FORM 10-KSB
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                [x] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended September 30, 1996

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

For the transition period from  N/A   to ____
Commission file #33-72880

                             GLENGATE APPAREL, INC.
             (Exact Name of Registrant as Specified in its Charter)
                              New Jersey 22-3266971
                  (State or Other Jurisdiction of (IRS Employer
               Incorporation or Organization) Identification No.)

              207 Sheffield Street, Mountainside, New Jersey 07092
               (Address of principal executive offices) (Zip Code)

         Registrant's telephone No. including area code: (908) 518-0006

      Securities registered pursuant to Section 12(b) of the Exchange Act:
                                      None
                                (Title of class)
      Securities registered pursuant to Section 12(g) of the Exchange Act:
                                      None
                                (Title of class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Securities  and  Exchange Act of 1934
during the preceding 12 months (or for such shorter  period that the  Registrant
was  required  to file such  report),  and (2) has been  subject to such  filing
requirement for the past 90 days. Yes X No __

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-B is not contained  herein,  and will not be contained,  to the
best  of  the  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-K SB [ X] NONE

Issuer's Revenue for the fiscal year ended September 30, 1996:  $ 6.2 million

The aggregate  market value of the 3,613,433  shares of common stock held by non
affiliates of the Registrant as of December 5, 1996,  was $4,289,145  based upon
the closing bid price of such shares as listed in the over the counter market.

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of December 5, 1996: $.001 par value,  8,113,932

Documents incorporated by reference
Incorporated in Part III of this Form 10-KSB: Proxy Statement to be furnished to
security holders for the fiscal year ended September 30,1996

Transitional Small Business Disclosure format   Yes __   No  X

<PAGE>

                             GlenGate Apparel, Inc.

                          Annual Report on Form 10-KSB

                                Table Of Contents


Item                                                                Page
Part I

  1     Description of Business  .................................... 3

  2     Description of Property  .................................... 5

  3     Legal Proceedings        .................................... 5

  4     Submission of Matters to a Vote of Security Holders  ........ 5

Part II

  5     Market for Common Stock, Equity and Related
               Stockholder Matters .................................  6

  6     Management's Discussion and Analysis of Financial
               Condition and Plan of Operation .......................7

  7     Financial Statements and Supplementary Data ................. 8

  8     Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure....................8

Part III

  9     Directors, Executive Officers, Promoters and
               Control Persons; Compliance with
               Section 16(a) of the Exchange Act .....................8

 10     Executive Compensation .......................................8

 11     Security Ownership of Certain Beneficial Owners
               and  Management .......................................9

 12     Certain Relationships and Related Transactions................9

 13     Exhibits and Reports on Form 8-K............................. 9



<PAGE>


                                     PART I


ITEM 1- Description of Business

General

GlenGate  Apparel,  Inc.,  a New Jersey  corporation,  was formed on November 8,
1993.  The  Company is engaged in the  design  and  production  of golf  apparel
marketed  under the GlenGate label and sold primarily to public and private golf
course pro shops and resorts domestically through regional sales vice presidents
and independent  sales  representatives  and  internationally  through  licensed
distributors.

Design and Manufacturing

The Company designs and contracts for the design of classic golf-style  garments
with  contemporary  influences  with a view toward  developing  and  maintaining
consumer recognition and loyalty across product lines from season to season. The
Company  contracts with third parties to manufacture  its lines of apparel.  The
Company exhibits at international industry shows and presents two seasonal lines
of clothing which include men's knit cotton shirts,  sweaters,  slacks,  shorts,
jackets and headwear. All items in each line are sold separately.

The Company staffs its design team with both Company and  independent  designers
who receive direction from the Company's sales, marketing and production staffs.
Product planning  meetings occur on a regular basis to review the status of each
line and to discuss  adjustments in line  composition,  fabrication,  selection,
product mix and  manufacturing.  In addition,  members of the design team attend
the  industry's  principal  trade shows  during each design cycle to discuss and
consult with customers  concerning current retail trends. The design process for
each line is an approximate six-month process of styling, coloring,  fabrication
of samples and selection of sewing techniques.

The  Company's  design  and  production  team  consists  of six  employees  with
extensive  experience  in the  apparel  industry.  The  activities  of these six
employees  include  management of the design and production  process,  sourcing,
merchandising and quality control.  The merchandise manager is a graduate of the
Parson's  School of Design in New York city with over seven years  international
experience  with men's  clothing  retailers and  manufacturers.  The  production
assistants have been  extensively  involved with the athletic  apparel field for
many years with emphasis on quality and production control.

The Company  additionally  utilizes the services of an independent design studio
located  in New York City  specializing  in men's  sportswear.  The  studio  has
expertise in design,  trends, color and patterns,  style and product engineering
and packaging.

The Company has  entered  into  purchase  agreements  with third party  domestic
manufacturers to cut and sew the Company's  products  according to the Company's
specifications.  The Company has no plans to own any  manufacturing  facilities.
The Company currently uses ten or more independent facilities to manufacture its
products.  One such facility  currently  accounts for  approximately 40% of such
manufacturing  on an annual  basis and two other  facilities  each  account  for
approximately  25%. No other  facility  accounts for more than 8% annually.  The
Company has generally  followed a policy of diversifying  production  among such
manufacturers  while  maintaining  sufficient  production  at each to  remain  a
significant  purchaser from each manufacturer.  The Company believes that, while
the loss of any one manufacturer would prove detrimental, given the availability
of  alternative  sources of supply,  such a loss and its impact on the Company's
business would likely be limited in scope and duration.

The Company has chosen to produce its primary  product  lines  within the United
States where the Company  believes that the  availability  of suppliers for both
raw and finished product is sufficient to cover its needs.

The  Company's  production  staff  coordinates  product  engineering  (including
pattern and sample making),  negotiates  price and quantity with its cutting and
sewing  contractors,  establishes  production  scheduling  and performs  quality
control.  The production staff also coordinates  inspection of fabric as well as
sample  testing  of fabric  for  shrinkage,  strength  and color  fastness.  The
production staff additionally  oversees  production at the facilities of each of
the cutting and sewing contractors as well as the Company's contract  embroidery
operations to monitor continuing compliance with the Company's specifications.
<PAGE>

The Company has  implemented  its  original  plan to custom  embroider  logos of
country  clubs and resorts  primarily  utilizing  the  services  of  independent
embroidery  contractors.  The Company has recently acquired embroidery equipment
for in house embroidery  operation at the warehouse and distribution center. The
implementation  of the operation,  is initially on a limited basis with plans to
expand the  operation  over the next two years.  Final  inspection,  packing and
shipping of the Company's  products is performed by the  Company's  employees at
its  warehouse  and   distribution   center.   The  Company  has  implemented  a
computerized software system to monitor inventory levels of finished goods.

Sales and Marketing

Management believes that the Company's ability to attain and maintain brand name
recognition  of the  GlenGate  label will be a critical  element in enabling the
Company to successfully continue to participate in the growing golf industry.

The Company  estimates  that there are  approximately  14,000 public and private
golf clubs and resorts with golf courses in the United  States.  The Company has
currently targeted  approximately 3,500 of these clubs and resorts as customers.
The  Company  has  either  made  sales  to  or  received  purchase  orders  from
approximately  1,400 clubs and resorts in the targeted group. No single customer
accounted for more than 3 % of the Company's net sales.

The Company  enlists the services of 28 independent  sales  representatives  who
sell on a commission basis.  These independent  representatives  are responsible
for certain targeted accounts in a given territory. Sales management, consisting
of three regional sales  vice-presidents  and a customer service network of five
others directs and implements the sales and marketing plans and programs adopted
by the Company.

The Company has begun test marketing  studies for acceptance of GlenGate Apparel
in the international  market.  Test marketing has successfully  begun in Canada,
where there are over 1,200 clubs and resorts and to the prime resort  facilities
in Bermuda.

The Company  introduces  new product at the two major golf industry  trade shows
held January and September each year in Orlando,  Florida and Las Vegas, Nevada.
Feedback  received  from the shows in the form of  orders,  comments,  and booth
attendance is used to redefine the product lines and corresponding forecasts.

The Company has enlisted three touring golf professionals  (Tom Purtzer,  Donnie
Hammond and Ed Humenik)  and other  persons  both inside and outside of the golf
industry  (including  Peter Kostis (a director of the  Company),  Don Criqui and
Dave Brown) to endorse and wear GlenGate apparel.  In addition,  the Company has
enlisted  approximately  12 home club golf  professionals  to help  promote  the
Company's   products.   The  Company  has  oral   arrangements  with  such  golf
professionals and other persons under which they have been compensated solely by
the  granting of stock  options.  The  Company may attempt to obtain  additional
endorsement  arrangements  in the future with other touring golf  professionals,
home club professionals and other notables.

The Company assists its pro shop customers with sales incentives and merchandise
assistance  programs,  including  the  placement  of  advertisements  in golfing
publications and by the use of touring golf professionals.

The Company's  sales terms generally  require  payment from customers  within 30
days after  shipment.  The Company does not sell goods on  consignment or accept
returns of purchased  merchandise  other than damaged  goods or goods  delivered
beyond the specified delivery date.

Competition

Golf  apparel  sold at the pro shop and  resort  level is not  dominated  by any
single  company and is highly  competitive,  both  within the United  States and
abroad. The Company views Ashworth,  Polo/Ralph Lauren,  Izod and Sport-Haley as
its most  significant  competitors.  Recent  entries  into the  market  by other
competitors  offering  comparable product may intensify  competitive  pressures.
Many of the existing  competitors have longer operating  histories,  better name
recognition  and  greater  financial,  marketing  and other  resources  than the
Company.  The Company also  competes  with other high quality  manufacturers  of
men's  leisurewear  sold at the  department  and  specialty  store level.  Tommy
Hilfiger, a well known sportswear manufacturer recently entered the golf apparel
market at the pro shop and department store level.

There can be no  assurances  that the  Company  will be able to  obtain  new and
maintain existing market share in the face of competition.
<PAGE>

Raw Materials

The Company's primary products are made of natural fibers.  The selection of raw
materials is based on quality, consistency, availability, flexibility in meeting
changing  production  requirements  and  pricing.  The  Company's  manufacturers
generally  obtain the materials to  manufacture  the product lines in accordance
with the Company's design specifications.

Trademarks

The Company  sells and markets its products  under the GlenGate  trademark.  The
Company obtained registration of the GlenGate name with the United States Patent
and Trademark Office in 1994. Registration on the Principal Register constitutes
constructive  nationwide  notice of the  registrant's  claim of ownership of the
trademark  and creates a refutable  presumption  of the  registrant's  exclusive
right to the  trademark.  Although  the Company  believes  that it will have the
exclusive right to use the trademark for the United States and overseas  markets
in which it is granted registration,  there can be no assurance that the Company
will be able  successfully  to protect the trademark  from  conflicting  uses or
claims of ownership.

Seasonality

The Company's  business is seasonal,  with the highest sales volume  expected in
the period from February  through July and the lowest sales volume in the period
from November through January. In the golf apparel business,  inventories are at
their highest from February through April, as finished goods are accumulated for
Spring and Summer sales. The Company's cash requirements are highest during this
period to enable the Company to support the accumulation.

Employees

As of December 1, 1996, the Company had 35 full-time employees.


ITEM 2 - Description of Property

Property

The Company leases  approximately  14,000 square feet of space in  Mountainside,
New  Jersey  for  use  as  its  principal  office,  production,   warehouse  and
distribution  facility.  The lease provides for an annual base rental of $76,000
for the year ending  December 31, 1997.  when the existing lease will expire The
Company is also  obligated to pay taxes,  insurance  and  maintenance  expenses.
Management  believes that the existing facilities will be adequate for its needs
through 1997.

ITEM 3 - Legal Proceedings

At  September  30,.1996,  the  Company  was not a party  to any  material  legal
proceedings .


ITEM 4 - Submission of Matters to a Vote of  Security Holders

No matter was submitted to a vote of the Company's  security  holders during the
fourth  quarter  of the fiscal  year  covered  by this  report,  either by proxy
solicitation or otherwise.



                                     PART II



ITEM 5 - Market for Common Stock, Equity and Related Stockholder Matters

The Company's  common stock is quoted on the  over-the-counter  market under the
symbol  "GLNN." On August  19,1994 the  Company  completed  its  initial  public
offering of 493,740  Units,  each  consisting of five shares of common stock and
one Warrant  entitling the holder thereof to purchase one share of common stock.
In July 1995, the Company called for the redemption of all warrants  outstanding
as of August 28,1995 at $.05 each. Through August 28,1995, 473,200 warrants were
exercised and 4,700 warrants were redeemed.  The remaining  15,840  warrants not
redeemed were canceled on August 17,1996. <PAGE>

In June 1995, the Company commenced  proceedings for the private placement of up
to 750,000 shares of common stock at $2.00 per share through August 10,1995.  In
July 1995, the Company  received  $288,400 for 144,200  shares  pursuant to that
private placement.

In May 1996, the Company  commenced  proceedings for the private placement of up
to 1,500,000  shares of common stock at $1.00 per share.  In September 1996, the
Company  received  $1,250,000 for 1,250,000  shares and a warrant to purchase an
additional 85,000 shares at $1.00 through September 30,1997.

The following  table sets forth the high and low bid  quotations  for the common
stock for the periods indicated.  The quotations in the over-the-counter  market
reflect  inter-dealer prices without retail markup,  markdown or commissions and
may not necessarily represent actual transactions.

<TABLE>
<CAPTION>

        Period                                        High              Low
<S>                                                 <C>             <C>
August 15, 1994 - September 30, 1994                  $1.00            $1.00

     Fiscal Year 1995
October 1, 1994 - December 31, 1994                   $1.75            $1.25
January 1, 1995 - March 31, 1995                      $3.00            $1.25
April 1, 1995 - June 30, 1995                         $4.25            $2.25
July 1,1995 - September 30, 1995                      $3.87            $1.43

     Fiscal Year 1996
October 1, 1995 - December 31, 1995                   $2.625           $1.625
January 1, 1996 - March 31, 1996                      $2.125           $1.375
April 1, 1996 - June 30, 1996                         $2.625           $1.25
July 1,1996 - September 30, 1996                      $2.125           $1.25
</TABLE>

As of December  5,1996,  there were  approximately  500 holders of record of the
common stock and the closing bid price for the common stock was $1.187


The Company has never paid any cash  dividends on its common stock.  The Company
anticipates  that for the  foreseeable  future any earnings will be retained for
use  in  the  Company's   business  and  no  cash  dividends  will  be  paid  to
stockholders.


ITEM - 6 Management's Discussion and Analysis of Financial Condition and
         Plan of Operation

Results of Operations

Comparison of Fiscal Years Ended September 30, 1996 and 1995.

The results for the fiscal years ended September 30, 1996 and September  30,1995
are not  comparable.  Prior to March 1995 the Company  was in the  developmental
stage.

During fiscal 1996 the Company had sales of approximately $6,230,000 an increase
of almost 89% when compared to the fiscal 1995 period.  This sales  increase was
due in part to the fact that  there  were seven  months of  operation  in fiscal
1995.  However,  during the 1996 year, the customer base increased by almost 55%
from about 900 accounts to almost 1,400.  During the fourteen  weeks from August
to December 5, 1996 this trend has continued. During that period the Company had
booked  approximately  $4,100,000  in  orders,  an  increase  of almost 32% when
compared  to the  $3,100,000  during  the  comparable  period  last  year.  This
continuing increase in sales, order position and customer base, demonstrates the
acceptance of the product at the pro shop level and supports management's belief
in a continuing market penetration and acceptance of GlenGate product.

Cost of goods sold as a percentage of sales, was reduced to approximately  67% ,
an  improvement  of almost 3% when  compared to 70% in fiscal 1995.  The Company
continues to reduce its exposure to unusual costs of embroidery,  irregulars and
other manufacturing problems. In October, the Company completed installation and
testing of an in house pilot  embroidery  operation  to further  reduce  certain
costs associated with independent contract embroidery. <PAGE>

Warehousing,  design,  selling and  administrative  expenses as a percentage  of
sales  were  reduced  to  approximately  53% , a  reduction  of almost  19% when
compared to 72% in fiscal 1995. An increase in the amount spent for warehousing,
design  selling  and  administrative   expense  was  primarily  attributable  to
increases in personnel  and facility  charges to  accommodate  the  increases in
sales and order processing volume during the year.

Interest  expenses  increased by over $134,000  during the year ended  September
30,1966.  The increase  resulted from the Company utilizing it's credit facility
to support almost $3,000,000 in sales and order increases during the fiscal year
ending September 1996.

The Company had an operating loss of $1,246,470 for the year ended September 30,
1996 and a net loss of $1,449,291 ($.22 per share) for the same period. The loss
can be attributed to a lack of  sufficient  sales to support the  infrastructure
required and in place for future planned  growth of the Company.  Operations for
the fiscal year ended  September  30,1995 are not  comparable  since the Company
remained  in the  developmental  stage  until  March  1995  when it first  began
shipping products to its customers.

Liquidity and Capital Resources

The Company  continues to experience  significant  growth since  emerging from a
developmental  stage in March 1995.  The  proceeds  from the  Company's  initial
public offering in 1994 and warrant and private  placement  offering in 1995 and
1996 have been used for the  development of the Company's  business as set forth
in the prospectus and private placement documents relating thereto.

Growth in sales and the need to continue to fund  continuing  losses  during the
developmental  stage increased the Company's working capital  requirements.  The
Company  had  cash  used in  operating  activities  during  the  fiscal  year of
$2,628,100  resulting  primarily  from a net loss of $1,449,300 and increases in
inventory and accounts receivable of $1,368,200. Cash requirements for operating
activities during the fiscal year ended September 30, 1996 were funded primarily
by  financing  activities  that  provided  additional  net  cash  of  $2,767,500
resulting from borrowings under the Company's  credit  facilities of $1,272,800,
$1,657,500  in net  proceeds  from the sale of common  stock and the exercise of
options.

While the  Company  currently  anticipates  having net  positive  cash flow from
operations through 1997, interim working capital requirements are expected to be
funded  utilizing  availability  under the credit facility  agreement  signed in
September 1996. The credit facility currently provides availability limited by a
collateral  formula  calculated  as the overall  lesser of  $3,000,000 or 85% of
qualified accounts  receivable and interim temporary financing available between
October 1, 1996 and April 30, 1997 of 50% of eligible  finished goods  inventory
to a maximum of  $1,500,000.  Peak inventory  positions are required  during the
October-April period to support spring purchases. Interest accrues at a variable
rate equal to 1 1/2% in excess of the bank's  prime  lending rate (8 1/4 % as of
September  30,1996).  As of  September  30,  1996,  the  Company  had drawn down
approximately $1,598,000 under the facility and approximately $400,000 was
available based on the borrowing formula at that date.

As of  September  30,  1996,  the  Company  had  purchase  commitments  with its
suppliers in the amount of approximately $2,425,000.

In the event the Company requires funds in addition to those available under the
current (or an amended)  credit  facility,  management  believes that such funds
will be available from offerings of common stock (if any),  from the exercise of
stock options (if any) and additional loans from  stockholders (as necessary) in
sufficient  amounts  to permit it to  conduct  its  operations.  Future  events,
including  the  problems,  expenses,  difficulties  and  delays  encountered  in
connection  with a new business  and the  competitive  environment  in which the
Company  operates,  may lead to cost  overruns  that  could  make the  Company's
sources  of  working  capital   insufficient  to  fund  the  Company's   planned
operations.  No  assurance  can be given that the Company will be able to obtain
such funds or that the terms thereof will be acceptable to the Company. <PAGE>

The Company has currently  outstanding  $190,000 in notes in favor of certain of
its officers.  The funds were advanced at varying times during the developmental
stages  of  the  Company  to  satisfy  working  capital  needs.  The  notes  are
subordinate to all creditors of the Company. The notes mature with interest at a
rate per annum of 1 1/2% over prime to be paid April 15,  1997.  The Company may
be unable to rely on its  directors,  officers and  principal  stockholders  for
additional loans in the future.


ITEM 7 - Financial Statements

The financial  information required by this Item are submitted beginning on Page
F-1


ITEM 8 - Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

None


                                    PART III


ITEM 9 - Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act

For  information  with  respect  to the  Company's  directors,  see the  section
entitled " Election of Directors" in the Company's  Proxy  Statement to be filed
in connection  with the Annual Meeting of Stockholders of the Company to be held
on February 14,1997 which section is incorporated herein by reference.


ITEM 10- Executive Compensation

For information with respect to the Company's  executive  compensation,  see the
section entitled "Executive Compensation" in the Company's Proxy Statement to be
filed in connection with the Annual Meeting of Stockholders of the Company to be
held on February 14,1997 which section is incorporated herein by reference.


ITEM 11 - Security Ownership of Certain Beneficial Owners and Management

For  information  with respect to the  Company's  security  ownership of certain
beneficial owners and management,  see the section entitled "Security  Ownership
of Directors and Officers" and "Principal  Stockholders"  in the Company's Proxy
Statement to be filed in connection  with the Annual Meeting of  Stockholders of
the Company to be held on February 14,1997 which section is incorporated  herein
by reference.


ITEM 12 - Certain Relationships and Related Transactions

For  information  with  respect  to  the  Company's  relationships  and  related
transactions  with  certain  directors,  see the section  entitled  "Election of
Directors" in the Company's  Proxy  Statement to be filed in connection with the
Annual  Meeting of  Stockholders  of the Company to be held on February  14,1997
which section is incorporated herein by reference.


ITEM 13 - Exhibits and Reports on Form 8 -K

Reports on form 8-K

No reports on Form 8-K were filed by the Company  during the last quarter of the
period covered by this report.

<PAGE>

Exhibits

 *3.1     Certificate of Incorporation of the Company
 *3.2     Certificate of Amendment to the Certificate of Incorporation
  3.3     Amended By-Laws of the Company
 *4.1     Specimen  certificate for common stock, $.001 par value
  4.2     Form of warrant to purchase common stock issuable to The Koffman Group
 *4.3     Form of Subordinated Note in favor of George Gatesy
 *4.4     Form of Subordinated Note in favor of Richard Martinelli
 10.1     Restricted stockholders agreement
 10.2     Financing and Security Agreement
 10.3     Lease dated October 4,1996
*10.11    GlenGate Apparel, Inc. 1994 Stock Option Plan
-----------------------------------------------------------------------------
*Icorporated herein by reference to the identically numbered Exhibit in the
 Company's Registration Statement on Form SB-2, Registration No. 33-7280 - NY






                          INDEX TO FINANCIAL STATEMENTS




                                                                     Page

Report of Independent Certified Public Accountants....................F-1

Balance Sheets as of September 30, 1996 and 1995......................F-2

Statements of Operations for the years ended
   September 30, 1996 and 1995........................................F-3

Statements of Stockholders' Equity for the years ended
   September 30, 1996 and 1995........................................F-4

Statements of Cash Flows for the years ended September 30,
   1996 and 1995......................................................F-5

Notes to Financial Statements..................................F-6 - F-10



<PAGE>






                                       F-1

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




Board of Directors and Stockholders
GlenGate Apparel Inc.
Mountainside,  New Jersey

We have audited the  accompanying  balance sheets of GlenGate Apparel Inc. as of
September  30,  1996  and  1995,  and  the  related  statements  of  operations,
stockholders'  equity,  and cash flows for the years then ended. 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 GlenGate  Apparel Inc. as of
September  30,  1996 and 1995,  and the results of its  operations  and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.








                                BDO Seidman, LLP

Woodbridge, New Jersey
November 25, 1996

<PAGE>


                                       F-2

                              GLENGATE APPAREL INC.

                                 BALANCE SHEETS
                                 --------------

<TABLE>
<CAPTION>


                                                   September 30,   September 30,
                                                        1996            1995
                                                   --------------  -------------
                                ASSETS (Note 5)
<S>                                               <C>              <C>
Current:
 Cash                                                 $   34,917       $10,038
 Accounts receivable, net of allowance for doubtful
      accounts of $173,515 and $28,765                 1,848,507       805,337
 Inventories (Note 3)                                  1,206,000       894,035
 Prepaid and other current assets                       314,968        191,280
                                                   --------------  -------------

           TOTAL CURRENT ASSETS                        3,404,392     1,900,690


Property and equipment, net of accumulated
  depreciation and amortization (Note 4)                 257,530       218,510
Organizational costs, net of accumulated
  amortization of $5,945 and $3,889, respectively          4,457         6,513
Security deposits and other assets                        31,460         9,460
                                                   --------------  -------------

           TOTAL ASSETS                               $3,697,839    $2,135,173
                                                   ==============  =============




                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current:
 Notes payable - bank (Note 5)                        $1,597,918      $325,109
 Current portion of equipment notes payable (Note 5)       5,127        13,527
 Subordinated notes payable to stockholders (Note 6)     190,000       300,496
 Accounts payable and accrued expenses                   490,915       268,465
                                                   --------------  -------------

           TOTAL CURRENT LIABILITIES                   2,283,960       907,597

Equipment notes payable less current portion (Note 5)     10,617        32,543
                                                   --------------  -------------
                                                       2,294,577       940,140

Commitments and contingencies (Notes 7 and 9)

STOCKHOLDERS' EQUITY (Note 9):
 Common stock at cost $.001 par value - 10,000,000
  shares authorized; 8,113,932 and 6,284,600
    issued and outstanding                                 8,114        6,285
Additional paid-in capital                             4,668,139    3,012,448
Accumulated deficit                                   (3,272,991)  (1,823,700)
                                                   --------------  -------------

     TOTAL STOCKHOLDERS' EQUITY                        1,403,262    1,195,033
                                                   --------------  -------------


     TOTAL STOCKHOLDERS' EQUITY AND LIABILITIES       $3,697,839   $2,135,173
                                                   ==============  =============
</TABLE>


                 See accompanying notes to financial statements

<PAGE>

                                            F-3

                                   GLENGATE APPAREL INC.

                                 STATEMENTS OF OPERATIONS
                                 ------------------------


<TABLE>
<CAPTION>




                                 Year Ended September       Year Ended September
                                       30, 1996                   30, 1995
                                 --------------------       --------------------
<S>                              <C>                        <C>
Sales                                 $6,229,728                 $3,293,295
Cost of sales                          4,150,138                  2,303,850
                                 --------------------       --------------------

      GROSS PROFIT                     2,079,590                    989,445
                                 --------------------       --------------------

Operating expenses:
 Warehousing                             318,516                    214,580
 Design                                  431,590                    137,140
 Selling                               1,378,456                  1,036,709
 General and administrative            1,197,498                    994,685
                                 --------------------       --------------------

      TOTAL OPERATING EXPENSES         3,326,060                  2,383,114
                                 --------------------       --------------------

Operating loss                        (1,246,470)                (1,393,669)
Net interest expense, including
  interest income of $37,023 in
  1995                                  (202,821)                   (31,853)
                                --------------------       --------------------

Net Loss                             $(1,449,291)               $(1,425,522)
                                 ====================       ===================

Loss per share                             $(.22)                     $(.25)
                                 ====================       ====================

Weighted average number of common
  shares outstanding                   6,605,941                  5,609,113
                                 ====================       ====================

</TABLE>


<PAGE>
                                            F-4

                                   GLENGATE APPAREL INC.

                            STATEMENTS OF STOCKHOLDERS' EQUITY
                            ----------------------------------


<TABLE>
<CAPTION>



                               Common Stock    Additional Treasury  Accumu-      Total
                             -----------------   Paid-In    Stock    lated    Stockholders'
                              Shares    Amount   Capital             Deficit     Equity
                             --------   ------  ---------  -------- --------   -----------
<S>                         <C>        <C>     <C>        <C>      <C>        <C>
BALANCE, SEPTEMBER
  30, 1994                  6,218,700   $6,219  $2,146,040  (700)   $(398,178)  $1,753,381

Cancellation of
  treasury stock             (700,000)    (700)          -   700            -            -

Options exercised             148,500      149     148,351     -            -      148,500
  
Warrants exercised
  and redeemed                473,200      473     567,132     -            -      567,605

Private placements
  of common stock             144,200      144     288,256     -            -      288,400

Offerings and
registration costs                  -        -    (137,331)    -            -     (137,331)

Net loss                            -        -           -     -    (1,425,522) (1,425,522)
                             --------   ------   ---------- ------- ----------  -----------

Balance, September
 30, 1995                   6,284,600    6,285   3,012,448     -    (1,823,700)  1,195,033

Options exercised             554,332      554     557,361     -             -     557,915

Private placements
 of common
 stock                      1,275,000    1,275   1,248,725     -             -   1,250,000

Offering costs,
 net                                -        -    (150,395)    -             -    (150,395)

Net loss                            -        -           -     -     (1,449,291)(1,449,291)
                            ---------   -------  ----------  ------   --------- -----------
Balance, September
 30, 1996                   8,113,932   $8,114  $4,668,139     -    $(3,272,991) $1,403,262
                            =========   =======  ==========  ======   ========= ===========

</TABLE>

<PAGE>
                                            F-5

                                   GLENGATE APPAREL INC.

                                 STATEMENTS OF CASH FLOWS
                                 ------------------------


<TABLE>
<CAPTION>




                                                   Year Ended       Year Ended
                                                    September        September
                                                     30, 1996         30, 1995
                                                    -----------     ------------
<S>                                                 <C>             <C>
Cash flows from operating activities:
 Net loss                                           $(1,449,291)    $(1,425,522)
 Adjustments to reconcile net loss to net cash
     used in operating activities:
        Depreciation and amortization                    77,578          31,811
        Provision for doubtful accounts                  13,051          28,765
        Changes in assets and liabilities:
         Inventories                                   (311,965)       (894,035)
         Accounts receivable                         (1,056,221)       (834,102)
         Prepaid and other current assets              (123,688)       (105,806)
         Accounts payable and accrued expenses          222,450         122,215
                                                    ------------    ------------

       Net cash used in operating activities         (2,628,086)     (3,076,674)
                                                    ------------    ------------

Cash flows from investing activities:
 Purchases of property and equipment                   (114,542)       (244,612)
 Maturity (purchase) of certificate of deposit                -         200,000
 Increase in security deposits and other assets               -          (9,460)
                                                    ------------    ------------

       Net cash used in investing activities           (114,542)        (54,072)
                                                    ------------    ------------

Cash flows from financing activities:
 Payment of financing cost                              (22,000)              -
 Proceeds from sale of common stock                   1,250,000         288,400
 Proceeds from options exercised                        557,915         148,500
 Proceeds from warrants exercised                                       567,605
 Payment of offering and registration costs            (150,395)       (137,331)
 Payment of organization costs                                                -
 Borrowings on equipment notes payable                                   46,070
 Payment of equipment notes                             (30,326)
 Net borrowings under line of credit                  1,272,809         325,109
 Repayments (payments) of borrowings from
    stockholders                                       (110,496)         89,751
                                                    --------------  ------------
       Net cash provided by financing activities      2,767,507       1,328,104
                                                    --------------  ------------

Net increase (decrease) in cash                          24,879      (1,802,642)
Cash, beginning of period                                10,038       1,812,680
                                                    --------------  ------------
Cash, end of period                                     $34,917         $10,038
                                                    ==============  ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 Interest paid                                         $196,216         $67,293
                                                    ==============  ============

</TABLE>

                      See accompanying notes to financial statements

<PAGE>
                                            F-6

                                   GLENGATE APPAREL INC.

                               NOTES TO FINANCIAL STATEMENTS
                               -----------------------------

NOTE 1 - ORGANIZATION
---------------------

GlenGate  Apparel,  Inc. (the  "Company") was  incorporated  in the State of New
Jersey on November 8, 1993.  On or about March 15, 1995,  the Company  commenced
operations as a result of having completed the first sales of its products.  The
Company  designs,  contracts to have made,  and markets men's golf apparel.  The
Company's  primary products consist of men's knit cotton shirts and sweaters and
woven cotton slacks, shorts and headwear. Customers of the Company are primarily
public and private golf course pro shops and resorts in the United States.


NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
---------------------------------------

CASH AND CASH EQUIVALENTS

For  statement of cash flow  purposes,  the Company  considers all highly liquid
investments  with  an  original  maturity  of  three  months  or less to be cash
equivalents. The Company did not have any cash equivalents at September 30, 1996
and 1995.

REVENUE RECOGNITION

Revenue is recognized upon shipment of goods to customers.

INVENTORIES

Inventories  are valued at the lower of cost or market with cost  determined  by
the first-in, first-out (FIFO) method.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost.  Depreciation  and  amortization are
calculated  on a  straight  line basis over the  estimated  useful  lives of the
related assets.

ORGANIZATIONAL COSTS

Costs incurred to organize and  incorporate  the Company have been  capitalized.
Amortization is calculated on a straight line basis over a sixty month period.

LOSS PER SHARE

Loss per share is computed on the basis of the weighted average number of common
shares  outstanding  during the period.  The assumed  conversion of common stock
equivalents has not been included because the effect would be anti-dilutive.

SIGNIFICANT RISKS AND UNCERTAINTIES

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  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

 <PAGE>
                                            F-7

                                  GLENGATE APPAREL INC.

                              NOTES TO FINANCIAL STATEMENTS
                              -----------------------------

EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

In  March  1995,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standard  ("SFAS") No. 121  "Accounting  for
Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of."
The Company believes that this  pronouncement will not have a material impact on
the Company's  results of operations and financial  condition.  In October 1995,
the FASB issued SFAS No. 123  "Accounting  for  Stock-Based  Compensation."  The
Company is currently studying SFAS No. 123, but does not currently plan to adopt
the fair value based method of accounting  for stock  options or similar  equity
instruments.  According-ly, the adoption of SFAS No. 123 is not expected to have
a material impact on the Company's results of operations or financial condition.


NOTE 3 - INVENTORIES
--------------------

Inventories as of September 30 are summarized as follows:

<TABLE>
<CAPTION>
                                             1996            1995
                                        ------------    ------------
         <S>                            <C>             <C>
         Raw Materials                     $36,345         $84,675
         Finished goods                  1,139,655         788,510
         Supplies                           30,000          20,850
                                        ------------    ------------
                                        $1,206,000        $894,035
                                        ============    ============
</TABLE>

NOTE 4 - PROPERTY AND EQUIPMENT
-------------------------------

Property and equipment consists of the following as of September 30:
<TABLE>
<CAPTION>
                                                                       Estimated
                                                                         useful
                                                                         lives
                                            1996            1995        (years)
                                        ------------    ------------  ----------
<S>                                     <C>             <C>           <C>
Leasehold improvements                     $37,718         $21,312           3
Machinery and equipment                    153,311         148,811       4 - 5
Furniture and fixtures                      90,020          48,867       3 - 5
Computer equipment and software             82,483          30,000           5
                                        ------------    ------------
                                           363,532         248,990
Less: Accumulated depreciation
   and amortization                        106,002          30,480
                                        ------------    ------------
                                          $257,530        $218,510
                                        ============    ============
</TABLE>

NOTE 5 - NOTES PAYABLE
----------------------

In  September  1996,  the Company  entered  into a two year  revolving  loan and
security agreement (the "Agreement") with a financial institution.  Availability
under the Agreement, is limited by a collateral formula calculated as the lesser
of $3,000,000 or 85% of qualified accounts receivable. The lender also agreed to
advance  additional  funds to the Company  between October 1, 1996 and April 30,
1997 based on a collateral  formula  calculated as the lesser of $750,000 or 50%
of eligible Finished Goods Inventory.  Interest accrues at a variable rate equal
to 1 1/2% in excess of the bank's prime lending rate (8 1/4% as of September 30,
1996). Outstanding borrowings are collateralized by substantially all the assets
of the Company.  Under the terms of the Agreement,  the Company is also required
to meet various financial covenants, as defined.
 <PAGE>

                                            F-8

                                  GLENGATE APRAREL INC.

                              NOTES TO FINANCIAL STATEMENTS
                              -----------------------------


The  average  amount  outstanding  under the  Agreement  during  the year  ended
September 30, 1996 was  approximately  $1,212,000 at a weighted average interest
rate of 9 3/4%.

The  fair  value  of the  debt  approximates  the  recorded  value  based on the
borrowing rates currently available for loans with similar terms and maturities.

Additionally,  the Company has  outstanding  borrowings  under an equipment note
payable  aggregating  $15,744 as of September 30, 1996. Annual maturities of the
equipment  note are $5,127 - September  30, 1997,  $5,127 - September  30, 1998,
$5,490 - September 30, 1999.


NOTE 6 - NOTES PAYABLE - STOCKHOLDERS
-------------------------------------

The Company has currently  outstanding  $190,000 in notes in favor of certain of
its officers.  The funds were advanced at varying times during the developmental
stages  of  the  Company  to  satisfy  working  capital  needs.  The  notes  are
subordinate to all creditors of the Company. The notes mature with interest at a
rate per annum of 1 1/2% over Prime to be paid April 15,  1997.  The Company may
be unable to rely on its  directors,  officers and  principal  stockholders  for
additional loans in the future.


NOTE 7 - COMMITMENTS
--------------------

As of September 30, 1996, the Company has purchase  commitments  for merchandise
of approximately $2,425,000.

In January 1995, the Company entered into a three year operating lease agreement
with a three year renewal option for office and warehouse facilities under which
the future minimum annual rentals as of September 30, 1996 are as follows:
<TABLE>
         <S>            <C>
         1997            $76,000
         1998             19,000
                        ==========
                         $95,000
                        ==========
</TABLE>

Rent expense was $70,408 and $54,969 for the years ended  September 30, 1996 and
1995, respectively.


NOTE 8 - INCOME TAXES
---------------------

The  Company  adopted  the  Provisions  of  Statement  of  Financial  Accounting
Standards No. 109 "Accounting for Income Taxes" ("SFAS 109") effective  November
8, 1993  (inception).  SFAS 109  requires a company to  recognize  deferred  tax
liabilities and assets for the expected  future tax  consequences of events that
have been recognized in a company's financial  statements or tax returns.  Under
this method,  deferred tax  liabilities  and assets are determined  based on the
difference  between the financial  statement  carrying  amounts and tax bases of
assets and  liabilities  using enacted tax rates in effect in the years in which
the differences are expected to reverse.

At September  30, 1996,  the Company had net  operating  loss  carryforwards  of
approximately  $3,089,000,  which expire through 2011, and temporary differences
related  primarily to inventory  costs  capitalized  for tax purposes  totalling
approximately $235,000. The deferred tax asset related to the net operating loss
carryforwards and temporary differences amounted to approximately $1,330,000 and
is fully offset by a valuation allowance of the same amount.

<PAGE>
                                            F-9

                                  GLENGATE APPAREL INC.

                              NOTES TO FINANCIAL STATEMENTS
                              -----------------------------


NOTE 9 - STOCKHOLDERS' EQUITY
-----------------------------

a)   Redeemable Common Stock Warrants

     As part of the Company's  initial public  offering  completed on August 15,
     1994,  493,740  redeemable common stock purchase warrants were issued.  The
     warrants were originally  exercisable at $1.20 per share through August 17,
     1995 and,  thereafter,  at $1.40 per share through August 17, 1996. In July
     1995, the Company called for the redemption of all warrants  outstanding as
     of August 28, 1995 at $.05 each and extended  the  exercise  price of $1.20
     through that date. Through August 28, 1995, 473,200 warrants were exercised
     and 4,700  warrants  were  redeemed.  The  remaining  15,840  warrants  not
     redeemed as of September 30, 1995 were canceled on August 17, 1996.

b)   Common Stock Options

     In December 1994 the Company's Board of Directors  approved the adoption of
     the 1994 Stock Option Plan ("the "Plan) to provide  incentives for selected
     persons to promote the financial  success and progress of the Company.  The
     Plan provides for the  Compensation  Committee or such other committee that
     the Board may appoint to  administer  the Plan.  The Plan  provides for the
     reservation  of  2,500,000  shares of common  stock for  issuance  upon the
     exercise of granted options.

     The following is a summary of the common stock options granted, canceled or
     exercised for the period October 1, 1994 through September 30, 1996.

<TABLE>
<CAPTION>

                                   Shares           Exercise price per share
                                 -----------      ----------------------------
      <S>                        <C>               <C>
      Outstanding -
         September 30, 1994              -
      Granted                    2,222,500               $1.00 to $3.00
      Canceled                    (140,000)              $1.00
      Exercised                   (148,500)              $1.00
                                 -----------
      Outstanding -
         September 30, 1995      1,934,000               $1.00 to $2.50
      Granted                      476,000               $1.25 to $1.625
      Canceled                    (119,668)              $1.00 to $2.50
      Exercised                   (554,332)              $1.00 to $1.25
                                 -----------
      Outstanding -
         September 30, 1996      1,736,000               $1.00 to $2.50
                                 ===========

</TABLE>

     As of September 30, 1996,  1,021,850  outstanding stock options were 
     exercisable at $1.00,  218,834 at $1.25,  and 154,000 at prices between
     $1.125 and $2.50. In fiscal 1997, 211,650 outstanding stock options become
     exercisable at $1.00 and 70,334 become exercisable at prices between $1.25
     and $2.00.  In fiscal 1998, 59,332  outstanding stock options become
     exercisable at prices between $1.25 and $1.50.  The options expire at
     various dates  throught fiscal 2005 and all were granted at or above quoted
     market value.


c)   Stockholders Agreement

     In  April   1995,   the  Company  and  the   founding   stockholders   (the
     "Stockholders")  negotiated a  stockholders'  agreement  which requires the
     Company to purchase the shares held by a Stockholder upon the death of that
     Stockholder,  at  estimated  fair  market  value  (as  defined  in the  new
     stockholders'  agreement),  but  limited  to the  extent  of any  insurance
     proceeds payable to the Company as a result of the Stockholder's death.
<PAGE>

                                           F-10

                                  GLENGATE APPAREL INC.

                              NOTES TO FINANCIAL STATEMENTS
                              -----------------------------


d)   Private Placements of Common Stock

     In June 1995, the Company  commenced  proceedings for the private placement
     of up to 750,000  shares of common stock at $2.00 per share through  August
     10, 1995. In July 1995,  the Company  received  $288,400 for 144,200 shares
     pursuant to that private placement.

     In September 1996, the Company completed the private placement of 1,275,000
     shares of common stock for gross proceeds of $1,250,000. In connection with
     this  private  placement,  the  Company  granted  warrants  to  purchase an
     additional 85,000 shares at $1.00 exercisable through September 30, 1997.


NOTE 10 - CONCENTRATION OF CREDIT RISK
--------------------------------------

Financial  instruments  that  potentially  subject  the  Company to  significant
concentrations of credit risk consist principally of trade accounts  receivable.
The Company  performs  ongoing credit  evaluations  of its customers'  financial
condition to mitigate its credit risk.


<PAGE>



                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                          GlenGate Apparel, Inc.



                             BY:_____________________________
Dated:      December  19, 1996                George J. Gatesy, President


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


Signature                                 Title                       Date


_______________________       President, Director               December 19,1996
George J. Gatesy              (principal executive officer)


_______________________       Treasurer and Secretary          December 19, 1996
Norman Britman                (principal financial and
                               accounting officer)


_______________________       Director                         December 19, 1996
Peter J. Kostis


_______________________       Director                         December 19 ,1996
Richard  J. Martinelli


_______________________       Director                         December 19 ,1996
Robert J. Munch


_______________________       Director                         December 19 ,1996
Jeffrey Koffman


_______________________       Director                         December 19 ,1996
Martin Koffman