<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB


              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES AND EXCHANGE ACT OF 1934
                       For the year ended January 31, 2001

                          Commission File Number 0-5653

                             BALA CYNWYD CORPORATION
             (Exact name of registrant as specified in its charter)

                                 ---------------


         New Jersey                                       22-1436237
         ----------                                       ----------
(State or other jurisdiction of               (IRS Employer Identification No.)
incorporation or organization)

301 City Avenue, Bala Cynwyd, PA                            19004
--------------------------------                            -----
(Address of principal executive offices)                 (Zip Code)

       Registrant's telephone number, including area code:  (610) 667-8225

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

       Securities registered under Section 12(g) of the Exchange Act:  None

                                 ---------------

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes _[X]_ No___

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. [X]

Revenues for the most recent fiscal year were $43,587.

The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the average bid and asked prices of such stock as of
September 16, 1991, the last date on which price information was available from
the National Quotation Bureau, Inc., was $116,728. Shares of Common Stock held
by each officer and director and by each person who owns 10% or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily
conclusive and does not constitute an admission of affiliate status.

As of April 17, 2001, there were issued and outstanding 1,021,314 shares of the
registrant's Common Stock, par value $.05 per share.






<PAGE>


                                     PART I

ITEM 1- BUSINESS

         Until November 1, 1982, Bala Cynwyd Corporation, under its former name,
ITI Electronics, Inc. (the "Company") was engaged primarily as a designer and
manufacturer of electrical equipment for the communications industry. On April
7, 1983, the Company sold its business, its name and all of its operating assets
for the aggregate price of $592,600. The entire consideration was paid in cash
at settlement. In accordance with the terms of the purchase agreement, the buyer
assumed all warranties and returns on past sales.

         On April 21, 1983, a Certificate of Amendment to the Certificate of
Incorporation was filed with the Secretary of State of New Jersey changing the
corporate name of the Company to Bala Cynwyd Corporation.

         The Company currently has no full-time employees. Its Chairman,
President and Chief Executive Officer is Albert M. Zlotnick.

         The Company is currently seeking merger or acquisition partners so as
to best utilize the Company's cash and corporate structure.


ITEM 2 - PROPERTY

         The Company presently maintains its corporate and administrative
offices at 301 City Avenue, Bala Cynwyd, PA. The Company utilizes a portion of
the premises occupied by Davic Associates, an investment firm owned by Albert M.
Zlotnick. Due to the curtailed nature of the Company's operations, Davic
Associates has, until further notice, waived the payment of rent by the Company.
No rent was paid in the fiscal years ended January 31, 2001 and 2000.


ITEM 3 - LEGAL PROCEEDINGS

         On September 1, 1992, Antiquities of Nevada, Inc. defaulted on its
obligations to the Company under the loan documents, and on September 14, 1992,
Antiquities filed a Chapter 11 bankruptcy proceeding in the United States
Bankruptcy Court for the District of Nevada. On February 24, 1993, the Court
confirmed the amended Antiquities Plan of Reorganization, which provides, inter
alia, for a monthly repayment schedule of principal and interest owed to the
Company over a period of 22 months through November 30, 1994. Antiquities has
completed its payments to the Company (see Note 2 to financial statements).


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of security holders by the Company
during the fourth quarter of the fiscal year covered by this report.


                                     PART II


ITEM 5 - MARKET OF THE REGISTRANT'S COMMON EQUITY AND RELATED
         SECURITY HOLDERS MATTERS

         Due to the infrequent and limited number of shares of common stock
traded, the common stock has been unpriced during the last two fiscal years. The
last available market price data for the common stock was on September 16, 1991
as follows: high bid: 1/4; low bid: 1/4, as reported by the National Quotation
Bureau, Inc. Such quotations represent prices in the over-the-counter market
between dealers in securities, and do not include retail mark-up, mark-down or
commission, and do not necessarily represent actual transactions, and cannot be
considered indicative of any reliable market value for the common stock.



                                      - 2 -

<PAGE>



         As of April 17, 2001, the Company's common stock, $.05 par value, was
held of record by approximately 650 record holders.

         Holders of the Company's common stock are entitled to receive dividends
as and when they may be declared by the Company's Board of Directors. The
Company did not pay a cash dividend on its common stock during its last three
fiscal years and by reason of its present financial condition and contemplated
financial requirements, the Company does not anticipate paying any cash
dividends upon such stock in the foreseeable future.


ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

General

           The Company presently conducts no business except for necessary
administrative matters and has ceased to be an operating company. As such, for
the fiscal years ended January 31, 2001 and 2000, the Company had no revenues
from operations. Given the virtual suspension of the Company's operations except
for necessary administrative matters, the Company's officers have waived further
compensation.


Results of Operations

         The Company had an increase in net income of $16,067 for the year ended
January 31, 2001 compared with the year ended January 31, 2000 due to an
increase in interest income. The increase in revenue and dividend income of
$22,201 for the year ended January 31, 2001 as compared to the year ended
January 31, 2000, was primarily due to an increase in interest revenue of
$16,195.


Liquidity and Capital Resources

           During the year ended January 31, 2001, the Company satisfied its
working capital needs from cash on hand at the beginning of the year and cash
generated from interest income. As of January 31, 2001, the Company had working
capital of $454,408. This working capital is expected to provide the Company
with sufficient capital while it seeks a merger, acquisition or other
arrangement by and between the Company and a viable operating entity, although
there is no assurance that this will occur.


Market Risk

         The Company's market risk includes the potential decrease in interest
earned on its cash and cash equivalents arising from a decline in interest
rates.


Forward-Looking Statements

         The Company desires to take advantage of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995 and is making this
cautionary statement in connection with such safe harbor legislation. This Form
10-KSB, and the Annual Report to Shareholders, Form 10- QSB or Form 8-K of the
Company, or any other written or oral statements made by or on behalf of the
Company may include forward-looking statements which reflect the Company's
current views with respect to future events and financial performance. The words
"believe," "expect," "anticipate," "intends," "estimate," "forecast," "project,"
"should" and similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Report Act
of 1995. All forecasts and projections in this Form 10-KSB are "forward-looking
statements," and are based on management's current expectations of the Company's
near-term results, based on current information available pertaining to the
Company, including the risk factors noted below.




                                      - 3 -

<PAGE>




         The Company wishes to caution investors that any forward looking
statements made by or on behalf of the Company are subject to uncertainties and
other factors that could cause actual results to differ materially from such
statements. These uncertainties and other risk factors include, but are not
limited to: changing economic and political conditions in the United States and
in other countries, changes in governmental spending and budgetary policies,
governmental laws and regulations surrounding various matters such as
environmental remediation, contract pricing and international trading
restrictions, customer product acceptance and continued access to capital
markets and foreign currency risks. The Company wishes to caution investors that
other factors may, in the future, prove to be important in affecting the
Company's results of operations. New factors emerge from time to time and it is
not possible for management to predict all such factors, nor can it assess the
impact of each such factor on the business or the extent to which any factor, or
a combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements.

         Investors are further cautioned not to place undue reliance on such
forward-looking statements as they speak only to the Company's views as of the
date the statements are made. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.


ITEM  7 - FINANCIAL STATEMENTS

         The Financial Statements of Bala Cynwyd Corporation for the years ended
January 31, 2001 and 2000 are included as part of this report following the
signature page of this report:

         Cover page                                                 F-1
         Independent Auditor's Report
           (Margolis & Company P.C.)                                F-3
         Balance sheet                                              F-4
         Statement of operations                                    F-5
         Statement of shareholders' equity                          F-6
         Statement of cash flows                                    F-7
         Notes to financial statements for the
           years ended January 31, 2001 and 2000               F-8, F-9 & F-10


ITEM 8 - DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         The Company has had no disagreements with its independent accountants
during the Company's most recent fiscal years.



                                    PART III

ITEM 9 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The executive officers and directors of the Company are as follows:

       Name             Age                    Position
       ----             ---                    --------
Albert M. Zlotnick      75      Chairman, President and Chief Executive Officer
Robert Zlotnick         38      None


         Albert M. Zlotnick has served as the Company's Chairman and President
since April, 1983. Due to the curtailed nature of the Company's business
activities, Mr. Zlotnick does not devote full time to the affairs of the
Company. Mr. Zlotnick's primary occupation is as a private investor and
financial consultant. Mr. Zlotnick currently serves as the Chairman of the Board


                                      - 4 -

<PAGE>



of Directors of the following companies: P.H.C., Inc., Upward Technology
Corporation, Robin Industries, Inc., Electronic Data Controls Corp. and
Convention Centers, Inc. He also serves as a director of Comprehensive Holding
Corporation, S.A. of Geneva, Switzerland.


         Robert Zlotnick is a psychologist and is the son of Albert M. Zlotnick.
He has served as a Director since April, 1983.

         The Company's By-Laws provide for the election of directors at the
annual meeting of shareholders, such directors to hold office until the next
annual meeting and until their successors are duly elected and qualified. The
By-Laws also provide that the annual meeting of shareholders be held each year
at such time, date and place as the Board of Directors shall determine by
resolution. Directors may be removed at any time for cause by the Board of
Directors and with or without cause by a majority of the votes cast by the
shareholders entitled to vote for the election of directors.

         Officers will normally be elected at the annual meeting of the Board of
Directors held immediately following the annual meeting of shareholders, to hold
office for the term for which elected and until their successors are duly
elected and qualified. Officers may be removed by the Board of Directors at any
time with or without cause.


ITEM 10 - EXECUTIVE COMPENSATION

         No Executive Officer received in excess of $100,000 cash compensation
during the fiscal year ended January 31, 2001.

         The following information is furnished for the Company's Chief
Executive Officer (see Note 4 to financial statements).

                                              Summary Compensation Table

                                         Years ended                 Total
Name and Principal Position              January 31,             Compensation
---------------------------              ------------            ------------

Albert M. Zlotnick,                          2001                   $25,000
  Chief Executive Officer                    2000                    18,000
  Chairman and President                     1999                    15,000

         The Company does not provide any non-cash remuneration to its Executive
Officers and Directors. No pension plan or other retirement benefit for the
benefit of Executive Officers or Directors is funded by the Company. The Company
pays no remuneration to Directors for service as such. The Company has no
options, warrants or rights plans.


ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding beneficial
ownership of Common Stock as of April 30, 2001 by (i) each person or entity
known by the Company to own beneficially 5% or more of its outstanding Common
Stock, (ii) each director, and (iii) each executive officer, and (iv) all
directors and executive officers of the Company as a whole. Except as otherwise
noted below, the listed beneficial owner has sole voting and investment power
with respect to such shares and the address of the listed beneficial owner is
that of the Company.

NAME AND ADDRESS                    NO. OF SHARES OWNED        PERCENT OF CLASS
----------------                    -------------------        ----------------

Albert M. Zlotnick                        554,404                     54%

All directors and executive
  officers as a group                     554,404                     54%



                                      - 5 -

<PAGE>



         Robert Zlotnick, a Director of the Company by reason of being the son
of Albert M. Zlotnick, could be deemed to be a beneficial owner of these shares
owned by Albert M. Zlotnick, although Robert Zlotnick has no legal or equitable
interest in such shares and disclaims beneficial ownership of such shares.


ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The Company utilizes a portion of the premises occupied by Davic
Associates, with which Mr. Zlotnick is a principal. Due to the curtailed nature
of the Company's operations Davic Associates has, until further notice, waived
the payment of rent by the Company.


ITEM 13 - EXHIBITS, REPORTS ON FORM 8-K AND FINANCIAL STATEMENTS

         (a) Exhibits:

         The following Exhibits are filed as part of this report. Where such
filing is made by incorporation by reference (I/B/R), reference is made to
Commission file number 0-5653 unless another statement or report is identified
in parentheses.


Exhibit No.                     Description
-----------                     -----------

    3A            Articles of Incorporation of Registrant                I/B/R
    3B            By - Laws of Registrant                                I/B/R

         (b) Reports on Form 8-K

         No reports on Form 8-K were filed by the Company during the fourth
quarter of the year ended January 31, 2001.

         (c) Financial Statements

         The financial statements and related notes of the Company begin on page
F-1 in the appendix. The report of the independent certified public accountants
on the Company's financial statements is on page F-3 in the appendix.



                                      - 6 -

<PAGE>




                                   SIGNATURES

         Pursuant to the requirements of the 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.



                                    BALA CYNWYD CORPORATION



                                    By:/s/Albert M. Zlotnick
                                       -----------------------------------------
                                       ALBERT M. ZLOTNICK, Chairman
                                       and Chief Executive Officer
                                       Dated: April 18, 2001


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


       Signature                 Title                                Date
       ---------                 -----                                ----

/s/ Albert M. Zlotnick    Chairman and Chief Executive Officer    April 18, 2001
----------------------    (Principal Executive Officer and
ALBERT M. ZLOTNICK        Principal Accounting Officer)



                                     - 7 -


<PAGE>




                             BALA CYNWYD CORPORATION


                              FINANCIAL STATEMENTS


                               FOR THE YEARS ENDED
                            JANUARY 31, 2001 AND 2000








                                      F-1

<PAGE>



                             BALA CYNWYD CORPORATION

                                TABLE OF CONTENTS
                  FOR THE YEARS ENDED JANUARY 31, 2001 AND 2000
--------------------------------------------------------------------------------









                                                                       PAGE
                                                                      NUMBER
                                                                      ------
Independent Auditor's Report                                            F-3

Financial Statements:
   Balance sheet                                                        F-4
   Operations                                                           F-5
   Shareholders' equity                                                 F-6
   Cash flows                                                           F-7
   Notes to financial statements                                    F-8 to F-10



                                       F-2



<PAGE>





                          INDEPENDENT AUDITOR'S REPORT



To the Board of Directors
Bala Cynwyd Corporation
Bala Cynwyd, Pennsylvania

We have audited the accompanying balance sheet of Bala Cynwyd Corporation as of
January 31, 2001 and 2000, and the related statements of operations,
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bala Cynwyd Corporation as of
January 31, 2001 and 2000, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.






                                                   Certified Public Accountants


Bala Cynwyd, PA
April 17, 2001

                                       F-3

<PAGE>



                             BALA CYNWYD CORPORATION

                                  BALANCE SHEET
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                                        JANUARY 31,
                                                                                 2001              2000
                                                                              ----------        ----------

                                                      ASSETS

<S>                                                                             <C>               <C>
Cash and cash equivalents                                                       $     42          $458,670
Due from shareholder                                                             460,000              -
Interest receivable                                                               23,347              -
Prepaid taxes                                                                      1,300              -
                                                                                ---------         --------

                                                                                $484,689          $458,670
                                                                                ========          ========



                                       LIABILITIES AND SHAREHOLDERS' EQUITY


Liabilities:
   Due to affiliate                                                             $  3,862          $  3,862
   Due to shareholder                                                             22,179             1,927
   Accrued expenses                                                                4,000             5,152
   Income taxes payable                                                              240             2,332
                                                                                --------          --------

                                                                                  30,281            13,273
                                                                                --------          --------


Shareholders' equity:
   Preferred stock, cumulative convertible,
     $.05 par value; 500,000 shares authorized,
     2,600 shares issued                                                             130               130
   Common stock, $.05 par value; 2,000,000
     shares authorized, 1,054,419 shares issued                                   52,721            52,721
   Additional paid-in capital                                                    462,327           462,327
   Accumulated deficit                                                           (41,204)          (50,215)
                                                                                --------          --------
                                                                                 473,974           464,963
   Less treasury stock, at cost:
     Preferred stock, 2,600 shares                                                (5,000)           (5,000)
     Common stock, 33,105 shares                                                 (14,566)          (14,566)
                                                                                --------          --------

           Net shareholders' equity                                              454,408           445,397
                                                                                --------          --------

                                                                                $484,689           458,670
                                                                                ========          ========
</TABLE>






The notes to financial statements are an integral part of the above statement.

                                       F-4

<PAGE>



                             BALA CYNWYD CORPORATION

                             STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>



                                                                                          YEAR ENDED
                                                                                         JANUARY 31,
                                                                                  2001              2000
                                                                                --------          --------

<S>                                                                              <C>               <C>
Revenue, interest and dividend  income                                           $43,587           $21,386


General and administrative expenses                                               34,576            28,442
                                                                                 -------           -------


Income (loss) before provision for income taxes                                    9,011            (7,056)


Provision for personal holding company income taxes                                  -                 -
                                                                                 -------           -------


Net income (loss)                                                                $ 9,011           ($7,056)
                                                                                 -------           =======


Net income (loss) per share, basic and diluted                                   $   .01           ($  .01)
                                                                                 =======           =======
</TABLE>





















The notes to financial statements are an integral part of the above statement.

                                       F-5

<PAGE>



                             BALA CYNWYD CORPORATION

                        STATEMENT OF SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------










<TABLE>
<CAPTION>

                                                                                                            TREASURY STOCK
                                                                     ADDITIONAL                        ------------------------
                                        PREFERRED       COMMON         PAID-IN       ACCUMULATED        PREFERRED      COMMON
                                          STOCK          STOCK         CAPITAL         DEFICIT            STOCK         STOCK
                                      -------------    ---------    ------------- -----------------    -----------    ---------

<S>              <C> <C>                   <C>          <C>           <C>              <C>              <C>           <C>
Balance, January 31, 1999                  $130         $52,721       $462,327         ($43,159)        ($5,000)      ($14,566)


Net (loss) for year ended
  January 31, 2000                                                                       (7,056)
                                           ----         -------       --------         --------        --------       --------

Balance, January 31, 2000                   130          52,721        462,327          (50,215)         (5,000)       (14,566)

Net income for year ended
  January 31, 2001                                          -             -               9,011             -             -
                                           ----         -------       --------         --------        --------      ---------

Balance January 31, 2001                   $130         $52,721       $462,327         ($41,204)        ($5,000)      ($14,566)
                                           ====         =======       ========          =======         =======       ========
</TABLE>


























The notes to financial statements are an integral part of the above statement.

                                       F-6

<PAGE>



                             BALA CYNWYD CORPORATION

                             STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>


                                                                                         YEAR ENDED
                                                                                        JANUARY 31,
                                                                                2001               2000
                                                                              ----------         ---------

                                            INCREASE (DECREASE) IN CASH

<S>                                                                           <C>                 <C>
Cash flows from operating activities:
   Net income (loss)                                                           $   9,011          ($ 7,056)
   Adjustments to reconcile net income (loss)
       to net cash provided by (used in) operating activities:
     Interest accrued on due from shareholder                                    (23,347)             -
     (Increase) decrease in operating assets:
       Prepaid taxes                                                              (1,300)             -
     Increase (decrease) in operating liabilities:
       Accrued expenses                                                           (1,152)           (8,328)
       Income taxes payable                                                       (2,092)           (4,042)
       Due to shareholder                                                         20,252              -
                                                                               ---------          --------

           Net cash provided by (used in) operating activities                     1,372           (19,426)
                                                                               ---------          --------


Cash flows from investing activities:
   Loan to shareholder                                                          (460,000)            -
                                                                               ---------          --------

Net (decrease) in cash and cash equivalents                                     (458,628)          (19,426)


Cash and cash equivalents at beginning of year                                   458,670           478,096
                                                                               ---------          --------


Cash and cash equivalents at end of year                                       $      42          $458,670
                                                                               =========          ========




                                 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the year for:
   Income taxes                                                                $    -             $  1,642
                                                                               ---------          --------
</TABLE>










The notes to financial statements are an integral part of the above statement.

                                       F-7

<PAGE>



                             BALA CYNWYD CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED JANUARY 31, 2001 AND 2000
--------------------------------------------------------------------------------





1.       Nature of Business and Summary of Significant Accounting Policies

         Nature of business - The Company presently conducts no business, but is
         searching for appropriate investment and acquisition opportunities. Its
         only income consists of interest from investment income.

         Earnings per share - The Company adopted Statement of Financial
         Accounting Standards No. 128, "Earnings per Share," which establishes
         standards for computing basic and diluted earnings per share. Per share
         data is computed using the weighted average number of common shares
         outstanding. The weighted average number of common shares was 1,021,314
         for both years.

         Cash equivalents - For purposes of the statement of cash flows, the
         Company considers all highly liquid debt instruments purchased with
         maturities of three months or less to be cash equivalents.

         Short-term investments potentially subject the Company to
         concentrations of credit risk. To limit this risk, the Company places
         its short-term cash investments with high credit quality financial
         institutions.

         The carrying value of the financial instruments, including cash and
         cash equivalents, approximates fair value as of January 31, 2001,
         because of the short maturity of these financial instruments.

         Use of estimates - The presentation 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 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.

         Recent accounting pronouncements - The FASB issued SFAS No. 133,
         "Accounting for Derivative Instruments and Hedging Activities,"
         effective for fiscal years beginning after December 15, 1998. The
         adoption of this pronouncement will have no impact on the Company's
         results of operations, financial position, or cash flows.

         Income taxes - The Company follows the provisions of Statement of
         Financial Accounting Standards No. 109, "Accounting for Income Taxes"
         ("SFAS 109"), which requires the recognition of deferred tax
         liabilities and assets for the expected future tax consequences of
         events that have been included in the financial statements or tax
         returns. Under this method, deferred tax liabilities and assets are
         determined based on the differences between the financial statement and
         tax bases of assets and liabilities using tax rates in effect for the
         year in which the differences are expected to reverse.



                                       F-8

<PAGE>


                             BALA CYNWYD CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                  FOR THE YEARS ENDED JANUARY 31, 2001 AND 2000
--------------------------------------------------------------------------------



2.       Note Receivable

         On October 30, 1991, the Company agreed to extend credit facilities up
         to an initial principal amount of $350,000 to Antiquities of Nevada,
         Inc. ("Antiquities"), and on January 29, 1992 entered into an amendment
         increasing the maximum credit availability by $150,000 through June 15,
         1992. On May 15, 1992, the loan agreement was amended, whereby the
         principle amount of $431,724 due as of that date was to be repaid in
         installments from June to August, 1992, with the balance of principle,
         accrued interest and related costs due September 1, 1992. The note
         bears interest at 10% per annum and is collateralized by all of the
         assets of Antiquities, along with the guarantees of the stockholders.

         On September 1, 1992, Antiquities defaulted on its obligations under
         the loan agreement, and filed under Chapter 11 of the Federal
         Bankruptcy Code on September 14, 1992. Under court order, Antiquities
         was required to pay the Company $10,000 per month towards this
         obligation plus interest of $3,000 per month, pending the filing and
         confirmation of a plan of reorganization. On February 24, 1993, the
         plan of reorganization was confirmed by the Court. The plan required
         monthly payments of principal of $10,000 to July, 1993, $15,000 to
         June, 1994 and $20,000 to November, 1994, plus interest payable monthly
         at 10% per annum. Through July, 1993, the principal payments were
         received. Subsequent to that point in time, monthly principal payments
         in amounts less than the required amounts were received.

         Through January 31, 1996, the Company had incurred legal and other
         costs in excess of $192,000 in connection with exercising its rights
         under the note, which, pursuant to the loan agreement, is reimbursable
         to the Company by Antiquities of which approximately $90,000 was
         collected. The Bankruptcy Court had ordered Antiquities to pay during
         the 23rd through 26th months of the confirmed plan, $86,500 of the
         Company's legal fees and expenses incurred during the Antiquities
         bankruptcy proceedings. The Company provided an allowance in the amount
         of $88,000 for any potentially uncollectible reimbursements.
         Antiquities has made payments in accordance with the loan agreement
         which was $1,294 in excess of the Company's allowance for the year
         ended January 31, 2000. The receivables were paid off as of January 31,
         1999.


3.       Due From Shareholder

         The amount due from shareholder bears interest at the rate of 9.5% per
         annum at January 31, 2001 with no specific repayment terms. Total
         interest receivable for this loan at January 31, 2001 was $23,347.


4.       Management Fees

         The Company has agreed to compensate its president and principal
         shareholder for his services in maintaining the corporate books and
         records and in investigating possible merger and acquisition candidates
         for the Company, and to reimburse him for expenses incurred. Management
         fees of $25,000 and $18,000 are included in general and administrative
         expenses for the years ended January 31, 2001 and 2000, respectively.




                                       F-9

<PAGE>


                             BALA CYNWYD CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED
                  FOR THE YEARS ENDED JANUARY 31, 2001 AND 2000
--------------------------------------------------------------------------------






5.       Income Taxes

         The Company is classified as a personal holding company for federal
         income tax purposes for each of the periods presented. The Company is
         subject to a federal tax equal to 39.6% of its undistributed earnings,
         in addition to any other income taxes payable.

         A valuation allowance is provided to reduce deferred tax assets to a
         level which, more likely than not, will be realized. The valuation
         allowance provided effectively eliminated the deferred tax asset
         resulting from net operating loss carryforwards.

         The Company had a net operating loss carry forward for federal tax
         purposes of $24,249 which will expire in 2019.









                                      F-10