<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, 1999 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, 1999, 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
Number of Record Holders
Title of Class As of July 31, 1999
-------------- ------------------------
Common Stock 785
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, 1997
- ---- ---------- --- -------- ----------------
<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: November 12, 1999
4
<PAGE> 5
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, 1999 and 1998, 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
November 12, 1999
<PAGE> 6
PART I . FINANCIAL INFORMATION
JILCO INDUSTRIES, INC.
BALANCE SHEETS - JULY 31, 1999 AND 1998
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash $ 889 $ 2,049
--------- ---------
TOTAL CURRENT ASSETS $ 889 $ 2,049
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 7,499 $ --
Notes payable to shareholder 53,250 53,250
Note payable 57,500 48,000
Accrued interest 67,545 58,222
Other accrued expenses -- 800
--------- ---------
Total current liabilities 185,794 160,272
--------- ---------
SHAREHOLDERS' DEFICIT
Common stock, no par value
1,500,000 shares authorized
449,991 shares issued and outstanding 749,950 749,950
Accumulated deficit (934,855) (908,173)
--------- ---------
Total shareholders' deficit (184,905) (158,223)
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 889 $ 2,049
========= =========
</TABLE>
See Accompanying Report of Independent Certified Public Accountants.
See Notes to Financial Statements.
2
<PAGE> 7
JILCO INDUSTRIES, INC.
STATEMENTS OF LOSS AND DEFICIT
YEARS ENDED JULY 31, 1999, 1998, AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
EXPENSES
Professional fees $ 11,674 $ 28,607 $ 2,500
Fees and licenses -- 90 10
Printer fees 4,616 13,146 --
Interest expense 9,323 7,078 5,238
Sundry and other 269 84 84
--------- --------- ---------
Total expenses 25,882 49,005 7,832
--------- --------- ---------
LOSS BEFORE PROVISION FOR INCOME TAXES (25,882) (49,005) (7,832)
PROVISION FOR INCOME TAXES 800 800 800
--------- --------- ---------
NET LOSS (26,682) (49,805) (8,632)
ACCUMULATED DEFICIT, BEGINNING OF YEAR (908,173) (858,368) (849,736)
--------- --------- ---------
ACCUMULATED DEFICIT, END OF YEAR $(934,855) $(908,173) $(858,368)
========= ========= =========
BASIC LOSS PER SHARE $ (0.06) $ (0.11) $ (0.02)
========= ========= =========
DILUTED LOSS PER SHARE $ (0.06) $ (0.11) $ (0.02)
========= ========= =========
WEIGHTED-AVERAGE SHARES OUTSTANDING 449,991 449,991 449,991
========= ========= =========
</TABLE>
See Accompanying Report of Independent Certified Public Accountants.
See Notes to Financial Statements.
3
<PAGE> 8
JILCO INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED JULY 31, 1999, 1998, AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(26,682) $(49,805) $ (8,632)
Increase in accrued interest 9,323 7,078 5,238
Increase in accounts payable 7,499 -- --
Decrease in other accrued expenses (800) 800 --
-------- -------- --------
Net cash used in operating activities (10,660) (41,927) (3,394)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 9,500 43,000 4,000
-------- -------- --------
Net cash provided by financing activities 9,500 43,000 4,000
-------- -------- --------
Net increase (decrease) in cash (1,160) 1,073 606
CASH, BEGINNING OF YEAR 2,049 976 370
-------- -------- --------
CASH, END OF YEAR $ 889 $ 2,049 $ 976
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
INTEREST PAID $ -- $ -- $ --
======== ======== ========
INCOME TAXES PAID $ 1,742 $ -- $ 800
======== ======== ========
</TABLE>
See Accompanying Report of Independent Certified Public Accountants.
See Notes to Financial Statements.
4
<PAGE> 9
JILCO INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 1999
(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
other 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 February 1998, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 132,
"Employers' Disclosures about Pensions and Other Post-Retirement
Benefits." The Company does not expect adoption of SFAS No. 132 to have
a material impact, if any, on its financial position or results of
operations.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," is effective for financial statements with fiscal years
beginning after June 15, 1999. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. This statement is not applicable to the Company.
SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after
the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise," is effective for financial statements with the first fiscal
quarter beginning after December 15, 1998. This statement is not
applicable to the Company.
See Accompanying Report of Independent Certified Public Accountants.
5
<PAGE> 10
JILCO INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 1999
(UNAUDITED)
NOTE 1 - THE COMPANY (CONTINUED)
Recently Issued Accounting Pronouncements (Continued)
SFAS No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections," is effective for financial statements with fiscal years
beginning February 1999. This statement is not applicable to the
Company.
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.
See Accompanying Report of Independent Certified Public Accountants.
6
<PAGE> 11
JILCO INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 1999
(UNAUDITED)
NOTE 3 - NOTES PAYABLE TO SHAREHOLDER
Notes payable to shareholder at July 31 consisted of the following:
<TABLE>
<CAPTION>
1999 1998
------- -------
<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>
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, 1999 and 1998, the Company did not provide
a provision for income taxes due to the net loss incurred. At July 31,
1999, the Company has approximately $117,131 and $41,868 in net
operating loss carryforwards for federal and state income tax purposes,
respectively, that begin to expire in 2000. 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 $43,593 and $33,460 for the years ended July 31, 1999
and 1998, respectively. The other components of the Company's deferred
tax assets and liabilities are immaterial. The Company has established a
valuation allowance of approximately $42,311 and $32,539 for the years
ended July 31, 1999 and 1998, 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 $9,772 and $16,995 during the years ended July 31, 1999 and
1998, respectively.
See Accompanying Report of Independent Certified Public Accountants.
7
<PAGE> 12
JILCO INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 1999
(UNAUDITED)
NOTE 6 - YEAR 2000 ISSUE
The Company is conducting a comprehensive review of its computer systems
to identify the systems that could be affected by the Year 2000 Issue
and is developing an implementation plan to resolve the Issue.
The Issue is whether computer systems will properly recognize
date-sensitive information when the year changes to 2000. Systems that
do not properly recognize such information could generate erroneous data
or cause a system to fail. The Company is dependent on computer
processing in the conduct of its business activities.
Based on the review of the computer systems, management does not believe
the cost of implementation will be material to the Company's financial
position and results of operations.
See Accompanying Report of Independent Certified Public Accountants.
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JUL-31-1999
<CASH> 889
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 889
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 889
<CURRENT-LIABILITIES> 185,794
<BONDS> 0
0
0
<COMMON> 749,950
<OTHER-SE> (934,855)
<TOTAL-LIABILITY-AND-EQUITY> 889
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,359
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,323
<INCOME-PRETAX> (26,682)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26,682)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,682)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
