<PAGE>   1
                                   THE FOLLOWING ITEM WERE THE SUBJECT OF A FORM
                                   12b-25 AND ARE INCLUDED HEREIN: ALL ITEMS.


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
(Mark One)
[X]      Annual Report under Section 13 or 15(d) of the Securities Exchange Act
         of 1934 [Fee Required] for the fiscal year ended September 30, 1996

[ ]      Transition Report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934 [No Fee Required] for the transition period from
                       to 
         -------------    -------------


COMMISSION FILE NUMBER:  0-27842

                               SPORTS-GUARD, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

                Delaware                                  54-1778587
     (State or other jurisdiction of        (I.R.S. Employer Identification No.)
     incorporation or organization)          

      3212 Skipwith Road, Suite G-1          
              Richmond, VA                                  23294
(Address of principal executive offices)                  (Zip Code)

Issuers's telephone number: (804) 967-0500

Securities to be registered pursuant to Section 12(b) of the Act: None

Securities to be registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.01 Par Value
                                (Title of Class)

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

         Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [   ]
                                ---

         The issuer's revenues for the fiscal year ended September 30, 1996 were
$1,495.00.

         The aggregate market value of the voting stock held by non-affiliates
of the registrant as of January 6, 1997 (based upon the average bid and asked
prices) was $478,094.50.

         The number of shares of the registrant's Common Stock, $.01 par value,
outstanding as of January 6, 1997 was 5,981,923.

         Documents incorporated by reference: None.

         Transitional Small Business Issuer Format (check one):
         Yes          No   X
             -----       -----

<PAGE>   2

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

Business Development.

     On July 26, 1995, the Company's predecessor, Sports-Guard, Inc., a Virginia
corporation ("SportsGuard Virginia"), reincorporated in the State of Delaware as
"Sports-Guard, Inc." (the "Reincorporation"). Sports-Guard Virginia was
originally incorporated on July 11, 1994. The Company was incorporated in the
State of Delaware on July 17, 1995 to act as the successor in interest to
Sports-Guard Virginia following the Reincorporation. The Company effected the
Reincorporation because management believed that Delaware corporate laws were
more conducive to the Company's goal of having its securities become publicly
traded. On February 2, 1996, the Company completed the acquisition by merger
with Skate Publishing Corp., a Delaware corporation ("Skate"). Skate had limited
assets and approximately 400 shareholders of record and was acquired by the
Company in order to increase its shareholder base. Skate had no active
operations at the time of the merger with the Company.

     The Company's principal executive office is located at 3212 Skipwith Road,
Suite G-1, Richmond, Virginia 23294 and its telephone number is (804) 967-0500.

Business of the Issuer.

     The Company is a development stage entity engaged in the distribution of
sports safety equipment. The Company's first product, known as the
Fielders-Guard, is a polycarbonate face guard for use primarily by defensive
players in the sports of baseball and softball. The Company intends to establish
additional sports-safety products in the future, although no specific product
has been identified. The Company commenced operations in late 1995 when it
pursued testing of the prototype Fielders-Guard, contracted for the acquisition
of its production mold for the Fielders Guard mask and implemented a public
relations and advertising campaign.

     PRODUCTS

     Initial Product Entry. The Company's initial product, known as the
Fielders-Guard, is a lightweight polycarbonate face guard designed for use
primarily, although not exclusively, by defensive players in the sports of
baseball and softball. The Fielders-Guard is designed to reduce injuries to the
defensive player's face and eye area from hit or deflected balls.

     The Company's founder began developing the Fielder's Guard in 1990 after
his nearly 25 years of experience with Little League Baseball, both as a coach
and league administrator, provided him with first hand experience of the
frequency of face and eye injuries among defensive players and the resulting
long-term fear of playing. These experiences are supported by industry
statistics. Gallup poll projections indicate that nearly 64 million Americans
participate in the sports of baseball and softball. Younger players are at
greater risk of injury because of lower skill levels and slower reaction times.
According to the American Academy of Plastic and Reconstructive Surgery, in
1994, there were an estimated 181,000 emergency-room treated injuries among
children ages 5-14 which were baseball and softball related. Facial injuries
were the most frequently reported, accounting for 56,000 (31%) of these
injuries. Bicycling is the only children's activity associated with more
injuries.


                                      -1-
<PAGE>   3

     The Fielders-Guard reduces the risk of facial and eye injuries, and as a
result increases player confidence and performance due to the reduced "fear of
the ball." The face guards currently in use in these sports are those attached
to batting helmets designed for the protection of batters and base runners.
Management believes that the patented Fielders-Guard is the first face guard
designed and marketed specifically for use by defensive players.

     The Mask. The Fielders-Guard is comprised of a one-piece, lightweight,
molded mask, impact cushioning forehead and mouth pads, both of which are
secured to the inside surface of the mask, a head harness and a lip guard. The
mask is molded from a relatively thin plastic material having high impact
strength. The upper edge of the mask rises slightly above the user's head. The
lower edge of the mask extends below the user's chin to cover a portion of the
user's throat. The mask extends laterally across the user's face from one temple
to the other.

     An important feature of the Fielders-Guard is that the mask is formed with
an opening sized and positioned to accommodate insertion of the visor of a
regulation baseball cap. The mask is also formed with an elongated oval eye
opening which allows the user unobstructed forward and substantially
unobstructed peripheral vision. The lower edge of the eye opening extends below
the user's sight line to a level slightly above the tip of the nose in order to
provide protection for the user's nose. A baseball cannot pass through the
opening, even at the widest point.

     The mask is secured to the user's head by an adjustable harness with straps
which run across the back of the user's head above the ears and from the back of
the head to the upper edge of the mask. The forehead and mouth pads allow the
mask to be fitted against the user's face when the harness is tightened. The
thickness of the forehead and mouth pads permit the user to wear most safety
eyeglass styles under the Fielders-Guard without experiencing any loss of
forward or peripheral vision. The forehead and mouth pads are designed to
minimize the impact of blows to the face by hit or deflected balls by absorbing
the impact of the blows and distributing the impact across the surface of the
mask.

     Product Development and Testing. The design for the Fielders-Guard calls
for the mask to be constructed of a high impact strength polycarbonate material.
This type of material was chosen not only because it its lightweight, but also
for its strength.

     A prototype Fielders-Guard, manufactured using an injection mold, was
tested at Detroit Testing Laboratory, Inc. in November 1995 using American
Society of Testing Materials ("ASTM") F-910-86 test and procedures standards.
The current test standard was approved by ASTM on July 25, 1986. The test
specifications were submitted by the Company and all tests were performed by the
independent testing personnel of Detroit Testing Laboratory, Inc. Tests were
conducted using the prototype Fielders-Guard attached to a baseball cap, which
was then attached to a headform. The impact test was designed to approximate the
impact of a direct blow from a baseball traveling at approximately 70 miles per
hour. The ball speeds were determined by the existing ASTM F-910-86 test
standard. The prototype Fielders-Guard did not break even at the highest speed
tested.

     Although the current ASTM test standard was designed for testing helmets
and face-guards for the protection of batters, base-runners and base-coaches, it
is the only ASTM test available at this time. The purpose of the test was to
insure that the Fielders-Guard provides a similar safety level relating to ball
impact as the other non-defensive player devices currently on the market. The
Company intends to continue testing the manufactured Fielders-Guard at various
intervals as management deems necessary or as otherwise required by the
Company's insurance carrier. The Company also intends to pursue the


                                      -2-
<PAGE>   4

establishment of a new ASTM test standard for defensive players which the
Company has identified as "Non-Helmet Face Guard."

     The Company has also submitted the Fielders-Guard to the Consumer Product
Safety Commission for consideration as part of HP95-1 Petition for Development
of a Safety Standard for Protective Batting Helmets. The petition, which was
originally submitted on October 12, 1994 by the American Academy of Facial
Plastic and Reconstructive Surgery, requests that the Consumer Product Safety
Commission adopt a consumer product safety standard requiring that all
protective batting helmets intended to be used by children under the age of 15
be manufactured with a face guard that conforms to Standard F910 of the ASTM.

     Lack of Market Acceptance; Redesigned Product. The Company was unsuccessful
in generating any significant level of sales of the Fielders-Guard as a result
of its initial marketing efforts. Management concluded that the Company had
insufficient resources to fully implement its marketing campaign or complete a
roll out of its Fielders-Guard product. Between March and June of 1996, the
Company raised $118,880 from a private offering of convertible notes in order to
provide working capital for the wholesale and retail marketing of the
Fielders-Guard product. Despite the Company's continued marketing efforts, the
Company achieved only minimal sales of the Fielders-Guard during the nine month
period ended June 30, 1996.

     Management determined, based upon various factors, including customer
feedback, that the design of the Fielders-Guard was a significant factor in the
lack of market acceptance of the product. The Company received positive feedback
on the safety related goals of its product, but a negative response to the
actual design. As a result, since June 30, 1996, the Company has developed a
plan to redesign its product in order to attempt to attain market acceptance.
The Company engaged Advanced Design Corporation of Newington, Virginia, to
develop structural improvements in the Fielders-Guard while reducing the overall
size and thickness of the polycarbonate mask and impact pads. The redesigned
Fielders-Guard has a projection for the nose area and a more open design
allowing more ventilation and easier communication between players. The
redesigned Fielders-Guard is lighter-weight and is constructed with a clear
polycarbonate injection molded mask which allows for clearer visibility of the
player's face.

     The Company has produced approximately 25 prototypes of the redesigned
Fielders-Guard, using a vacuum mold, for use in obtaining a preliminary
indication of market acceptance and establishing relationships with potential
dealers. The Company has received confirmation from its patent counsel that the
redesigned Fielders-Guard is protected by the existing Patent for the
Fielders-Guard. There can be no assurance that the redesigned Fielders-Guard
will receive market acceptance or that the Company will be able to generate any
meaningful level of sales of the redesigned Fielders-Guard product.

     The Company's current cash position is not sufficient to fund completion of
the redesign of the Fielders-Guard product, to fund the purchase of the
injection molds or to fund continued operations, including the advertising and
marketing expenses which management believes will be necessary to introduce the
redesigned product. See, "Item 6. Management's Discussion and Analysis or Plan
of Operation."

     CONTRACT MANUFACTURING

     The mask of the Fielders-Guard is manufactured using a polycarbonate
injection mold. The Company's first mold is a single cavity production mold
capable of producing a minimum of 9,000 units


                                      -3-
<PAGE>   5

per week. The cost of the injection mold was approximately $32,000. Additional
molds, including, if necessary, a two cavity mold, will be purchased as sales
volumes require.

     The Fielders-Guard mask is manufactured for the Company on a purchase order
basis by Reiss Corporation, Thermoplastic Subsystems Group, of Blackstone,
Virginia. To date, the only variance in pricing has been due to price
fluctuations for polycarbonate materials. The Company also contracts with
another division of Reiss Corporation for assembly of the Fielders-Guard
components into finished product, as well as for inventory storage and shipment.
The Company believes that its arrangements with Reiss Corporation are adequate
for current and anticipated production requirements, however, the Company has
identified two alternate manufacturers.

     The Company has also entered into an agreement with Revere Mold and
Engineering of Chester, Virginia, for production of the injection mold for the
redesigned Fielders-Guard. The new injection mold will cost $35,000 and is
expected to be completed approximately January 15, 1997. Management intends to
engage Reiss Corporation to begin contract manufacturing of the redesigned
Fielders-Guard mask immediately following completion of the new injection mold.
The redesigned pads for the Fielders-Guard will be produced by Rubatex
Corporation of Bedford, Virginia, using the Company's existing inventory of pads
for initial production. Product assembly and packaging services will continue to
be provided on a contract basis by Reiss Corporation.

     DISTRIBUTION AND MARKETING

     The Company intends to market the Fielders-Guard throughout the United
States to both wholesale and retail/consumer customers. The suggested retail
price of the Fielders-Guard is $59.95, plus $4.50 postage and handling, plus
sales tax where applicable.

     The Company plans to make wholesale sales through attendance at national
tradeshows, advertisements in industry publications and contact with youth,
adult and senior baseball and softball organizations and sporting goods
wholesalers and retailers. The Company does not intend, at least initially, to
engage distributors or to sublicense to sporting goods manufacturers, however,
the Company is working to establish network of agents to identify dealers in
Virginia, North Carolina and Maryland to market the Fielders-Guard through
display and league salespersons who will contact athletic directors, trainers,
training camps and coaches. The Company also plans to make sales directly to the
consumer through print, radio and television advertisements which include a
toll-free telephone number. The Company also plans to engage one (1) additional
person to assist in implementing the Company's marketing plan and managing the
regional dealer network.

     All of the Company's marketing plans are dependent on the availability of
sufficient working capital and are subject to change.

     In November 1995, the Company implemented a comprehensive public relations
and advertising campaign. Over 800 media packets were sent to 200 newspapers,
major network news programs, 40 television stations and numerous magazines. In
addition, a video news release was produced and transmitted via satellite to
television stations across the country. As a result, approximately 20
television, radio and print reports on the Fielders-Guard have been produced,
and based upon the level of follow-up telephone calls received, management
believes that interest in future coverage is strong. Consumer reaction has been
generally favorable, and questionable feedback has generally involved consumers
who have not actually seen the product and requested additional information.


                                      -4-
<PAGE>   6

     The Company acquired its initial inventory of Fielders-Guards in March
1996, and through April 30, 1996, 41 units were sold. Management believes that
sluggish sales to date are a result of lack of advertising.

     The success of the Fielders-Guard will depend upon the Company's ability to
achieve market exposure and acceptance for the product. The Company's
advertising and marketing program is designed to educate potential buyers about
the advantages of the Fielders-Guard in order to achieve acceptance of the
product. The Company intends to try to develop public awareness of the
Fielders-Guard product through a public relations effort directed to syndicated
writers, newspapers, radio, television talk and sports shows, magazines and
trade articles. Efforts will be made to gain support of the Consumer Products
Safety Commission, medical eye, dental and reconstructive surgeons and
sports-safety organizations.

     The Company has not undertaken any market research to date to determine the
nature and extent of the market for its product. There can be no assurance that
the Company's current marketing plan will result in significant sales of the
Fielders-Guard.

     Although product testing has not indicated a significant likelihood of
liability claims related to the Fielders-Guard, the Company plans to obtain a
$1,000,000 product liability insurance policy for the Fielders-Guard. The
Company has obtained a quotation for the policy and plans to implement coverage
as soon as cash flow from operations or outside financing permits.

     COMPETITION

     The Company has no known direct competitor currently marketing a similar
comprehensive protective face guard product. There are companies marketing
helmets and protective gear for baseball batters and base-runners. The only
safety equipment known to the Company currently offered to the defensive
baseball player for protection of the face are goggles or safety glasses and
mouth-guards. The Company is aware of an August 1994 patent issued for a
baseball infielder's mask, however, to the Company's knowledge, the device is
not currently being marketed and management believes that it does not provide
the same protection as the Fielders-Guard. The Company is currently reviewing
whether the device infringes on the Patents. The Company believes that the
United States patents covering the Fielders-Guard invention, to which the
Company holds exclusive licenses, will provide significant barriers to entry for
other companies desiring to market a similar product. See "Patents and
Trademark" and "Licensing Arrangements" below.

     RAW MATERIALS

     The forehead pad, mouth pad, head harness and lip guard components of the
Fielders-Guard are readily available from existing manufacturers with a minimum
of modification before assembly. The mask is produced by a contract manufacturer
using the Company's polycarbonate injection mold. (See "Contract Manufacturing"
above.)

     PATENTS AND TRADEMARK

     The Fielders-Guard face guard invention is protected by United States
Patent Nos. 5,206,955 and 5,267,353 (the "Patents") which are exclusively
licensed to the Company. (See "Licensing Arrangements" below.) The Company has
received confirmation from its patent counsel that the redesigned Fielders-Guard
is protected by the Patents. One of the Patents covers an alternative design
providing for a mask comprised of a matrix of metallic rods coated with a
resilient material.


                                      -5-
<PAGE>   7

     The Company believes that it could assert the Patents to prevent other
persons from manufacturing, selling, or using the Fielders-Guard or similar
products, as covered by the claims in the Patents, in the United States.
However, the Company has not yet undertaken any research to determine whether,
and cannot provide any assurances that: (1) the Patents will be enforceable and
adequate to protect the Company from the sale in the United States, or
importation into the United States from any other country, of a competing
product by another person; (2) the manufacture, sale or distribution of the
product will not infringe upon the patent or other proprietary rights of another
person in the United States; or (3) the Company will be financially capable of
prosecuting or defending any infringement action with respect to the patents or
rights of other persons.

     On April 14, 1995, the United States Patent and Trademark Office issued a
Notice of Publication of the trademark of the name "Sports-Guard," which is
exclusively licensed to the Company. (See "Licensing Arrangements" below.)
However, there can be no assurance that the Company will be financially capable
of prosecuting or defending any infringement action with respect to the
trademark, or the trademark rights of others.

     LICENSING ARRANGEMENTS

     The Company holds an exclusive license to the Patents. The Patents are
owned by the Company's founder, President and majority shareholder, Norman O.
Milligan ("Milligan") and have been licensed to the Company for an initial term
of ten (10) years expiring in July 2004, with an option to renew for the life of
the Patents, pursuant to a Patent License Agreement (the "Patent License
Agreement"). The Patent License Agreement also provides the Company with the
exclusive license to use the trademark "Sports-Guard" (the "Trademark"), which
is also owned by Mr. Milligan, in connection with the Fielders-Guard product, as
well as a right of first refusal for use of the Trademark in connection with any
other product. The Patent License Agreement provides that during the term of Mr.
Milligan's employment by the Company as its President, all royalties under the 
Patent License Agreement are waived by Mr. Milligan.

     In the event that Mr. Milligan's employment as President of the Company is
terminated, royalties are payable under the Patent License Agreement of $1.00
per unit during the initial term of the agreement and $1.50 per unit during the
renewal term. Mr. Milligan may terminate the Patent License Agreement in the
event of a breach by the Company which is uncured for a period of 10 days after
written notice, the bankruptcy or insolvency of the Company, or certain
transactions involving a change of control. The Patent License Agreement is
binding on the heirs, successors and assigns of Mr. Milligan.

     RESEARCH AND DEVELOPMENT

     Research and development costs related to the original Fielders-Guard
invention were not borne by the Company, as the invention is licensed to the
Company. Since its inception, the Company has been primarily engaged in the
preparation for production of the Fielders-Guard product, including the design,
production and testing of prototypes and the production of an injection mold for
use in manufacturing the mask for the Fielders-Guard. Recently, the Company has
undertaken the redesign of the Fielders-Guard. The Company's President has
expended significant effort in connection with the redesign of the
Fielders-Guard and the Company estimates that its out-of-pocket design costs
will range from $5,000 to $10,000 and the cost of the injection mold is expected
to be $35,000.


                                      -6-
<PAGE>   8

     EMPLOYEES

     The Company currently has only one employee, its President. To date, all
sales, marketing, advertising and other services not performed by Mr. Milligan
have been performed by independent third party contractors. The Company intends
to hire one additional employee to perform marketing sales, production and
administrative services as revenues from operations permit. Although the Company
generally does not intend to engage additional personnel until sales of the
Company's product will support the current level of operating expenses, the
Company is currently attempting to identify potential candidates with national
experience in sports products and marketing.


ITEM 2.  DESCRIPTION OF PROPERTY.

     The Company maintains is principal office and warehouse distribution
facility in Richmond, Virginia. The approximately 4,000 square foot facility is
leased from David R. Milligan, a director of the Company, under a five year
lease which terminates on November 14, 2000. The rent under the lease is $40,000
per annum for the term of the lease, and includes all parking, utilities,
cleaning and building maintenance. Management believes that its current
facilities will be sufficient for the Company's purposes for the next twelve
months, and that additional office or warehouse facilities will be available in
the Richmond area when needed.


ITEM 3.  LEGAL PROCEEDINGS.

     There are no pending legal proceedings to which the Company or the property
of the Company are subject. In addition, no proceedings are known to be
contemplated by a governmental authority against the Company or any officer or
director of the Company.


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

     Inapplicable.


                                      -7-
<PAGE>   9

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Prior to July 1996, there was no trading activity in the Company's common
stock. The Company's common stock may be traded in the over-the-counter market
and quoted in what are commonly referred to as on the "pink sheets", which
reports quotations by brokers or dealers in particular securities. Because of
the lack of readily available quotations and the limited trading volume
frequently associated with these securities, there is a greater risk of market
volatility of such securities than for securities traded on national exchanges.
Trading in the Company's stock is reported under the symbol SPGU.

     The following table sets forth the quarterly high and low bid prices (to
the nearest $1/8) of the common stock from July 29, 1996 (the date for which
quotations are first available) through September 1996.

<TABLE>
<CAPTION>
                                                                             HIGH                     LOW
                                                                        ---------------        -----------------
YEAR ENDED SEPTEMBER 30, 1996
<S>                                                                     <C>                    <C>
     First Quarter....................................................          --                      --

     Second Quarter...................................................          --                      --

     Third Quarter....................................................          --                      --

     Fourth Quarter...................................................       2-5/8                       1
</TABLE>


     These quotations represent inter-dealer quotations without adjustment for
retail markups, markdowns or commissions and does not necessarily represent
actual transactions.

     As of January 6, 1997, there were approximately 420 record holders of the
Company's common stock.

Common Stock

     The authorized capital stock of the Company consists of 20,000,000 shares
of common stock, $.01 par value ("Common Stock"), of which, as of January 6,
1997, 5,981,923 shares of Common Stock were issued and outstanding and held of
record by approximately 420 persons. Each holder of shares of Common Stock is
entitled to one vote for each share held on all matters to be voted upon by the
shareholders generally. The shares do not have cumulative voting rights which
means that holders of more than 50% of the shares of Common Stock voting for the
election of directors can elect all the directors, and that in such an event the
holders of the remaining shares would not be able to elect a single director.
The approval of proposals submitted to shareholders at a meeting requires the
favorable vote of a majority of the shares voting, except in the case of certain
fundamental matters where Delaware law requires the favorable vote of at least a
majority of all outstanding shares. Shareholders are entitled to receive such
dividends as may be declared from time by the Board of Directors out of funds
legally available therefor, and in the event of liquidation, dissolution or
winding up of the Company to share ratably in all assets remaining after payment
of liabilities. The holders of shares of Common Stock have no preemptive,
conversion or subscription rights.


                                      -8-
<PAGE>   10

Common Stock Purchase Warrants

     In connection with the Company's 1995 private placement, warrants to
purchase an aggregate of 375,000 shares of Common Stock were issued
("Warrants"). Each Warrant outstanding entitles the holder to purchase one (1)
share of Common Stock for an exercise price of $1.00. The Warrants are
exercisable beginning upon the date of issuance and continuing for a period of
three (3) years. The shares of Common Stock underlying the Warrants carry
piggyback registration rights which entitle the holder to elect to have his or
her shares of Common Stock issued upon exercise of the Warrants registered under
the Securities Act of 1933 in the event that the Company files a registration
statement under such act, subject to certain limitations.

10% Convertible Notes

     Between March and June 1996, the Company conducted a private placement of
up to $200,000 in principal amount of 10% convertible promissory notes ("Notes")
resulting in gross proceeds of $118,880. The Notes have a term of two years and
are convertible into Common Stock at the election of the holder at a price of
$1.00 per share. The shares of Common Stock underlying the Notes carry piggyback
registration rights which entitle the holder to elect to have his or her shares
of Common Stock issued upon exercise of the Notes registered under the
Securities Act of 1933 in the event that the Company files a registration
statement under such act, subject to certain limitations.

Transfer Agent

     The Transfer Agent for the Company's Common Stock is American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York 10005.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

     The Company is a development stage entity engaged in the design and
distribution of sports safety equipment. The Company's first product, known as
the Fielders-Guard, is a polycarbonate face guard for use primarily by defensive
players in the sports of baseball and softball.

     Historically, the Company's operations have been financed by advances from
the Company's principal stockholder and sales of common stock, including the
private offering of units at $1.00 per unit, each unit consisting of one share
of common stock and a warrant to purchase one share of common stock at $1.00 per
share, between August and November 1995, which resulted in gross proceeds of
$375,000 (the "Unit Offering"). The proceeds of the Unit Offering were used
primarily to complete production of an injection mold for the Fielders-Guard, to
manufacture prototypes and inventory, for research and development of
improvements on the Fielders-Guard product, for the payment of advertising and
marketing expenses and general operating expenses. In addition, the proceeds
were used for legal and accounting fees related to initiating Securities and
Exchange Commission reporting by the Company.

     The Company was unsuccessful in generating any significant level of sales
of the Fielders-Guard as a result of its initial marketing efforts. Management
concluded that the proceeds of the Unit Offering were not sufficient to permit
the Company to fully implement its marketing campaign or complete a roll out of
its Fielders-Guard product. Between March and June of 1996, the Company raised
gross proceeds of $118,880 from the private offering of convertible notes in
order to provide working capital for the wholesale and retail marketing of its
product and the continuation of its business. The notes have a term


                                      -9-
<PAGE>   11

of two years and are convertible into shares of the Company's common stock at
the election of the holder at a price of $1.00 per share.

     Despite the Company's continued marketing efforts, the Company achieved
only minimal sales of the Fielders-Guard during the nine month period ended June
30, 1996. Management determined, based upon various factors, including customer
feedback, that the design of the Fielders-Guard was a significant factor in the
lack of market acceptance of the product. The Company received positive feedback
on the safety related goals of its product, but a negative response to the
actual design. As a result, since June 30, 1996, the Company has developed a
plan to redesign its product in order to attempt to attain market acceptance.
The Company engaged Advanced Design Corporation of Newington, Virginia, to
develop structural improvements in the Fielders-Guard while reducing the overall
size and thickness of the polycarbonate mask and impact pads. The redesigned
Fielders-Guard has a projection for the nose area and a more open design
allowing more ventilation and easier communication between players. The
redesigned Fielders-Guard is lighter-weight and is constructed with a clear
polycarbonate injection molded mask which allows for clearer visibility of the
player's face.

     The Company has produced approximately 25 prototypes of the redesigned
Fielders-Guard, using a vacuum mold, for use in obtaining a preliminary
indication of market acceptance and establishing relationships with potential
dealers. The Company has received confirmation from its patent counsel that the
redesigned Fielders-Guard is protected by the existing patent for the
Fielders-Guard. The Company also entered into an agreement with Revere Mold and
Engineering of Chester, Virginia, for production of the injection mold for the
redesigned Fielders-Guard. The new injection mold will cost $35,000 and is
expected to be completed approximately January 15, 1997. Management intends to
engage Reiss Corporation of Blackstone, Virginia, to begin contract
manufacturing of the Fielders-Guard mask immediately following completion of the
new injection mold. The redesigned pads for the Fielders-Guard will be produced
by Rubatex Corporation of Bedford, Virginia, using the Company's existing
inventory of pads for initial production. Product assembly and packaging
services will continue to be provided on a contract basis by Reiss Corporation.

     The Company's current cash position is not sufficient to fund redesign of
the product or continued operations, including the advertising and marketing
expenses which management believes will be necessary to introduce the redesigned
product. Management believes that an aggregate of approximately $410,000,
exclusive of product costs, will be required to fund operations for the next
twelve months. The Company believes that profitable operations can be achieved
if a fiscal 1997 sales volume of 13,000 units ($585,000) is achieved as a result
of implementation of the Company's current marketing plan. There can be no
assurance that the redesigned product will result in market acceptance or any
meaningful level of sales.

     The Company plans to conduct a private offering of Common Stock to raise
funds necessary in order to continue its operations. The Company intends to
offer an aggregate of 1,000,000 shares of its Common Stock to accredited
investors only at a price of $.50 per share. From June 30, 1996 to the date of
this report, operations were funded by advances aggregating $125,000 from Norman
O. Milligan, the Company's President and principal stockholder. Mr. Milligan
received the funds he advanced to the Company as loans from business associates.
These persons have indicated that they desire to participate in the private
offering by assigning Mr. Milligan's loan obligations to the Company (with the
result that the Company's obligation to Mr. Milligan will be extinguished). In
order to prevent dilution to the current stockholders of the Company as a result
of this new offering, Mr. Milligan has agreed to contribute to capital a number
of shares of Common Stock held by him equal to the number of shares sold in the
private offering (up to 1,000,000 shares). The Common Stock Purchase Agreement
to be


                                      -10-
<PAGE>   12

entered into in connection with the private offering provides that in the event
that the Company fails to achieve fiscal 1997 sales of at least 5,000 units of
the Fielders-Guard, Mr. Milligan will enter into a change of control agreement
whereby all of the shares of Common Stock owned by him will be exchanged for
certain operating assets, including inventory and license rights related to the
Fielders-Guard. In addition, Mr. Milligan will resign as an officer and
director, and cause the remainder of the board to be replaced. Upon such a
change of control, Ronald K. Stack and Troy D. Wiseman or their designees will
be appointed as trustees to carry out the search for a new operating company to
merge with the Company.

     During the next twelve months, general and administrative expenses are
expected to substantially increase due to product development costs, advertising
costs related to continuation of the Company's marketing plan, legal and
accounting fees related to maintaining the Company reporting status with the
Securities and Exchange Commission and other expenses related to the Company's
marketing efforts. Although management does not expect to engage any significant
additional personnel until such time as sales of the Company's product will
support the current level of operating expenses, the Company is currently
attempting to identify potential candidates with national experience in sports
products and marketing. If the Company generates large sales volumes of the
Fielders-Guard, the Company may require additional working capital to finance
increased inventory requirements.

     The Company does not anticipate incurring any significant research and
development activities, other than the redesign of the Fielders-Guard, until
such time as revenues from operations will support such activities. Absent
receipt of additional financing, the Company will not make any significant
capital expenditures for plant or equipment during the next twelve months.

     There is no assurance that the Company will be successful in raising
additional capital, that the redesigned Fielders-Guard will result in market
acceptance, that the Company will be able to generate any meaningful level of
sales of the redesigned Fielders-Guard product or that the Company will be able
to continue its ongoing operations.


ITEM 7.  FINANCIAL STATEMENTS.

                               SPORTS-GUARD, INC.
                          (A Development Stage Company)
                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

<TABLE>
<S>                                                                                                                <C>
Report of Independent Auditors...................................................................................  12
Balance Sheets as of September 30, 1996 and 1995.................................................................  13
Statements of Operations for the years ended September 30, 1996 and 1995 and for
     the period from Inception (July 11, 1994)
     through September 30, 1996..................................................................................  14
Statements of Stockholders' Equity (Deficit) for the period from Inception (July 11, 1994)
     to September 30, 1996.......................................................................................  15
Statements of Cash Flows for the years ended September 30, 1996
     and 1995 and for the period from Inception (July 11, 1994)
     through September 30, 1996..................................................................................  17
Notes to Financial Statements....................................................................................  18
</TABLE>


                                      -11-
<PAGE>   13
                    [LETTERHEAD OF GOODMAN & COMPANY, L.L.P.]





                         REPORT OF INDEPENDENT AUDITORS




The Board of Directors and Stockholders
SPORTS-GUARD, INC.


         We have audited the accompanying balance sheets of SPORTS-GUARD, INC.
(a development stage company) as of September 30, 1996 and 1995, and the related
statements of operations, stockholders' equity (deficit), and cash flows for the
years then ended and for the period from inception, July 11, 1994, to September
30, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of SPORTS-GUARD, INC.
as of September 30, 1996 and 1995, and the results of its operations and its
cash flows for the years then ended and for the period from inception, July 11,
1994, to September 30, 1996, in conformity with generally accepted accounting
principles.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the financial
statements, the Company has incurred net losses since its inception and has
experienced severe liquidity problems. Those conditions raise substantial doubt
about the Company's ability to continue as a going concern unless the Company
successfully completes its proposed private offering or arranges alternative
financing as discussed in Note 4. Management's plans in regard to those matters
are also described in Note 4. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



                                             /s/ Goodman & Company LLP



7301 Forest Avenue
Richmond, Virginia
December 12, 1996


                                      -12-
<PAGE>   14
SPORTS-GUARD, INC.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

<TABLE>
<CAPTION>
==========================================================================================
September 30,                                                       1996          1995
------------------------------------------------------------------------------------------
                          ASSETS
<S>                                                              <C>           <C>      
Current assets
  Cash                                                           $  22,832     $  84,746
  Inventory                                                         29,744            -- 
  Prepaid expenses                                                      75            -- 
                                                                 ---------     ---------
      Total current assets                                          52,651        84,746

Property and equipment (net of accumulated depreciation
    of $4,724 and $0)                                               39,640        28,100
Deferred charges                                                        --        16,284
Other assets - deposit                                                  --           100
                                                                 ---------     ---------
                                                                 $  92,291     $ 129,230
                                                                 =========     =========
       LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities
  Accounts payable - trade                                       $  37,030     $   1,936
  Accrued expenses                                                   7,809        20,203
  Accounts payable - stockholder                                   126,855        20,085
                                                                 ---------     ---------
      Total current liabilities                                    171,694        42,224
                                                                 ---------     ---------
Long-term liabilities
  Convertible notes                                                118,880            -- 
                                                                 ---------     ---------
      Total long-term liabilities                                  118,880            -- 
                                                                 ---------     ---------
        Total liabilities                                          290,574        42,224
                                                                 ---------     ---------
Stockholders' equity (deficit)
  Common stock, $.01 par value, 20,000,000 shares authorized,
    5,854,923 and 4,452,000 shares issued and outstanding           58,549        44,520
  Common stock subscriptions                                            --       170,000
  Additional paid-in capital                                       352,912       (30,946)
  Deficit accumulated during the development stage                (609,744)      (96,568)
                                                                 ---------     ---------
    Total stockholders' equity (deficit)                          (198,283)       87,006
                                                                 ---------     ---------
                                                                 $  92,291     $ 129,230
                                                                 =========     =========
</TABLE>

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


                                      -13-
<PAGE>   15

SPORTS-GUARD, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS
================================================================================

<TABLE>
<CAPTION>
                                                                     July 11, 1994
                                      Year Ended       Year Ended   (Inception) to
                                     September 30,   September 30,   September 30,
                                         1995            1996            1996
                                       ---------       ---------       ---------
<S>                                  <C>             <C>            <C>      
Sales                                  $      --       $   1,495       $   1,495
Cost of sales                                 --             317             317
                                       ---------       ---------       ---------
    Gross profit                              --           1,178           1,178
                                       ---------       ---------       ---------

Expenses
  Advertising                          $      --       $ 143,087       $ 143,087
  Legal and accounting fees               16,940          73,292          90,821
  Consulting fees                         13,000          62,560          75,560
  Executive compensation                      --          72,000          72,000
  Executive compensation - waived         24,000          24,000          48,000
  Rent                                     4,952          37,088          45,547
  Travel                                   5,490          11,896          18,736
  Auto expenses                            5,021           4,306          15,844
  Telephone                                1,742          12,209          15,298
  Contracted labor                           418          14,343          14,761
  Office expenses                          2,014           9,651          12,692
  License and fees                           244          10,275          10,519
  Interest                                    --           6,936           6,936
  Payroll taxes                               --           5,710           5,710
  Printing                                    --           5,680           5,680
  Meals and entertainment                  1,819           2,606           5,640
  Testing                                    990           4,171           5,161
  Depreciation                                --           4,724           4,724
  Postage                                    666           3,569           4,496
  Supplies                                 3,027              --           3,027
  Equipment rental                            --           2,327           2,327
  Dues and subscriptions                     591           1,212           1,992
  Insurance                                  400              --           1,344
  Taxes                                      150           1,025           1,175
  Miscellaneous                               --             978             978
  Utilities                                   --             609             609
  Donations                                   25             100             125
  Repairs                                     31              --              31
                                       ---------       ---------       ---------

    Total expenses                        81,520         514,354         612,820
                                       ---------       ---------       ---------

    Net loss                           $ (81,520)      $(513,176)      $(611,642)
                                       =========       =========       =========

Loss per share                              0.02            0.09            0.12
                                       =========       =========       =========
</TABLE>

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


                                      -14-
<PAGE>   16
SPORTS-GUARD, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

================================================================================

FROM INCEPTION, JULY 11, 1994 THROUGH SEPTEMBER 30, 1996
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                              DEFICIT
                                                                                                             ACCUMULATED
                                                                                    COMMON       ADDITIONAL  DURING THE
                                                                         COMMON      STOCK        PAID-IN    DEVELOPMENT
                                                                         STOCK    SUBSCRIPTIONS   CAPITAL       STAGE        TOTAL
                                                                        ------------------------------------------------------------
<S>                                                                     <C>       <C>            <C>         <C>          <C>      
BALANCE, JULY 11, 1994 (INCEPTION)                                      $    --   $      --      $     --    $     --     $      --

Common stock-issued                                                       6,300          --            --          --         6,300

Syndication costs incurred as an S Corporation during the development 
  stage                                                                      --          --       (10,576)         --       (10,576)

Net loss incurred as an S Corporation                                        --          --            --     (16,946)      (16,946)
                                                                        ------------------------------------------------------------
BALANCE, SEPTEMBER 30, 1994                                               6,300          --       (10,576)    (16,946)      (21,222)

Syndication costs incurred as an S Corporation during the development 
  stage                                                                      --          --        (4,252)         --        (4,252)

Conversion of common stock previously issued to $.01 par value,
  20,000,000 shares authorized, 4,452,000 shares issued on
  July 18, 1995, at a rate of 2,120 shares issued for each previous
  share of common stock outstanding                                      38,220          --            --     (38,220)           --

Common stock subscriptions received for 170,000 units sold at $1 per
  unit consisting of one share of the Company's common stock, $.01
  par value and a common stock purchase warrant                              --     170,000            --          --       170,000

Executive compensation waived during the Company's tax status as an
  S Corporation                                                              --          --         8,000          --         8,000

Net loss incurred during the development stage through July 24, 1995,
  effective date of S Corporation termination                                --          --            --     (23,172)      (23,172)

Reclassification of S Corporation development stage net loss during 
  the development stage from inception, July 11, 1994, through July 24,
  1995, effective date of S Corporation termination                          --                   (40,118)     40,118            --

Net loss incurred as a C Corporation from July 25, 1995, through
  September 30, 1995                                                         --          --            --     (58,348)      (58,348)

Executive compensation waived during the Company's tax status as
  a C Corporation                                                            --          --        16,000          --        16,000
                                                                        ------------------------------------------------------------
BALANCE, SEPTEMBER 30, 1995 (CARRIED FORWARD)                           $44,520   $ 170,000      $(30,946)   $(96,568)    $  87,006
                                                                        ============================================================
</TABLE>



                                      -15-


<PAGE>   17
SPORTS-GUARD, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
================================================================================
FROM INCEPTION, JULY 11, 1994 THROUGH SEPTEMBER 30, 1996
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                                DEFICIT
                                                                                                              ACCUMULATED
                                                                                    COMMON      ADDITIONAL   DURING THE
                                                                         COMMON      STOCK       PAID-IN     DEVELOPMENT
                                                                         STOCK   SUBSCRIPTIONS   CAPITAL        STAGE      TOTAL
                                                                        ------------------------------------------------------------
<S>                                                                     <C>      <C>            <C>          <C>          <C>      
BALANCE, SEPTEMBER 30, 1995 (BROUGHT FORWARD)                           $44,520    $ 170,000    $(30,946)    $ (96,568)   $  87,006

  Common stock subscriptions received for 205,000 units sold at $1 per
    unit consisting of one share of the Company's common stock, $.01
    par value and a common stock purchase warrant                            --      205,000          --            --      205,000

  Converted 375,000 units of common stock subscriptions to 375,000 
    shares of common stock with a par value of $.01                       3,750     (375,000)    371,250            --           --

  Syndication costs incurred during the development stage                    --           --      (1,113)           --       (1,113)

  Issued 1,027,923 shares of $.01 par value common stock for all of the 
    outstanding shares of Skate Publishing Corporation                   10,279           --     (10,279)           --           --

  Net loss                                                                   --           --          --      (513,176)    (513,176)

  Executive compensation waived                                              --           --      24,000            --       24,000
                                                                        ------------------------------------------------------------
BALANCE, SEPTEMBER 30, 1996                                             $58,549    $      --    $352,912    $ (609,744)   $(198,283)
                                                                        ============================================================
</TABLE>


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


                                      -16-

<PAGE>   18
SPORTS-GUARD, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS
================================================================================

<TABLE>
<CAPTION>
                                                                                                  JULY 11, 1994
                                                                  YEAR ENDED       YEAR ENDED    (INCEPTION) TO
                                                                 SEPTEMBER 30,    SEPTEMBER 30,   SEPTEMBER 30,
                                                                     1995             1996             1996
                                                                ------------------------------------------------
<S>                                                              <C>              <C>             <C>       
CASH FLOWS FROM OPERATING ACTIVITIES
            Net loss                                              $ (81,520)       $(513,176)       $(611,642)
            Adjustment to reconcile to net cash used
              in operating activities:
            Depreciation                                                 --            4,724            4,724
            Waived compensation                                      24,000           24,000           48,000
                Changes in:
                  Accounts payable                                    1,936           35,094           37,030
                  Accrued expenses                                   20,203          (12,394)           7,809
                  Organizational costs paid                         (15,310)          16,284               --
                  Inventory                                              --          (29,744)         (29,744)
                  Prepaid expenses                                       --              (75)             (75)
                                                                 -----------------------------------------------
                    NET CASH USED IN OPERATING
                     ACTIVITIES                                     (50,691)        (475,287)        (543,898)
                                                                 -----------------------------------------------
          CASH FLOWS FROM INVESTING ACTIVITIES
            Acquisition of equipment                                (28,100)         (16,264)         (44,364)
            Deposits                                                   (100)             100               --
                                                                 -----------------------------------------------
                    NET CASH USED IN INVESTING
                     ACTIVITIES                                     (28,200)         (16,164)         (44,364)
                                                                 -----------------------------------------------
          CASH FLOWS FROM FINANCING ACTIVITIES
            Proceeds from notes payable                                  --           10,000           10,000
            Repayments of notes payable                                  --          (10,000)         (10,000)
            Proceeds from convertible notes                              --          118,880          118,880
            Common stock subscriptions (net of
              syndication costs of $4,252, $1,113
              and $15,941)                                          165,748          203,887          359,059
            Issuance of common stock                                     --               --            6,300
            Borrowings from shareholder                              25,389          126,280          173,865
            Repayments of borrowings from shareholder               (27,500)         (19,510)         (47,010)
                                                                 -----------------------------------------------
                    NET CASH PROVIDED BY FINANCING
                     ACTIVITIES                                     163,637          429,537          611,094
                                                                 -----------------------------------------------
          NET (DECREASE) INCREASE IN CASH                            84,746          (61,914)          22,832

          CASH AT BEGINNING OF PERIOD                                    --           84,746               --
                                                                 -----------------------------------------------
          CASH AT END OF PERIOD                                   $  84,746        $  22,832        $  22,832
                                                                 ===============================================
          SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
            Cash paid for interest                                $       --       $   6,612        $   6,612
                                                                 ===============================================
</TABLE>


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


                                      -17-

<PAGE>   19
SPORTS-GUARD, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 1996
--------------------------------------------------------------------------------

NOTE 1 - ORGANIZATION AND BUSINESS

         SPORTS-GUARD, INC. (the "Company") was incorporated in Virginia in July
1994 and reincorporated in July 1995 as a Delaware corporation. It is the
Company's plan to distribute a patented face guard to be used primarily by
defensive players in the sports of baseball and softball.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         METHOD OF ACCOUNTING

         The Company uses the accrual basis of accounting in accordance with
generally accepted accounting principles for financial statement and federal
income tax purposes.

         PROPERTY AND EQUIPMENT

         Property and equipment includes equipment used for the manufacture of
sports safety equipment. Depreciation is computed using straight-line or
accelerated methods over the assets' expected useful lives.

         DEFERRED CHARGES

         Deferred charges, consisting of organizational costs, are being
amortized using the straight-line method over five years. Amortization will be
recognized when production commences.

         INVENTORY

         Inventory is accounted for using the first-in, first-out (FIFO) method.

         INCOME TAXES

         Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due and those which
are deferred. Deferred income taxes are recognized for differences between the
basis of assets and liabilities for financial statement and income tax purposes.
These differences are measured by the average tax rates expected to apply to
taxable income in the years when these differences reverse. Changes in deferred
tax assets or liabilities are recognized in operations in the year in which they
occur. The principal types of differences between tax assets and liabilities for
financial statement and tax return purposes are start-up costs and net operating
losses. A deferred tax asset has been recognized in the amount of $117,391 and
$14,525, at September 30, 1996 and 1995 for which a valuation allowance has been
fully established. The Company has net operating losses in the amount of
$526,225 that are available to offset taxable income through 2011.

         USE OF ACCOUNTING ESTIMATES

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.


                         (Notes continued on next page)

                                                         
                                      -18-

<PAGE>   20
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         CREDIT RISK

         Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of temporary cash investments.
The Company places its temporary cash investments with high credit quality
financial institutions. As of September 30, 1996, the Company had no significant
concentrations of credit risk.

         EARNINGS PER SHARE

         Earnings per share are based on the weighted average number of shares
outstanding during the period. The weighted average number of shares outstanding
during 1996 and since inception were 5,481,460 and 4,925,920, respectively.


NOTE 3 - INVENTORY


<TABLE>
<CAPTION>
         Inventory consisted of the following at September 30, 1996:

                     <S>                    <C>      
                     Raw materials          $  20,749
                     Finished goods             8,995
                                            ---------
                                            $  29,744
                                            =========
</TABLE>       
 

NOTE 4 - DEVELOPMENT STAGE OPERATIONS

         The Company is a development stage entity which plans to engage in the
manufacture, sale and distribution of sports safety equipment. The Company's
first product, known as the Fielders-Guard, is a polycarbonate face guard to be
used primarily, although not exclusively, by defensive players in the sports of
baseball and softball. The Company commenced its development stage operations as
a Virginia corporation on July 11, 1994, with the issuance of 2,100 shares
(3,000 shares were authorized) of $3 par value stock to its then sole
shareholder, Norman O. Milligan. For the first year of its development, start up
costs were incurred primarily for professional fees associated with obtaining
the financing and initial equipment necessary to develop the molds to be used in
the manufacture of the face protection products. During this development phase,
the Company was treated as an S Corporation for income tax reporting purposes.
The Company was reorganized as a Delaware corporation on July 25, 1995. In this
reorganization, one share of Sports-Guard, Inc. (Virginia) stock was converted
into 2,120 shares of Sports-Guard, Inc. (Delaware) stock. After this
reorganization, the Company was provided the authority to issue 20,000,000
shares of common stock and, upon conversion of the previous 2,100 Virginia
shares outstanding, 4,452,000 shares of the reorganized Company were
outstanding.

         Also in conjunction with the reorganization, a Confidential Private
Placement Memorandum (CPOM) was offered for the sale of 400,000 units each
consisting of one share of the Company's common stock, $.01 par value, and a
common stock purchase warrant. The purchase warrant provides for the holder of
the warrant to be eligible to purchase an additional number of shares not to
exceed 100% of the holder's original number of shares, par value $.01, for a
three-year period at the price of $1.00 per share. The CPOM required eligible
participants to enter into a subscription agreement, which after acceptance by
the Company, would result in the issuance of the appropriate shares of common
stock and stock purchase warrants. At September 30, 1995, 170,000 units had been
subscribed and fully paid. During October 1995, an additional 205,000 units were
subscribed and fully paid. The offering was concluded with the final issuance of
shares on November 10, 1995. The amount of units issued pursuant to the CPOM was
375,000 units with $375,000 of capital provided to the Company. The proceeds
were used primarily to complete production of an injection mold for the
Fielders-Guard, to manufacture prototypes and inventory, for research and
development of improvements on the Fielders-Guard product, for the payment of
advertising and marketing expenses and general operating expenses. In addition,
the proceeds were used for legal and accounting fees related to initiating
Securities and Exchange Commission reporting by the Company.


                         (Notes continued on next page)

                                                                             
                                      -19-

<PAGE>   21
NOTE 4 - DEVELOPMENT STAGE OPERATIONS (CONTINUED)

         On February 2, 1996, the Company issued 1,027,923 shares of its common
stock for all of the outstanding shares of Skate Publishing Corporation, a
Delaware corporation. Skate Publishing had been inactive since its formation,
had never conducted any business and had no significant assets at the time of
the merger. The estimated fair value of the net assets acquired with Skate
Publishing Corporation was used to determine the cost assigned to stock issued.
The Company acquired Skate Publishing Corporation in order to increase its
shareholder base.

         The Company was unsuccessful in generating any significant level of
sales of the Fielders-Guard as a result of its initial marketing efforts.
Management concluded that the proceeds of the CPOM were not sufficient to permit
the Company to fully implement its marketing campaign or complete a roll out of
its Fielders-Guard product. Between March and June of 1996, the Company raised
gross proceeds of $118,880 from the private offering of convertible notes in
order to provide working capital for the wholesale and retail marketing of its
product and the continuation of its business. The notes have a term of two years
and are convertible into shares of the Company's common stock at the election of
the holder at a price of $1.00 per share. (see note 10)

         Despite the Company's continued marketing efforts, the Company achieved
only minimal sales of the Fielders-Guard during the year ended September 30,
1996. Management determined, based upon various factors, including customer
feedback, that the design of the Fielders-Guard was a significant factor in the
lack of market acceptance of the product. The Company received positive feedback
on the safety related goals of its product, but a negative response to the
actual design. As a result, since June 30, 1996, the Company has developed a
plan to redesign its product in order to attempt to attain market acceptance.
The Company engaged Advanced Design Corporation of Newington, Virginia, to
develop structural improvements in the Fielders-Guard while reducing the overall
size and thickness of the polycarbonate mask and impact pads. The redesigned
Fielders-Guard has a projection for the nose area and a more open design
allowing more ventilation and easier communication between players. The
redesigned Fielders-Guard is lighter-weight and is a clear polycarbonate
injection molded mask which allows for clearer visibility of the player's face.

         The Company has produced approximately 25 prototypes of the redesigned
Fielders-Guard, using a vacuum mold, for use in obtaining a preliminary
indication of market acceptance and establishing relationships with potential
dealers. The Company has received confirmation from its patent counsel that the
redesigned Fielders-Guard is protected by the existing patent for the
Fielders-Guard. The Company also entered into an agreement with Revere Mold and
Engineering of Chester, Virginia, for production of the injection mold for the
redesigned Fielders-Guard. The new injection mold will cost $35,000 and is
expected to be completed approximately January 15, 1997. Management intends to
engage Reiss Corporation of Blackstone, Virginia to begin contract manufacturing
of the Fielders-Guard mask immediately following completion of the new injection
mold. The redesigned pads for the Fielders-Guard will be produced by Rubatex
Corporation of Bedford, Virginia, using the Company's existing inventory of pads
for initial production. Product assembly and packaging services will continue to
be provided on a contract basis by Reiss Corporation.

         The Company's current cash position is not sufficient to fund redesign
of the product or continued operations, including the advertising and marketing
expenses which management believes will be necessary to introduce the redesigned
product. Management believes that an aggregate of approximately $410,000,
exclusive of product costs, will be required to fund operations for the next
twelve months. The Company believes that profitable operations can be achieved
if a fiscal 1997 sales volume of 13,000 units ($585,000) is achieved as a result
of implementation of the Company's current marketing plan. There can be no
assurance that the redesigned product will result in market acceptance or any
meaningful level of sales.


                         (Notes continued on next page)

                                                                       
                                      -20-

<PAGE>   22
NOTE 4 - DEVELOPMENT STAGE OPERATIONS (CONTINUED)

         The Company plans to conduct a private offering of Common Stock to
raise funds necessary in order to continue its operations. The Company intends
to offer an aggregate of 1,000,000 shares of its Common Stock to accredited
investors only at price of $.50 per share. From June 30, 1996 to the date of
this report, operations were funded by advances aggregating $125,000 from Norman
O. Milligan, Sr., the Company's president and principal stockholder. Mr.
Milligan received the funds he advanced to the Company as loans from business
associates. These persons have indicated that they desire to participate in the
private offering by assigning Mr. Milligan's loan obligations to the Company
(with the result that the Company's obligation to Mr. Milligan will be
extinguished). In order to prevent dilution to the current stockholders of the
Company as a result of this new offering, Mr. Milligan has agreed to contribute
to capital a number of shares of Common Stock held by him equal to the number of
shares sold in the private offering (up to 1,000,000 shares).

         During the next twelve months, general and administrative expenses are
expected to substantially increase due to product development costs, advertising
costs related to continuation of the Company's marketing plan, legal and
accounting fees related to maintaining the Company reporting status with the
Securities and Exchange Commission and other expenses related to the Company's
marketing efforts. Management does not expect to engage any significant
additional personnel until such time as sales of the Company's product will
support the current level of operating expenses. In addition, if the Company
generates large sales volumes of the Fielders-Guard, the Company may require
additional working capital to finance increased inventory requirements.

         The Company does not anticipate incurring any significant research and
development activities, other than the redesign of the Fielders-Guard, until
such time as revenues from operations will support such activities. Absent sales
revenue or receipt of additional financing, the Company has no plans for any
significant capital expenditures for plant or equipment during the next twelve
months.

         There is no assurance that the Company will be successful in raising
additional capital, that the redesigned Fielders-Guard will result in market
acceptance, that the Company will be able to generate any meaningful level of
sales of the redesigned Fielders-Guard product or that the Company will be able
to continue its ongoing operations.


NOTE 5 - EMPLOYMENT AGREEMENT

         The Company has entered into an employment agreement with Mr. Norman
Milligan, who is also the majority stockholder and Chief Executive Officer of
the Company, for an initial period ending June 30, 2000. The agreement
automatically renews for successive one-year periods unless certain
notifications are made by either party at least sixty days prior to the
expiration date. The agreement contains basic compensation for future fiscal
years as follows:

<TABLE>
<CAPTION>
          <S>                                     <C>            
          September 30, 1997                      $   96,000
          September 30, 1998                          96,000
          September 30, 1999                          96,000
          June 30, 2000                               72,000
                                                  ----------
                                                  $  360,000
                                                  ==========
</TABLE>
          
         Mr. Milligan waived his right to receive compensation through the
initial six-months of this agreement.

         In addition, the agreement contains bonus formulas based upon the
Company's performance and customary non-taxable fringe benefits.


                         (Notes continued on next page)

                                                                          
                                      -21-

<PAGE>   23
NOTE 6 - PATENT LICENSE AGREEMENT

         The patents covering the protective face guards the Company will
provide and distribute are owned by Mr. Milligan. The Company has executed a
patent license agreement with Mr. Milligan which provides the Company with the
exclusive license to manufacture, sell, and distribute the products under the
patents for an initial term of ten years. The license agreement provides for the
payment of royalties to Mr. Milligan, such payment being waived by Mr. Milligan
while he is employed by the Company as its President.


NOTE 7 - OTHER RELATED PARTY TRANSACTIONS

         Accounts payable owed to Mr. Milligan in the amount of $126,855 are
payable on demand with no interest.(see Note 4) The amounts advanced by Mr.
Milligan to the Company during the year totaled $126,280. These funds were used
for working capital. During 1996, repayments of $19,510 were made by the Company
to Mr. Milligan.


NOTE 8 - RISKS AND UNCERTAINTIES

         The Company was recently formed and has limited operating history. The
success of the face protection sports gear is dependent on the Company's ability
to achieve market acceptance for the product. The product is new and the Company
has not previously manufactured, sold or distributed this product. The Company
has not, at this time, undertaken any extensive market research or broad test
marketing to determine the nature and extent of the market for the product.
Although the Company anticipates that its full scale operations will commence in
the near term (within one year), there can be no assurance that factors outside
the control of the Company will not result in delays. The Company will not be
able to diversify its activities in the event there is insufficient market
acceptance of its product.

         The Company is dependent upon the services of Mr. Milligan. The loss of
Mr. Milligan's services could have a materially adverse effect on the operations
of the Company. Although Mr. Milligan has worked in commercial and industrial
construction management for approximately 30 years and has been actively
involved in the administration of youth softball and baseball activities for the
last 25 years, he does not have any experience or expertise in the manufacture,
sale or distribution of sports products or in any other aspect of the sporting
goods industry.

         In the event of increased manufacturing expenses, cost overruns, delays
or unanticipated low sales volume, the Company may not have sufficient cash to
operate in the near term. If any of the aforementioned events occur, additional
financing would probably be necessary to fund continuing operations.
Additionally, there can be no assurance that the Company will be able to obtain
such additional debt or equity financing. If such financing were available, it
might not be on terms which are acceptable to the Company.

         The Company has obtained the rights to United States Patents issued on
May 4, 1993, and December 7, 1993, under the U.S. Patent Office Number 5,206,955
and 5,267,353, for its protective face guards. The Company believes that it
could assert the Patents to prevent other persons from manufacturing, selling,
or using the product or similar products, as covered by the claims in the
Patents, in the United States. However, the Company has not yet undertaken any
research to determine whether, and cannot provide any assurances that: (1) the
Patents will be enforceable and adequate to protect the Company from the sale in
the United States, or importation into the United States from any other country,
of a competing product by another person; (2) the manufacture, sale or
distribution of the product will not infringe upon the patent or other
proprietary rights of another person in the United States; or (3) the Company
will be financially capable of prosecuting or defending any infringement action
with respect to the patents or the rights of other persons.


                         (Notes continued on next page)

                                                                          
                                      -22-

<PAGE>   24
NOTE 8 - RISKS AND UNCERTAINTIES (CONTINUED)

         On April 14, 1995, the United States Patent and Trademark Office issued
a Notice of Publication of the trademark of the name "Sports-Guard" (the
"Trademark") which is owned by Mr. Milligan and licensed to the Company.
However, there can be no assurance that the Company will be financially capable
of prosecuting or defending any infringement action with respect to the
Trademark or the trademark rights of others. Neither the Company nor Mr.
Milligan has filed any applications to register the Trademark with the
Commonwealth of Virginia or any other jurisdictions.


NOTE 9 - LEASE AGREEMENTS

         On September 21, 1995, the Company entered into a five year lease for
its principal office and warehouse facility of approximately 4,000 square feet
in Richmond, Virginia with David R. Milligan, a director of the Company. The
lease, with annual rent of $40,000 including all parking, utilities, cleaning
and building maintenance, terminates on November 14, 2000.

         On July 11, 1996, the Company entered into a 36 month operating lease
for its copier and fax machine in their principal office with the Great American
Leasing Corporation. The lease is a monthly rent of $145 and will terminate on
July 11, 1999.


NOTE 10 - CONVERTIBLE NOTES

         As noted in note 4, during the third quarter, the Company issued
convertible promissory notes in the amount of $118,880 to an accredited investor
in a private offering. The notes bear interest at the rate of 10% per annum and
are due 24 months from the date of issuance. Interest is payable on the notes
quarterly and in arrears beginning on June 30, 1996. The notes are convertible,
at the option of the holder, into the Company's $.01 par value common stock, at
an initial conversion price of $1.00 per share. The Company used the entire
proceeds for working capital purposes, including payment of advertising and
marketing expenses, and general and administrative expenses.


                                    * * * * *


                                      -23-
<PAGE>   25
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.

     Inapplicable.


                                    PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.

     The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
        NAME                   AGE                        POSITION
<S>                            <C>               <C>                          
Norman O. Milligan             68                President, Chief Financial
                                                 Officer, Secretary and Director

Ronald K. Milligan             40                Director

David R. Milligan              37                Director

Norman O. Milligan, Jr.        41                Director
</TABLE>

     NORMAN O. MILLIGAN is the founder of the Company and has served as a
director and sole officer since its inception. Milligan spent over 35 years in
the industrial and commercial contracting business before retiring in 1990.
Shortly thereafter, he began development of the Fielders-Guard, for which he
received a patent in 1993, and subsequently founded the Company. Milligan has
served in various positions, including coach, league president, district
administrator and state official, of Little League Baseball in Virginia from
1968 to the present. Milligan also serves as a member of the Sports and
Equipment Committee of the American Society of Testing Materials. He attended
Norfolk Division College of William & Mary from 1949-1952, following three years
of service in the United States Air Force from 1946-1949.

     RONALD K. MILLIGAN has been a director of the Company since its inception.
From 1982 to the present he has been employed in various capacities by Blue
Cross/Blue Shield of Virginia, including Supervisor of Claims Administration,
Field Marketing and currently serves as Director of Marketing, Totals Programs
Administrators. He received a B.A. in History from Virginia Military Institute
in 1978.

     DAVID R. MILLIGAN has been a director of the Company since its inception.
Since 1989, he has served as the president of James River Interiors, Inc., a
commercial and industrial drywall, acoustical and exterior coating contractor.
From 1985 to 1988, he served as a construction manager for MR Interiors, Inc. He
received a B.A. in Economics from the University of Richmond in 1983.

     NORMAN O. MILLIGAN, JR. has been a director of the Company since its
inception. He served as a Center Manager for J.B. Acoustical Co. of Richmond,
Virginia, a subsidiary of U.S. Gypsum Co., from 1987 to 1993 when it merged with
Building Supply, Inc. He now serves as an Area Sales Representative for Building
Supply, Inc.

     All directors serve a term of one year or until their successors have been
duly elected and qualified.


                                      -24-

<PAGE>   26
Family Relationships.

     Norman O. Milligan is the father of Ronald K. Milligan, David R. Milligan
and Norman O. Milligan, Jr.

Compliance with Section 16(a) of the Exchange Act

     Section 16(a) of the Securities Exchange Act of 1934 and the rules
thereunder require the Company's officers and directors and persons who own more
than 10% of the Company's common stock to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and to furnish the
Company with copies. During the fiscal year ended September 30, 1996, each of
the directors or officers filed the Initial Statement of Beneficial Ownership of
Securities two (2) days following the required due date. No directors or
officers failed to file any other required report on a timely basis.


ITEM 10.  EXECUTIVE COMPENSATION.

Compensation of Officers.

     No executive officer of the Company was paid cash or non-cash compensation
in excess of $100,000 during the fiscal years ended September 30, 1996 and 1995
or during the period from inception to September 30, 1994. The Company had and
has no compensation plans in place and no officer has received non-cash
compensation. The following table sets forth the compensation paid by the
Company to its chief executive officer for services rendered during fiscal 1996
and 1995, and during the period from inception to September 30, 1994.

<TABLE>
<CAPTION>
                                                                        ANNUAL COMPENSATION
                                                          -----------------------------------------------
                                                                                          OTHER ANNUAL
NAME AND PRINCIPAL POSITION                      YEAR      SALARY ($)      BONUS ($)      COMPENSATION
--------------------------------------------   --------   -------------   -----------   -----------------
<S>                                            <C>        <C>             <C>           <C>          
Norman O. Milligan, President...............     1996        $72,000          ---              ---
                                                 1995        $ -0-            ---              ---
                                                 1994*       $ -0-            ---              ---
</TABLE>
--------------------
         *Represents the period from inception (July 11, 1994) to September 30,
1994.

Compensation of Directors.

         Directors receive no compensation for their services as such.

Employment Agreement.

         The Company and Mr. Milligan have entered into a five (5) year
employment agreement (the "Employment Agreement") which commenced July 1, 1995.
The Employment Agreement provides for a base salary of $8,000 per month and
incentive compensation based upon the Company's gross sales. The incentive
compensation formula provides for an annual payment to Mr. Milligan equal to
one-half percent (0.5%) of annual gross sales in excess of $1 million and less
than or equal to $2 million, plus one percent (1%) of annual gross sales in
excess of $2 million and less than or equal to $3 million, plus one


                                      -25-

<PAGE>   27
and one-half percent (1.5%) of annual gross sales in excess of $3 million. In
consideration of the incentive compensation provided by the Employment
Agreement, Mr. Milligan has agreed, and the Patent License Agreement provides,
that all royalties due to Mr. Milligan for the Patents and Trademark are waived
for so long as Mr. Milligan is employed as President of the Company. (See Item
1. Description of Business--Business of the Issuer--Licensing Arrangements.) The
Employment Agreement also provides that Mr. Milligan is entitled to a motor
vehicle for his use and reimbursement of out-of-pocket business expenses. Mr.
Milligan is also entitled to participate in any group life or health insurance
policies or programs as may be maintained by the Company from time to time at no
cost. Mr. Milligan agreed to waive all salary payable during the first six
months of the term of the Employment Agreement (through December 31, 1995). The
Company commenced paying Mr. Milligan's salary in accordance with the Employment
Agreement on January 1, 1996. The Employment Agreement automatically renews for
successive one year terms unless either party delivers notice of its intention
not to renew 60 days prior to the expiration of the current term.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table sets forth certain information regarding the
ownership of the Company's common stock, $.01 par value ("Common Stock") as of
January 6, 1997, (i) by each person who is known by the Company to be the
beneficial owner of more than 5% of its Common Stock; (ii) by each of the
Company's directors and officers; and (iii) by all of the Company's directors
and officers as a group:

<TABLE>
<CAPTION>
Shareholder(1)                        No. of Shares         Percentage
--------------                        -------------         ----------
<S>                                   <C>                   <C>   
Norman O. Milligan                     4,452,000              74.42%

Apportum Consulting Corp.(2)             573,734               9.59%

Ronald K. Milligan                             0                  -

David R. Milligan                              0                  -

Norman O. Milligan, Jr.                        0                  -

All officers and directors as a        4,452,000              74.42%
group (4 persons)
</TABLE>

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

(1)      The addresses of these shareholders are as follows: Norman O. Milligan:
         3212 Skipwith Road, Suite G-1, Richmond, Virginia 23294. Apportum
         Consulting Corp.: 90 Park Avenue, 16th Floor, New York, New York 10016.

(2)      Includes 50,000 shares held of record by The Wiseman Family Trust, a
         shareholder of Apportum Consulting Corp. as well as 40,000 shares held
         by another entity in which such shareholder is a greater than 10%
         beneficial owner. Neither Apportum Consulting Corp., The Wiseman Family
         Trust nor their respective shareholders or beneficiaries are officers,
         directors or affiliates of the Company. Does not include 118,880 shares
         issuable upon conversion of outstanding indebtedness.

         The Company plans to conduct a private offering of Common Stock to
raise funds necessary in order to continue its operations. The Company intends
to offer an aggregate of 1,000,000 shares of its Common Stock to accredited
investors only at a price of $.50 per share. From June 30, 1996 to the date of
this report, operations were funded by advances aggregating $125,000 from Norman
O. Milligan, the


                                      -26-

<PAGE>   28
Company's President and principal stockholder. Mr. Milligan received the funds
he advanced to the Company as loans from business associates. These persons have
indicated that they desire to participate in the private offering by assigning
Mr. Milligan's loan obligations to the Company (with the result that the
Company's obligation to Mr. Milligan will be extinguished). In order to prevent
dilution to the current stockholders of the Company as a result of this new
offering, Mr. Milligan has agreed to contribute to capital a number of shares of
Common Stock held by him equal to the number of shares sold in the private
offering (up to 1,000,000 shares). The Common Stock Purchase Agreement to be
entered into in connection with the private offering provides that in the event
that the Company fails to achieve fiscal 1997 sales of at least 5,000 units of
the Fielders-Guard, Mr. Milligan will enter into a change of control agreement
whereby all of the shares of Common Stock owned by him will be exchanged for
certain operating assets, including inventory and license rights related to the
Fielders-Guard. In addition, Mr. Milligan will resign as an officer and
director, and cause the remainder of the board to be replaced. Upon such a
change of control, Ronald K. Stack and Troy D. Wiseman or their designees will
be appointed as trustees to carry out the search for a new operating company to
merge with the Company.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Norman O. Milligan, an officer, director and the principal shareholder
of the Company, is the owner of the Patents for the Fielders-Guard and the
Trademark for the name Sports-Guard. (See Part I. Item 1. Description of
Business--Business of the Issuer--Patents and Trademark.) The Company holds an
exclusive world-wide license for the Patents and for use of the Trademark in
connection with the Fielders-Guard product (as well as a right of first refusal
for use of the Trademark in connection with any other product). (See Part I.
Item 1. Description of Business--Business of the Issuer--Licensing
Arrangements.) The Patent License Agreement has an initial term of ten (10)
years expiring in July 2004, with an option to renew for the life of the
Patents. The Patent License Agreement provides that, during the term of Mr.
Milligan's employment as President of the Company, all royalties under the
Patent License Agreement are waived by Mr. Milligan.

         The Company and Mr. Milligan have entered into an Employment Agreement,
effective July 1, 1995, with a term of five (5) years and providing for a base
salary of $96,000 per annum and incentive compensation based on the Company's
gross sales. (See Part III. Item 10. Executive Compensation--Employment
Agreement.)

         On September 21, 1995, the Company entered into a five year lease for
its principal office and warehouse facility in Richmond, Virginia with David R.
Milligan, a director of the Company. (See Part I. Item 2. Description of
Property.)

         Since the Company's inception, Norman O. Milligan has periodically made
advances to the Company to cover operating expenses. At September 30, 1995, the
balance owed to Mr. Milligan for such advances was $20,203 (with no stated rate
of interest). During fiscal 1995, Mr Milligan advanced $25,389 to the Company
and was repaid an aggregate of $27,500. At December 31, 1995, the balance owed
to Mr. Milligan for such advances was $1,685. At September 30, 1996, the balance
owed to Mr. Milligan for such advances was $126,855 (with no stated rate of
interest). During fiscal 1996, Mr Milligan advanced $126,280 to the Company and
was repaid an aggregate of $19,510.

         The Company believes that all of the transactions entered into by it
were fair and reasonable, and intends that all future transactions, if any, with
affiliates will be on terms no less favorable than could be obtained from
unaffiliated parties.


                                      -27-

<PAGE>   29
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

    (a)  EXHIBITS AND INDEX OF EXHIBITS.

                                                                            Page

2.1*     Certificate of Incorporation of the Company

2.2*     Bylaws of the Company.

3.1*     Specimen Common Stock Certificate.

3.2*     (Form of) Stock Purchase Warrant.

3.3**    (Form of) 10% Convertible Notes.

6.1*     Patent License Agreement dated July 15, 1995 between the
         Company and Norman O. Milligan.

6.2*     Employment Agreement dated July 1, 1995 between the
         Company and Norman O. Milligan.

6.3*     Office Lease dated September 21, 1995 between the
         Company, as lessee, and David R. Milligan, as lessor.

27       Financial Data Schedule.

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

*Incorporated herein by reference to the Company's Registration Statement on
Form 10-SB filed February 23, 1996.

**Incorporated herein by reference to the Company's Registration Statement on
Form 10-SB/A filed June 3, 1996.

         (b)  REPORTS ON FORM 8-K.

         No reports on Form 8-K were filed by the Company during the fourth
quarter of the fiscal year ended September 30, 1996.

      
                                      -28-

<PAGE>   30
                                   SIGNATURES


         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Dated:  January 10, 1997                    SPORTS-GUARD, INC.



                                            By: /s/Norman O. Milligan
                                                --------------------------------
                                                Norman O. Milligan, President



         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

Signature

<TABLE>
<S>                             <C>                                     <C> 
/s/Norman O. Milligan           President (Principal Executive          January 10, 1997
-----------------------------   Officer, Principal Financial Officer)
NORMAN O. MILLIGAN              and Director                         
                                
                                
                                
                                
/s/Ronald K. Milligan           Director                                January 10, 1997
-----------------------------   
RONALD K. MILLIGAN              
                                
                                
                                
/s/David R. Milligan            Director                                January 10, 1997
-----------------------------   
DAVID R. MILLIGAN               
                                
                                
                                
/s/Norman O. Milligan, Jr.      Director                                January 10, 1997
----------------------------- 
NORMAN O. MILLIGAN, JR.       
</TABLE>

                              
                                        -29-