, resigned from their
positions as directors and officers of the Company. The Board of Directors then
entered into a one year consulting contract with the former chief executive
officer beginning September 12, 1996, that provides for services to be rendered
to the Company, at management's request, at the rate of $75 per hour. Two new
directors were appointed, Daniel W. Parke who was named as the Company's chief
executive officer and Jonathan D. Forgy who was named as the Company's
president. The two new officers and directors are affiliates of Parke
Industries, Inc., an affiliated company controlled by Dan Parke.

         As part of the Workout Agreement, Parke Industries, Inc. and its
affiliates acquired 600,000 shares of the Company's common stock at $0.10 per
share on September 11, 1996. The purchase price consisted of $20,000 for future
administrative services at the rate of $5,000 per month for four months from
Parke Industries, Inc. and $40,000 in cash from Parke Industries, Inc. and its
affiliates. The Company's new chief executive officer was given a salary of $12
per year and options to purchase 300,000 shares of common stock exercisable at
$0.50 per share. The Company's new president was given a salary of $24,000 per
year, later raised to $48,000, and options to purchase 100,000 shares of common
stock exercisable at $0.50 per share. In addition, the Company granted options
to purchase 200,000 shares of common stock exercisable at $.50 per share to
Parke Industries, Inc.


                                       7
<PAGE>   8
         Effective September 11, 1996, certain outstanding debt obligations to
related parties were renegotiated to an aggregate principal amount of $558,500.
These related party obligations totaled $630,067, including accrued interest of
$100,308, at June 30, 1996. Moreover, the outstanding debt obligations to the
related parties had increased to $652,179 by September 10, 1996 due to
additional borrowings and accrued interest. The accrued interest of $93,679 
($652,179 less $558,500) will not be recognized as a gain on the restructuring
of the debt in accordance with Statement of Financial Accounting Standards No.
15, "Accounting by Debtors and Creditors for Troubled Debt Restructuring."
Instead, the effective interest rate of the restructured notes payable will be
reduced for financial statement reporting purposes. (The above debt of 
$652,179 was converted to equity in 1997, see "Conversion of related party debt
to common stock", Note 7).

         The Workout Agreement provided for the issuance of 20,000 shares of
common stock to the Company's former chief executive officer to fulfill the
Company's obligation under his service contract. Such shares were valued at
$0.10 per share and were charged to operations in fiscal 1997. The Workout
Agreement also provided for the issuance of notes payable to certain related
parties totaling $60,000 due on or about January 10, 1997, together with
interest at 15% per annum, and secured by all of the assets of the Company. On
September 19, 1996, the Company issued 140,000 shares of no par value common
stock of the Company at $.20 per share for the payment of legal services
rendered in connection with the Workout Agreement. The value of such shares
totals $28,000, of which $10,000 was expensed is fiscal 1996 and $18,000 was
expensed in fiscal 1997.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         Exhibits filed concurrently with this report (and referenced in the
Exhibit Index) have thirteen asterisks in the left margin, and are hereby
incorporated herein by this reference.

         Exhibits previously filed with the Company's quarterly report on Form
10-QSB for the quarterly period ended December 31, 1996 have twelve asterisks in
the left margin, and are hereby incorporated herein by this reference.

         Exhibits previously filed with the Company's quarterly report on Form
10-QSB for the quarterly period ended September 30, 1996 have eleven asterisks
in the left margin, and are hereby incorporated herein by this reference.

         Exhibits previously filed with the Company's quarterly report on Form
10-Q for the quarterly period ended March 31, 1996 have ten asterisks in the
left margin, and are hereby incorporated herein by this reference.

         Exhibits previously filed with the Company's quarterly report on Form
10-Q for the quarterly period ended September 30, 1995 have nine asterisks in
the left margin, and are hereby incorporated herein by this reference.

         Exhibits previously filed with the Company's quarterly report on Form
10-K for the fiscal year ended June 30, 1995 have eight asterisks in the left
margin, and are hereby incorporated herein by this reference.

         Exhibits previously filed with the Company's quarterly report on Form
10-Q for the quarterly period ended December 31, 1994 have seven asterisks in
the left margin, and are hereby incorporated herein by this reference.

         Exhibits previously filed with the Company's annual report on Form 10-K
for the fiscal year ended June 30, 1994 have six asterisks in the left margin,
and are hereby incorporated herein by this reference.


                                       8
<PAGE>   9
         Exhibits previously filed with the Company's annual report on Form 10-K
for the fiscal year ended June 30, 1993 have five asterisks in the left margin,
and are hereby incorporated herein by this reference.

         Exhibits previously filed with the Company's quarterly report on Form
10-Q for the quarterly period ended March 31, 1993 have four asterisks in the
left margin, and are hereby incorporated herein by this reference.

         Exhibits previously filed with the Company's annual report on Form 10-K
for the fiscal year ended June 30, 1992 have three asterisks in the left margin,
and are hereby incorporated herein by this reference.

         Exhibits previously filed with the Company's annual report on Form 10-K
for the fiscal year ended June 30, 1991 have two asterisks in the left margin,
and are hereby incorporated herein by this reference.

         Exhibits previously filed with the Company's annual report on Form 10-K
for the fiscal year ended June 30, 1989 have one asterisk in the left margin,
and are hereby incorporated herein by this reference.

         Finally, all Exhibits previously filed with the Securities and Exchange
Commission as part of the Company's initial Form 10 filing on or about November
12, 1986 or in other reports filed pursuant to the Securities Exchange Act of
1934 have no asterisk in the left margin, and are hereby incorporated herein by
this reference.

<TABLE>
<S>                <C>
**            3.1  Articles of Incorporation as in effect on the date hereof
                   (including Amendment thereto effective December 28, 1988).

************  3.2  Articles of Incorporation as in effect on the date hereof
                   (including Amendment thereto effective November 20, 1996).

**            3.3  Bylaws.

              4.1  Specimen of Issued and Outstanding Restricted Share
                   Certificate and reverse side thereof (see also Exhibits 3.1
                   and 3.3).

              4.6  Incentive Stock Option Plan.

             10.7  Agreement (assigning patent rights).

             10.8  Agreement Between Scientific Component Systems, Inc. and NRG,
                   Inc., June 29, 1983.

             10.9  Agreement, July, 1983 (assigning patent rights, with Exhibit 
                   10.7 as exhibit).

             10.10 Assignment of Patent Rights from Scientific Component Systems, 
                   Inc. to NRG, Inc., April 20, 1984.

             10.11 Assignment of Patent Rights from Rhett McNair and James
                   Helling to NRG, Inc., April 20, 1984.
</TABLE>


                                       9
<PAGE>   10
<TABLE>
<S>                <C>
             10.12 Assignment of Patent Rights from Rhett McNair, James Helling, 
                   William R. Ingles and Gerald L. Fullerton to NRG, Inc., April 
                   20, 1984.

             10.13 Agreement Assigning Patent Rights from Scientific Component 
                   Systems, Inc., to NRG, Inc., April 20, 1984.

**           10.14 Assignment with Possibility of Reverter of Patent Rights from 
                   Rhett McNair to NRG, Inc., January 21, 1986.

             10.20 Form of Warrant Certificate.

***          10.27 New Lease for Company Headquarters in Tustin, California.

*            10.28 Royalty Agreement with Rhett McNair.

*            10.29 Consulting Agreement with MLF & Associates, Inc., April 1, 
                   1990.

***          10.30 Promissory Note Payable to Oliver Washburn and Extension 
                   Thereto.

***          10.31 Promissory Note Payable to Malcolm Fickel and Extension 
                   Thereto.

***          10.32 Promissory Note Payable to Malcolm Fickel and Extension
                   Thereto.

***          10.33 Promissory Note Payable to Malcolm Fickel and Extension
                   Thereto.

***          10.34 Promissory Note Payable to Malcolm Fickel and Extension
                   Thereto.

***          10.35 Deferred Compensation Agreement Between the Company and Malcolm
                   Fickel.

***          10.36 Line of Credit Agreement with Bank.

***          10.37 Promissory Note Payable to Peter C. Kreft.

****         10.38 Stock Purchase Agreement Between the Company and MLF & 
                   Associates, Inc. Retirement Trust, April 30, 1993.

****         10.39 Stock Purchase Agreement Between the Company and Malcolm L. 
                   Fickel, April 30, 1993.

****         10.40 Stock Purchase Agreement Between the Company and Oliver K. 
                   Washburn, April 30, 1993.

****         10.41 Stock Purchase Agreement Between the Company and Peter C. 
                   Kreft, April 30, 1993.

****         10.42 Stock Purchase Agreement Between the Company and Thomas C. 
                   Moceri, April 30, 1993.

*****        10.43 Financing Agreement Between the Company and Pre-Banc Business 
                   Credit, Inc., May 21, 1993.

*****        10.44 Addendum to Consulting Agreement between the Company and 
                   Malcolm L. Fickel, June 30, 1993.
</TABLE>


                                       10
<PAGE>   11
<TABLE>
<S>                <C>
*****        10.45 Leasing Agreement Between the Company and Auto Car Leasing 
                   Company, September 9, 1993.

*****        10.46 Stock Warrant Agreement Between the Company and Eddie R. 
                   Fischer, September 9, 1993.

*******      10.47 Note and Revolving Loan Agreement Between the Company and 
                   William T. Moceri, IRA, November 15, 1994.

********     10.48 Promissory Note Payable to Thomas C. Moceri, Trustee, Thomas C.
                   Moceri Profit Sharing Plan, September 28, 1994.

********     10.49 Promissory Note Payable to Oliver Washburn, March 7, 1995.

********     10.50 Promissory Note Payable to Oliver Washburn, March 7, 1995.

********     10.51 General Release Agreement Between the Company and Peter Kreft,
                   June 9, 1995.

*********    10.52 Promissory Note Payable to Oliver Washburn, September 14, 1995.

**********   10.53 Promissory Note Payable to Oliver Washburn, November 13, 1995.

**********   10.54 Promissory Note Payable to Oliver Washburn, April 26, 1996.

***********  10.55 Promissory Note Payable to Oliver Washburn, July 18, 1996.

***********  10.56 Workout Agreement dated August 30, 1996

***********  10.57 Secured Promissory Note to Malcolm L. Fickel , September 11,1996

***********  10.58 Secured Promissory Note to Oliver K. Washburn , September 11,1996

***********  10.59 Subordinated Cash Flow Promissory Note to Oliver K. Washburn,
                   September 30 , 1996

*************10.60 Debt For Equity  Swap Agreement

*************10.61 Administrative Services Agreement

*************10.62 Non-Qualified Stock Option Agreement

*************10.63 Employment agreement with Jonathan D. Forgy

*************10.64 Employment agreement with Daniel W. Parke

             28.2  Patent No. 4,520,436 (X-18 Series Downlight).

**           28.4  Patent No. 4,595,969 (Lamp Mounting Apparatus and Method).

**           28.5  Patent No. 4,641,228 (Lamp Mounting Apparatus and Method).

**           28.6  Patent No. 4,700,110 (Lamp Switching).

**           28.7  Patent No. 4,704,664 (Lamp Apparatus).

**           28.8  Trademarks Registered (Lightning Bolt Logo, Scientific NRG Component Systems, SCS,
                   X-18) and Notice of Publication of Trademark, "Switchit".

******       28.9  Patent No. 4,922,393 (Lamp Apparatus).
</TABLE>

(b)      Reports on Form 8-K

         No reports were filed during the quarter ended March 31, 1997 on form
8-K.


                                       11
<PAGE>   12
                          SCIENTIFIC NRG, INCORPORATED

                          PART I. FINANCIAL INFORMATION
               Item 1. Condensed Financial Statements (Unaudited)

                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                   March 31,          June 30,
                                                                     1997               1996
                                                                     ----               ----
ASSETS                                                           (Unaudited)
<S>                                                                <C>               <C>       
CURRENT ASSETS
  Cash ....................................................        $   46,586        $       --
  Trade receivables, less allowance for
    doubtful accounts at March 31 of $5,702
    and June 30, 1996 of $9,812 ...........................            21,388            57,982
  Subscriptions Receivable ................................            71,500                --
  Inventories (Note 2) ....................................            73,070            88,635
  Prepaid expenses ........................................            58,543             2,364
                                                                   ----------        ----------
         Total current assets .............................           271,087           148,981
EQUIPMENT AND LEASEHOLD IMPROVEMENTS,
  at depreciated cost .....................................             5,564            26,441
OTHER ASSETS, deposits ....................................                --             4,809
                                                                   ----------        ----------
                                                                   $  276,651        $  180,231
                                                                   ==========        ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
  Line of credit (Note 3) .................................        $       --         $   44,220
  Current obligations under capital leases ................                --             6,059
  Accounts payable ........................................            44,049           241,711
  Accrued compensation ....................................                --            58,161
  Accrued interest to related parties .....................                --                --
  Other accrued expenses ..................................            52,379            55,080
                                                                   ----------        ----------
        Total current liabilities .........................            96,428           405,231
  Obligations under capital leases ........................                --             9,089
  Notes Payable to related parties (Notes 3 and 7) ........                --           358,159
  Accrued interest to related parties (Notes 3 and 7) .....                --           100,308
  Accrued service contract to related party (Notes 3 and 7)                --           175,500
                                                                   ----------        ----------
        Total liabilities .................................            96,428         1,048,287
                                                                   ----------        ----------
STOCKHOLDERS' EQUITY (DEFICIT)
  Common stock, no par value;
    authorized 40,000,000 shares;
    issued and outstanding:
      March 31,1997 4,203,423 shares
      June 30, 1996 2,166,050 shares ......................         3,556,707         2,871,020
  Accumulated deficit .....................................        (3,376,484)       (3,739,076)
                                                                   ----------        ----------
        Total stockholders' equity (deficit) ..............           180,223          (868,056)
                                                                   ----------        ----------
                                                                   $  276,651        $  180,231
                                                                   ==========        ==========
</TABLE>

                       See accompanying notes to unaudited
                         condensed financial statements


                                      F - 1

<PAGE>   13
                          SCIENTIFIC NRG, INCORPORATED
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                         Three Months Ended March 31,   Nine Months Ended March 31,
                                              1997           1996          1997         1996
                                              ----           ----          ----         ----
<S>                                        <C>           <C>           <C>          <C>    
Net sales .............................    $  153,475    $  80,792     $  388,737    $ 443,207
Cost of sales .........................        72,703       54,734        241,896      270,062
                                           ----------    ---------     ----------    ---------
Gross profit ..........................        80,772       26,058        146,841      173,145
Operating expenses:
  General, administrative,
    and selling costs .................        86,517      101,290        285,021      332,595
  Research and development ............         1,111          379          3,944        4,101
                                           ----------    ---------     ----------    ---------
Loss from operations ..................        (6,856)     (75,611)      (142,124)    (163,551)
Other income (Note 5) .................        22,177           --         63,565           --
Interest expense ......................        (1,547)     (21,217)       (19,242)     (63,502)
                                           ----------    ---------     ----------    ---------
Income (loss) before extraordinary
   item and income taxes ..............        13,774      (96,828)       (97,801)    (227,053)
Income tax provision ..................          (200)        (200)          (600)        (600)
                                           ----------    ---------     ----------    ---------
Income (loss) before extraordinary item        13,574      (97,028)       (98,401)    (227,653)
Extraordinary gain on conversion of
   debt to common stock,
   net of $0 tax, (Note 7) ............       460,992           --        460,992           --
                                           ----------    ---------     ----------    ---------
Net income (loss) .....................    $  474,566    $ (97,028)    $  362,591    $(227,653)
                                           ==========    =========     ==========    =========
Weighted average number
  of shares outstanding ...............     3,525,293    2,104,050      2,960,346    2,104,050
                                           ----------    ---------     ----------    ---------
Income (loss) per share:
   From continuing operations .........    $       --        (0.05)         (0.03)       (0.11)
   Extraordinary gain .................          0.13           --           0.15           --
                                           ----------    ---------     ----------    ---------
Net income (loss) per common share ....    $     0.13    $   (0.05)    $     0.12    $   (0.11) 
                                           ==========    =========     ==========    =========
</TABLE>



                       See accompanying notes to unaudited
                         condensed financial statements

                                      F - 2
<PAGE>   14
                          SCIENTIFIC NRG, INCORPORATED

             CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                        Nine Months Ended March 31, 1997
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                        Common Stock
                                                  ---------------------------       Accumulated           Stockholders'
                                                   Shares            Amount           Deficit           Equity (Deficit)
                                                   ------            ------         -----------         ----------------
<S>                                               <C>              <C>               <C>                     <C>      
Balance, June 30, 1996 ..................         2,166,050        $2,871,020        $(3,739,076)            $(868,056)
Common stock issued for cash and                                                                           
  services to be rendered under the                                                                        
  workout agreement (Note 4) ............           600,000            60,000                 --                60,000
Common stock issued in connection                                                                          
  with legal services rendered (Note 4) .           140,000            28,000                 --                28,000
Common stock issued in connection                                                                          
  with services rendered under                                                                             
  the service contract (Note 4) .........            20,000             2,000                 --                 2,000
Net loss - First Quarter ................                --                --            (90,768)              (90,768)
                                                  ---------        ----------        -----------             ---------
Balance, September 30, 1996 .............         2,926,050         2,961,020         (3,829,844)             (868,824)
Common stock issued for cash (Note 5) ...           172,000            43,000                 --                43,000
Net loss - Second Quarter ...............                --                --            (21,206)              (21,206)
                                                  ---------        ----------        -----------             ---------
Balance, December 31, 1996 ..............         3,098,050         3,004,020         (3,851,050)             (847,030)
Common stock issued for cash (Note 6) ...           598,000           299,000                 --              (299,000)
Common stock issued in connection
  with legal services rendered (Note 6) .            25,000            12,500                 --                12,500
Common stock issued in connection                                                                          
  with future legal services (Note 6) ...            20,000            10,000                 --                10,000
Common stock issued for services                                                                           
  to be rendered under the administrative                                                                  
  services agreement (Note 6) ...........            80,000            40,000                 --                40,000
Common stock issued in connection                                                                          
   with the cancellation of debt (Note 7)           382,373           191,187                 --               191,187
Net income - Third Quarter ..............                --                --            474,566               474,566
                                                  ---------        ----------        -----------             ---------
Balance, March 31, 1997 .................         4,203,423        $3,556,707        $(3,376,484)            $ 180,233
                                                  =========        ==========        ===========             =========
</TABLE>


                       See accompanying notes to unaudited
                         condensed financial statements

                                      F - 3

<PAGE>   15
                          SCIENTIFIC NRG, INCORPORATED

                  CONDENSED STATEMENTS OF CASH FLOW Nine Months
                          Ended March 31, 1997 and 1996
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                       March 31,        March 31,
                                                         1997             1996
                                                       ---------        ---------
<S>                                                   <C>              <C>      
CASH FLOW FROM OPERATING ACTIVITIES
  Cash received from customers ...............        $ 369,831        $ 497,472
  Cash paid to suppliers and employees .......         (572,507)        (620,594)
  Interest paid ..............................           (6,870)         (23,930)
                                                      ---------        ---------
     Net cash used in operating activities ...         (209,546)        (147,052)
                                                      ---------        ---------
CASH FLOW USED IN INVESTING ACTIVITIES
  Purchase of equipment and
    leasehold improvements ...................           (5,000)              --
                                                      ---------        ---------
CASH FLOW FROM FINANCING ACTIVITIES
  Net decrease in line of credit .............          (44,220)         (45,729)
  Proceeds from advances and notes from
    Company's officer and/or director ........           70,000          170,000
  Principal payments under
    capital lease obligations ................          (15,148)          (6,668)
  Principal payments on advances .............          (60,000)              --
  Proceeds from issuance of common stock .....          310,500               --
                                                      ---------        ---------
     Net cash provided by financing activities          261,132          117,603
                                                      ---------        ---------
     Net increase (decrease) in cash .........           46,586          (29,449)
CASH
  Beginning of period ........................               --           19,599
                                                      ---------        ---------
  Ending of period ...........................        $  46,586        $  (9,850)
                                                      =========        =========
</TABLE>



                       See accompanying notes to unaudited
                         condensed financial statements

                                      F - 4
<PAGE>   16
                          SCIENTIFIC NRG, INCORPORATED

                  CONDENSED STATEMENTS OF CASH FLOW (Continued)
                   Nine Months Ended March 31, 1997 and 1996
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                March 31,    March 31,
                                                                  1997         1996
                                                                ---------    ---------
<S>                                                            <C>          <C>      
RECONCILIATION OF NET INCOME (LOSS)
 TO NET CASH USED IN OPERATING ACTIVITIES
  Net Income (loss) .......................................    $ 362,591    $ (227,653)
  Adjustments to reconcile net income (loss)
    to net cash provided by (used in) operating activities:
    Non-cash interest expense .............................       18,212           --
    Depreciation and amortization .........................        3,625        5,465
    Provision for doubtful accounts .......................       (4,110)       9,000
    Loss on disposal of fixed assets ......................       22,252           --
    Compensation expense arising from
      professional services and service contracts .........       52,500           --
    Extraordinary gain from debt conversion to equity .....     (460,992)          --
    Write off of other assets - deposits ..................        4,809           --
   Change in assets and liabilities:
        Trade receivables .................................       40,704       43,460
        Inventories .......................................       15,565      (32,330)
        Prepaid expenses and deposits .....................       (6,179)       2,940
        Accounts payable, accrued compensation
          and other accrued expenses ......................     (259,123)       9,372
        Accrued interest payable ..........................           --       42,094
        Accrued Income Taxes ..............................          600          600
                                                               ---------    ---------
     Net cash used in operating activities ................    $(209,546)   $(147,052)
                                                               =========    =========
</TABLE>


                       See accompanying notes to unaudited
                         condensed financial statements

                                      F - 5
<PAGE>   17
                          SCIENTIFIC NRG, INCORPORATED

                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1.  BASIS OF PRESENTATION

In the opinion of the Company's management, the accompanying unaudited condensed
financial statements include all adjustments (consisting of normal accruals)
necessary for the fair presentation of its financial position at March 31, 1997,
results of operations for the three and nine months ended March 31, 1997 and
1996 and cashflows for the nine months ended March 31, 1997 and 1996. Although
the Company believes that the disclosures in these financial statements are
adequate to make the information presented not misleading, certain information
and disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. These financial statements should be read in conjunction with the
Company's audited financial statements included in the Company's Annual Report
on Form 10-KSB filed with the Securities and Exchange Commission on December 23,
1996. Operating results for the three and nine month periods ended March 31,
1997 are not necessarily indicative of the results that may be expected for the
Company's entire year ending June 30, 1997. The Financial Accounting Standards
Board has issued Statement of Financial Accounting Standards 128, "Earnings per
Share" (SFAS 128), which is effective for financial statements issued for
periods ending after December 15, 1997. The effect of adopting SFAS 128 has not
yet been determined.

NOTE 2.  INVENTORIES

Inventories are stated at the lower of cost or net realizable value. Cost is
determined under the standard cost method. Costs include materials, direct
labor, and an allocable portion of manufacturing overhead. The Company operates
in an industry in which its products are subject to design changes and
manufactured based upon customer specifications. Accordingly, should design
requirements change significantly or customer orders be canceled, the ultimate
net realizable value of such products could be less than the carrying value of
such amounts. At March 31, 1997, management believes that inventories are
carried at their net realizable value.

NOTE 3.  LINE OF CREDIT, BRIDGE NOTES AND RELATED PARTY NOTES PAYABLE

The Line of Credit was paid in full in October 1996. In September 1996 the
Company borrowed $60,000 in Bridge Notes from related parties as more fully
explained under Item 5 "Other Information". Subsequent to June 30, 1996, all
notes payable, related accrued interest and the accrued service contract
obligation to related parties were restructured as part of the Workout Agreement
(see Note 4). Such amounts were converted to common stock on February 4, 1997,
(see Note 7). As of March 31,1997 these bridge notes are paid in full.


                                      F-6
<PAGE>   18
                          SCIENTIFIC NRG, INCORPORATED

         NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)

NOTE 4. WORKOUT AGREEMENT

On September 11, 1996 , the board of directors of the Company approved a formal
Workout Agreement (the "Workout Agreement") which provided a method to [1]
restructure outside of bankruptcy existing debt payable to certain related
parties, [2] provide for a change in the Company's officers and directors, and
[3] issue additional notes payable and additional shares of common stock of the
Company in order to finance operations (see Item 5, "Other Information" and
Note 7, "Conversion of related party debt").

NOTE 5. COMMON STOCK

In November 1996 the Company received subscriptions from officers and existing
shareholders to purchase 172,000 shares at $.25 per share. The proceeds were
needed to settle certain accounts payable at discounts of 70% off of face value.
For the three and nine months ended March 31, 1997 the Company had paid
settlements to vendors resulting in discounts to the Company of $22,177 and 
$85,819, respectively. Such amounts have been included in Other Income in the
unaudited condensed statement of operations and presented net of a $22,254 loss
on the disposal of the outdated computer system, for the nine months ended March
31, 1997.

NOTE 6. PRIVATE PLACEMENT

The Company issued 723,000 shares of common stock at $.50 per share. The
offering closed March 31, 1997. At March 31, 1997 the Company had subscriptions
receivable of $71,500. These subscriptions were paid in full in April 1997. The
proceeds will be used for working capital. The Company received cash of 
$299,000 for 598,000 shares. Further the Company issued 25,000 shares in
connection with legal services rendered and 20,000 shares in connection with
future legal services. Additionally the Company issued 80,000 shares for eight
months of services to be rendered under the administrative services agreement.


                                       F-7

<PAGE>   19
                          SCIENTIFIC NRG, INCORPORATED

         NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                                   (UNAUDITED)



NOTE 7. CONVERSION OF RELATED PARTY DEBT TO COMMON STOCK (SEE EXIBIT 10.60)

On February 4, 1997 the related party debt and accrued interest totaling 
$652,179, (see Item 5, "Other Information"), was converted to equity for
382,373 shares of common stock. At the time of conversion the Company was
offering shares at $.50 per share through a private placement (see Note 6,
"Private Placement"). The Company recorded the debt conversion during the
quarter ended March 31, 1997 as an issuance of common stock for $191,187 and
recognized the difference between the carrying value of the debt in such stock
issuance as an extraordinary gain on relief of indebtedness totaling $460,992.



                                       F-8
<PAGE>   20
                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date: May 20, 1997
                                                   SCIENTIFIC NRG, INCORPORATED,
                                                   a Minnesota Corporation


                                                   By: /s/ Daniel W. Parke
                                                       -------------------------
                                                   Name:   Daniel W. Parke
                                                   Title:  Chairman and CEO


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

           Signatures                              Date
           ----------                              ----

           By: /s/ Daniel W. Parke                 May 20, 1997
               -----------------------------
           Name:   Daniel W. Parke
           Title:  Chairman and CEO

           By: /s/ Oliver K. Washburn              May 20,1997
               -----------------------------
           Name:   Oliver K. Washburn
           Title:  Treasurer and Principal
                   Financial Officer


                                       12
<PAGE>   21
 Index to Exhibits

 10.60    Debt For Equity Swap Agreement
 10.61    Administrative Services Agreement
 10.62    Non-Qualified Stock Option Agreement
 10.63    Employment Agreement with Jonathan D. Forgy
 10.64    Employment Agreement with Daniel W. Parke
 27       Financial Data Schedule