U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
<TABLE>
<S>       <C>                                          <C>                                   <C> 
(Mark One)
[X]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
           OF 1934
                     For the fiscal year ended December 31, 1998

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

Commission file number                                               1-5673
                      --------------------------------------------------------------------------------------------------------------
                      
                                                       RANGER INDUSTRIES, INC.
------------------------------------------------------------------------------------------------------------------------------------
                                        (Exact name of small business issuer as specified in its charter)

                               Connecticut                                                                06-0768904  
----------------------------------------------------------------    ----------------------------------------------------------------
                      (State or other jurisdiction                                           (I.R.S. Employer Identification No.)
                    of incorporation or organization)

               One Regency Drive, Bloomfield, Connecticut                                                    06002
----------------------------------------------------------------    ----------------------------------------------------------------
                (Address of principal executive offices)                                                  (Zip Code)

Issuer's telephone number                                        (860) 726-1208
                         -----------------------------------------------------------------------------------------------------------

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

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

                                                    Common Stock, $0.0l par value
------------------------------------------------------------------------------------------------------------------------------------
                                                          (Title of Class)
</TABLE>

           Check  whether the issuer (1) filed all reports  required to be filed
by  Section  13 or 15(d) of the  Exchange  Act during the past 12 months (or for
such shorter  period that the  registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days. Yes X  No


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

           State issuer's revenues for its most recent fiscal year:  NONE.

           State the  aggregate  market  value of voting and  non-voting  common
equity held by  non-affiliates  computed by  reference to the price at which the
common  equity  was sold,  or the  average  bid and asked  price of such  common
equity,  as of a  specified  date  (March  19,  1999)  within  the past 60 days:
$1,765,675

           State  the  number  of  shares  outstanding  of each of the  issuer's
classes of common equity,  as of the latest  practicable  date (March 29, 1999):
5,278,644 shares

                   DOCUMENTS INCORPORATED BY REFERENCE: None.

    Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

810748.5

<PAGE>



                                     PART I

Item 1.  Business.

             Background. Ranger Industries, Inc., a Connecticut corporation (the
"Registrant") was organized in 1961, as the successor to the Connecticut Leather
Company,  which was founded in 1932.  From 1961 through 1990, the Registrant was
known as "Coleco Industries,  Inc." The Registrant's principal executive offices
are  located  at One  Regency  Drive,  Bloomfield,  Connecticut  06002,  and its
telephone number is (860) 726-1208.

             In 1988, the  Registrant,  then known as Coleco  Industries,  Inc.,
filed a voluntary petition in bankruptcy,  and in 1990, a plan of reorganization
(the "Plan") was  approved by the  bankruptcy  court and became  effective as of
February  28, 1990 (the  "Effective  Date"),  and the  Registrant  emerged  from
Chapter 11 pursuant thereto. In accordance with the Plan:

             (i)   the  Registrant  emerged  from the Chapter 11  proceeding
                   with $950,000 in cash and no liabilities,

             (ii)  $5.5 million was  transferred  to a product  liability  trust
                   (the  "Product  Liability  Trust"),  to process and liquidate
                   product  liability  claims  pending or arising  after May 15,
                   1990, and

             (iii) all other assets were transferred to a  reorganization  trust
                   (the  "Reorganization  Trust"),  which  was  responsible  for
                   collecting and liquidating the Registrant's  other assets and
                   distributing  them to the  Registrant's  former  creditors in
                   accordance with the Plan.

             The  Reorganization  Trust  made what was  expected  to be its last
distribution in May, 1996 and was terminated by order of the bankruptcy court on
August 27, 1996. In August 1998, however,  the Registrant received an additional
distribution of $45,601 from the former Reorganization Trust's trustee.

             The Product  Liability Trust contains assets of  approximately  $12
million as of December 31, 1998. Under the terms of the Product Liability Trust,
the residual funds, if any,  remaining after the distribution of Trust assets to
pay product liability claims and expenses would be distributed to the Registrant
on February 28, 2020. The bankruptcy court, in its discretion,  is authorized to
permit an earlier  payout to the  Registrant.  The  Registrant  may apply to the
bankruptcy  court for  termination of the Product  Liability  Trust earlier than
originally  scheduled  (i.e.,  prior to February 28, 2020),  but there can be no
assurance that such application will be successful,  or that the Registrant will
otherwise  receive any  distribution of assets from the Product  Liability Trust
prior to 2020, if ever.


810748.5
                                       -1-

<PAGE>



             As of December 31, 1998,  the Registrant had adjusted net operating
loss  carryforwards  ("NOLs") of approximately  $182 million.  The NOLs resulted
principally from operating losses sustained by the Registrant prior to 1990. See
Note 6 of the  Notes  to the  Financial  Statements  for an  explanation  of the
possible utility of these NOLs.

             Under  management  that  was  installed  under  the  Plan  and that
remained in control of the  Registrant  through  July 29, 1997,  the  Registrant
pursued the  business of  acquiring  investments,  but that effort  proved to be
unsuccessful.

             During  1997,  Pure Group,  Inc.,  a Delaware  corporation  ("PGI")
wholly owned by one of the Registrant's current directors,  engaged in and won a
proxy contest for control of the Registrant. The current Board of Directors, who
were the  nominees of PGI in the proxy  contest,  took office on July 29,  1997,
pursuant to a settlement agreement dated that date (the "Settlement  Agreement")
among PGI, the former members of the  Registrant's  Board of Directors,  and the
Registrant.  Thereafter, they were elected as the directors of the Registrant at
the Annual Meeting of Shareholders of the Registrant that was held on August 11,
1997. The Registrant had not held an annual meeting of  shareholders at any time
since 1990.

             In October 1997, the Registrant received a payment of approximately
$802,000 as a distribution from a bankruptcy  proceeding in which the Registrant
had filed a claim in 1983. The Registrant had apparently  written off that claim
as worthless prior to the conclusion of the Registrant's  bankruptcy  proceeding
in 1990. At the time that the payment was received,  the Registrant had no other
material  liquid  assets.  As of December 31, 1998,  the  Registrant  had liquid
assets of approximately  $759,000,  substantially  all of it attributable to the
October 1997  distribution and the August 1998 distribution of $45,601 described
above.

             As of March 31, 1997,  the Registrant had cash on hand of less than
$5,000 and no other financial  resources.  In connection with the proxy contest,
PGI agreed to lend the  Registrant  certain  funds  necessary for the call of an
annual meeting of  shareholders.  Under the Settlement  Agreement,  PGI lent the
Registrant  approximately  $197,000, and thereafter,  PGI lent the Registrant an
additional  $267,000.  The  loans  were  demand  loans  bearing  interest  at  2
percentage  points above the prime rate. In March 1998,  PGI and the  Registrant
exchanged the full balance of that debt, plus interest, for 778,644 newly issued
shares of the  Registrant's  common  stock,  par value $0.01 per share  ("Common
Stock").  As a result, PGI now holds approximately 21% of the outstanding Common
Stock.  The  exchange  enabled the  Registrant  to  conserve  its cash for other
corporate purposes. See Item 12, Certain Relationships and Related Transactions.


Item 2.      Properties.

             As of  the  Effective  Date  of the  Plan,  the  Registrant  had no
material  properties,  and it has  acquired  none  since  then.  The  Registrant
currently has the use of office space in Bloomfield,

810748.5
                                       -2-

<PAGE>



Connecticut,  and leases space in a public  warehouse for the storage of some of
its business records.

Item 3.      Legal Proceedings.

             In March 1999, one of the Company's inactive  subsidiaries received
a Notice of Intent to Levy from the  Internal  Revenue  Service  (the  "IRS") in
which the IRS alleges a debt of approximately $460,000 in connection with a 1984
tax  obligation  of that  company.  The  Company  believes  that the  assertions
contained in the Notice of Intent to Levy are without merit,  but the Company is
still in the process of evaluating the merits of those assertions.

Item 4.      Submission of Matters to a Vote of Securities Holders.

             Inapplicable.


810748.5
                                       -3-

<PAGE>



                                     PART II

Item 5.      Market for Common Equity and Related Shareholder Matters.

             The Common  Stock is traded  over the  counter and quotes have been
reported by the OTC Bulletin  Board since  February 2, 1997. The table set forth
below  reports the high and low closing bid  quotations  as compiled by National
Quotation  Bureau,  LLC,  of New  York,  New  York  (for  1997  prices)  and IDD
Information Services (for 1998 prices) for each calendar quarter in the last two
complete  fiscal years,  and for the first  quarter of the current  fiscal year,
through the date indicated.  The quotations reflect interdealer prices,  without
retail  markups,  markdowns or  commissions  and may not  necessarily  represent
actual transactions.


                             High Bid                    Low Bid
--------------------------------------------------------------------------------
1997 - 1st Quarter           $ 1.1875                   $ 0.2500
1997 - 2nd Quarter             1.7500                     0.3125
1997 - 3rd Quarter             1.0625                     0.4375
1997 - 4th Quarter             1.5000                     0.6250
1998 - 1st Quarter            1.00000                    0.40625
1998 - 2nd Quarter            0.93750                    0.56250
1998 - 3rd Quarter            0.87500                    0.43750
1998 - 4th Quarter            0.75000                    0.28125
1999 - 1st Quarter            0.59375                    0.28125
(through March 19)


             The number of  registered  holders of the Common  Stock as of March
19, 1999, was approximately 1,000.

             The  Registrant  has not paid any cash dividends on its stock since
1974 and has no expectation of doing so in the foreseeable future.

Item 6.      Plan of Operation.

             The following discussion should be read in conjunction with Item 1,
Business, and the Financial Statements, including the Notes thereto.


810748.5
                                       -4-

<PAGE>



             As a result of the  receipt of  approximately  $802,000 in the last
quarter  of 1997 and  approximately  $45,600 in the third  quarter of 1998,  the
Registrant has sufficient  liquidity to meet its current operating  expenses for
the foreseeable future. The Registrant's cash on hand was approximately $759,000
as of December 31, 1998, and the Registrant's projected cash operating costs and
expenses,  net of interest income,  for the fiscal year ending December 31, 1999
are  approximately  $87,000.  The  Registrant  does not  expect to have to raise
additional funds in the next twelve months.

             The  Registrant's  financial  resources at the present time,  other
than its cash on hand,  are (i) a remainder  interest  in the Product  Liability
Trust and (ii) the possible utility of net operating loss carryforwards ("NOLs")
of approximately  $182 million as of March 5, 1999. See Note 6, Income Taxes, in
the Condensed  Financial  Statements included in Part 7 of this Report. The NOLs
have sheltered the  Registrant's  modest  interest  income and the income of the
Product  Liability  Trust.  The income of the Product  Liability  Trust, if any,
continues to be taxable to the Registrant.  As more fully discussed in the Notes
to  the  Financial  Statements,  the  continuing  availability  of the  NOLs  is
uncertain.

             Year  2000  Issues.  The  Registrant  does  not use a  computer  to
maintain  its  financial  records at this time.  The  Registrant  therefore  (i)
considers  itself  ready to deal  with the  transition  to the year  2000;  (ii)
expects to bear no significant  costs  associated  with addressing the Year 2000
problem;  and  (iii)  believes  that its Year  2000  issues  present  it with no
material risks. The Registrant cannot be certain that BankBoston, the bank where
most of the Registrant's cash is kept in the form of accounts, will be free from
Year 2000 difficulties.  The Registrant believes,  however,  that those accounts
are safe from any material risk associated  with the Year 2000 problem.  Because
the  Registrant  has no  operations  and does not use a computer to maintain its
financial  records,  the  Registrant  has not  considered  it  necessary to make
contingency plans for dealing with the Year 2000 problem and it has not done so.

Item 7.      Financial Statements.

             See the  "Index  to  Financial  Statements  and  Schedules,"  which
appears on page F - 1 hereof.

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

             Inapplicable.



810748.5
                                       -5-

<PAGE>



                                    PART III

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

             Directors and Executive  Officers.  The following  table sets forth
the names, ages and business backgrounds of the Registrant's  executive officers
and directors,  together with all positions and offices held with the Registrant
by such executive  officers and directors.  All executive officers and directors
first took office on July 29, 1997:


Name, Age and Office                     Business Background

Morton E. Handel,  63,                   President  of S&H  Consulting,  Ltd.,  
Chief Executive Officer,                 a privately  held  investment and 
President and Director                   consulting firm.  Chairman of the Board
                                         and  director  of  Marvel  Enterprises,
                                         Inc.,  a  publicly  held  entertainment
                                         company  operating  in  the  licensing,
                                         comic   book    publishing    and   toy
                                         businesses;  director  and  chairman of
                                         the  Audit  Committee  of  CompUSA,   a
                                         publicly   held  retailer  of  computer
                                         hardware,  software,  and  accessories;
                                         director of Ithaca Industries,  Inc., a
                                         publicly held manufacturer of underwear
                                         and  hosiery;  director  of  Concurrent
                                         Computer Corporation, a manufacturer of
                                         real-time    computers   and   computer
                                         systems.    

Isaac    Perlmutter, 55,                 Independent investor;  sole shareholder
Director                                 of Pure Group, Inc.; director of Marvel
                                         Enterprises,   Inc.,  a  publicly  held
                                         entertainment  company operating in the
                                         licensing,  comic book  publishing  and
                                         toy businesses.

Raymond  Minella, 49,                     Principal of  Berenson,  Minella &
Director                                 Company, an investment banking firm.

              Section 16(a) Beneficial Ownership Reporting Compliance. During
1998, Mr. Handel, Mr. Perlmutter and PGI failed to file forms required by
Section 16(a) of the Securities Exchange Act of 1934 on a timely basis. The
number of reports not filed on a timely basis during 1998 and from January 1,
1999 to March 29, 1999 was as follows: three for Mr. Handel (two Forms 4, each
to show a purchase of shares of Common Stock, and a Form 5 to show an
acquisition of shares of Common Stock pursuant to Mr. Handel's employment
agreement; see Note 8 to the Financial Statements), one for Mr. Perlmutter (a
Form 4 to show an acquisition of Common Stock by PGI; see Item 12), and one for
PGI (a Form 3 to show PGI's having become a ten-percent owner; see Items 11 and
12).


810748.5
                                       -6-

<PAGE>



Item 10.           Executive Compensation.

             Executive  Officers.  In the three fiscal years ended  December 31,
1998, 1997 and 1996, the only executive  officers of the Registrant who received
any salary or other compensation from the Registrant were Mr. James B. Rubin and
Mr. Morton E. Handel, as follows:

                                           Fiscal year ended       Total annual
Name and Positions                            December 31,         compensation
James T. Rubin, President and Director            1998                        0
(through July 29, 1997)                           1997                $17,888(1)
                                                  1996                   50,000


Morton E. Handel, President and Chief             1998                45,063(2)
Executive Officer                                 1997                        0
                                                  1996                        0

1. For the period from January 1 through July 29, 1997, only.

2. See Note 8 of the Notes to the Financial Statements.

             The Registrant's  current  executive  officer,  Mr. Handel,  served
without any compensation from July 29, 1997 to August 4, 1998.

             Compensation of Directors.  Each director of the Registrant is paid
an  attendance  fee of $500 for each regular or special  meeting of the Board of
Directors which he attends, in person or by telephone.



810748.5
                                       -7-

<PAGE>



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

             The  following  table lists all  persons  who have  reported to the
Securities and Exchange Commission their beneficial ownership of more than 5% of
the Registrant's Common Stock, and all directors and officers of the Registrant,
as of March 15, 1999:

<TABLE>
<CAPTION>
<S>                                                              <C>                            <C>    
====================================================================================================================================
Beneficial Owner                                                  Number of Shares               Percentage1
------------------------------------------------------------------------------------------------------------------------------------
Morton E. Handel, President, Chief Executive Officer                                                          
and Director                                                               718,167                     13.6%
------------------------------------------------------------------------------------------------------------------------------------
Massachusetts Financial Services Company                                   398,930                      7.6%
------------------------------------------------------------------------------------------------------------------------------------
Isaac Perlmutter, Director(2)                                            1,136,137                     21.5%
------------------------------------------------------------------------------------------------------------------------------------
All directors and officers as a group(3)                                 1,854,304                     35.1%
====================================================================================================================================
</TABLE>

1.     All percentages  have been  determined  using the number of shares of the
       Registrant's  Common  Stock  outstanding  as of  March  19,  1999,  i.e.,
       5,278,644 shares.

2.     Consists of 1,102,100  shares owned by PGI,  which is wholly owned by Mr.
       Perlmutter,  and 34,037 shares owned by another  corporation wholly owned
       by Mr. Perlmutter.

3.     Consists  of  shares   beneficially  owned  by  Mr.  Handel  and  by  Mr.
       Perlmutter. Mr. Minella does not own any shares of the Registrant.


Item 12.           Certain Relationships and Related Transactions.

             From  time to time in  1997,  PGI  (which  is  wholly  owned by Mr.
Perlmutter,  who became a director of the  Registrant on July 29, 1997) advanced
funds to or for the benefit of the Registrant, and on July 29, 1997, the balance
of such advances stood at approximately  $197,000.  Prior  management  agreed on
behalf of the  Registrant to repay such advances on demand,  and to pay interest
on the  outstanding  balance at the rate of 2  percentage  points over the prime
rate,  compounded  monthly.  Advances made after July 29, 1998, were made on the
same  terms and  conditions  as  provided  for the  advances  made  prior to Mr.
Perlmutter's  election as a director.  No cash payments of principal or interest
were  made  on  such  indebtedness  in  1997,  and on  February  20,  1998,  the
outstanding  balance of principal and interest was  $483,616.  On March 9, 1998,
the  Registrant  agreed  to  exchange  778,644  shares  of  its  authorized  but
theretofore  unissued  Common  Stock for the $483,616 of debt due PGI. The value
per share used for the  purposes  of the  exchange  was  $0.6211,  which was the
weighted  average of the closing  price of shares  traded for the 30-day  period
prior to February 20, 1998.


810748.5
                                       -8-

<PAGE>



             Throughout  1996,  and the period from  January 1 through  July 28,
1997,  the  Registrant  had a  management  services  agreement  with  M.D.  Sass
Associates,  Inc. ("Sass"),  of which the Registrant's  president  throughout in
such periods, Mr. James B. Rubin, was a Senior Managing Director. The Registrant
incurred costs of $19,200 payable to Sass in 1996, and $9,600 in 1997.


                                     PART IV

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

           (a) Exhibits. The exhibits that are part of this report are listed in
the Exhibit Index at the end of this report.

           (b) Reports on Form 8-K. In the last  quarter of the year  covered by
this report, the Registrant filed no Current Reports on Form 8-K.

810748.5
                                       -9-

<PAGE>



                                   SIGNATURES


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

                      Ranger Industries, Inc.



March 29, 1999                   /s/ MORTON E. HANDEL  
                      ----------------------------------------------------------
                                Morton E. Handel
                                President and Chief Executive Officer

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



March 29, 1999                  /s/ MORTON E. HANDEL     
                      ----------------------------------------------------------
                                Morton E. Handel,
                                President, Chief Executive Officer, Director,
                                and Acting Chief Financial and Accounting
                                Officer (principal executive, financial and
                                accounting officer)


March 29, 1999                  /s/ RAYMOND MINELLA   
                      ----------------------------------------------------------
                                Raymond Minella, Director


March 29, 1999                  /s/ ISAAC PERLMUTTER   
                      ----------------------------------------------------------
                                Isaac Perlmutter, Director



810748.5


<PAGE>



                                  EXHIBIT INDEX

The  following  exhibits  are a part of  this  report.  All  such  exhibits  are
incorporated  herein by reference to other documents on file with the Securities
and Exchange Commission, except those marked with an asterisk.


     Exhibit No.        Description

     3.1                Amended and restated certificate of incorporation of
                        the Registrant,  incorporated herein by reference to the
                        Registrant's  Annual  Report  on Form 10-K for the year
                        ended December 31, 1989, SEC File No. 1-5673.

     3.2                Amended  and  restated  by-laws of the  Registrant,
                        incorporated  herein by  reference  to the  Registrant's
                        Annual Report on Form 10-KSB for the year ended December
                        31, 1994, SEC File No. 1-5673.

     10.1               Settlement  agreement  dated  July 29,  1997,  among the
                        Registrant,  Pure  Group,  Inc.,  and  Messrs.  James B.
                        Rubin,  James Berman and Duncan N. Darrow,  incorporated
                        herein by  reference  to Exhibit IV of  Amendment  No. 4
                        dated  July 29,  1997,  of  Schedule  13D  filed by Pure
                        Group,  Inc.,  and certain other persons with respect to
                        ownership of the Registrant's Common Stock.

     10.2               Employment  Agreement  dated as of August 4, 1998,
                        between   the   Registrant   and   Morton   E.   Handel,
                        incorporated  herein by reference to Exhibit 10.2 of the
                        Registrant's Quarterly Report on Form 10-Q for the three
                        months  ended June 30, 1998.  

     21*                List of subsidiaries.

     27*                Financial Data Schedule.


810748.5

<PAGE>

                    RANGER INDUSTRIES, INC. AND SUBSIDIARIES
                   Index to Financial Statements and Schedules
<TABLE>
<CAPTION>

                                                                                                                 Page

<S>                                                                                                              <C>
Report of Independent Accountants.................................................................................F-2

Balance Sheets as of December 31, 1998 and 1997...................................................................F-3

Statements of Operations for the years ended December 31, 1998 and 1997...........................................F-4

Statements of Changes in Shareholders' Equity for the years ended December 31, 1998
  and 1997........................................................................................................F-5

Statements of Cash Flows for the years ended December 31, 1998 and 1997...........................................F-6

Notes to Financial Statements.....................................................................................F-7


Schedules not included herein have been omitted because they are not applicable
or the required information is shown in the Financial Statements or Notes
thereto.
</TABLE>


815094.2
                                       F-1

<PAGE>




                        Report of Independent Accountants


To the Board of Directors of
Ranger Industries, Inc.
(formerly Coleco Industries, Inc.)


In our opinion, the accompanying balance sheets and the related statements of
operations, changes in shareholders' equity and of cash flows, present fairly,
in all material respects, the financial position of Ranger Industries, Inc. (the
"Company") at December 31, 1998 and 1997, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.


PricewaterhouseCoopers LLP





February 28, 1999
Hartford, CT


815094.2
                                       F-2

<PAGE>


<TABLE>
<CAPTION>

Ranger Industries, Inc.
(formerly Coleco Industries, Inc.)
Balance Sheets
December 31, 1998 and 1997
----------------------------------------------------------------------------------------------------------------------



                                                                                       1998                1997
<S>                                                                               <C>                <C>             

Assets
Current assets
      Cash and equivalents                                                        $       759,216    $        784,800
      Prepaid expenses                                                                      2,625                   -
      Income tax receivable                                                                 3,436               3,446
                                                                                  ---------------     ----------------


                                                                                          765,277             788,246
                                                                                  ---------------     ----------------


Other assets                                                                                6,802                   -
                                                                                  ---------------     ----------------


           Total assets                                                           $       772,079    $        788,246
                                                                                  ---------------     ----------------


Liabilities and Stockholders' Equity
Current liabilities
      Accounts payable and other liabilities                                      $        18,075    $         19,918
      Deferred income taxes                                                                 3,576                   -
      Accrued interest payable                                                                  -              16,337
      Note payable to Pure Group, Inc.                                                          -             196,477
      Other amounts owed to Pure Group, Inc.                                                    -             265,303
                                                                                  ---------------     ----------------

           Total current liabilities                                                       21,651             498,035

Non-current liabilities
      Deferred income taxes                                                                 8,391                   -
                                                                                  ---------------     ----------------


           Total liabilities                                                               30,042             498,035
                                                                                  ---------------     ----------------


Stockholders' equity
      Common stock - $.01 par value, 20,000,000 shares
        authorized, 5,278,644 and 4,000,000 shares issued and outstanding,                 52,786              40,000
        respectively
      Capital in excess of par value                                                    1,661,430             985,000
      Unearned compensation                                                             (114,937)                   -
      Retained deficit                                                                  (857,242)           (734,789)
                                                                                  ---------------     ----------------

           Total stockholders' equity                                                     742,037             290,211
                                                                                  ---------------     ----------------

           Total liabilities and stockholders' equity                                     772,079             788,246
                                                                                  ===============     ===============


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


815094.2
                                       F-3

<PAGE>



Ranger Industries, Inc.
(formerly Coleco Industries, Inc.)
Statements of Operations
For the Years Ended December 31, 1998 and 1997
-------------------------------------------------------------------------------------------------------------------




                                                                                      1998                1997

Net sales                                                                        $             -       $            -
                                                                                 ---------------        -------------


Operating costs and expenses
      Administrative expenses                                                            110,356             111,697
      Legal expenses                                                                      32,794             111,243
      Proxy contest and annual meeting expenses                                                -             251,781

Other income and expenses
      Bad debt recoveries income                                                           2,603             802,160
      Interest expense                                                                   (5,498)            (16,337)
      Interest income                                                                     35,559               8,861
                                                                                 ---------------        ------------

           (Loss) income before income taxes                                           (110,486)             319,963
                                                                                 ---------------        ------------


Provision for income taxes
      Current                                                                                  -               8,400
      Deferred                                                                            11,967                   -
                                                                                 ---------------        ------------


           Net (loss) income                                                           (122,453)             311,563
                                                                                 ---------------        ------------


           Basic (loss) income per share                                         $         (.03)       $         .08
                                                                                 ---------------        ------------



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

</TABLE>

815094.2
                                       F-4

<PAGE>


<TABLE>
<CAPTION>


Ranger Industries, Inc.
(formerly Coleco Industries, Inc.)
Statements of Changes in Shareholders' Equity
For the Years Ended December 31, 1998 and 1997
-----------------------------------------------------------------------------------------------------------------------------------




                                                Common Stock          Capital in                                       Total
                                           Number           Par       Excess of       Retained       Unearned      Shareholders'
                                          of Shares        Value      Par Value       Deficit      Compensation       Equity
                                                                                                                     (Deficit)

<S>                                        <C>           <C>         <C>            <C>             <C>                <C>       
Balances at December 31, 1996              4,000,000     $   40,000  $    985,000   $ (1,046,352)   $          -       $ (21,352)

Net income                                         -              -             -         311,563               -         311,563
                                         -----------      ---------   -----------      ----------      -----------      ---------


Balances at December 31, 1997              4,000,000         40,000       985,000       (734,789)               -         290,211

Issuance of common stock to PGI              778,644          7,786       475,829               -                         483,615

Issuance of common stock in lieu of cash     500,000          5,000       155,000               -       (160,000)               -
compensation

Amortization of unearned
      compensation                                 -              -             -               -          45,063          45,063

Net loss                                           -              -             -       (122,453)                       (122,453)

Distribution from Ranger Industries, Inc.
      reorganization, net                          -              -        45,601               -                          45,601
                                         -----------      ---------   -----------      ----------      -----------      ---------


Balances at December 31, 1998              5,278,644     $   52,786  $  1,661,430   $   (857,242)   $   (114,937)      $  742,037
                                         -----------      ---------   -----------      ----------      -----------      ---------

</TABLE>


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


815094.2
                                       F-5

<PAGE>

<TABLE>


Ranger Industries, Inc.
(formerly Coleco Industries, Inc.)
Statements of Cash Flows
For the Years Ended December 31, 1998 and 1997
----------------------------------------------------------------------------------------------------------------



                                                                                   1998             1997

<S>                                                                              <C>              <C>         
Cash flows from operating activities
      Net (loss) income                                                          $  (122,453)     $    311,563
                                                                                  -----------      -----------

      Adjustments to reconcile net (loss) income to net cash
        (used in) provided by operating activities
           Interest expense settled in shares of Ranger stock                           5,498                -
           Compensation expense settled in shares of Ranger stock                      45,063                -
           Deferred income taxes                                                       11,967                -
           Changes in assets and liabilities
             Bad debt recoveries receivable                                                 -            2,931
             Prepaid expenses and other assets                                        (9,427)            1,044
             Income tax receivable                                                         10          (3,446)
             Accounts payable, accrued liabilities and interest payable               (1,843)         (32,081)
                                                                                  -----------      -----------

                Total adjustments                                                      51,268         (31,552)
                                                                                  -----------      -----------


                Net cash (used in) provided by operating activities                  (71,185)          280,011
                                                                                   ----------      -----------


Cash flows from financing activities
      Distribution from reorganization trust                                           45,601                -
      Proceeds from note payable to Pure Group, Inc.                                        -          196,477
      Other proceeds from Pure Group, Inc.                                                  -          265,303
                                                                                  -----------      -----------

                Net cash provided by financing activities                              45,601          461,780
                                                                                  -----------      -----------


Net (decrease) increase in cash and cash equivalents                                 (25,584)          741,791

Cash and cash equivalents at beginning of year                                        784,800           43,009
                                                                                  -----------      -----------


Cash and cash equivalents at end of year                                        $     759,216     $    784,800
                                                                                  -----------      -----------


Supplemental disclosures of cash flow information
      Cash paid during the year for
        income taxes                                                                        -    $      13,324
                                                                                  -----------      -----------


Noncash transactions
      Common stock issued in exchange for the cancellation
        of amount owed to PGI                                                   $     483,616                 -
                                                                                  -----------      ------------


      Common stock issued in exchange for employment services                   $     160,000    $            -
                                                                                  -----------      ------------



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

</TABLE>

815094.2
                                       F-6

<PAGE>


Ranger Industries, Inc.
(formerly Coleco Industries, Inc.)
Notes to Financial Statements
December 31, 1998 and 1997
-------------------------------------------------------------------------------


1.    Organization

      In July 1988, Ranger Industries, Inc. (the "Registrant" or the "Company",
      and then known as Coleco Industries, Inc.) filed a voluntary petition in
      United States Bankruptcy Court under Chapter 11 of the Federal Bankruptcy
      Code. Effective February 28, 1990, the bankruptcy court approved a plan of
      reorganization (the "Plan"), pursuant to which all then outstanding debt
      and equity securities of the Registrant were canceled, and 4,000,000
      shares of the Registrant's new $0.01 par value common stock (the "Common
      Stock") were distributed to the unsecured creditors. On the Effective Date
      of the Plan, the Registrant retained $950,000 in cash for working capital
      purposes and was expected to engage in the business of acquiring income
      producing properties or businesses.

      The Plan provided for the creation of a Reorganization Trust in order to
      liquidate the Registrant's remaining assets (other than the $950,000 in
      cash retained by the Registrant) and effectuate distributions thereof to
      the Registrant's creditors. The Reorganization Trust completed the
      distribution of its assets in May 1996 and was terminated by order of the
      bankruptcy court on August 27, 1996. Also, see Note 9.

      The Plan also provided for the creation of a Product Liability Trust in
      order to settle certain personal injury claims (including claims arising
      thereafter) against the Registrant. The Product Liability Trust continues
      to process and liquidate certain product liability claims. Pursuant to the
      terms of the Product Liability Trust Agreement, residual funds, if any,
      will revert to the Registrant, as grantor of the trust, upon the earlier
      of (a) February 28, 2020, or (b) approval by the bankruptcy court of
      earlier termination of the Product Liability Trust.


2.    Change In Control

      Following the conclusion of a hostile proxy contest (the "Proxy Contest"),
      initiated by Pure Group, Inc. ("PGI") during the second quarter of 1997,
      the Company's former directors resigned from the Board of Directors
      effective July 29, 1997, and new directors were elected. The terms under
      which this change in control took place are outlined in a settlement
      agreement dated July 29, 1997 between PGI, the Company and the Company's
      former directors (the "Settlement Agreement"). Under the terms of the
      Settlement Agreement, and as set forth in a demand promissory note dated
      July 29, 1997, PGI loaned the Company $196,477 to pay its then outstanding
      obligations. The note required the Company to pay interest to PGI at two
      percentage points above the prime rate. Additionally, PGI loaned the
      Company $251,780 to cover costs incurred in connection with the Proxy
      Contest, including the costs of holding the 1997 annual meeting and
      $13,523 for working capital purposes. These additional loans of $265,303
      were subject to the same terms outlined in the demand promissory note.
      Also, see Note 7.


3.    Summary of Significant Accounting Policies

      The financial statements have been prepared using the accrual basis of
      accounting. The preparation of financial statements in conformity with
      generally accepted accounting principles requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities, if
      applicable, 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.


815094.2
                                       F-7

<PAGE>


Ranger Industries, Inc.
(formerly Coleco Industries, Inc.)
Notes to Financial Statements
December 31, 1998 and 1997
-------------------------------------------------------------------------------


      Certain amounts from 1997 have been reclassified to conform with the 1998
      presentation.

      Income
      The only source of income is interest income and the recovery of certain
      bad debts.

      Expenses
      Expenses of the Company consist of professional fees and other costs
      incurred in connection with the Company's filing requirements and
      interest.

      Earnings Per Share
      In 1997, the Company adopted Statement of Financial Standards No. 128,
      "Earnings Per Share". This pronouncement had no impact on the Company's
      consolidated financial position, results of operations, or cash flows.
      Basic earnings (loss) per share were computed based on the weighted
      average number of shares of common shares outstanding. There are no
      dilutive securities outstanding and, as such, basic and diluted earnings
      per share are the same. Weighted average common shares outstanding were
      4,837,691 and 4,000,000 shares during 1998 and 1997, respectively. As
      discussed in Note 1, all previously existing debt and equity securities
      were canceled on February 28, 1990.

      Cash and Cash Equivalents
      Cash equivalents consist of short-term highly liquid investments with an
      original maturity, when purchased, of three months or less.


4.    Bankruptcy Claim Recovery

      On October 9, 1997, the Company received $802,160 as a distribution on a
      bankruptcy claim filed by the Company's predecessor in 1983.


5.    Income Taxes

      Effective January 1, 1993, the Company adopted Statement of Financial
      Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109").
      SFAS 109 requires recognition of deferred tax liabilities and assets for
      the expected future tax consequences of events that have been included in
      the financial statements or income tax returns. Under this method,
      deferred tax liabilities and assets are determined based on the difference
      between the financial statement and tax bases of assets and liabilities
      using enacted tax rates in effect for the year in which the differences
      are expected to reverse. In addition, deferred tax assets are subject to a
      valuation allowance to reduce them to net realizable value.

      As discussed in Note 1, the assets and liabilities of the Company, except
      for $950,000 retained for working capital purposes, were transferred to
      the Reorganization and Product Liability Trusts, respectively, effective
      February 28, 1990, in accordance with the Plan. Although the matter is not
      free from doubt, these Trusts have been treated as grantor trusts.
      Accordingly, taxable income or loss associated with the disposition of
      assets and the settlement of liabilities by the Trusts are reflected on
      the federal income tax return of Ranger Industries, Inc., although such
      assets and liabilities are not presented in these financial statements
      (also see Note 6).


815094.2
                                       F-8

<PAGE>


Ranger Industries, Inc.
(formerly Coleco Industries, Inc.)
Notes to Financial Statements
December 31, 1998 and 1997
-------------------------------------------------------------------------------


      Tax expense or benefit is attributable to state taxes and Federal
      alternative minimum tax due.

      At December 31, 1998 and 1997, it was estimated that the Company had
      adjusted tax net operating loss carryforwards and future deductions of
      approximately $182.2 million and $192 million, respectively, after giving
      effect to the Plan and the transactions contemplated thereby, which may be
      used to offset future taxable income, subject to several limitations, and
      which begin to expire in the year 2002. These amounts include the tax
      consequences of the activity of the Reorganization and Product Liability
      Trusts, as well as the activity of Ranger Industries, Inc. At December 31,
      1998 and 1997, the Company had Alternative Minimum Tax (AMT) loss
      carryforwards of approximately $153.9 million and $168 million,
      respectively, which will begin to expire in the year 2002. The Company
      also had approximately $7.7 million in tax credit carryforwards at
      December 31, 1998 and 1997. At the current tax rates, the taxable income
      equivalent of the credit carryforwards is approximately $22.6 million.

      Under current tax laws, the Internal Revenue Code provides for certain
      limitations following an "ownership change". Accordingly, under the
      confirmed Plan of Reorganization, the continued availability of the
      Company's net operating loss carryforwards and other tax attributes may be
      subject to substantial limitations (also see Note 6).

      At December 31, 1998, the Company had deferred tax liabilities of $11,967,
      as a result of a compensation expense temporary difference, associated
      with the stock issued to Mr. Handel (see Note 8). There were no deferred
      tax liabilities at December 31, 1997. Additionally, any deferred tax asset
      recorded to recognize the tax net operating loss carryforwards would be
      subject to a full valuation allowance under the provisions of SFAS 109,
      due to the uncertainty of the Company's ability to generate taxable income
      to utilize the carryforwards.


6.    Treasury Regulation

      On January 6, 1992, the Department of the Treasury promulgated new
      Treasury Regulations. These regulations interpret Section 269 of the
      Internal Revenue Code which permits the Internal Revenue Service to deny
      corporations the ability to use tax benefits, such as net operating losses
      ("NOLs") where control of the corporation was acquired for the principal
      purpose of avoiding tax. The regulations provide that if a corporation in
      a bankruptcy reorganization that qualifies for an exemption from the
      general rule limiting the use of net operating loss carryforwards does not
      carry on a significant amount of an active trade or business during and
      subsequent to such bankruptcy reorganization, the Internal Revenue Service
      will presume, absent a showing of strong evidence to the contrary, that
      the principal purpose of the reorganization was to evade or avoid Federal
      income tax and that Section 269 should apply. The regulations are only
      effective, by their terms, with respect to acquisitions of control of
      corporations occurring after August 14, 1990 and, accordingly, they do not
      apply to Ranger Industries, Inc.

      Despite the inapplicability of these regulations to Ranger, the issue of
      essentially inactive reorganized companies with NOLs that survive
      bankruptcy intact has now been firmly raised in the eyes of the Internal
      Revenue Service. Accordingly, due to the Company's disposition of its
      historic toy businesses to Hasbro and the Company's switch to a new
      business of acquiring investments, it is possible that the Internal
      Revenue Service may assert that the Company has not carried on a
      significant trade or business during and subsequent to its reorganization.
      If such an assertion is made and ultimately sustained, then the Company
      would be unable to utilize its estimated $182.2 million of net operating
      loss carryforwards. This could have

815094.2
                                       F-9

<PAGE>


Ranger Industries, Inc.
(formerly Coleco Industries, Inc.)
Notes to Financial Statements
December 31, 1998 and 1997
-------------------------------------------------------------------------------


      a materially adverse effect on the Company's ability to attract outside
      investors willing to invest in the Company. Notwithstanding these
      regulations, there can be no assurance that the Company will be able to
      attract sufficient outside investment to allow it to continue to operate,
      once its current working capital is depleted. The financial statements do
      not include any adjustments that might result from the resolution of these
      uncertainties.


7.    PGI Indebtedness

      On March 9, 1998, the Company issued 778,644 shares of its $.01 par value
      common stock in exchange for the cancellation of the amount owed to PGI as
      of February 10, 1998. The exchange value of $.6211/share was determined
      using the weighted average of the closing prices of the Company's common
      stock for the 30-day period prior to February 20, 1998, the date of the
      agreement.


8.    Stock Compensation

      On August 4, 1998, the Company entered into a five-year Employment
      Agreement (the "Agreement") with Mr. Morton E. Handel, whereby Mr. Handel
      will serve as the Company's Chief Executive Officer and President. As base
      compensation, in lieu of cash, Mr. Handel received 500,000 shares of the
      Company's stock, one-fifth of which is immediately vested and
      non-forfeitable as of the date of the Agreement. Mr. Handel will vest in
      an additional 20 percent of the shares each year over the succeeding four
      anniversaries of the Agreement.

      The estimated market value of the stock award was $160,000 or $.32 per
      share. The Company will incur compensation expense based on the vesting
      terms included in the Agreement. For the year ended December 31, 1998, the
      Company recognized compensation expense of $45,063, plus related taxes, in
      connection with this stock award, which is included in administrative
      expenses in the financial statements.


9.    Distribution from Ranger Industries, Inc.'s Reorganization Trust

      As described in Note 1, the Reorganization Trust made what was expected to
      be its final distribution to creditors on May 29, 1996. In August 1998,
      however, the Company received an additional distribution of $45,601 from
      the former trustee of the Reorganization Trust. This amount has been
      reflected as an adjustment to the original capitalization of the Company
      and, accordingly, is included in capital in excess of par value at
      December 31, 1998.


10.   Related Party Transactions

      The Company had an agreement with M.D. Sass Associates, Inc. ("SASS") of
      which James B. Rubin was Senior Managing Director, under which SASS
      provided accounting, administrative, financial, legal, secretarial and
      other supportive services at the Company's request. The Company incurred
      costs of $4,800 for these services for each of the quarters ended March 31
      and June 30, 1997. In connection with the change in control described in
      Note 2, this agreement was terminated. All amounts owed to SASS in
      connection with this agreement were paid during the quarter ended
      September 30, 1997.

815094.2
                                      F-10

<PAGE>


Ranger Industries, Inc.
(formerly Coleco Industries, Inc.)
Notes to Financial Statements
December 31, 1998 and 1997
-------------------------------------------------------------------------------


      Effective August 1, 1990, Mr. Rubin, as Chief Executive Officer, was
      entitled to an annual salary of $50,000 through the date of the change in
      control (see Note 2). All fees for his services are included in
      administrative expenses in the condensed financial statements. All amounts
      owed to Mr. Rubin in connection with this agreement were paid during the
      quarter ended September 30, 1997.

      Also, see Notes 2, 7 and 8 for additional related party transaction
      information.


815094.2
                                      F-11