UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-KSB





(Mark One)

|x | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended July 31, 2008

or



| ̈ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from              to

Commission file number 000-06649





JILCO INDUSTRIES, INC.

(Exact name of Small Business Issuer as specified in
its charter)







|                                         |  |                                     
|---------------------------------------- |  | ------------------------------------
|California                               |  | 95-2075885                          
|(State of incorporation)                 |  | (I.R.S. employer identification no.)
|                                         | 
|P. O. Box 10539 Beverly Hills, CA        |  | 90213                               
|(Address of principal executive offices) |  | (Zip code)                          

310-788-3813

(Registrants telephone number, including area code)





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

None

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

Common Stock, no par value





Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.   ̈

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   ̈    No  x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is contained herein, 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.   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes  x    No   ̈

The issuers revenue for the fiscal year ended July 31, 2008 was $0.

On July 31, 2008 the
aggregate market value of the voting and non-voting common equity held by non-affiliates of the issuer was approximately $0 computed by reference to the price at which the common equity was last transacted on that date.

On July 31, 2008, the issuer had approximately 4,422,983 shares of Common Stock, no par value issued and outstanding.

Transitional Small Business Disclosure Format (Check One):    Yes   ̈    No  x









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Unless the context in this Annual Report otherwise requires, all references in this Annual Report to Company,
our, us and we refer to Jilco Industries, Inc.

Item 1. Description of Business.

We have not engaged in any revenue-generating business operations and have not been so engaged since April 2, 1968 when we were discharged from bankruptcy under our
former name Sportsways, Inc.

FORWARD LOOKING STATEMENTS AND CERTAIN RISKS ASSOCIATED WITH AN INVESTMENT IN OUR COMMON STOCK

This Annual Report contains statements which, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of
federal securities law. The words believe, estimate, anticipate, project, intend, expect, plan, outlook, scheduled, forecast and similar expressions are intended to identify forward-looking statements. Statements and assumptions with respect to
future revenues, income and cash flows, program performance, the outcome of litigation, environmental remediation cost estimates and planned dispositions of assets are examples of forward-looking statements. Numerous factors, including potentially
the risk factors described in this section and elsewhere in this Annual Report, could affect our forward-looking statements and actual performance.



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An investment in our common stock involves substantial risks. You should consider carefully the following information
about these risks, together with the financial and other information, including additional risks, contained elsewhere in this Annual Report, before you decide whether to buy our common stock. If any of the described events actually occur, our
business, financial condition and results of operations would likely suffer and the market price, if any, of our common stock would decline. In such case, you may lose all or part of your investment.

Because we have no revenue-producing operating history, there is no basis on which you can evaluate our prospects. Prospective investors customarily
consider a companys revenue-producing operating history as a factor in determining whether to make an investment. Prospective investors who decide to purchase our shares may have decided not to purchase the shares if they had an operating
history to review.

We have had recurring losses and expect losses to continue for the foreseeable future.We incurred net losses of $22,429
and $51,360 during the fiscal years ended July 31, 2008 and 2007 respectively. See the Financial Statements and related notes begin on Page F-1 of this Annual Report which show net losses at each reported fiscal year end and each interim fiscal
quarter. Presently we do not have revenue-producing operations. Any future operations may not be sufficient to generate the revenues necessary to reach profitability.

Because of our limited capital, unless we obtain substantial additional capital we may not have sufficient capital to continue as a going concern. As stated in the Notes to our Financial Statements,
because we have suffered recurring losses and a have a deficiency in net assets and working capital, there is substantial doubt about our ability to continue as a going concern. However, our affiliates have for a number of years and intend to
continue during the next twelve months to lend us all funds necessary to maintain our corporate and filing status.

Item 2. Description of
Property.

We do not have an interest in any property.

Item 3. Legal Proceedings.

We are not a party to any pending legal proceeding that primarily involves a claim for damages and the
amount involved in such proceeding, exclusive of interest and costs, exceeds 10% of our current assets nor is any of our property the subject of such a pending legal proceeding. We are not aware of any such proceeding that a governmental authority
is contemplating.

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

No matter was submitted during the fiscal years ended July 31, 2008 to a vote of our security holders through the solicitation of proxies or otherwise.



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PART II

Item 5. Market For Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a) Market
Information.

Our common stock is not traded in any public trading market.

(b) Holders.

On July 31, 2008, our common stock of record was held by approximately 788 holders.

(c) Dividends.

We have not paid dividends on our common stock since
our discharge from bankruptcy in 1968 and do not anticipate paying cash dividends in the foreseeable future. We intend to retain any earnings for the operation and expansion of our business. Other than financial ability, we have no legal,
contractual or corporate constraints against the payment of dividends.

(d) Securities Authorized for Issuance Under Equity Compensation Plans.

We do not have any compensation plans under which equity securities are authorized for issuance.

Issuer Purchases of Equity Securities

During our fiscal year ended July 31, 2008, no
purchase was made by or on behalf of us or any affiliated purchaser, as defined in Rule 10b-18(a)(3) under the Securities and Exchange Act of 1934, of shares or other units of any class of our equity securities that is registered by us
pursuant to section 12 of that Act.

Recent Sales of Unregistered Equity Securities

We did not sell any equity securities during the fiscal year ended July 31, 2008 that were not registered under the Securities Act of 1933.

Subscription Agreement for the Conversion of Notes Payable to Common Stock

On August 7, 2007, five Note Holders collectively requested and the Company subsequently approved a conversion of certain revolving notes payable representing $132,166 of principal as of June 30, 2005 and
$132,060 of accrued interest as of June 30, 2005 into 3,523,005 Shares of Common Stock, no par value, at a conversion rate of $0.075 per share. The shares described above were issued on September 25, 2007.



4



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Item 6. Managements Discussion and Analysis or Plan of Operation

The following discussion and analysis should be read in conjunction with our financial statements and the related notes to the financial statements included elsewhere in
this report.

This discussion contains forward-looking statements that involve risks and uncertainties. Such statements, which include statements
concerning future revenue sources and concentration, selling, general and administrative expenses, research and development expenses, capital resources, additional financings and additional losses, are subject to risks and uncertainties, including,
but not limited to, those discussed above in Part I, Item 1 and elsewhere in this Annual Report, particularly in Risk Factors, that could cause actual results to differ materially from those projected. The forward-looking statements
set forth in this Annual Report are as of July 31, 2008 unless expressly stated otherwise, and we undertake no duty to update this information.

Our
affiliates have for a number of years, and intend to continue during the next twelve months, to lend us all funds necessary for us to maintain our corporate and filing status. The notes payable schedules appearing in the notes to the financial
statements beginning on Page F-1 of this Annual Report show funds lent to us during the past fiscal year.

We have no off-balance sheet arrangements that
have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to
investors.

Results of OperationsComparison of the Years Ended July 31, 2008 and 2007

Revenue

We had no revenues from operations during
either 2008 or 2007. We have focused our efforts on locating assets to recommence revenue-producing operations.

General and
Administrative Expense

General and administrative expenses were $21,629 for the year ended July 31, 2008, compared to $50,560 for the year ended
July 31, 2007, a decrease of $28,931. This decrease is attributable to decreases in professional fees.

Interest Expense
Interest expense was $4,180 for the year ended July 31, 2008, compared to $13,490 for the year ended July 31, 2007, a decrease of $9,310. This decrease is due to a decrease in notes payable shareholder. Due to the conversion of
certain Notes Payable and interest accrued thereon through June 30, 2005 into 3,523,005 shares of common stock in the first quarter of fiscal year 2008 interest expense significantly decreased in fiscal year 2008.

Net Loss

We had a net loss of $22,429 or $0.01 per
share for the year ended July 31, 2008, compared to a net loss of $51,360 or $0.09 per share for the year ended July 31, 2007. We expect to incur additional net losses attributable to continued expenditures until we have revenues
sufficient to offset continued expenditures.



5



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Liquidity and Capital Resources

We have incurred negative cash flow from operations since our inception. As of July 31, 2008, we had cash of $392 and an accumulated deficit of $1,101,779. Our negative operating cash flow since inception has
been funded through affiliate and shareholder loans.

The financial statements accompanying this Report have been prepared on a going concern basis, which
contemplates the realization of assets and settlement of liabilities and commitments in the normal course of our business. As reflected in the accompanying financial statements, we had a net loss of $22,429 and negative cash flow from operations of
$20,159 for the year ended July 31, 2008, and a stockholders deficit of $1,101,779 as of July 31, 2008. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is
dependent on our ability to raise additional funds and implement our business plan. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Critical Accounting Policies

Our discussion and
analysis of our results of operations and liquidity and capital resources are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and
judgments, including those related to revenue recognition, valuation of intangible assets and investments, and share-based payments. We base our estimates on anticipated results and trends and on various other assumptions that we believe are
reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature,
estimates are subject to an inherent degree of uncertainty. Actual results that differ from our estimates could have a significant adverse effect on our operating results and financial position. We believe that the following significant accounting
policies and assumptions may involve a higher degree of judgment and complexity than others.

The methods, estimates and judgments the Company uses in
applying these most critical accounting policies have a significant impact on the results of the Company reports in its financial statements.

It is the
Companys policy to expense share-based payments as of the date of grant in accordance with Financial Accounting Statements Board (FASB) Statement number 123R Share-Based Payment. Application of this pronouncement
requires significant judgment regarding the assumptions used in the selected option pricing model, including stock price volatility and employee exercise behavior. Most of these inputs are either highly dependent on the current economic environment
at the date of grant or forward-looking expectations projected over the expected term of the award. As a result, the actual impact of adoption on future earnings could differ significantly from our current estimate.



6



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Recent Accounting Pronouncements

In December 2004, FASB issued Statement of Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment. Under current practice, the reporting entity can account for share-based
payment under the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees and disclose share-based compensation as if accounted for under the provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. Under the provisions of SFAS No. 123R, a public entity is required to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date
fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. It the Companys policy to expense share based payments as of the date of grant. Application of
this pronouncement requires significant judgment regarding the assumptions used in the selected option pricing model, including stock price volatility and employee exercise behavior. Most of these inputs are either highly dependent on the current
economic environment at the date of grant or forward-looking expectations projected over the expected term of the award. As a result, the actual impact of adoption on future earnings could differ significantly from our current estimate.

In May 2005, FASB issued SFAS No. 154, Accounting Changes and Error Corrections, a Replacement of Accounting Principles Board (APB) Opinion
No. 20 and FASB Statement No. 3 (SFAS 154). SFAS 154 requires retrospective application to prior periods financial statements for changes in accounting principles, unless it is impracticable to determine either the
period-specific effects or the cumulative effect of the change. SFAS 154 also requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting
principle, such as a change in non-discretionary profit-sharing payments resulting from an accounting change, should be recognized in the period of the accounting change. SFAS 154 also requires that a change in depreciation, amortization, or
depletion method for long-lived, non-financial assets be accounted for as a change in accounting estimate effected by a change in accounting principle. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. Early adoption is permitted for accounting changes and corrections of errors made in fiscal years beginning after the date this Statement is issued. The Company is required to adopt the provisions of SFAS 154,
as applicable, beginning in fiscal 2007. The Company does not believe the adoption of SFAS 154 has had or will have a significant effect on its present or future financial statements.

In June 2006, FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (FIN 48) which defines the threshold for recognizing the benefits of tax return positions in
the financial statements as more-likely-than-not to be sustained by the taxing authority. A tax position that meets the more-likely-than-not criterion shall be measured at the largest amount of benefit that is more than 50%
likely of being realized upon ultimate settlement. FIN 48 applies to all tax positions accounted for under SFAS No. 109, Accounting for Income Taxes. Interpretation No. 48 is effective for fiscal years beginning after
December 15, 2006. Upon adoption, the financial statements will be adjusted to reflect only those tax positions that are more-likely-than-not to be sustained as



7



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of the adoption date. Any adjustment will be recorded directly to our beginning retained earnings balance in the period
of adoption and reported as a change in accounting principle. The Company does not expect the adoption of Interpretation No. 48 will have a material effect on its financial statements.

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), which defines
fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a
fair value hierarchy used to classify the source of the information. This statement is effective beginning in November 15, 2007. The Company is currently evaluating the impact of adopting this standard.

In September 2006, the SEC issued Staff Accounting Bulletin no. 108 (SAB 108) to clarify consideration of the effects of prior year errors when quantifying
misstatements in current year financial statements for the purpose of quantifying materiality. SAB 108 requires issuers to quantify misstatements using both the rollover and iron curtain approaches and requires an adjustment
to the current year financial statements in the event that after the application of either approach and consideration of all relevant quantitative and qualitative factors, a misstatement is determined to be material. SAB 108 is effective for fiscal
years beginning after November 15, 2006. The Company does not expect the adoption of SAB 108 will have a material effect on its financial statements.

Other recent accounting pronouncements issued by FASB (including its Emerging Issued Task Force), the American Institute of Certified Public Accountants and the SEC did not or are not believed by management to have a material impact on the
Companys present or future financial statements.

Item 7. Financial Statements.

Our Financial Statements and related notes begin on Page F-1 of this Annual Report.

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

Not applicable.

Item 8A. Controls and Procedures.

(a) An evaluation was
conducted under the supervision and with the participation of our management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures
as of July 31, 2008. Based on that evaluation, the CEO and CFO concluded that our controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.



8



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(b) There was no change in our internal control over financial reporting that occurred during the fiscal year ended
July 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 8B. Other Information.

No information is required to be disclosed in a report on Form 8-K during the fiscal year covered by this
Form 10-KSB which has not been reported.

PART III

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

Directors, Executive Officers and Significant Employees

The following are our directors and executive
officers and significant employees. Each director holds office until the next annual meeting of shareholders and until the directors successor is elected and qualified or until the directors resignation or removal. Each executive officer
holds office for the term for which such officer is elected or appointed and until a successor is elected or appointed and qualified or until such officers resignation or removal.

Directors block template in file: Jilco 10K tables.xls



|                   |  |                                                   |  |     |  |                      |  |                                                
|------------------ |  | ------------------------------------------------- |  | --- |  | -------------------- |  | -----------------------------------------------
|Name               |  | Principal Occupation                              |  | Age |  | FirstElectedDirector |  | Common SharesOwned Beneficiallyon July 31, 2008
|Martha J. Kretzmer |  | President, Secretary, and Treasurer of Registrant |  | 52  |  | 1991                 |  | 2000                                           

There are no family relationships among our directors, executive officers, or persons nominated or chosen by us to
become directors or executive officers.

None of the following events occurred during the past five years that is material to an evaluation of the ability
or integrity of any director, person nominated to become a director, executive officer, promoter or control person:



| |  | Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or
within two years prior to that time;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 10. Executive Compensation

No officer or director of Registrant receives any remuneration.

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Securities
Authorized for Issuance Under Equity Compensation Plans

We do not have any compensation plans under which equity securities are authorized for
issuance.



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Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of July 31, 2008 with respect to any person (including any group) who is known to us to be the
beneficial owner of more than 5% of any class of our common stock and as to each class of our equity securities beneficially owned by our directors, and directors & officers as a group:

Security Ownership block template in file: Jilco 10K tables.xls



|                                                                                                                                  |  |                                                  |           |  |                             |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------ | --------- |  | --------------------------- | -
|Name and Address of Beneficial Owner                                                                                              |  | Shares of Common StockBeneficially Owned (1) (2) |           |  | ApproximatePercent of Class |  
|Brandon Wolsic, Custodian for Dylan Rey Ross 1011 North Beverly Drive, Beverly Hills CA 90210                                     |  | 704,601                                          |           |  | 15.93                       | %
|                                                                                                                                  |  |                                                 
|Brandon Wolsic, Custodian for Kendra Raven Ross 1011 North Beverly Drive, Beverly Hills CA 90210                                  |  | 704,601                                          |           |  | 15.93                       | %
|                                                                                                                                  |  |                                                 
|Brandon Wolsic, Custodian for Julianna Audrey Ross 1011 North Beverly Drive, Beverly Hills CA 90210                               |  | 704,601                                          |           |  | 15.93                       | %
|                                                                                                                                  |  |                                                 
|Landon Michael Ross 1011 North Beverly Drive, Beverly Hills CA 90210                                                              |  | 704,601                                          |           |  | 15.93                       | %
|                                                                                                                                  |  |                                                 
|Jacquelyn Michelle Ross 1011 North Beverly Drive, Beverly Hills CA 90210                                                          |  | 704,601                                          |           |  | 15.93                       | %
|                                                                                                                                  |  |                                                 
|Leonard M. Ross, Trustee of The Leonard M. Ross Revocable Trust (u/d/t 12-20-85) 1011 North Beverly Drive, Beverly Hills CA 90210 |  | 364,022                                          | (3)(4)(5) |  | 8.23                        | %
|                                                                                                                                  |  |                                                 
|Martha J. Kretzmer 921 Loma Vista El Segundo, CA 90245                                                                            |  | 2,000                                            |           |  | 0.05                        | %



|(1) | Unless otherwise noted below, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by
them.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | For purposes hereof, a person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days from the date hereof upon the exercise of
warrants or options or the conversion of convertible securities. Each beneficial owners percentage ownership is determined by assuming that any such warrants, options or convertible securities that are held by such person (but not those held
by any other person) and which are exercisable within 60 days from the date hereof, have been exercised.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(3) | Excludes 90,000 shares held by The Ross 1992 Childrens Trust for the Benefit of Landon Michael Ross of which Nathalie Zahra Rey-Ross is the trustee and holds sole voting and
investment power.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Excludes 90,000 shares held by The Ross 1992 Childrens Trust for the Benefit of Jacquelyn Michelle Ross, of which Nathalie Zahra Rey-Ross is the trustee and holds sole voting
and investment power.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Excludes 40,000 shares held by The Wolsic 1994 Insurance Trust, of which Nathalie Zahra Rey-Ross is the trustee and holds sole voting and investment power.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

Item 12. Certain Relationships and Related Transactions.

Other than as otherwise set forth in this Annual Report, during the last two years there have been no transactions, or are there any proposed transactions, to which we were or are to be a party, in which any of the following persons had or
is to have a direct or indirect material interest and the amount involved in the transaction or a series of similar transactions does not exceed $60,000:



| |  | Any of our directors or executive officers;
|- |  | -------------------------------------------



| |  | Any nominee for election as a director;
|- |  | ---------------------------------------



| |  | Any security holder named in this Annual Report as beneficially owning more than 5% of our outstanding common stock; and
|- |  | ------------------------------------------------------------------------------------------------------------------------



| |  | Any member of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the above persons.
|- |  | ----------------------------------------------------------------------------------------------------------------------------

Item 13. Exhibits.



|               |  |                                                                                                                                                                                          
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                              
|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).                                                                       
|               | 
|3.3            |  | Amended and Restated Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3(1) to the Companys January 31, 2007 Form 10-QSB).                              
|               | 
|3.4            |  | Amended and Restated By-laws of the Registrant (incorporated by reference to Exhibit 3(2) to the Companys January 31, 2007 Form 10-QSB).                                                
|               | 
|10.1           |  | Revolving Demand Note, dated November 10, 1995, 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).



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|      |  |                                                                                                                                                                                                 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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(1) 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 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).        
|      | 
|10.8  |  | 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).           
|      | 
|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).                
|      | 
|10.11 |  | Promissory Note, dated August 9, 1972, between the Company and Leonard M. Ross (incorporated by reference to Exhibit 10(3) to the Companys 1989 Form 10-K).                                    
|      | 
|10.12 |  | Note Extension and Modification Agreement, effective December 31, 1997, between the Company and Mill Equities Co. (incorporated by reference to Exhibit 10(12) to the Companys 2006 Form
10-K).
|      | 
|10.13 |  | Note Extension and Modification Agreement, effective December 31, 1999, between the Company and Mill Equities Co. (incorporated by reference to Exhibit 10(13) to the Companys 2006 Form
10-K).
|      | 
|10.14 |  | Note Extension and Modification Agreement, effective December 31, 1999, between the Company and Mill Equities Co (incorporated by reference to Exhibit 10(14) to the Companys 2006 Form
10-K). 
|      | 
|10.15 |  | Note Extension and Modification Agreement, effective December 31, 1994, between the Company and Leonard M. Ross (incorporated by reference to Exhibit 10(15) to the Companys 2006 Form
10-K).  
|      | 
|10.16 |  | Note Extension and Modification Agreement, effective December 31, 1994, between the Company and Leonard M. Ross (incorporated by reference to Exhibit 10(16) to the Companys 2006 Form
10-K).  
|      | 
|10.17 |  | Note Extension and Modification Agreement, effective December 31, 1994, between the Company and Leonard M. Ross (incorporated by reference to Exhibit 10(17) to the Companys 2006 Form
10-K).  
|      | 
|10.18 |  | Unregistered Sale of Equity Securities (incorporated by reference to Exhibit 10(1) to the Companys August 9, 2007 Form 8-K)                                                                    
|      | 
|31.1  |  | Rule 13a-14(a) Certification.**                                                                                                                                                                 
|      | 
|32.1  |  | Section 1350 Certification.**                                                                                                                                                                   



|** | Filed herewith.
|-- | ---------------



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Item 14. Principal Accountant Fees and Services.

Audit Fees

We have not retained principal accountants for the audit of our annual financial
statements for our fiscal year ended July 31, 2008. Therefore, no fees were billed by principal accountants for any audit services for our fiscal year ended July 31, 2008, or for the review of financial statements included in our Forms
10-QSB or contained herein. No services were provided by principal accountants in connection with statutory and regulatory filings or engagements for this fiscal year.

Audit-Related Fees

Since principal accountants were not engaged, nothing was billed by any principal accountants in
our fiscal year ended July 31, 2008 and no professional services were rendered by any principal accountants for assurance and related services by any principal accountants.

Tax Fees

Since principal accountants were not engaged, nothing was billed by any principal
accountants in our fiscal year ended July 31, 2008 and no professional services were rendered by any principal accountants for tax compliance, tax advice, and tax planning.

All Other Fees

Since principal accountants were not engaged, nothing was billed by any
principal accountants of our fiscal year ended July 31, 2008 and no professional services were rendered by any principal accountants for products and services provided by the principal accountants, other than the services reported above
Item 14.

Audit Committee Administration of Engagement of Principal Accountants

Since we did not engage principal accountants to render audit or non-audit services, we did not have an audit committee approve any engagement terms or pre-approval
policies and procedures.



14



---

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                       |  |                        |  |                                      
|---------------------- |  | ---------------------- |  | -------------------------------------
|                       |  | JILCO INDUSTRIES, INC.
|                       |  |                       
|Date: October 30, 2008 |  | By:                    |  | /s/ MARTHA KRETZMER                  
|                       |  |                        |  | Martha Kretzmer                      
|                       |  |                        |  | President and Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



|                       |  |                        |  |                        
|---------------------- |  | ---------------------- |  | -----------------------
|                       |  | JILCO INDUSTRIES, INC.
|                       |  |                       
|Date: October 30, 2008 |  | By:                    |  | /s/ MARTHA KRETZMER    
|                       |  |                        |  | Martha Kretzmer        
|                       |  |                        |  | Chief Financial Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the date indicated.



|                       |  |     |  |                                                                                                                              
|---------------------- |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------
|Date: October 30, 2008 |  | By: |  | /s/ MARTHA KRETZMER                                                                                                          
|                       |  |     |  | Martha Kretzmer                                                                                                              
|                       |  |     |  | President, Treasurer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer)
|                       |  |    
|Date: October 30, 2008 |  | By: |  | /s/ MARTHA KRETZMER                                                                                                          
|                       |  |     |  | Martha Kretzmer Director                                                                                                     



15



---

JILCO INDUSTRIES, INC.

BALANCE SHEETS

(UNAUDITED)



|                                                                                                                                                                |  |               |            |   |               |   |            |               |  |   |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | ------------- | - | ---------- | ------------- |  | - | ---------- | -
|                                                                                                                                                                |  | July 31, 2008 |            |   | July 31, 2007 |   |            | July 31, 2006 | 
|ASSETS                                                                                                                                                          |  |               |            |   |               |   |            |               |  |   |            |  
|CURRENT ASSETS                                                                                                                                                  |  |               |            |   |               |   |            |               |  |   |            |  
|Cash                                                                                                                                                            |  | $             | 392        |   |               | $ | 1,551      |               |  | $ | 512        |  
|                                                                                                                                                                |  |               |            |   |               |   |            |               |  |   |            |  
|TOTAL CURRENT ASSETS                                                                                                                                            |  |               | 392        |   |               |   | 1,551      |               |  |   | 512        |  
|                                                                                                                                                                |  |               |            |   |               |   |            |               |  |   |            |  
|TOTAL ASSETS                                                                                                                                                    |  | $             | 392        |   |               | $ | 1,551      |               |  | $ | 512        |  
|                                                                                                                                                                |  |               |            |   |               |   |            |               |  |   |            |  
|LIABILITIES & SHAREHOLDERS EQUITY                                                                                                                              |  |               |            |   |               |   |            |               |  |   |            |  
|CURRENT LIABILITIES                                                                                                                                             |  |               |            |   |               |   |            |               |  |   |            |  
|Accounts payable                                                                                                                                                |  | $             | 0          |   |               | $ | 1,910      |               |  | $ | 0          |  
|Advances                                                                                                                                                        |  |               | 19,000     |   |               |   | 0          |               |  |   | 0          |  
|Interest payable                                                                                                                                                |  |               | 30,196     |   |               |   | 158,075    |               |  |   | 144,585    |  
|Note payable shareholder                                                                                                                                        |  |               | 38,000     |   |               |   | 170,166    |               |  |   | 133,166    |  
|Other Accrued Payables                                                                                                                                          |  |               | 800        |   |               |   | 800        |               |  |   | 800        |  
|                                                                                                                                                                |  |               |            |   |               |   |            |               |  |   |            |  
|Total current liabilities                                                                                                                                       |  |               | 87,996     |   |               |   | 330,951    |               |  |   | 278,551    |  
|SHAREHOLDERS EQUITY                                                                                                                                            |  |               |            |   |               |   |            |               |  |   |            |  
|Preferred stock, no par value10,000,000 shares authorized-none outstanding                                                                                      |  |               |            |   |               |   |            |               |  |   |            |  
|Common stock, no par value250,000,000 shares authorized 4,422,983 shares issued and outstanding on 4/30/08 and 899,978 shares issued and
outstanding on 7/31/07 |  |               | 1,014,175  |   |               |   | 749,950    |               |  |   | 749,950    |  
|Accumulated deficit                                                                                                                                             |  |               | (1,101,779 | ) |               |   | (1,079,350 | )             |  |   | (1,027,990 | )
|                                                                                                                                                                |  |               |            |   |               |   |            |               |  |   |            |  
|Total shareholders' deficit                                                                                                                                     |  |               | (87,604    | ) |               |   | (329,400   | )             |  |   | (278,040   | )
|                                                                                                                                                                |  |               |            |   |               |   |            |               |  |   |            |  
|TOTAL LIABILITIES & SHAREHOLDERS EQUITY                                                                                                                        |  | $             | 392        |   |               | $ | 1,551      |               |  | $ | 512        |  
|                                                                                                                                                                |  |               |            |   |               |   |            |               |  |   |            |  



---

JILCO INDUSTRIES, INC.

STATEMENTS OF LOSSES

(UNAUDITED)



|                                                |  |               |           |   |               |   |         |               |  |   |         |  
|----------------------------------------------- |  | ------------- | --------- | - | ------------- | - | ------- | ------------- |  | - | ------- | -
|                                                |  | YEARS ENDED   |           |   |               |  
|                                                |  | July 31, 2008 |           |   | July 31, 2007 |   |         | July 31, 2006 | 
|EXPENSES                                        |  |               |           |   |               |   |         |               |  |   |         |  
|Interest expense                                |  | $             | 4,180     |   |               | $ | 13,490  |               |  | $ | 11,576  |  
|Legal/Professional fees                         |  |               | 5,274     |   |               |   | 24,924  |               |  |   | 0       |  
|Public filing fees                              |  |               | 11,329    |   |               |   | 7,818   |               |  |   | 0       |  
|Fees and licenses                               |  |               | 25        |   |               |   | 245     |               |  |   | 193     |  
|Sundry & other                                  |  |               | 821       |   |               |   | 4,083   |               |  |   | 150     |  
|                                                |  |               |           |   |               |   |         |               |  |   |         |  
|TOTAL EXPENSES                                  |  |               | 21,629    |   |               |   | 50,560  |               |  |   | 11,919  |  
|                                                |  |               |           |   |               |   |         |               |  |   |         |  
|INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES |  |               | (21,629   | ) |               |   | (50,560 | )             |  |   | (11,919 | )
|PROVISION FOR INCOME TAXES                      |  |               | 800       |   |               |   | 800     |               |  |   | 816     |  
|                                                |  |               |           |   |               |   |         |               |  |   |         |  
|NET INCOME (LOSS)                               |  | $             | (22,429   | ) |               | $ | (51,360 | )             |  | $ | (12,735 | )
|                                                |  |               |           |   |               |   |         |               |  |   |         |  
|BASIC INCOME (LOSS) PER SHARE                   |  | $             | (0.01     | ) |               | $ | (0.09   | )             |  | $ | (0.03   | )
|                                                |  |               |           |   |               |   |         |               |  |   |         |  
|DILUTED INCOME (LOSS) PER SHARE                 |  | $             | (0.01     | ) |               | $ | (0.09   | )             |  | $ | (0.03   | )
|                                                |  |               |           |   |               |   |         |               |  |   |         |  
|WEIGHTED-AVERAGE SHARES OUTSTANDING             |  |               | 4,355,603 |   |               |   | 543,739 |               |  |   | 449,991 |  
|                                                |  |               |           |   |               |   |         |               |  |   |         |  



---

JILCO INDUSTRIES, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                   |  |               |          |   |               |   |         |               |  |   |         |  
|-------------------------------------------------- |  | ------------- | -------- | - | ------------- | - | ------- | ------------- |  | - | ------- | -
|                                                   |  | YEARS ENDED   |          |   |               |  
|                                                   |  | July 31, 2008 |          |   | July 31, 2007 |   |         | July 31, 2006 | 
|CASH FLOWS FROM OPERATING ACTIVITIES               |  |               |          |   |               |   |         |               |  |   |         |  
|Net Income (loss)                                  |  | $             | (22,429  | ) |               | $ | (51,360 | )             |  | $ | (12,735 | )
|Increase (Decrease) in Accounts Payable            |  |               | (1,910   | ) |               |   | 1,910   |               |  |   | 0       |  
|Increase (Decrease) in Accrued Interest            |  |               | (127,986 | ) |               |   | 13,490  |               |  |   | 11,576  |  
|(Increase) Decrease in notes receivable            |  |               | 132,166  |   |               |   | 0       |               |  |   | 0       |  
|                                                   |  |               |          |   |               |   |         |               |  |   |         |  
|NET CASH USED IN OPERATING ACTIVITIES              |  |               | (20,159  | ) |               |   | (35,960 | )             |  |   | (1,159  | )
|                                                   |  |               |          |   |               |   |         |               |  |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES               |  |               |          |   |               |   |         |               |  |   |         |  
|Proceeds from Advances                             |  |               | 19,000   |   |               |   | 37,000  |               |  |   | 1,000   |  
|                                                   |  |               |          |   |               |   |         |               |  |   |         |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES          |  |               | 19,000   |   |               |   | 37,000  |               |  |   | 1,000   |  
|                                                   |  |               |          |   |               |   |         |               |  |   |         |  
|NET INCREASE (DECREASE) IN CASH                    |  |               | (1,159   | ) |               |   | 1,040   |               |  |   | (159    | )
|CASH, BEGINNING OF PERIOD                          |  |               | 1,551    |   |               |   | 512     |               |  |   | 671     |  
|                                                   |  |               |          |   |               |   |         |               |  |   |         |  
|CASH, END OF PERIOD                                |  | $             | 392      |   |               | $ | 1,551   |               |  | $ | 512     |  
|                                                   |  |               |          |   |               |   |         |               |  |   |         |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |  |               |          |   |               |   |         |               |  |   |         |  
|INTEREST PAID                                      |  |               |         |   |               |   |        |               |  |   |        |  
|                                                   |  |               |          |   |               |   |         |               |  |   |         |  
|INCOME TAXES PAID                                  |  | $             | 800      |   |               | $ | 800     |               |  | $ | 800     |  
|                                                   |  |               |          |   |               |   |         |               |  |   |         |  

See Notes to Financial Statements



---

NOTE 1 Description of the Business and Summary of Significant Accounting Policies

Description of the Business

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. It has not engaged in any revenue generating activities since that time nor since the last filing of
its form 8-KSB on August 9, 2007 The expenses the Company has incurred since that time represent those necessary to keep the Company in good standing in its state of residence.

Significant Accounting Policies

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.

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.



---

Basis of Presentation

The financial statements of the Company have been prepared on the basis on the Company continuing as a going concern, which contemplates the realization of assets and the payment of liabilities in the ordinary course of business. Should the
Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due.

The company has suffered recurring losses and has a deficiency in net assets that raise substantial doubt about its ability to continue as a going concern. The Companys continued existence is dependent upon its ability to raise
additional capital. However, Affiliates of the Company have, for a number of years, and will continue during the next twelve months, to lend the Company all funds necessary for it to maintain its corporate and filing status.

The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of
liabilities that might be necessary should the Company be unable to continue as a going concern.

In December 2004, FASB issued SFAS No. 123R,
Share-Based Payment. Under current practice, the reporting entity can account for share-based payment under the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees and
disclose share-based compensation as if accounted for under the provisions of SFAS No. 123, Accounting for Stock-Based Compensation. Under the provisions of SFAS No. 123R, a public entity is required to measure the cost of
employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. It
the Companys policy to expense share based payments as of the date of grant. Application of this pronouncement requires significant judgment regarding the assumptions used in the selected option pricing model, including stock price volatility
and employee exercise behavior. Most of these inputs are either highly dependent on the current economic environment at the date of grant or forward-looking expectations projected over the expected term of the award. As a result, the actual impact
of adoption on future earnings could differ significantly from our current estimate.

In May 2005, FASB issued SFAS No. 154, Accounting Changes
and Error Corrections, a Replacement of Accounting Principles Board Opinion No. 20 and FASB Statement No. 3 (SFAS 154). SFAS 154 requires retrospective application to prior periods financial statements for changes
in accounting principles, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 also requires that retrospective application of a change in accounting principle be limited to the
direct effects of the change. Indirect effects of a change in accounting principle, such as a change in non-discretionary profit-sharing payments resulting from an accounting change, should be recognized in the period of the accounting change. SFAS
154 also requires that a change in depreciation, amortization, or depletion method for long-lived, non-financial assets be accounted for as a change in accounting estimate effected by a change in accounting principle. SFAS 154 is effective for
accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Early adoption is permitted for accounting changes and corrections of errors made in fiscal years beginning after the date this Statement is
issued. The Company is required to adopt the provisions of SFAS 154, as applicable, beginning in fiscal 2007. The Company does not believe the adoption of SFAS 154 has had or will have a significant effect on its present or future financial
statements.

In June 2006, FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (FIN 48) which
defines the threshold for recognizing the benefits of tax return positions in the financial statements as more-likely-than-not to be sustained by the taxing authority. A tax position that meets the more-likely-than-not
criterion shall be measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement. FIN 48 applies to all tax positions accounted for under SFAS No. 109, Accounting for Income Taxes.
Interpretation No. 48 is effective for fiscal years beginning after December 15, 2006. Upon adoption, the financial statements will be adjusted to reflect only those tax positions that are more-likely-than-not to be sustained as of the
adoption date. Any adjustment will be recorded directly to our beginning retained earnings balance in the period of adoption and reported as a change in accounting principle. The Company does not expect the adoption of Interpretation No. 48
will have a material effect on its financial statements.



---

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets  An Amendment
of FASB Statement No. 140 (SFAS 156), which requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract
under certain situations at fair value, if practicable, and permits the subsequent measurement of servicing assets and servicing liabilities at fair value. SFAS 156 was effective for the Company beginning August 1, 2007. The Company does not
expect the adoption of this statement to have a material impact on its financial statements.

In September 2006, FASB issued Statement of Financial
Accounting Standards No. 157, Fair Value Measurements (SFAS 157), which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS 157 does
not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. This statement is effective beginning in November 15, 2007. The
Company is currently evaluating the impact of adopting this standard.

In September 2006, the SEC issued Staff Accounting Bulletin no. 108 (SAB
108) to clarify consideration of the effects of prior year errors when quantifying misstatements in current year financial statements for the purpose of quantifying materiality. SAB 108 requires issuers to quantify misstatements using both the
rollover and iron curtain approaches and requires an adjustment to the current year financial statements in the event that after the application of either approach and consideration of all relevant quantitative and
qualitative factors, a misstatement is determined to be material. SAB 108 is effective for fiscal years beginning after November 15, 2006. The Company does not expect the adoption of SAB 108 will have a material effect on its financial
statements.

These and other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of
Certified Public Accountants (AICPA), and the Securities and Exchange Commission (SEC) did not or are not believed by management to have a material impact on the Companys present or future financial statements.

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

11% Note - Revolving unsecured note payable, interest accrues at 11% per annum. Principal and accrued interest was due July 31, 2008. $11,166
of the principal and the interest accrued through June 30, 2005 on this note was converted into Common Shares of the Company on August 7, 2007 at the rate of $0.075 per share, resulting in the issuance of 373,336 newly issued shares of
common stock outstanding.

SCHEDULE OF NOTE PAYABLE TO SHAREHOLDER

AS OF JULY 31, 2008



|                                                           |  |   |       
|---------------------------------------------------------- |  | - | ------
|Beginning Balance July 31, 2007                            |  | $ | 38,000
|Funds Advanced during Fiscal Quarter Ending April 30, 2008 |  |   | 0     
|                                                           |  |   |       
|Ending Balance July 31, 2008                               |  | $ | 38,000

NOTE 4 - INCOME TAXES

For the years ended July 31, 2000 - 2008, the Company did not provide a provision for income taxes due to the net losses incurred. At July 31 in each of those years, the Company had approximately net operating loss carryforwards
for federal and state income tax purposes as shown in the table below, that began to expire in 2000. The components of the Companys deferred tax assets and liabilities for income taxes consisted of a deferred tax asset relating to the net
operating loss carryforwards for such years as shown in the table below. The other components of the Companys deferred tax assets and liabilities are immaterial.



---

The Company has established a valuation allowance as shown in the table below for the years ended July 31, 2000 - 2008, 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 as shown in the table below during the years ended July 31, 2000 - 2008.

Annual Net Tax Losses Sustained and Applied and Deferred Recoverable Assets



|              |  |               |         |                       |   |               |  |                    |         |                               |   |         |  |   |  
|------------- |  | ------------- | ------- | --------------------- | - | ------------- |  | ------------------ | ------- | ----------------------------- | - | ------- |  | - | -
|Tax Year      |  | LossSustained |         | LossPreviouslyApplied |   | LossRemaining |  | ValuationAllowance |         | DeferredRecoverableTax Assets
|July 31, 1992 |  | $             | 950     |                       | $ | 0             |  | $                  | 950     |                               | $ | 950     |  | $ | 0
|July 31, 1993 |  | $             | 920     |                       | $ | 0             |  | $                  | 920     |                               | $ | 920     |  | $ | 0
|July 31, 1994 |  | $             | 2,002   |                       | $ | 0             |  | $                  | 2,002   |                               | $ | 2,002   |  | $ | 0
|July 31, 1995 |  | $             | 878     |                       | $ | 0             |  | $                  | 878     |                               | $ | 878     |  | $ | 0
|July 31, 1996 |  | $             | 925     |                       | $ | 0             |  | $                  | 925     |                               | $ | 925     |  | $ | 0
|July 31, 1997 |  | $             | 3,393   |                       | $ | 0             |  | $                  | 3,393   |                               | $ | 3,393   |  | $ | 0
|July 31, 1998 |  | $             | 44,728  |                       | $ | 0             |  | $                  | 44,728  |                               | $ | 44,728  |  | $ | 0
|July 31, 1999 |  | $             | 9,760   |                       | $ | 0             |  | $                  | 9,760   |                               | $ | 9,760   |  | $ | 0
|July 31, 2000 |  | $             | 14,846  |                       | $ | 0             |  | $                  | 14,846  |                               | $ | 14,846  |  | $ | 0
|July 31, 2001 |  | $             | 463     |                       | $ | 0             |  | $                  | 463     |                               | $ | 463     |  | $ | 0
|July 31, 2002 |  | $             | 2,482   |                       | $ | 0             |  | $                  | 2,482   |                               | $ | 2,482   |  | $ | 0
|July 31, 2003 |  | $             | 965     |                       | $ | 0             |  | $                  | 965     |                               | $ | 965     |  | $ | 0
|July 31, 2004 |  | $             | 720     |                       | $ | 0             |  | $                  | 720     |                               | $ | 720     |  | $ | 0
|July 31, 2005 |  | $             | 1,919   |                       | $ | 0             |  | $                  | 1,919   |                               | $ | 1,919   |  | $ | 0
|July 31, 2006 |  | $             | 12,735  |                       | $ | 0             |  | $                  | 12,735  |                               | $ | 12,735  |  | $ | 0
|July 31, 2007 |  | $             | 10,586  |                       | $ | 0             |  | $                  | 10,586  |                               | $ | 10,586  |  | $ | 0
|July 31, 2008 |  | $             | 146,058 |                       | $ | 0             |  | $                  | 146,058 |                               | $ | 146,058 |  | $ | 0
|              |  |               |         |                       |   |               |  |                    |         |                               |   |         |  |   |  
|TOTAL         |  | $             | 254,330 |                       | $ | 0             |  | $                  | 254,330 |                               | $ | 254,330 |  | $ | 0
|              |  |               |         |                       |   |               |  |                    |         |                               |   |         |  |   |  

Controls and Procedures

As indicated in the certifications in Exhibits 31.1 and 31.2 of this Annual Report, the Companys chief executive officer and principal financial officer have evaluated the Companys disclosure controls and
procedures as of July 31, 2008. Based on that evaluation, these officers have concluded that the Companys disclosure controls and procedures are effective in ensuring that material information required to be in this quarterly report is
made known to them on a timely basis. There were no changes since the Companys last filed reports that materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.