<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 ---------------
                                  FORM 10-K/A-2

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

                   For the fiscal year ended January 31, 1996
                           Commission File No. 0-16913

                              THE SCORE BOARD, INC.
             (Exact Name of Registrant as specified in its charter)

New Jersey                                         22-2766077
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
incorporation or organization)

              1951 Old Cuthbert Road, Cherry Hill, New Jersey 08034
                    (Address of principal executive offices)

Registrant's telephone number, including area code: (609) 354-9000

Securities registered pursuant to Section 12(b) of the Act: Not Applicable

Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.01 par value
                                (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 Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                         Yes    X           No 
                              ------           ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not 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-K or any amendment to this Form 10-K. [X]

The aggregate market value, as of April 25, 1996, of voting stock of the
registrant held by non-affiliates was approximately $66,621,583.

The number of outstanding shares of registrant's Common Stock, $.01 par value,
on April 25, 1996 was 11,843,837.

                    Documents Incorporated By Reference: None
<PAGE>
 
                             THE SCORE BOARD, INC.
                             ---------------------

                                     INDEX
                                     -----

                     Item                                           Page
                     ----                                           ----   
PART I     1.        Business                                         3

PART II    7.        Management's Discussion and Analysis
                     of Financial Condition and Results
                     of Operations                                   13

PART IV    14.       Exhibits, Financial Statement Schedules,
                     and Reports on Form 8-K                         19

                                       2
<PAGE>
 
                                    PART I
                                    ------

Item 1. Business
----------------

Introduction
------------

        The Score Board, Inc. (the "Company" or "Registrant") designs,
manufactures, markets and distributes sports and entertainment related products.
Its primary activities are the marketing and sale of specialty sports trading
cards, sports and entertainment memorabilia and prepaid telephone calling cards.
The Company's products are sold primarily through national and regional cable
television shopping networks, national and regional retailers, wholesalers and
distributors, hobby stores, and premium and promotional programs.

        The Company's trading card activities focus on the sale of Company
designed specialty sports trading cards. The Company's memorabilia operations
consist of designing, manufacturing and selling autographed and non-autographed
sports and entertainment memorabilia. The sports and entertainment memorabilia
product lines include autographed baseballs, baseball bats, footballs,
basketballs, hockey sticks, uniform jerseys and trading cards, as well as
autographed and non-autographed photo plaques, limited edition lithographs, gold
record plaques, shirts, jewelry, commemorative coins and ceramic items. Each
item of memorabilia features the name, likeness or similar indicia of an athlete
or entertainment celebrity, or certain characters and trademarks associated with
a television show or motion picture.

        The Company also designs and sells prepaid telephone calling card
products, which products are sold in discrete sets or packaged with the
Company's trading card products. In addition, the Company licenses third parties
to manufacture and sell trading cards and other non-autographed products.

        The Company produces its various products based upon personal service
contracts with celebrities and other license agreements. Under the personal
service contracts, the celebrities agree to autograph memorabilia, for which
they are generally paid on a per signature basis with a specific guaranteed
minimum. They may also grant to the Company a license to manufacture and sell,
and to sublicense third parties to manufacture and sell, various non-autographed
products such as prepaid telephone calling cards, watches, greeting cards, party
accessories and ornaments. They may also be paid additional fees for performing
other services, including personal appearances, on behalf of the Company.

        The Company was incorporated in the State of New Jersey on November 25,
1986. References to the Company include The Score Board, Inc. and its wholly-
owned subsidiaries, Americana Memorabilia, Inc., Classic Games, Inc., Classic
Marketing, Inc., SB Acquisition Corp. and Score Board Holding Corporation.
References to Classic refer to Classic Marketing, Inc. The Company's fiscal year
ends on January 31st.

                                       3
<PAGE>
 
        In July 1995, the Company merged five of its wholly-owned subsidiaries,
California Gold, Inc., Catch A Star Collectibles, Inc., Pro Legends, Inc., Score
Board Retail Corp. and Score Board Sub, Inc., with and into the Company. The
merger was effected in accordance with a Plan of Merger adopted on March 30,
1994. None of the subsidiaries merged into the Company had active operations.

Trading Cards
-------------

        The Company produces various trading card products based upon its
personal service contracts with athletes and other license agreements. Pursuant
to its contracts with athletes, the Company produces draft pick trading card
sets featuring the top draft picks in the Major League Baseball, National
Basketball Association, National Football League and National Hockey League
drafts. The draft pick line includes football and basketball trading card sets
and, until recently, baseball and hockey sets. These sets have been marketed in
different configurations, including complete sets, foil packs of twelve cards
and jumbo packs of sixteen cards, and are distributed through the Company's
various channels of distribution. The Company also produces a multi-sport
trading card product featuring race car drivers and draft pick players from each
of the four major sports, and produces various high-end trading card products
featuring baseball, basketball, football and hockey players which are marketed
through the Company's various channels of distribution. Certain of these high-
end trading card products include foil-packed premium trading cards with a
prepaid telephone calling card in each pack. Other high-end products include
foil-packed trading cards with randomly inserted autographed trading cards. The
Company also produces various auto racing trading card products which feature
race car drivers, members of their pit crews, race cars and car owners.

        In addition, the Company produces the Classic Pro-Line collection of
trading card products under its license agreements with the National Football
League Properties, Inc. ("NFLP") and the National Football League Players
Association ("NFLPA").

        The Company has discontinued production of minor league baseball trading
cards and its hockey draft pick and baseball draft pick sets.

        The Company's trading card products are manufactured, printed and
packaged for the Company by unrelated third parties.

Memorabilia
-----------

        The Company's memorabilia line consists of sports memorabilia and
entertainment memorabilia. Sports memorabilia products are based upon personal
service contracts entered into with certain well-known athletes, as well as non-
exclusive licenses obtained from entities such as Major League Baseball
Properties, Inc. ("MLBP"), the Major League Baseball Players Association
("MLBPA"), NBA Properties, Inc. ("NBAP") and NFLP. The products currently
include items such as autographed baseballs, baseball bats, uniform jerseys,
helmets, basketballs, footballs and trading cards. The sports memorabilia line
also includes autographed 

                                       4
<PAGE>
 
and non-autographed photo plaques, limited edition lithographs, shirts,
commemorative coins and ceramic items.

        As of January 31, 1996, the Company had personal service contracts with
approximately forty sports celebrities, including Cal Ripken, Jr., Shaquille
O'Neal, Hank Aaron, Nolan Ryan, Hakeem Olajuwon, Barry Bonds, Ken Griffey, Jr.,
Frank Thomas, Greg Maddux, Alonzo Mourning, Troy Aikman, Emmitt Smith, III,
Steve Young and Dale Earnhardt. The contracts typically have a term of one to
two years, and the Company has generally not experienced difficulty in renewing
these contracts. Many of these contracts prohibit the celebrity from
autographing certain items for sale through mass merchandising channels, such as
television shopping networks and retail catalogs, unless the sales are arranged
by the Company.

        The Company has license agreements with MLBP and the MLBPA, pursuant to
which the Company may utilize the names and logos of MLBP (and its member teams)
and the MLBPA in connection with the manufacture and distribution of autographed
and non-autographed memorabilia. During the past fiscal year, products sold by
the Company under one or both of these licenses included autographed baseballs,
baseball bats, photographs and collector plaques. Both the MLBP and the MLBPA
licenses will expire on December 31, 1996.

        The Company has a license agreement with NBAP, pursuant to which the
Company may use the names, logos, emblems and uniforms of the NBAP and its
member teams in connection with a variety of autographed and non-autographed
memorabilia. The NBAP has also granted the Company the right, on a group basis,
to use the names, likenesses and other attributes of current NBA players on such
memorabilia. The license agreement will expire July 31, 1996.

        In addition, the Company has acquired a license from NFLP to utilize the
names, logos and other identifying symbols of NFLP and its member teams on a
variety of autographed and non-autographed memorabilia. The license will expire
March 31, 1997.

        The Company's entertainment memorabilia is based upon exclusive and non-
exclusive licenses obtained, and personal service contracts entered into, by the
Company involving certain well-known celebrities and certain characters and
trademarks associated with motion pictures and television shows. The products
currently include limited edition lithographs, gold record plaques, mugs,
ceramic items, jewelry, commemorative coins, stamp plaques, photo plaques,
framed and matted photos, posters and similar products.

        As of January 31, 1996, the Company had personal service contracts
with approximately fifteen entertainment celebrities. The contracts typically
have a term of one to three years, and the Company generally has not had
difficulty in renewing these contracts.

        The Company has a non-exclusive license from Paramount Pictures, Inc.
to market certain Star Trek memorabilia through direct mail/catalog outlets,
                  ---------
retail outlets and certain television shopping networks. The Company has also
obtained an exclusive license from Lucasfilm, Ltd. to market newly developed
autographed and non-autographed memorabilia based on characters 

                                       5
<PAGE>
 
and trademarks associated with the Star Wars series of motion pictures, as well
                                   ---------     
as a non-exclusive license to market currently existing products relating
thereto.

        The Company's memorabilia is marketed primarily through national and
regional cable shopping television networks, national and regional retailers,
hobby stores and premium and promotional programs.

Sublicensing
------------

        The Company's sublicensing business is based upon its personal
service contracts with certain well-known athletes. Under these contracts, the
Company acquires the right to manufacture and sell, and to sublicense third
parties to manufacture and sell, various non-autographed products. The Company
receives royalties from the sale of products by the third parties with which it
enters into sublicensing agreements.

        The Company has sublicensed to Hallmark Cards, Inc. the right to
manufacture and sell an exclusive line of personal communication and celebration
specialty products (e.g., greeting cards and party accessories) and holiday
ornaments featuring various professional athletes. The Company has also
sublicensed to Sprint Communications Company, L.P. the right to manufacture and
sell, both nationally and internationally, prepaid telephone calling cards
featuring the Company's portfolio of athletes from all major sports. The Company
has also sublicensed numerous other companies to produce items such as trading
cards, gold trading cards, collector plates and watches.

Recent Developments
-------------------

        In February 1995, the Company terminated operations at its plaque and
framing division and entered into an agreement to lease the premises and assets
of such division to Record Time Design, Inc. ("RTDI"). RTDI is owned and
operated by former employees of the Company. Under the terms of the lease
agreement, RTDI will supply the Company with plaque and framing services at a
fixed cost, and will pay the Company a monthly rental fee for the leased
premises and assets. The Company also granted RTDI an option to purchase the
leased assets at a mutually agreed upon price.

        In July 1995, the Company secured a $12,000,000 asset based revolving
line of credit from Congress Financial Corporation, a subsidiary of CoreStates
Financial Corp. This line of credit replaced the Company's previous credit line
with Mellon Bank, N.A. See Item 7. "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."

        On November 6, 1995, the Company settled its securities litigation in
accordance with the terms of a Stipulation of Settlement on file with the United
States District Court for the District of New Jersey. See Item 3. "Legal
Proceedings."

                                       6
<PAGE>
 
        On February 2, 1996, the Company announced a twenty percent staffing
reduction (approximately 40 employees), the elimination of certain marginally
profitable products and small inventory lots, and a new minimum order policy. It
also announced a $1,960,000 pre-tax restructuring charge relating to these
matters.

        On March 27, 1996, the Company announced a non-recurring special
charge of $3,715,000 in connection with the write-down of certain assets
relating to license agreements and its assessment of estimated legal costs to be
incurred in connection with ongoing litigation.

Marketing and Distribution
--------------------------

        The Company markets its products primarily through in-house sales
employees and independent sales representatives. Channels of distribution
include cable television shopping networks such as QVC and Canadian Home
Shopping Network, national and regional retailers (including toy stores,
convenience stores, mass market retailers, warehouse clubs and distributors of
periodical publications), wholesalers and distributors, hobby stores, and
premium and promotional programs.

        The Company has utilized various sales representatives and
distributors who are generally paid commissions of varying rates based on net
sales with respect to certain specified accounts. Commissions are customarily
paid pursuant to oral arrangements, although the Company has several written
agreements with sales representatives. The Company primarily ships its
memorabilia products from its warehouse in Cherry Hill, New Jersey, and has its
trading card products shipped to customers by unrelated manufacturers.

License Agreements, Personal Service Contracts and Trademarks
-------------------------------------------------------------

        In general, the production or distribution of products depicting the
image of any celebrity, athlete, team, league, organization logo or trademark
requires a license from such celebrity, athlete, team, league, organization or
owner of the trademark. The Company believes that it has obtained, and is
currently in material compliance with, all licenses necessary to produce and
market its existing products and its products under development. The Company is
constantly seeking to sign athletes to personal services contracts and to
acquire licenses from other licensing entities in connection with the production
of its product lines.

        The Company acquires the products it utilizes to produce its sports
and entertainment memorabilia pursuant to license agreements it has obtained or
from manufacturers the Company believes to be duly licensed. The Company obtains
the autographs for its memorabilia products pursuant to personal service
contracts. The Company's business is largely dependent upon its ability to
maintain existing licenses and personal service contracts and to obtain
additional licenses and personal service contracts necessary to offer new
products.

        To enable the Company to produce its draft pick trading card sets, the
Company enters into contracts with draft pick athletes. In specific instances,
the Company has obtained the exclusive 

                                       7
<PAGE>
 
right to depict certain of the draft pick athletes until they become members of
a major league team. Because the players are shown in their high school or
college uniforms, rather than in the uniforms of their future professional
teams, and are not yet members of the players' associations, the Company
believes that no licenses are needed from either the leagues or the players'
associations to produce its draft pick trading card sets. The Company has,
however, obtained a license from the NFLP to use certain identifying marks of
the NFLP on the Company's "Classic Football Draft Pick Set."

        The Company has also acquired licenses from the NFLP, NBAP, MLBP and
MLBPA in connection with the manufacture and distribution of football,
basketball and baseball memorabilia. The Company has several other exclusive and
non-exclusive licenses, which grant the Company the right to produce and
distribute trading cards and sports and entertainment-related memorabilia. See
Item 1. "Business - Memorabilia."

        The Company considers its trademarks to be of material importance to its
business. The principal trademarks, including Score Board(R) and Classic(R),
have been registered in the United States and Canada.

Employees
---------

        As of January 31, 1996, the Company employed 187 full-time persons
and 3 part-time persons. No employees of the Company are subject to collective
bargaining agreements. The Company considers its relations with its employees to
be satisfactory.

Risk Factors
------------

        In addition to the other information contained in this Report, the
following risk factors should be considered carefully in evaluating the Company
and its business. This Report contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including those set forth in the following risk factors and
elsewhere in this Report.

        Dependence Upon License Agreements
        ----------------------------------
        
        In general, the production or distribution of products depicting the
image of any celebrity, athlete, team, league, organization, logo or trademark
requires a personal service contract or license from such celebrity, athlete,
team, league, organization or owner of the trademark. The Company's business is
highly dependent upon its ability to obtain and maintain existing licenses and
personal service contracts and to obtain additional licenses and personal
service contracts necessary to offer new products. Although the Company believes
it will be able to renew its licenses and personal service contracts upon their
expiration, there can be no assurance that such renewals can be obtained on
terms acceptable to the Company. The inability of the Company to renew existing
licenses and personal services contracts and/or to acquire additional licenses
and personal service contracts with sports and entertainment celebrities could
have a material adverse impact on the Company's sales and earnings.

                                       8
<PAGE>
 
        Competition
        -----------

        The Company believes that no single entity competes against the
Company in all of its product offerings. In each of its product lines, however,
the Company has significant existing and potential competition.

        With respect to the manufacture and sale of draft pick trading cards,
the Company believes that it is the dominant source of these cards. The
competitive factors in this market are principally based upon quality, ability
to make prompt delivery and ability to obtain premier players on an exclusive
basis. With respect to the manufacture and sale of other trading cards, the
Company competes directly with other manufacturers, some of whom have far
greater experience and finances devoted to these products. The Company
encounters competition principally based upon product pricing, creativity,
quality and ability to make delivery.

        With respect to memorabilia, the Company's sports products compete
with several other sports memorabilia companies, including a company which is an
affiliate of a major trading card manufacturer, as well as dealers involved in
sports trading cards. The Company believes that its sports memorabilia
competitors generally sell their products primarily through television shopping
networks, retail stores, card shows and catalogs, and that the dealers generally
sell their products only through hobby magazines and sports card shows. The
Company's entertainment memorabilia product line competes with certain licensors
who have developed their own entertainment memorabilia product lines which are
sold in their own stores and in catalogs, as well as with dealers, fan clubs,
entertainment memorabilia conventions and concert hall concessions. The Company
faces competition for the sale of sports and entertainment memorabilia based
upon reputation for authenticity of product, product quality and pricing,
athlete/celebrity selection and ability to deliver product in volume. The
Company's practice of providing certificates of authenticity for autographed
memorabilia has enhanced its distribution of these products. The Company also
competes with other sports and entertainment memorabilia companies for the
engagement of sports and entertainment celebrities under personal services
contracts.

        Reliance on Television Shopping Networks
        ----------------------------------------

        For the Company's fiscal year ended January 31, 1996, sales to
national and regional cable television networks accounted for approximately 22%
of the Company's net sales. Sales to one of these television shopping networks,
QVC Network, Inc. ("QVC"), accounted for approximately 17% of the Company's net
sales for fiscal year 1996. The Company has no written agreement with QVC, and
cannot give any assurance that it will attain its current level of sales to QVC.
The loss of QVC as a customer, or cable television as a sales outlet for the
Company's products, could have a material adverse impact on the Company.

                                       9
<PAGE>
 
        Factors Affecting Sales and Earnings
        ------------------------------------

        The market for sports trading cards and sports and entertainment
memorabilia is affected by many factors, including seasonality, consumer
interest and general economic conditions. Furthermore, with respect to trading
cards, there has been a significant increase in the number and type of such
cards printed and sold over the past several years, which has made it more
difficult to predict consumer interest with respect to particular cards.
Recently, the market for sports trading cards has experienced a contraction,
which has resulted in diminished sales of trading cards by the Company and
certain of its competitors.

        As part of its marketing efforts, the Company has sports and
entertainment celebrities under contract to sign autographs and make
appearances. If the Company were not able to respond to changes in consumer
demand and tastes quickly enough, or if the celebrities under contract with the
Company were to become ill or injured, or to fall into public disfavor, the
Company's sales and earnings could be materially adversely affected. The
Company's sales and earnings could also be materially adversely affected if the
Company were unable to retain the services of the celebrities or if an
overabundance of the celebrities' autographs were to become available for sale.

        Source of Materials
        -------------------

        The Company obtains the standard items to be autographed, such as
baseballs, footballs, basketballs and uniform jerseys, and components for its
memorabilia products from licensed dealers and unrelated third party
manufacturers. The sources for many of these items are limited to several or, in
certain cases, one manufacturer or supplier. Although the Company does not have
formal written agreements with any supplier, the Company generally has not
experienced difficulty in obtaining these items. No assurance can be given,
however, that the Company will not experience any significant difficulty in
obtaining these items in the future.

        Dependence on Key Personnel
        ---------------------------

        The Company's future success depends upon its ability to attract and
retain its key managerial personnel. The loss of services of certain of the
Company's executive officers or the inability of the Company to attract
additional management personnel could have a material adverse effect upon the
Company's business, financial condition and results of operations. Certain of
its key executive officers, including Kenneth Goldin, the President and Chief
Executive Officer, and Michael A. Hoppman, the Chief Financial Officer, have
employment agreements with the Company. Mr. Goldin's employment agreement
terminates on December 31, 1996 and Mr. Hoppman's employment agreement
terminates on April 30, 1996.

        Potential for Significant Fluctuations in Quarterly Operating Results
        ---------------------------------------------------------------------

        The Company has experienced, and may in the future experience,
significant quarter to quarter fluctuations in its results of operations. Such
fluctuations may result in volatility in the 

                                       10
<PAGE>
 
price of the Common Stock. Quarterly results of operations may fluctuate as a
result of a variety of factors, including demand for the Company's products, the
timing of the introduction of new trading card products or other products by the
Company or its competitors, the market acceptance of new products, competitive
conditions in the industry and general economic conditions. As a result, the
Company's revenues are difficult to forecast, and the Company believes that
period to period comparisons of results of operations are not necessarily
meaningful and should not be relied upon as an indication of future results of
operations. Due to the foregoing factors, it is possible that in future quarters
the Company's operating results will be below the expectations of public market
analysts and investors. Such an event could have a material adverse effect on
the price of the Common Stock.

        Management of Changing Business
        -------------------------------

        The Company has experienced significant changes, including the
restructuring of its continuing business and discontinuance of certain products
and product lines. Such changes have placed and may continue to place a
significant strain on the Company's management and operations. In order to
manage such changes in the future, the Company must continue to implement and
improve its operational, financial and management systems, and hire, train and
manage its employees. If the Company is unable to implement such systems and
manage such changes effectively, the Company's business, financial condition and
results of operations could be materially and adversely affected.

        Potential Volatility of Stock Price
        -----------------------------------

        The market price of the Company's Common Stock has been, and may in
the future be, highly volatile. Factors such as announcements with respect to
new products or licenses by the Company or its competitors, fluctuations in the
Company's operating results and general market and economic conditions could
cause the market price of the Common Stock to fluctuate substantially. These or
other factors may adversely affect the market price of the Common Stock. See
Item 5. "Market for the Registrant's Common Equity and Stockholder Matters."

        The Company has limited written agreements with its customers and
distributors. In light of this, no assurance can be given that the Company will
not experience a diminution or cessation of sales to any of its customers or
distributors.

        Distribution
        ------------

        The Company's channels of distribution include cable television
shopping networks, national and regional retailers, wholesalers and
distributors, hobby stores, and premium and promotional programs. The loss of
one or more of these channels of distribution could have a material adverse
impact on the Company.

                                       11
<PAGE>
 
        Pledge of Company's Assets
        --------------------------

        The Company has a revolving credit facility from Congress Financial
Corporation whereby borrowings are available up to $12,000,000. This facility is
secured by a pledge of essentially all of the Company's assets. The credit
facility restricts, among other things, the ability of the Company to obtain
additional borrowings. In the event of default the lender would be entitled to
foreclose and take title to these assets.

        Lack of Dividends
        -----------------

        The Company has not paid any dividends on its common stock since
inception and does not intend to pay any dividends to its shareholders in the
foreseeable future. The Company currently intends to reinvest its earnings, if
any, in the development and expansion of its business.

        Litigation
        ----------

        On February 14, 1995, Upper Deck Authenticated, Ltd. ("UDA") filed
suit against the Company and three unaffiliated entities in the United States
District Court for the Southern District of California alleging, inter alia,
that the Company had engaged in unfair competition and violated UDA's right to
use the indicia of certain athletes on sports memorabilia and collectibles. The
Company has responded to UDA's suit by denying all wrongdoing and filing its own
claims against UDA, Upper Deck Company and their President, charging them with
unfair competition, defamation and tortious interference with current and
prospective contractual relations. Discovery in this matter is ongoing. The
Company provided a $500,000 reserve at January 31, 1996 for estimated legal fees
related to this suit, as management plans to vigorously defend these actions.

        In August 1996, a purported class action was filed against the
Company alleging, inter alia, that the practice of randomly inserting chase
cards in packages of trading cards constitutes illegal gambling activity in
violation of state and federal law, including the Racketeer Influenced and
Corrupt Organization Act. Plaintiffs seek certification of a class of persons
who, within the applicable statute of limitations, purchased packages of the
Company's trading cards that might contain randomly inserted chase cards. The
Company has filed a motion to dismiss the suit.

        Shares Eligible for Future Sale
        -------------------------------

        Sales of the Company's common stock in the public market could
adversely affect the market price of the Company's common stock and could impair
the Company's future ability to raise capital through the sale of equity
securities.

                                       12
<PAGE>
 
        Personal Service Contracts
        --------------------------

        The Company routinely enters into personal service contracts with
athletes. These contracts provide primarily for athletes to sign various items
of memorabilia and may include personal appearances. These contracts typically
are for one to two years but some may extend for much greater periods. As of
December 1, 1996, the Company had approximately $10,000,000 of commitments under
these contracts. There is to be no assurance that the Company will be fully able
to utilize the athletes' services for which the Company is committed to pay
under these personal service contracts.


                                    PART II
                                   --------

Item 7. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------

Fiscal Years Ended January 31, 1996 and 1995
--------------------------------------------

        Fiscal 1996 was a year of transition, following a major restructuring in
fiscal 1995. Excluding realignment, restructuring and product line adjustment
costs and the securities litigation settlement, the Company reported sales of
$74,953,000 in fiscal 1996, compared to $72,799,000 in fiscal 1995, and a
pre-tax loss of $354,000 in fiscal 1996, compared to $17,556,000 in fiscal 1995.

        Following is a comparison of sales by major product category and
distribution channels:
<TABLE> 
<CAPTION> 
                                           Fiscal 1996             Fiscal 1995
                                           -----------             -----------
<S>                                        <C>                     <C> 
Classic(R) Draft Pick Cards                $19,183,000             $22,618,000
NFL ProLine Trading Cards                    9,592,000               7,731,000
Other Trading Cards                         14,018,000               8,493,000
Memorabilia                                 28,037,000              29,944,000
Other                                        4,123,000               4,013,000
                                           -----------              ----------
                                           $74,953,000             $72,799,000
                                           ===========             ===========
     
Cable Television                           $16,235,000             $13,465,000
Retail                                      26,956,000              30,375,000
Hobby                                       25,611,000              21,748,000
Other                                        6,151,000               7,211,000
                                           -----------             -----------
                                           $74,953,000             $72,799,000
                                           ===========             ===========
</TABLE> 
        The increase in net sales was primarily due to increases in NFL
Proline trading cards and other trading cards. The increase in NFL Proline
trading cards was primarily due to new product releases as well as increased
marketing efforts by the Company. The increase in other trading cards was
primarily due to increased sales of trading card sets which included prepaid
telephone cards. Such increases were offset by decreased sales of Classic Draft
Pick trading cards, which declined due to a reduction in production quantities
in response to market conditions, and 

                                       13
<PAGE>
 
decreased sales of memorabilia products, which declined due to the
discontinuation of several entertainment related product categories.

        The increase in gross profit margins, which has been a major focus of
management, is a result of the Company's development of new trading card
products and marketing strategies which have enabled the Company to increase its
selling prices. In addition, prior year's results reflect the disposition of
slow moving items at low margins, as well as additional reserves for product
returns and inventories.

        The Company experienced decreases in both selling and general
administrative expenses. Variable selling expenses such as royalties and
commissions were down substantially due to significantly lower sales volumes.
General and administrative expenses were lower primarily due to reductions in
payroll and related expenses. These items decreased due to the restructuring of
the Company which significantly reduced the number of employees required to
operate the business.

        On June 27, 1995, the Company reached an agreement for the full
settlement and dismissal of its shareholder litigation, and on November 6, 1995,
the settlement received final court approval. The settlement required the
Company to pay $3,000,000 in cash (paid by insurance) and $2,000,000 in the
Company's Common Stock (430,394 shares). See Item 3 - "Legal Proceedings."
Accordingly, in the quarter ended July 31, 1995, the Company recorded a
one-time, $2,000,000 pre-tax, noncash charge of $2,000,000 to reflect the fair
value of Common Stock on the settlement date. In addition, the Company incurred
legal and other fees of approximately $175,000 associated with the shareholder
litigation.

        In fiscal 1996, the Company recorded pre-tax charges of $5,675,000
for the costs associated with a strategic realignment program designed to reduce
costs, improve operating efficiencies and to concentrate the Company's efforts
on its core product lines. This realignment included the discontinuance of the
hockey draft pick trading card products, the write-down of certain license
agreements, elimination of small lot inventories and employee termination costs.
In addition, the charge also includes a $500,000 litigation reserve.

        No income tax benefits were reflected in the current year's results.

Fiscal Years Ended January 31, 1995 and 1994
--------------------------------------------

        Fiscal year 1995 was impacted by a number of issues which affected
the results of operations. The sports trading card market had become saturated
with various products which affected sales, inventory levels and product
returns; the Company had expanded into product lines in prior years which, in
retrospect, were not as successful as originally anticipated; the cost structure
of the Company had out-paced the needs of the business; and Paul Goldin, the
Company's Chairman of the Board, Chief Executive Officer and President, died
unexpectedly in May 1994.

                                       14
<PAGE>
 
        In response to these issues, the Company closed the operations of
Classic Games, Inc. in Georgia during the summer and fall of 1994 and relocated
it to New Jersey to improve the coordination of product development and to take
advantage of cross-marketing opportunities. The cost structure of the entire
Company was analyzed and substantial personnel reductions were made. Personnel
levels at the beginning of fiscal 1995 were 350 and were less than 200 at
February 1, 1995. Product lines were analyzed to determine which ones held
long-term benefit to the Company. Inventories were reviewed as part of this
analysis. The Company identified the product lines (and inventories) which it
felt no longer fit within the Company's core business. Specific product lines
discontinued were sports and entertainment trivia games, certain entertainment
memorabilia product lines, minor league trading cards and other sports trading
cards. Also, in order to generate cash to reduce bank debt, the Company
identified certain inventories to be liquidated through alternate channels of
distribution. The restructuring of the Company was completed at the end of
fiscal 1995, except for the sale of inventory through alternate distribution
channels which was expected to be substantially completed by the end of fiscal
1996.

        As a consequence of these actions, the Company recorded pre-tax
charges totaling $23,800,000, of which approximately $17,000,000 was non-cash,
to cover associated costs. The major components of the charge were:
<TABLE> 
      <S>                                  <C> 
      Subsidiary relocation                 $7,100,000
      Severance costs                        1,700,000
      Inventory write-downs and
         reserves                           13,200,000
      Other asset write-downs and
         reserves                            1,800,000
                                           ----------- 
                                           $23,800,000
                                           ===========     
</TABLE> 
        Aside from the charges for restructuring and product line adjustments
discussed above, sales and gross profit margins were down when compared to
fiscal 1994.

        Following is a comparison of sales by major product and distribution
channels:
<TABLE> 
<CAPTION> 
                                          Fiscal 1996         Fiscal 1995
                                          -----------         ------------
<S>                                       <C>                 <C> 
Classic Draft Pick Cards                  $22,618,000          $53,179,000
NFL ProLine Trading Cards                   7,731,000            5,730,000
Other Trading Cards                         8,493,000            9,344,000
Memorabilia                                29,944,000           34,648,000
Other                                       4,013,000            5,694,000

                                          -----------         ------------
                                          $72,799,000         $108,595,000
                                          ===========         ============

Cable Television                          $13,465,000          $31,712,000
Retail                                     30,375,000           53,665,000
Hobby                                      21,748,000           21,399,000
Other                                       7,211,000            1,819,000

                                          -----------          -----------
                                          $72,799,000         $108,595,000
                                          ===========         ============
</TABLE> 

                                       15
<PAGE>
 
        Sales were down in virtually all product categories. Trading card
product sales were down due to an oversupply of trading card product in the
market place and higher than normal returns. Memorabilia product sales declined
due to the discontinuation by the Company of several product lines. Overall,
sales of sports related products were affected due to decreased consumer demand
of such products in response to labor strife in two major league sports as well
as decreases in selling prices due to the reduction of inventory through
alternative channels of distribution. The Company disposed of approximately
$11,000,000 cost value of such inventory through January 31, 1995.

        Gross profit margins in fiscal 1995 were adversely effected compared
to fiscal 1994 due to reduced sales of the Company's draft pick trading card
product, which generally has high margins, and the sale of discontinued product
at a loss or at no margin (after reserves were established). Gross profit
margins were also negatively affected by additional inventory reserves and
increased reserves for returns and allowances.

        Selling, general and administrative expenses were generally lower
than fiscal 1994, as variable selling expenses were down substantially due to
lower sales. Payroll and related expenses were also lower, but most of the
reductions did not occur until the second half of the year. Interest expense was
higher than the previous year due to generally higher average bank borrowings
and interest rate increases. Income tax benefits represent expected refunds
offset by adjustment of the net deferred tax assets reported at January 31,
1995. The Company did not consider it appropriate to record any deferred tax
assets at January 31, 1995.

Seasonality
-----------

        Sales of the Company's trading card products are somewhat seasonal,
with sales peaks typically following the draft for the sport to which the
product relates. The Company has been working to reduce seasonality, to the
extent possible, by having more trading card issues in more limited quantities
throughout the year. Sales of sports-related memorabilia products tend to be
more constant, with sales peaks during holiday seasons and the then current
sport season. Sales of entertainment-related products tend to be less seasonal
and are planned, where possible, to counterbalance the seasonality of sport
trading card products.

Liquidity and Capital Resources
-------------------------------

        Accounts receivable increased due to increases in sales during the last
month of fiscal 1996 as compared to the last month of fiscal 1995. Inventory
levels decreased primarily due to the disposal of $7,500,000 of slow moving
inventory identified in fiscal 1995. Prepaid contracts declined primarily due to
increases in reserves.

        In fiscal 1996, the Company disposed of $7,500,000 of slow moving
inventory identified in fiscal 1995. The income tax receivable decreased as the
Company received a refund of $7,600,000 of Federal income taxes from the carry
back of its fiscal 1995 tax loss. The 

                                       16
<PAGE>
 
proceeds were used to pay off the balance of $5,500,000 on the Company's then
existing amortizing term loan with Mellon Bank, N.A. ("Mellon"); the remainder
was applied to reduce the Company's revolving credit facility with Mellon. Due
to the availability of funds, the Company was able to reduce its trade accounts
payable and accrued liabilities from year ago levels. Operating activities
provided cash of $4,536,000 in fiscal 1996 while operating activities used
$1,001,000 in fiscal 1995.

        On July 31, 1995, the Company's loan agreement with Mellon was
replaced by a three year revolving credit facility from Congress Financial
Corporation. Borrowing under the new facility is available up to $12,000,000,
subject to availability, as defined, based on eligible inventory and accounts
receivable, as defined. Interest is charged at prime rate plus 2%. The facility
is secured by essentially all of the Company's assets. At March 31, 1996, the
outstanding balance was $8,986,000 and unused credit was $146,000.

        Based on the Company's present plans and strategic initiatives put in
place over the last two years, the Company believes that it will have sufficient
liquidity and capital resources, including borrowings under its credit facility,
to fund future operations.

        At January 31, 1996, the Company has Federal net operating loss
carry-forwards of approximately $14,000,000 for which no benefit has been
reflected in the consolidated financial statements. These carry-forwards, in
addition to other fully reserved deferred tax assets, may offset future taxable
income. See note 9 to the Consolidated Financial Statements.

Recent FASB Pronouncements
--------------------------

        The Financial Accounting Standards Board issued two Standards in
fiscal 1996 which would apply to the Company. SFAS No. 121 is effective for
fiscal 1997 and requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Implementation of this Standard is not expected to have a material
impact on the Company's financial position or results of operations.

        SFAS No. 123 establishes financial accounting and reporting standards
for stock-based employee compensation plans. In fiscal 1997, if the Company opts
not to account for stock-based compensation in accordance with the Standard, it
will be required to disclose the effect on net income and earnings per share had
adoption occurred. The Company does not anticipate adopting the accounting
provisions of this Standard.

Inflation
---------
         In recent years, the Company has not experienced any material adverse
effects due to inflation.

                                       17
<PAGE>
 
                                    PART IV
                                    -------

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
------------------------------------------------------------------------

(a)   (1)   The following financial statements are filed as part of this Report:

            (i)     Reports of Independent Public Accountants;
            (ii)    Consolidated Balance Sheets as of January 31, 1996 and 1995;
            (iii)   Consolidated Statements of Operations for the years ended
                    January 31, 1996, 1995 and 1994;
            (iv)    Consolidated Statements of Stockholders' Equity for the
                    years ended January 31, 1996, 1995 and 1994; and
            (v)     Consolidated Statements of Cash Flow for the years ended
                    January 31, 1996, 1995 and 1994.

      (2)   The following financial statement schedule is filed as part of this
            report:

            Schedule II. Valuation and Qualifying Accounts and Reserves

      All other schedules are omitted, as the required information is either
inapplicable or presented in the financial statements or related notes.


      (3)   The following Exhibits are filed as part of this Report.
             
      3.1   Certificate of Incorporation, including certain amendments thereto
            (1)

      3.2   Amendment to Certificate of Incorporation, filed on January 14, 1991
            (2)

      3.3   Amendment to Certificate of Incorporation, filed on October 26, 1993
            (11)

      3.4   Agreement and Plan of Merger, dated as of March 30, 1994, among The
            Score Board, Inc., California Gold, Inc., Catch A Star Collectibles,
            Inc., Score Board Retail Corp. and Score Board Sub, Inc. (11)

      3.5   By-Laws (11)

      3.6   Amendment to By-Laws, dated June 21, 1990 (3)

      10.1  Employment Agreement with Kenneth Goldin* (11)

                                       18
<PAGE>
 
        10.2  Employment Agreement with Michael Hoppman* (11)

        10.3  The Score Board, Inc. 1987 Stock Option Plan, as amended* (2)

        10.4  401(k) Plan* (2)

        10.5  Lease Agreement with Woodlands Joint Venture for office and
              warehouse space at Troon Circle, Austell, Georgia (5), and
              amendment thereto, dated June 30, 1992 (9)

        10.6  Lease Agreement with Woodlands Joint Venture for warehouse space
              at Troon Circle, Austell, Georgia (11)

        10.7  Lease Agreement with Cherry Hill Commerce Center for office and
              warehouse space at Cuthbert Road, Cherry Hill, New Jersey (4)

        10.8  Lease Agreement with Cherry Hill Commerce Center for office and
              warehouse space at Cuthbert Road, Cherry Hill, New Jersey (11)

        10.9  Lease Agreement with Cherry Hill Commerce Center for office and
              warehouse space at Cuthbert Road, Cherry Hill, New Jersey (11)

        10.10 Sales Representation Agreement with Howard Kay, dated August 31,
              1992 and amendments thereto, dated July 20, 1993 and November 4,
              1993 (11)

        10.11 Form of Indenture, dated September 1, 1992, between The Score
              Board, Inc. and Bank America Trust Company of New York, as Trustee
              (6)

        10.12 Form of 9% Convertible Subordinated Debenture (6)

        10.13 Loan and Security Agreement by and between Congress Financial
              Corporation and The Score Board, Inc. dated July 31, 1995 (13)

        10.14 The Score Board, Inc. 1992 Stock Incentive Plan* (7)

        10.15 The Score Board, Inc. 1992 Directors Stock Option Plan* (7)

        10.16 The Score Board, Inc. 1993 Non-Employee Stock Option Plan* (10)

        10.17 Form of Indenture due February 1, 2003, between The Score Board,
              Inc. and Bank America Trust Company of New York, as Trustee (8)

        10.18 Form of 9% Convertible Subordinated Debenture (8)

                                       19
<PAGE>
 
        10.19  Merchandise License Agreement between Paramount Pictures and The
               Score Board, Inc., dated June 25, 1991, and Amendments thereto
               dated October 30, 1991, June 1, 1992, August 13, 1992, August 1,
               1993, September 15, 1993 (11) and November 10, 1994 (13) re: Star
               Trek memorabilia.

        10.20  License Agreement No. ML-2483D with Major League Baseball
               Properties, Inc. re: autographed and unautographed memorabilia,
               dated May 16, 1994 (13) **

        10.21  License Agreement with Major League Baseball Players Association
               re: autographed and unautographed memorabilia, dated May 16, 1994
               (13) **

        10.22  Retail License Agreement with NBA Properties, Inc. re:
               memorabilia, dated June 20, 1994 (13) **

        21.1   Subsidiaries (14)

        23.1   Consent of Arthur Andersen re: Form S-8 Registration Statement
               pertaining to 1987 Stock Option Plan, Form S-8 Registration
               Statement pertaining to 1992 Stock Incentive Plan and 1992
               Directors Stock Option Plan, Form S-3 Registration Statement
               pertaining to 1993 Non-Employee Stock Option Plan (14)

        27.    Financial Data Schedule (14)

-----------------
*       Management contract or compensatory plan or arrangement required to be
        filed as an exhibit to this Annual Report on Form 10-K.

**      Confidential Treatment was requested for portions of this document.

(1)     Reference is made to the Company's report on Form 10-K for the year
        ended January 31, 1989, as filed on May 1, 1989, which is hereby
        incorporated by reference.

(2)     Reference is made to the Company's Form S-8 Registration Statement, as
        filed on February 5, 1991, which is hereby incorporated by reference.

(3)     Reference is made to the Company's Form S-1 Registration Statement (File
        No. 33-36741) as filed on September 10, 1990, which is hereby
        incorporated by reference.
        
(4)     Reference is made to the Company's report on Form 10-K for the year
        ended January 31, 1991, as filed on May 1, 1991, which is hereby
        incorporated by reference.

(5)     Reference is hereby made to the Company's report on Form 10-K, for the
        year ended January 31, 1992, as filed on April 1, 1992, which is hereby
        incorporated by reference.

(6)     Reference is hereby made to the Company's report on Form 8-K, as filed
        on August 13, 1992, which is hereby incorporated by reference.

                                       20
<PAGE>
 
(7)     Reference is made to the Company's report on Form 10-Q, for the quarter
        ended October 31, 1992, as filed on December 15, 1992, which is hereby
        incorporated by reference.

(8)     Reference is hereby made to the Company's report on Form 8-K, as filed
        on January 26, 1993, which is hereby incorporated by reference.

(9)     Reference is hereby made to the Company's report on Form 10-K for the
        year ended January 31, 1993, as filed on May 3, 1993, which is hereby
        incorporated by reference.

(10)    Reference is hereby made to the Company's Form S-3 Registration
        Statement, as filed on September 2, 1993, which is hereby incorporated
        by reference.

(11)    Reference is hereby made to the Company's report on Form 10-K, for the
        fiscal year ended January 31, 1994, as filed on May 2, 1994 which is
        hereby incorporated by reference.

(12)    Reference is hereby made to the Company's report on Form 10-K/A-1, as
        filed on May 31, 1995, which is hereby incorporated by reference.

(13)    Reference is hereby made to the Company's report on Form 8-K, as filed
        on August 25, 1995, which is hereby incorporated by reference.

(14)    Filed herewith.

(b)     Reports on Form 8-K during the fourth quarter of the period covered by
        this Report: On November 15, 1995, the Company filed a report on Form 8-
        K reporting upon Item 4.

                                       21
<PAGE>
                      THE SCORE BOARD, INC AND SUBSIDIARIES
                      -------------------------------------

                        CONSOLIDATED FINANCIAL STATEMENTS
                        ---------------------------------

                   YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
                   -------------------------------------------



                                      INDEX
                                      -----

REPORTS OF THE INDEPENDENT PUBLIC ACCOUNTANTS                 1 - 2

CONSOLIDATED BALANCE SHEETS                                     3

CONSOLIDATED STATEMENTS OF  OPERATIONS                          4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                 7

CONSOLIDATED STATEMENTS OF CASH FLOW                          5 - 6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    8 - 18
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To The Score Board, Inc.:

We have audited the accompanying consolidated balance sheet of The Score Board,
Inc. (a New Jersey corporation) and subsidiaries as of January 31, 1996, and
the related consolidated statements of operations, stockholders' equity and cash
flow for the year 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 audit.

We conducted our audit 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 audit provides 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 The Score Board, Inc. and
subsidiaries as of January 31, 1996, and the results of their operations and
their cash flow for the year then ended, in conformity with generally accepted
accounting principles.

                                                             Arthur Andersen LLP

Philadelphia, Pa.,
  March 22, 1996



                                      F-1
<PAGE>
 
              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Stockholder and Directors
The Score Board, Inc.

     We have audited the consolidated balance sheet of The Score Board, Inc., as
of January 31, 1995 and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the two years in the period
ended January 31, 1995.  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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Score
Board, Inc. as of January 31, 1995 and the results of its operations audits cash
flows for each of the two years in the period ended January 31, 1995 in
conformity with generally accepted accounting principles.

BDO SEIDMAN

Philadelphia, Pennsylvania
April 12, 1995



                                      F-2
<PAGE>
                     THE SCORE BOARD, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE> 
<CAPTION> 
                                                                                      JANUARY 31
                                                                          ---------------------------------
                                                                                1996               1995
                                                                          ---------------    ---------------
<S>                                                                         <C>                <C> 
CURRENT ASSETS:                                                                                   
  Cash                                                                      $    142,000       $    101,000
  Accounts receivable, net of reserve for returns and doubtful
    accounts of $1,925,000 and 2,258,000                                      14,895,000         13,914,000
  Inventories                                                                 16,449,000         17,251,000
  Prepaid expenses and other                                                   2,784,000          3,095,000
  Prepaid contracts                                                            1,674,000          5,756,000
  Income tax receivable                                                          514,000          8,174,000
                                                                          ---------------    ---------------

     Total current assets                                                     36,458,000         48,291,000

  FIXED ASSETS,  net                                                           1,616,000          2,992,000
  INTANGIBLE AND OTHER ASSETS,  net                                            2,044,000          2,404,000
                                                                          ---------------    ---------------

                                                                            $ 40,118,000       $ 53,687,000
                                                                          ===============    ===============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Bank indebtedness                                                         $      --          $ 14,096,000
  Accounts payable                                                             9,122,000         11,461,000
  Accrued liabilities                                                          4,401,000          5,488,000
                                                                          ---------------    ---------------

     Total current liabilities                                                13,523,000         31,045,000
                                                                          ---------------    ---------------

LONG-TERM DEBT                                                                20,402,000         10,737,000
                                                                          ---------------    ---------------

COMMITMENTS AND CONTINGENCIES (Notes 11 and 12)

STOCKHOLDERS' EQUITY:
  Preferred stock - $.01 par value, authorized
    10,000,000 shares; none issued                                                 --                 --
  Common stock - $.01 par value, authorized
    30,000,000 shares; issued 11,822,642 shares in
    1996 and 11,249,748 in 1995                                                  118,000            112,000
  Additional paid-in capital                                                  19,505,000         17,019,000
  Accumulated deficit                                                        (13,430,000)        (5,226,000)
                                                                          ---------------    ---------------

     Total stockholders' equity                                                6,193,000         11,905,000
                                                                          ---------------    ---------------

                                                                            $ 40,118,000       $ 53,687,000
                                                                          ===============    ===============
</TABLE> 



        The accompanying notes are an integral part of these statements.

                                       F-3

<PAGE>
                     THE SCORE BOARD, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>     
<CAPTION> 

                                                                      YEAR ENDED JANUARY 31
                                                     ------------------------------------------------------
                                                           1996               1995               1994
                                                     ---------------    ---------------    ----------------
<S>                                                    <C>                <C>                <C> 
NET SALES                                              $ 74,953,000       $ 72,799,000       $ 108,595,000

COST OF GOODS SOLD                                       45,211,000         57,885,000          59,193,000
                                                     ---------------    ---------------    ----------------

GROSS PROFIT                                             29,742,000         14,914,000          49,402,000
                                                     ---------------    ---------------    ----------------

SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES                                                28,126,000         30,082,000          32,380,000

REALIGNMENT, RESTRUCTURING AND DISCONTINUANCE
 OF PRODUCT LINES                                         5,675,000         23,800,000              --

SECURITIES LITIGATION SETTLEMENT                          2,175,000            --                   --

NET PROCEEDS FROM INSURANCE                                 --              (1,100,000)             --
                                                     ---------------    ---------------    ----------------

INCOME (LOSS) FROM OPERATIONS                            (6,234,000)       (37,868,000)         17,022,000

INTEREST EXPENSE                                          1,970,000          2,388,000           1,346,000
                                                     ---------------    ---------------    ----------------

INCOME (LOSS) BEFORE INCOME TAXES                        (8,204,000)       (40,256,000)         15,676,000

INCOME TAXES (BENEFIT)                                      --              (6,440,000)          5,162,000
                                                     ---------------    ---------------    ----------------

NET INCOME (LOSS)                                     $  (8,204,000)      $ (33,816,000)     $   10,514,000 
                                                     ===============    ===============    ================



NET INCOME (LOSS) PER SHARE                           $       (0.71)      $      (3.01)     $         0.95
                                                     ===============    ===============    ================

WEIGHTED AVERAGE SHARES
 OUTSTANDING                                             11,558,000         11,243,000          11,094,000
                                                     ===============    ===============    ================
</TABLE>      







        The accompanying notes are an integral part of these statements.

                                       F-4


<PAGE>
                     THE SCORE BOARD, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF
                              STOCKHOLDERS' EQUITY

<TABLE> 
<CAPTION> 
                                                                                                               
                                                         COMMON STOCK                   ADDITIONAL        RETAINED 
                                                ---------------------------------        PAID-IN          EARNINGS 
                                                    SHARES           AMOUNT              CAPITAL          (DEFICIT)
                                                ---------------------------------    ---------------    --------------
<S>                                             <C>                <C>               <C>                <C> 
BALANCE, JANUARY 31, 1993                          10,474,478      $     105,000       $ 10,443,000      $ 18,076,000

Exercise of stock options                             731,270              7,000          4,586,000           --
Tax benefit of options exercised                      --                 --               1,822,000           --
Net income                                            --                 --                 --             10,514,000
                                                --------------    ---------------    ---------------    --------------

BALANCE, JANUARY 31, 1994                          11,205,748            112,000         16,851,000        28,590,000

Exercise of stock options                              44,000            --                 168,000           --
Net loss                                              --                 --                 --            (33,816,000)
                                                --------------    ---------------    ---------------    --------------
 
BALANCE, JANUARY 31, 1995                          11,249,748            112,000         17,019,000        (5,226,000)

Exercise of stock options                             142,500              2,000            490,000           --
Issuance of shares in settle-
ment of securities litigation                         430,394              4,000          1,996,000           --
Net loss                                              --                 --                 --             (8,204,000)
                                                --------------    ---------------    ---------------    --------------

BALANCE, JANUARY 31, 1996                          11,822,642      $     118,000       $ 19,505,000      $(13,430,000)
                                                ==============    ===============    ===============    ==============
</TABLE> 


        The accompanying notes are an integral part of these statements.

                                      F-5


<PAGE>

                     THE SCORE BOARD, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>     
<CAPTION> 

                                                                                      YEAR ENDED JANUARY, 31
                                                                     ------------------------------------------------------
                                                                           1996               1995               1994
                                                                     ---------------     --------------    ----------------
<S>                                                                   <C>                 <C>               <C> 
OPERATING ACTIVITIES:

  Net income (loss)                                                   $  (8,204,000)      $(33,816,000)     $   10,514,000
  Adjustments to reconcile net income (loss) to
   net cash provided by (used in) operating activities:         
   Realignment,restructuring and discontinuance of product lines          5,675,000         23,800,000             --
   Cash used in restructuring                                            (1,425,000)        (4,514,000)            --
   Depreciation                                                           1,477,000          1,406,000             937,000
   Provision for doubtful accounts and reserve for returns                1,092,000          5,522,000             207,000
   Amortization of intangible assets                                        919,000            968,000             969,000
   Settlement of lawsuit                                                  2,000,000            --                  --
   Deferred taxes                                                            --              1,168,000            (541,000)
  Changes in operating assets and liabilities:
   Accounts receivable                                                   (2,073,000)         7,967,000         (10,460,000)
   Inventories                                                             (498,000)         2,209,000          (5,146,000)
   Prepaid expenses and contracts                                           943,000          1,594,000          (6,224,000)
   Other assets                                                            (179,000)           (97,000)            (86,000)
   Accounts payable                                                      (2,339,000)         1,883,000          (4,070,000)
   Accrued liabilities                                                     (435,000)        (1,002,000)            806,000
   Income tax receivable                                                  7,660,000         (8,089,000)            387,000
                                                                     ---------------     --------------    ----------------
        Net cash provided by (used in)
         operating activities                                             4,605,000         (1,001,000)        (12,707,000)
                                                                     ---------------     --------------    ----------------
INVESTING ACTIVITIES:
 Business acquisitions                                                      --                 --                 (803,000)
 Purchases of fixed assets                                                 (152,000)          (367,000)         (2,421,000)
 Proceeds from sales of fixed assets                                                           --                   32,000
                                                                     ---------------     --------------    ----------------

        Net cash used in investing activities                              (152,000)          (367,000)         (3,192,000)
                                                                     ---------------     --------------    ----------------

</TABLE>      




        The accompanying notes are an integral part of these statements.

                                       F-6

<PAGE>
                     THE SCORE BOARD, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (CONTINUED)

<TABLE> 
<CAPTION> 
                                                                               YEAR ENDED JANUARY, 31
                                                              -------------------------------------------------------
                                                                    1996                1995               1994
                                                              ---------------     ---------------    ----------------
<S>                                                           <C>                 <C>                <C> 
FINANCING ACTIVITIES:
   Net borrowings (repayments) of bank indebtedness               (4,212,000)         (1,934,000)         12,030,000
   Proceeds from the exercise of stock options                       492,000             168,000           4,593,000
   Payments of capital lease obligations                            (312,000)           (372,000)           (289,000)
   Deferred financing costs                                         (380,000)           (116,000)           (106,000)
                                                              ---------------     ---------------    ----------------

          Net cash provided by (used in)
            financing activities                                  (4,412,000)         (2,254,000)         16,228,000
                                                              ---------------     ---------------    ----------------

NET INCREASE (DECREASE) IN CASH                                       41,000          (3,622,000)            329,000

CASH, BEGINNING OF YEAR                                              101,000           3,723,000           3,394,000
                                                              ---------------     ---------------    ----------------

CASH, END OF YEAR                                              $     142,000       $     101,000      $    3,723,000
                                                              ===============     ===============    ================

SUPPLEMENTARY DISCLOSURE OF
  CASH FLOW INFORMATION:

  Cash paid for interest                                       $   2,218,000       $   2,369,000      $    1,303,000
                                                              ===============     ===============    ================

  Cash (received) paid for income taxes                        $  (7,660,000)      $     481,000      $    5,168,000
                                                              ===============     ===============    ================

  Capital leases                                               $      --           $     354,000      $       91,000
                                                              ===============     ===============    ================
</TABLE> 

       The accompanying notes are an integral part of these statements.

                                      F-7

<PAGE>
 
                     THE SCORE BOARD, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  BUSINESS DESCRIPTION AND SUMMARY OF ACCOUNTING POLICIES:

Business Description

The Company designs, manufactures, markets, and distributes sports trading cards
and sports and entertainment related memorabilia products in the United States.
The Company sells on credit to many of its customers which include television
shopping programs, large national retail chain stores, distributors, and hobby
stores.

Principles of Consolidation

The consolidated financial statements include the accounts of The Score Board,
Inc. and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated.

Use of Estimates

The preparation of financial statements 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.

Financial Instruments

The carrying value of the Company's outstanding bank indebtedness is considered
to approximate fair value on January 31, 1996. The fair value of the Company's
$10,500,000 convertible subordinated debentures is estimated at $7,500,000 based
on estimated borrowing rates currently available to the Company for similar
debentures and through discussions with certain debenture holders.

Revenue Recognition

The Company recognizes revenue when merchandise is shipped to customers.
Allowances for estimated returns are provided when sales are recorded.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined on the
first-in, first-out method.
    
Prepaid Contracts

The Company has personal service contracts with athletes and entertainers which 
provide for autograph services.  The contracts generally require the Company to 
make up-front payments, which are recorded as prepaid contracts, and upon 
receipt of the services the autograph cost is included in inventory.  Future 
contract commitments generally require future autograph services and, therefore,
are not recorded as a liability until the services are performed.  The Company 
continually evaluates whether events or circumstances have occurred that 
indicate that prepaid contract balances or future contract payments will not be 
recoverable.  When factors indicate that contract amounts may not be realizable,
the Company makes an estimate of the unrecoverable amounts and records such 
amounts in cost of goods sold.       

                                       F-8
<PAGE>
 
Fixed Assets and Depreciation

Fixed assets, which include assets leased under capital lease obligations, are
stated at cost. Depreciation is calculated using the straight-line method over
the estimated useful lives of the assets, which range from three to five years.

Intangible Assets

Intangible assets are amortized on a straight-line basis over the term of the
related agreements. Goodwill is amortized over the expected period of benefit,
not to exceed five years. Subsequent to its acquisitions, the Company
continually evaluates whether later events and circumstances have occurred that
indicate the remaining estimated useful lives may warrant revision or that the
remaining intangible asset balances may not be recoverable. When factors
indicate that intangible assets should be evaluated for possible impairment, the
Company uses an estimate of the related undiscounted cash flow over the
remaining life in measuring whether intangible assets are recoverable.

Income Taxes

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). 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.

Net Income (Loss) Per Share

Net income (loss) per share is based on the weighted average number of Common
Shares and Common Stock equivalents outstanding during the respective periods.
Fully-diluted income per share is computed assuming the convertible debentures
were converted as of the beginning of the period and the exercise of stock
options. Common Stock equivalents are not considered in the calculation of net
loss per share since they would be antidilutive. In 1994, fully-diluted net
income per share was $.92 based on 12,180,000 shares.

New Accounting Pronouncements

The Financial Accounting Standards Board issued two Standards that the Company
is required to adapt effective for fiscal 1997. SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Implementation of this
Standard is not expected to have a material impact on the Company's financial
position or results of operations.

SFAS No.123 establishes financial accounting and reporting standards for 
stock-based
                                       F-9
<PAGE>
 
compensation plans. In fiscal 1997, if the Company opts not to apply the
accounting provisions of the Standard, it will be required to disclose the
effect on net income and earnings per share had adoption occurred. The Company
does not anticipate adopting the accounting provisions of this Standard.

Reclassifications

Certain reclassifications have been made to the prior year financial statements
to conform to the current year presentation.
    
2.  REALIGNMENT, RESTRUCTURING AND DISCONTINUANCE OF PRODUCT LINES     

In fiscal 1996, the Company recorded pre-tax charges of $5,675,000 for the costs
associated with a strategic realignment program designed to reduce costs,
improve operating efficiencies and to concentrate the Company's efforts on its
core product lines. This realignment included the discontinuance of the Hockey
Draft card products, the write-down of certain license agreements, elimination
of small lot inventories and employee termination costs. In addition, the charge
also includes a $500,000 litigation reserve. (See Note 11)

In fiscal 1995, the Company recorded pre-tax charges of $23,800,000 for the
costs associated with a major restructuring of the business, including the
closing of its Classic Games subsidiary, discontinuance of several product
lines, acceleration of inventory dispositions of those product lines through
alternate distribution channels and personnel reductions. The costs associated
with these actions are summarized, as follows:
<TABLE>     
<CAPTION> 
                                            Year Ended January 31
                                         ----------------------------
                                            1996              1995
                                         ----------       -----------
   <S>                                   <C>              <C> 
   Closing of subsidiary                 $  265,000       $ 7,100,000
   Severance costs                          160,000         1,700,000
   Discontinuance of product lines        4,750,000        15,000,000
   Litigation                               500,000                --
                                         ----------       -----------

                                         $5,675,000       $23,800,000
                                         ==========       ===========
</TABLE>      
At January 31, 1996 and 1995, approximately $850,000 and $1,900,000,
respectively, remains in accrued liabilities for costs primarily associated with
the closing of the subsidiary and severance.

3.  NET PROCEEDS FROM OFFICER'S LIFE INSURANCE

In May 1994, the Company's President and Chief Executive Officer passed away.
The Company received proceeds from the key man life insurance policy of
approximately

                                      F-10
<PAGE>
 
$2,000,000 in June 1994. In accordance with the officer's employment agreement,
the Company is required to pay approximately $900,000 to a named beneficiary.
The liability outstanding at January 31, 1996 is $468,000, which is due to a
relative of the Company's current President and Chief Executive Officer.

4.  SECURITIES LITIGATION

In August 1994, eight separate proposed class action lawsuits were filed against
the Company and individual defendants alleging, inter alia, securities fraud
                                                ----------
under the federal securities laws. On November 17, 1994, the plaintiffs in these
lawsuits filed a consolidated amended class action complaint.
    
On June 27, 1995, the Company reached an agreement for the full settlement and
dismissal of the shareholder litigation, and on November 6, 1995 the settlement
received final court approval. The settlement required the Company to pay
$3,000,000 in cash (paid by insurance) and $2,000,000 in the Company's Common
Stock (430,394 shares). Accordingly, the Company recorded a one-time pre-tax,
non cash charge of $2,000,000 to reflect the fair value of Common Stock on the
settlement date. The cash payment was recorded as an expense net of the
$3,000,000 recovery that was received from the Company's insurance policy. In
addition, the Company incurred legal and other fees of approximately $175,000
associated with the shareholder litigation.      

5.   INVENTORIES
<TABLE> 
<CAPTION> 
                                                   January 31          
                                         ------------------------------
                                              1996             1995    
                                         -------------     ------------
           <S>                           <C>               <C> 
           Raw materials                  $ 1,940,000      $ 1,304,000
           Work-in-process                  1,616,000          720,000
           Finished goods                  17,516,000       24,917,000
           Valuation reserve               (4,623,000)      (9,690,000)
                                         -------------     ------------  

                                          $16,449,000      $17,251,000
                                         =============     ============  
</TABLE> 
                                         
6.  FIXED ASSETS
<TABLE> 
<CAPTION> 
                                                   January 31           
                                         ------------------------------ 
                                              1996             1995     
                                         -------------     ------------ 
<S>                                      <C>               <C> 
Computer equipment and
   software                               $ 3,069,000      $ 3,044,000
Equipment                                     965,000        1,007,000
Furniture and fixtures                        833,000          833,000
Automobiles                                    78,000           78,000
Leasehold improvements                      1,134,000        1,115,000
                                         -------------     ------------
                                          $ 6,079,000      $ 6,077,000
Less accumulated depreciation
  and amortization                         (4,463,000)      (3,085,000)
                                         -------------     ------------
  
                                          $ 1,616,000      $ 2,992,000
                                         =============     ============   
</TABLE> 
                                     F-11
<PAGE>
 
Computer equipment and software includes amounts under capital leases of
$1,367,000 and $1,457,000 in 1996 and 1995 respectively. Accumulated
amortization of leased property is approximately $1,032,000 and $845,000 at
January 31, 1996 and 1995, respectively.

7.  INTANGIBLE AND OTHER ASSETS
<TABLE> 
<CAPTION> 
                                                   January 31           
                                         ------------------------------ 
                                              1996             1995     
                                         -------------     ------------ 
<S>                                       <C>              <C> 
License agreements and other              $ 2,342,000      $ 2,477,000
Deferred financing costs                    1,568,000        1,406,000
Goodwill                                      595,000          595,000
                                         -------------     ------------  
                                            4,505,000        4,478,000
Less accumulated amortization              (2,959,000)      (2,324,000)
                                         -------------     ------------  
Net intangible assets                       1,546,000        2,154,000
Other assets                                  498,000          250,000
                                         -------------     ------------  
                                         
                                         $  2,044,000      $ 2,404,000
                                         =============     ============  
</TABLE> 
                                         
8.  BANK INDEBTEDNESS AND LONG-TERM DEBT
<TABLE> 
<CAPTION> 
                                                   January 31              
                                         ------------------------------
                                              1996             1995    
                                         -------------    -------------
      <S>                                <C>              <C> 
      Subordinated debentures            $ 10,500,000     $ 10,500,000
      Capital lease obligations               219,000          530,000
      Revolving credit                      9,884,000           --
                                         -------------    -------------   
                                           20,603,000       11,030,000
       

      Current portion of capital leases      (201,000)        (293,000)
                                         -------------    -------------   
                                         
                                         $ 20,402,000     $ 10,737,000
                                         =============    ============= 
</TABLE> 
                                         
In July 1995, the Company obtained a new, three-year revolving credit facility
with Congress Financial Corporation. This facility replaced the previous
financial arrangement with Mellon Bank, N.A. Borrowings under the new facility
are available up to $12,000,000, subject to availability, based on eligible
accounts receivable and inventories, as defined. Interest is charged at prime
plus 2%. The facility is secured by essentially all of the Company's assets and
subject to financial and non-financial covenants. The available credit, based on
collateral at January 31,1996, was $12,000,000, of which $9,884,000 was
outstanding and included in long-term debt.

                                      F-12
<PAGE>
 
On October 7, 1994, the previous financing agreement was amended to extend its
term until April 30, 1995. The facility was changed from a $19,000,000 revolving
credit to a $10,500,000 amortizing term loan and a $10,000,000 revolving credit.
The revolving credit was subject to available collateral and the term loan was
to be fully amortized by April 30,1995. On December 30, 1994, the agreement was
amended to modify certain financial covenants. The agreement was extended again,
until November 30,1995. The extension of the credit was agreed upon to allow the
Company sufficient time to find alternative financing.

The outstanding revolving credit at January 31, 1995 was $8,596,000. The
outstanding balance on the amortizing term loan was $5,500,000 at January 31,
1995 which was repaid, in full, in February, 1995. The weighted average interest
rate on the bank debt was 11.5%, 8.31%, and 5.7% in fiscal 1996, 1995 and 1994,
respectively. Year-end interest rates were 10.5%, 10.0% - 10.5% (1995) and 5.5%
- 6.25% (1994); maximum outstanding bank debt during the years 1996, 1995 and
1994 was $ 14,096,000, $18,380,000 and $16,030,000; average outstandings were $
8,544,000, $15,580,000 and $7,522,000. Outstanding bank debt at January 31, 1995
was all classified as current since replacement financing had not been obtained.

In fiscal 1993, the Company completed two private placements for a total of
$10,500,000 principal amount of 9% convertible, subordinated debentures and
received $9,429,000, net of expenses. Debentures for $7,500,000 are due
September 1, 2002 and are convertible into shares of the Company's common stock
at a price of $9.56 per share. The remaining $3,000,000 are due February 1, 2003
and are convertible at $11.37 per share. Both became callable in 1996 starting
at 106% and declining pro-rata over the respective lives of the obligations.

9.  INCOME TAXES

Income tax provision (benefit) consists of the following:
<TABLE> 
                                        --------------------------------------------     
                                                   Year Ended January 31

                                             1996          1995             1994
                                        -------------  -------------    ------------     
<S>                                     <C>            <C>              <C> 
Current:
      Federal                           $     --         (7,624,000)       3,501,000
      State                                   --           (550,000)         380,000
                                        -------------  -------------    ------------ 
                                              --         (8,174,000)       3,881,000
                                        -------------  -------------    ------------

Deferred:
      Federal                             (2,700,000)    (4,523,000)        (300,000)
      State                                   --           (265,000)        (241,000)
                                        -------------  -------------    ------------
                                          (2,700,000)    (4,788,000)        (541,000)
                                        -------------  -------------    ------------

Tax benefit charged to equity                 --              --           1,822,000
                                        -------------  -------------    ------------ 
Increase in valuation allowance         $ (2,700,000)    (6,522,000)          --
                                        -------------  -------------    ------------ 

                                        $     --        $(6,440,000)      $5,162,000
                                        =============  =============    ============
</TABLE> 

                                      F-13
<PAGE>
 
During fiscal 1994, certain optionee and warrant holders sold shares of the
Company's common stock which they had acquired during the year. This early
disposition resulted in a compensation deduction for income tax purposes, the
benefit of which was credited directly to additional paid-in capital.

A reconciliation of the effective income tax rate with the statutory Federal
income tax rate is as follows:
<TABLE> 
<CAPTION> 
                                                  Year Ended January 31
                                          -------------------------------------
                                            1996            1995         1994
                                          --------        --------     -------- 
     <S>                                  <C>             <C>          <C> 
     Statutory rate                          (34)%           (34)%         34%
                                           
     State income taxes, net               
       of Federal benefit                     --              (1)%          2%
     Charitable contributions                 --              --           (3)%
     Other                                     1%              2%          --
                                           
      Increase in valuation allowance         33%             17%          --
                                          --------        --------     -------- 
                                          
                                              --%            (16)%         33%
                                          ========        ========     ========
</TABLE> 
The major components of the net deferred tax asset are as follows:
<TABLE> 
<CAPTION> 
                                                   January 31          
                                         ------------------------------
                                             1996               1995    
                                         ------------       ------------
<S>                                      <C>                <C> 
Inventory valuation                      $ 2,014,000        $ 3,295,000
Contract reserves                          1,173,000             --
Accounts receivable reserve                  654,000            768,000

Other reserves and accrued expenses          581,000            742,000
Net operating loss carry forwards          4,800,000          1,717,000
                                         ------------       ------------ 
                                           9,222,000          6,522,000
Valuation allowance                       (9,222,000)        (6,522,000)
                                         ------------       ------------ 
                                         $    --            $    --
                                         ============       ============
</TABLE> 

Management has established a full valuation allowance for the net deferred asset
due to the uncertainty of its realization. At January 31, 1996, the Company has
approximately $14,000,000 of Federal net operating loss carry forwards that
begin to expire in 2010.

                                      F-14
<PAGE>
 
10.  STOCKHOLDERS' EQUITY

Stock Option Plans

The Company maintains four stock option plans that permit the grant of options
to purchase shares of common stock. Under the plans, Incentive Stock Options may
be granted to key employees, including officers and directors who are also
employees, and Non-Qualified Options may be granted to key employees, officers,
directors, advisors and consultants. The maximum term of any option under the
plans is ten years and the option price per share may not be less than 100% of
the fair market value of the Company's common stock on the date the option is
granted (110% in the case of incentive stock options granted to persons owning
more than 10% of the voting stock of the Company and 120% in the case of certain
non-qualified stock options granted under the Director's Plan).

Aggregate option activity is as follows:
<TABLE> 
<CAPTION> 
                                      Number              Price
                                      of shares           Range
                                      ---------           -----
<S>                                   <C>                 <C> 
Outstanding, January 31, 1993         1,530,740           $  .67-17.00
           Granted                      857,000             8.13-16.65
           Exercised                  ( 731,270)            1.09-13.13
           Canceled                   (  33,000)               9.13
                                      ----------          ------------ 
Outstanding, January 31, 1994         1,623,200              .67-17.00
           Granted                      340,000             2.50- 2.75
           Exercised                  (  44,000)             .67- 9.13
           Canceled                   ( 307,800)            8.13-17.00
                                      ----------          ------------         
Outstanding, January 31, 1995         1,611,400              .67-17.00
           Granted                      905,750            3.875- 7.20
           Exercised                  ( 142,500)            2.75- 4.25
           Canceled                   ( 329,710)            8.38-17.00
                                      ----------          ------------         
Outstanding, January 31, 1996         2,044,940              .67-17.00
                                      ==========          ============
</TABLE> 

At January 31, 1996, 329,650 options were available for grant under the plans
and 1,419,000 outstanding options, with an average exercise price of $ 7.37 per
share, were exercisable.

Other Stock Options

The Company has granted stock options to purchase common stock to non-affiliated
persons. At January 31, 1996, there were 4,000 options exercisable at an average
price of $8.19 per share.

                                      F-15
<PAGE>
 
11.  COMMITMENTS AND CONTINGENCIES

Personal Service Contracts

The Company has entered into personal service contracts with approximately 55
current and former professional athletes and entertainers to purchase autographs
on a per signature basis, and also, in some cases, for performing other
services, including personal appearances and licensed product rights on behalf
of the Company. Minimum future commitments under these contracts are as follows:
<TABLE> 
<CAPTION> 
           Year ending January 31,
           <S>                 <C> 
           1997                $ 7,036,000
           1998                  3,980,000
           1999                  2,805,000
           2000                  2,455,000
           2001                    455,000
           Thereafter            2,503,000
</TABLE> 
The Company is often required to make initial cash payments on personal service
contracts. As of January 31, 1996 and 1995, the Company has prepaid $1,674,000
and $5,756,000, respectively, under these contracts.

Lease Agreements

The Company leases office and warehouse space under leases accounted for as
operating leases. At January 31, 1996, future minimum annual rentals for leases
with remaining lease terms in excess of one year are as follows:
<TABLE> 
<CAPTION> 
           Year ending January 31,
           <S>                 <C> 
           1997                $ 1,070,000
           1998                    497,000
           1999                    358,000
           2000                     75,000
</TABLE> 
Rent expense for the years ended January 31, 1996, 1995 and 1994 were $701,000,
$1,008,000 and $1,174,000, respectively. Subleasing income of $270,000,
$194,000, $132,000 and $ 27,000 is to be received in fiscal 1997, 1998, 1999 and
2000, respectively.

Litigation

On February 14, 1995, Upper Deck Authenticated, Ltd. ("UDA") filed suit against
the Company and three unaffiliated entities in the United States District Court
for the Southern District of California alleging, inter alia, that the Company
had engaged in unfair competition and violated UDA's right to use the indicia of
certain athletes on sports memorabilia and collectibles. The Company has
responded to UDA's suit by

                                      F-16
<PAGE>
 
denying all wrongdoing and filing its own claims against UDA, Upper Deck Company
and their President, charging them with unfair competition, defamation and
tortious interference with current and prospective contractual relations.
Discovery in this matter is ongoing and the Company has provided a $500,000
reserve for estimated legal fees related to this suit, as management plans to
vigorously defend these actions. The Company does not expect the outcome of
these actions to have a material adverse effect on its financial position or
results of operations.

The Company is involved in various other legal proceedings and claims incident
to the conduct of its business which management believes will not have a
significant adverse impact on the financial position or results of operations.

12.  ROYALTY AGREEMENTS

The Company has signed various royalty agreements which permit the Company to
produce and market products utilizing licensed names, logos, likenesses and
trademarks. Most royalty agreements require the Company to pay a royalty equal
to a percentage of specified net sales ranging from 3.75% to 20% subject to
minimum guarantees aggregating $4,529,000 of which the Company has paid
$3,934,000 as of January 31, 1996. The royalty agreements expire at various
dates through October 30, 2002. Royalty expense under the agreements for the
years ended January 31, 1996, 1995 and 1994 was $6,167,000, $4,165,000 and
$5,043,000, respectively.

13.  SIGNIFICANT CUSTOMER AND SUPPLIER CONCENTRATIONS

During the year January 31, 1996, sales to national and regional cable
television networks accounted for approximately 22% of the Company's net sales.
Sales to one of these television shopping networks during fiscals 1996, 1995,
and 1994 were approximately $12,872,000, $11,289,000 and $17,522,000,
respectively. The Company has no written agreement with this customer. The loss
of this customer, or cable television as a sales outlet for the Company's
products, could have a material adverse impact on the Company's results of
operations.

At January 31, 1996, the Company had accounts receivable totaling $4,378,000, or
27% of gross receivables due from another major customer who is in the retail
business. Sales to that customer in fiscal 1996 were $7,097,000. In addition,
during fiscal 1994, the Company had sales directly and indirectly to another
customer of $9,567,000.

The Company relies on one key vendor as the sole supplier of its trading card
products. Although management believes that other vendors could provide similar
products on relatively comparable terms, an unanticipated change in this
vendor's supply to the Company could have a material adverse impact on the
Company's results of operations.

                                      F-17
<PAGE>
 
14.  BENEFIT PLAN

The Company has a defined contribution (401K) plan under which participation is
available to all employees meeting minimum service and age requirements.
Participants may contribute a percentage of their compensation limited to a
dollar amount set by law. The Company may contribute a discretionary matching
contribution up to 4% of the employees salary, and an additional discretionary
amount determined each year by the Company. Employer contributions for the years
ended January 31, 1996, 1995 and 1994 were $100,000, $120,000 and $136,000,
respectively.

15.  UNAUDITED QUARTERLY DATA - (IN THOUSANDS, EXCEPT PER SHARE DATA)

The following is a summary of unaudited quarterly data for the 1996 and 1995
fiscal years:
<TABLE> 
<CAPTION> 
1996                                 First     Second    Third     Fourth  
                                     Quarter   Quarter   Quarter   Quarter 
                                     -------   -------   -------   ------- 
<S>                                  <C>       <C>       <C>       <C> 
Net sales                            $15,562   $16,499   $23,947   $18,945 
Gross profit                           6,853     7,881     9,533     5,475 
Income (loss) from operations            990    (1,080)    2,277   ( 8,421)
Net income (loss)                        526    (1,538)    1,768   ( 8,960)
Net income (loss) per share             0.05    ( 0.14)     0.16     (0.76)
                                     
<CAPTION> 
1995                                 First     Second    Third     Fourth    
                                     Quarter   Quarter   Quarter   Quarter 
                                     -------   -------   -------   ------- 
<S>                                  <C>       <C>       <C>       <C> 
Net sales                            $11,232   $24,411   $18,019   $19,137
Gross profit                           2,149     6,173       917     5,675
Income (loss) from operations         (9,909)  (12,046)  (11,282)  ( 4,631)
Net income (loss)                     (6,785)  ( 8,206)  (13,830)  ( 4,995)
Net income (loss) per share            (0.62)    (0.72)    (1.23)    (0.44)
</TABLE> 

Fiscal 1996 results include a pre-tax charge of $2,175,000 in the second quarter
for settlement of securities litigation and $5,675,000 in the fourth quarter for
realignment and litigation. Fiscal 1995 results include pre-tax restructuring
and product line adjustments of $5,950,000, $11,500,000, $4,500,000 and
$1,850,000 in the first through fourth quarters, respectively.

                                      F-18
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To The Score Board, Inc.:

We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of The Score Board, Inc. and subsidiaries
included in this Form 10-K and have issued our report thereon dated March 22,
1996.  Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The schedule listed in Item 14a(2) is
presented of purposes of complying wit the Securities and Exchange Commission's
rules and is not part of the basic financial statements.  This schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.

                                                             ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
  March 22, 1996



                                      F-19
<PAGE>
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Stockholders and Directors
The Score Board, Inc.

The audits referred to in our report dated April 12, 1995 relating to the
consolidated financial statements of The Score Board, Inc., which is contained
in Item 8 of this Form 10-K, included in the audit of the financial statement
schedule listed in the accompanying index.  This financial statement schedule is
the responsibility of the Company's management.  Our responsibility is to
express an opinion on this financial statement schedule based upon our audits.

In our opinion, such financial statement schedule presents fairly in all
material respects, the information set forth therein.

BDO SEIDMAN

Philadelphia, Pennsylvania
April 12, 1995



                                      F-20
<PAGE>
 
                                  SIGNATURES
                                  ----------

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized on January 14, 1997.

                                       THE SCORE BOARD, INC.

                          By:          /s/ Kenneth Goldin
                                       ------------------------------------- 
                                       Kenneth Goldin, Chairman of the Board,
                                       Chief Executive Officer and President

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

<TABLE>     
<CAPTION> 

Signatures                 Title                              Date
----------                 -----                              ----
<S>                        <C>                                <C> 
/s/ Kenneth Goldin         Chairman, President,               January 15, 1997
------------------         Principal Executive 
Kenneth Goldin             Officer and Director 

</TABLE>