<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED
July 31, 1998 COMMISSION NO. 0-6649
JILCO INDUSTRIES, INC.
(exact name of registrant as specified in its charter)
California 95-207885
- ---------------------------- ---------------
(State or other jurisdiction I.R.S. Employer
of organization) Identification No.
P. O. Box 10539
Beverly Hills, California 90213
- ------------------------- -----
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code is (310) 274-1986. Securities
registered pursuant to Section 12(g) of the Act:
Common Stock, No 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 [ ]
As of July 31, 1998, there were 449,991 shares of common stock outstanding.
1
<PAGE> 2
PART I
ITEM 1. Business
Registrant is not engaged in any business operations and has not been so
engaged since 1968. (See Note 1 to the accompanying financial statements of
Registrant.)
ITEM 2. Description of Property
Registrant does not have an interest in any property.
ITEM 3. Legal Proceedings
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
PART II
ITEM 5. Market for Common Equity and Related Stockholder Matters
Market Information
There is no public trading market for Registrant's common equity.
Approximate Number of Equity Security Holders
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class As of July 31, 1998
-------------- -------------------
<S> <C>
Common Stock 785
</TABLE>
Dividends
Not applicable.
Recent Sales of Unregistered Securities
None.
2
<PAGE> 3
ITEM 6. Management's Discussion and Analysis or Plan of Operation
Refer to the attached financial statements and accompanying notes.
ITEM 7. Financial Statements
The financial statements of Registrant are attached hereto.
ITEM 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
ITEM 9. Directors and Executive Officers of Registrant
<TABLE>
<CAPTION>
First Common Shares
Principal Elected Owned Beneficially
Name Occupation Age Director On July 31, 1998
- ---- ---------- --- -------- ----------------
<S> <C> <C> <C> <C>
Martha J. Kretzmer President, 44 1991 -0-
Secretary and
Treasurer of
Registrant
</TABLE>
ITEM 10. Executive Compensation
No officer or director of Registrant receives any remuneration.
ITEM 11. Security Ownership of Certain Beneficial Owners and Management
<TABLE>
<CAPTION>
Name and Address of Amount and Nature Percent
Title of Class Beneficial Owner of Beneficial Owner of Class
- -------------- ---------------- ------------------- --------
<S> <C> <C> <C>
Common Stock Leonard M. Ross 400,955 shares 89.1%
P.O. Box 10539
Beverly Hills, California
90213
</TABLE>
ITEM 12. Certain Relationships and Related Transactions
None.
3
<PAGE> 4
ITEM 13. Exhibits and Reports on Form 8-K
(a) The Registrant's financial statements are attached hereto. The
Exhibits listed in the accompanying Exhibit Index on page 6 are filed as part of
this Form 10-KSB.
(b) No materially important events occurred during the fiscal year of
Registrant that would require filing of Form 8-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.
(Registrant) JILCO INDUSTRIES, INC.
By: /S/ Martha Kretzmer
------------------------
Name: Martha Kretzmer
Title: President
Date: October 27, 1998
4
<PAGE> 5
JILCO INDUSTRIES, INC.
List of Financial Statements
The following financial statements of Jilco Industries, Inc. are
included in Item 7:
Balance sheets -- Years ended July 31, 1998 and 1997.
Statements of loss and deficit -- Years ended July 31, 1998,
1997, and 1996.
Statements of cash flows -- Years ended July 31, 1998, 1997, and
1996.
Notes to financial statements -- July 31, 1998.
5
<PAGE> 6
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Jilco Industries, Inc.
Beverly Hills, California
We have compiled the accompanying balance sheets of Jilco Industries, Inc. (a
corporation) as of July 31, 1998 and 1997, and the related statements of loss
and deficit and cash flows for each of the two years then ended, in accordance
with Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
September 15, 1998
6
<PAGE> 7
PART I . FINANCIAL INFORMATION
JILCO INDUSTRIES, INC.
BALANCE SHEETS - JULY 31, 1998 AND 1997
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
1998 1997
--------------- ----------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 2,049 $ 976
--------------- ----------------
TOTAL CURRENT ASSETS $ 2,049 $ 976
=============== ================
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable to shareholder $ 53,250 $ 53,250
Note payable 48,000 5,000
Accrued interest 58,222 51,144
Other accrued expenses 800 -
--------------- ----------------
Total current liabilities 160,272 109,394
--------------- ----------------
SHAREHOLDERS' DEFICIT
Common stock, no par value
1,500,000 shares authorized
449,991 shares issued and outstanding 749,950 749,950
Accumulated deficit (908,173) (858,368)
--------------- ----------------
Total shareholders' deficit (158,223) (108,418)
--------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 2,049 $ 976
=============== ================
</TABLE>
See Accompanying Report of Independent Certified Public Accountants.
See Notes to Financial Statements.
7
<PAGE> 8
JILCO INDUSTRIES, INC.
STATEMENTS OF LOSS AND DEFICIT
YEARS ENDED JULY 31, 1998, 1997, AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997 1996
---------------- --------------- ----------------
<S> <C> <C> <C>
EXPENSES
Professional fees $ 28,607 $ 2,500 $ 43
Fees and licenses 90 10 -
Printer fees 13,146 - -
Interest expense 7,078 5,238 5,008
Sundry 84 84 82
---------------- --------------- ----------------
Total expenses 49,005 7,832 5,133
---------------- --------------- ----------------
LOSS BEFORE PROVISION FOR INCOME TAXES (49,005) (7,832) (5,133)
PROVISION FOR INCOME TAXES 800 800 800
---------------- --------------- ----------------
NET LOSS (49,805) (8,632) (5,933)
ACCUMULATED DEFICIT, BEGINNING OF YEAR (858,368) (849,736) (843,803)
---------------- --------------- ----------------
ACCUMULATED DEFICIT, END OF YEAR $ (908,173) $ (858,368) $ (849,736)
================ =============== ================
BASIC LOSS PER SHARE $ (0.11) $ (0.02) $ (0.01)
================ =============== ================
DILUTED LOSS PER SHARE $ (0.11) $ (0.02) $ (0.01)
================ =============== ================
WEIGHTED-AVERAGE SHARES OUTSTANDING 449,991 449,991 449,991
================ =============== ================
</TABLE>
See Accompanying Report of Independent Certified Public Accountants.
See Notes to Financial Statements.
8
<PAGE> 9
JILCO INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED JULY 31, 1998, 1997, AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997 1996
---------------- --------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (49,805) $ (8,632) $ (5,933)
Increase in accrued interest 7,078 5,238 5,008
Increase in other accrued expenses 800 - -
---------------- --------------- ----------------
Net cash used in operating activities (41,927) (3,394) (925)
---------------- --------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 43,000 4,000 1,000
---------------- --------------- ----------------
Net cash provided by financing activities 43,000 4,000 1,000
---------------- --------------- ----------------
Net increase in cash 1,073 606 75
CASH, BEGINNING OF YEAR 976 370 295
---------------- --------------- ----------------
CASH, END OF YEAR $ 2,049 $ 976 $ 370
================ =============== ================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
INTEREST PAID $ - $ - $ -
================ =============== ================
INCOME TAXES PAID $ - $ 800 $ 800
================ =============== ================
</TABLE>
See Accompanying Report of Independent Certified Public Accountants.
See Notes to Financial Statements.
9
<PAGE> 10
JILCO INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JULY 31, 1998
(UNAUDITED)
NOTE 1 - THE COMPANY
Jilco Industries, Inc. (the "Company") has been inactive since April 2,
1968 when it was discharged from bankruptcy under its previous name of
Sportways, Inc. The expenses the Company has incurred represent those
necessary to keep the Company in good standing in its state of
residence.
FAIR VALUE OF FINANCIAL INSTRUMENTS
For certain of the Company's financial instruments including cash and
accrued expenses, the carrying amounts approximate fair value due to
their short maturities. The amounts shown as notes payable also
approximate fair value because current interest rates and terms offered
to the Company for notes payable of similar maturities are
substantially the same.
CASH AND CASH EQUIVALENTS
For purpose of reporting cash flows, the Company includes cash on
deposit, cash on hand, and financial instruments purchased with an
original maturity of three months or less to be cash equivalents.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, as well as the
reported amounts of expenses during the reporting period. Accordingly,
actual results could differ from those estimates.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income." This statement requires companies to
classify items of other comprehensive income by their nature in a
financial statement and display the accumulated balance of other
comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of a statement of financial
position. SFAS No. 130 is effective for financial statements issued for
fiscal years beginning after December 15, 1997. Management believes
that SFAS No. 130 will not have a material effect, if any, on the
Company's financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information." This statement establishes
additional standards for segment reporting in the financial statements
and is effective for fiscal years beginning after December 15, 1997.
Management believes that SFAS No. 131 will not have an effect on the
Company's financial statements.
See Accompanying Report of Independent Certified Public Accountants.
10
<PAGE> 11
JILCO INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JULY 31, 1998
(UNAUDITED)
NOTE 1 - THE COMPANY (CONTINUED)
INCOME TAXES
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which
requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in
the financial statements or tax returns. Under this method, deferred
income taxes are recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their
financial reporting amounts at each period end based on enacted tax
laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the
amount expected to be realized. The provision for income taxes
represents the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
NOTE 2 - LOSS PER SHARE
The Company calculates basic loss per share using the weighted-average
number of shares outstanding for the period. Diluted loss per share
includes both the weighted-average number of shares and any common
share equivalents such as options or warrants in the calculation. As
the Company had no common share equivalents outstanding during any
periods presented, basic and diluted loss per share are the same.
NOTE 3 - NOTES PAYABLE TO SHAREHOLDER
Notes payable to shareholder at July 31 consisted of the following:
<TABLE>
<CAPTION>
1998 1997
--------------- ----------------
<S> <C> <C>
Revolving note payable, interest accrues at 9%
per annum. Principal and accrued interest
are due on demand. $ 40,000 $ 40,000
Revolving note payable, interest accrues at 11%
per annum. Principal and accrued interest
are due on demand. 8,250 8,250
Revolving note payable, interest accrues at 10%
per annum. Principal and accrued interest
are due on demand. 5,000 5,000
--------------- ----------------
TOTAL $ 53,250 $ 53,250
=============== ================
</TABLE>
See Accompanying Report of Independent Certified Public Accountants.
11
<PAGE> 12
NOTE 4 - NOTE PAYABLE
The note payable is due on demand. Interest accrues at 8% per annum
and is payable on December 31 of each year.
NOTE 5 - INCOME TAXES
For the years ended July 31, 1998 and 1997, the Company did not provide
a provision for income taxes due to the net loss incurred. At July 31,
1998, the Company has approximately $90,449 and $30,081 in net
operating loss carryforwards for federal and state income tax purposes,
respectively, that begin to expire in 1999. The components of the
Company's deferred tax assets and liabilities for income taxes consist
of a deferred tax asset relating to the net operating loss
carryforwards of approximately $33,460 and $15,750 for the years ended
July 31, 1998 and 1997, respectively. The other components of the
Company's deferred tax assets and liabilities are immaterial. The
Company has established a valuation allowance of approximately $32,539
and $15,544 for the years ended July 31, 1998 and 1997, respectively,
to fully offset its deferred tax assets as the Company does not believe
the recoverability of these deferred tax assets is more likely than
not. The valuation allowance increased by $16,995 and $1,278 during the
years ended July 31, 1998 and 1997, respectively.
See Accompanying Report of Independent Certified Public Accountants.
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Description
- --- -----------
<S> <C>
3(1) Articles of Incorporation of the Registrant, as amended
(incorporated by reference to Exhibit 3(1) to the Company's 1989
Form 10-K).
3(2) By-laws of the Registrant, as amended (incorporated by reference
to Exhibit 3(2) to the Company's 1989 Form 10-K).
10(1) Revolving Demand Note, dated November 10, 1996, between the
Company and TRACO (incorporated by reference to Exhibit 10(1) to
the Company's 1996 Form 10-K).
10(2) Note Extension and Modification Agreement, dated December 1,
1992, between the Company and Leonard M. Ross (incorporated by
reference to Exhibit 10(1) to the Company's 1993 Form 10-K).
10(3) Revolving Demand Note, dated November 7, 1989, between the
Company and Leonard M. Ross (incorporated by reference to Exhibit
10(1) to the Company's 1990 Form 10-K).
10(4) Note Extension and Modification Agreement, dated December 1,
1992, between the Company and Leonard M. Ross (incorporated by
reference to Exhibit 10(3) to the Company's 1993 Form 10-K).
10(5) Note Extension and Modification Agreement, dated November 7,
1989, between the Company and Leonard M. Ross (incorporated by
reference to Exhibit 10(2) to the Company's 1990 Form 10-K).
10(6) Revolving Demand Note, dated December 18, 1987, between the
Company and Leonard M. Ross (incorporated by reference to Exhibit
10(1) to the Company's 1989 Form 10-K).
10(7) Note Extension and Modification Agreement, dated December 1,
1992, between the Company and Leonard M. Ross (incorporated by
reference to Exhibit 10(6) to the Company's 1993 Form 10-K).
10(8) Note Extension and Modification Agreement, dated November 7,
1989, between the Company and Leonard M. Ross (incorporated by
reference to Exhibit 10(4) to the Company's 1990 Form 10-K).
10(9) Note Extension and Modification Agreement, dated July 13, 1988,
between the Company and Leonard M. Ross (incorporated by
reference to Exhibit 10(2) to the Company's 1989 Form 10-K).
</TABLE>
13
<PAGE> 14
<TABLE>
<S> <C>
10(10) Promissory Note Extension Agreement, dated August 8, 1986,
between the Company and Leonard M. Ross (incorporated by
reference to Exhibit 10(3) to the Company's 1989 Form 10-K).
27 Financial Data Schedule
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JILCO INDUSTRIES, INC. FOR THE FISCAL YEAR ENDED JULY
31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<CASH> 2,049
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,049
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,049
<CURRENT-LIABILITIES> 160,272
<BONDS> 0
0
0
<COMMON> 749,950
<OTHER-SE> (908,173)
<TOTAL-LIABILITY-AND-EQUITY> 2,049
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 41,927
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,078
<INCOME-PRETAX> 0
<INCOME-TAX> 800
<INCOME-CONTINUING> (49,805)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (49,805)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
