<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549


                                   FORM 10-Q


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


For the quarterly period ended           October 26, 1996
                               ----------------------------------------

                                      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                   1-258
                      ----------------------------------------------------------

                              JG INDUSTRIES, INC.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

           ILLINOIS                                     36-1141010
---------------------------------             ----------------------------------
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                     Identification No.)

    5630 WEST BELMONT AVENUE                      CHICAGO, IL  60634
--------------------------------------------------------------------------------
                   (Address of principal executive offices)
                                  (Zip Code)

                                (773) 481-5410
--------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)

    1615 WEST CHICAGO AVENUE                      CHICAGO, IL  60622
--------------------------------------------------------------------------------
                (Former name, former address and former fiscal
                      year, if changed since last report)


     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 requirement for the past 90 days.
Yes X  No
   ---   ---  


Common Stock outstanding as of October 26, 1996 -   7,061,890
--------------------------------------------------------------------------------

                                       1
<PAGE>
 
                        PART I - FINANCIAL INFORMATION
                        ------------------------------

                         ITEM 1. FINANCIAL STATEMENTS



Company or group of companies for which report is filed:

                JG INDUSTRIES, INC. AND SUBSIDIARIES (Company)
                ----------------------------------------------



In the opinion of management, all adjustments necessary to fairly present the
condensed consolidated financial position of the Company as of October 26, 1996,
January 27, 1996, and October 28, 1995 and the results of its operations and its
cash flows for the thirteen and thirty-nine week periods ended October 26, 1996
(fiscal 1997) and October 28, 1995 (fiscal 1996) have been included. These
adjustments consist solely of normal recurring accruals. The results of
operations for such interim periods are not necessarily indicative of results
for the full year.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted, although the Company believes that the
disclosures are adequate to make the information presented not misleading. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto in the
Company's latest Annual Report on Form 10-K.

                                       2
<PAGE>
 
                     JG INDUSTRIES, INC. AND SUBSIDIARIES
                     ------------------------------------
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     -------------------------------------
                       (IN THOUSANDS, EXCEPT SHARE DATA)
                                  (UNAUDITED)
<TABLE>
<CAPTION>

                                                      October 26,   January 27,   October 28,
                                                          1996          1996          1995
                                                      ------------  -----------   -----------
      ASSETS
      ------
<S>                                                       <C>           <C>           <C>
Current Assets:
  Cash and cash equivalents                               $ 3,515       $ 3,792       $11,728
  Receivables, net                                            815           350           817
  Merchandise inventories                                   9,090         8,734        14,153
  Due from Jupiter                                                        1,265
  Other current assets                                        661           335           362
                                                          -------       -------       -------

     Total current assets                                  14,081        13,211        28,325
                                                          -------       -------       -------

Land, buildings and
 equipment, at cost                                        14,538        23,650        24,287

Less accumulated depreciation
 and amortization                                           9,074        14,347        14,064
                                                          -------       -------       -------

                                                            5,464         9,303        10,223
                                                          -------       -------       -------

Leasehold rights, net                                          33            69           (29)

Due from Jupiter                                            1,265         1,265

Other assets                                                1,478         1,467         1,469
                                                          -------       -------       -------

                                                          $22,321       $25,315       $39,988
                                                          =======       =======       =======

LIABILITIES, COMMON STOCK AND
-----------------------------
  OTHER SHAREHOLDERS' EQUITY
  --------------------------

Current Liabilities:
  Notes payable                                           $   750       $   200       $ 3,469
  Current portion of long-term debt                           627         1,227
  Accounts payable                                          4,957         3,875         7,433
  Accrued liabilities                                       2,693         3,195         3,940
                                                          -------       -------       -------

    Total current liabilities                               8,400         7,897        16,069
                                                          -------       -------       -------

Long-term debt, less current portion                                      1,848         8,469

Other long-term liabilities                                   931           928

Minority interest                                           1,242         1,173         1,618

Redeemable preferred stock, including accrued
  dividends of $1,100, $754 and $673, respectively          4,283         3,937         3,856

Common stock and other shareholders' equity:
  Common shares; no par value;
   authorized 10,000,000 shares;
   issued 7,217,311 shares                                 11,246        11,246        11,246
  Paid-in capital                                           4,775         4,775         5,017
  Accumulated deficit                                      (7,271)       (5,204)       (5,002)
  Treasury shares - 155,421, 155,322 and
   155,322 shares at cost, respectively                    (1,285)       (1,285)       (1,285)
                                                          -------       -------       -------

                                                            7,465         9,532         9,976
                                                          -------       -------       -------

                                                          $22,321       $25,315       $39,988
                                                          =======       =======       =======
</TABLE>

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

                                       3
<PAGE>
 
                     JG INDUSTRIES, INC. AND SUBSIDIARIES
                     ------------------------------------
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                -----------------------------------------------
  FOR THE 13 AND 39 WEEK PERIODS ENDED OCTOBER 26, 1996 AND OCTOBER 28, 1995
  --------------------------------------------------------------------------
                                  (UNAUDITED)
<TABLE>
<CAPTION>
 
                                                13 WEEKS                    39 WEEKS
                                                  ENDED                       ENDED
                                       --------------------------   --------------------------
                                       October 26,    October 28,   October 26,    October 28,
                                          1996           1995          1996           1995
                                       -----------    -----------   -----------    -----------
<S>                                    <C>           <C>           <C>            <C>
 
                                                 (in thousands, except share data)
Net sales from
 continuing operations                  $   13,996    $   18,367    $   45,072     $   52,653  
                                                                                             
Cost of sales                                9,072        12,067        30,161         35,664
                                        ----------    ----------    ----------     ----------
 Gross profit                                4,924         6,300        14,911         16,989
                                                                                             
Selling, general and                                                                         
 administrative expenses                     5,135         6,592        17,036         19,541
                                        ----------    ----------    ----------     ----------
 Loss from continuing                                                                        
  operations                                  (211)         (292)       (2,125)        (2,552)
                                                                                             
Interest income (expense), net                  44          (270)           13           (793)
                                                                                             
Provision for store closing                    (28)                       (435)       
                                                                                             
Gain (loss) on sale of asset                   (79)                        933             (3)              
                                                                                             
Loss on subsidiary stock                                                                     
 transactions, net                                                                        (23)              
                                                                                             
Minority interest in net income                                                              
 of subsidiaries                               (23)         (359)          (69)          (402)
                                        ----------    ----------    ----------     ----------
                                                                                             
 Loss before income tax                                                                      
  provision and discontinued                                                                 
  operations                                  (297)         (921)       (1,683)        (3,773)
                                                                                             
Income tax provision                           (12)          (13)          (38)           (35)
                                        ----------    ----------    ----------     ----------
                                                                                             
 Loss before discontinued                                                                    
  operations                                  (309)         (934)       (1,721)        (3,808)
                                                                                             
Discontinued operations:                                                                     
 Income from operations, net                                                                 
  of applicable income taxes                                  82                          561
                                                                                             
 Gain on sale of discontinued                                                                
  operations, including income                                                               
  during phase-out period, less                                                              
  applicable income taxes                                  6,121                        6,121               
                                        ----------    ----------    ----------     ----------      
                                                                                             
 Income from discontinued operations                       6,203                        6,682
                                        ----------    ----------    ----------     ----------
                                                                                             
 Net income (loss)                      $     (309)   $    5,269    $   (1,721)    $    2,874
                                        ==========    ==========    ==========     ==========
                                                                                             
Net income (loss) applicable                                                                 
 to common and common                                                                        
 equivalent shares                      $     (429)   $    5,203    $   (2,067)    $    2,674
                                        ==========    ==========    ==========     ==========
                                                                                             
 Loss per common share from                                                                  
   continuing operations                     $(.06)        $(.14)        $(.29)         $(.54)
                                        ==========    ==========    ==========     ==========
                                                                                             
 Earnings (loss) per common share            $(.06)         $.74         $(.29)          $.38
                                        ==========    ==========    ==========     ==========
                                                                                             
Average number of common and common                                                          
 equivalent shares outstanding           7,061,890     7,062,141     7,061,900      7,059,785
                                        ==========    ==========    ==========     ========== 
</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                       4
<PAGE>
 
                       JG INDUSTRIES, INC. AND SUBSIDIARIES

     CONSOLIDATED STATEMENTS OF COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY

                  FOR THE FISCAL YEAR ENDED JANUARY 27, 1996,
                     AND THE QUARTER ENDED OCTOBER 26, 1996

                       (IN THOUSANDS, EXCEPT SHARE DATA)
                                  (UNAUDITED)
                                       
<TABLE>
<CAPTION>
                                     Common   Paid-In  Accumulated  Treasury
                                     Shares   Capital    Deficit      Stock    Total
                                     -------  -------  -----------  --------  -------
<S>                                  <C>      <C>      <C>          <C>       <C>
Balances, January 28, 1995           $11,242  $ 6,129    $(7,676)   $(1,279)  $ 8,416
Net income, fiscal 1996                                    2,753                2,753
Gains on sale of H-K stock
 to Jupiter                                       176                             176
Loss on repurchase of H-K stock
 from Jupiter                                  (1,530)                         (1,530)
Exercise of stock options for
 8,000 common shares                       4                                        4
Purchase of 884 common shares                                            (6)       (6)
Dividends accrued on
 redeemable preferred stock                                 (281)                (281)
                                     -------  -------    -------    -------   -------
Balances, January 27, 1996            11,246    4,775     (5,204)    (1,285)    9,532
Net loss, thirty-nine week
 period ended October 26, 1996                            (1,721)              (1,721)
Dividends accrued on
 redeemable preferred stock                                 (346)                (346)
                                     -------  -------    -------    -------   -------
Balances, October 26, 1996           $11,246  $ 4,775    $(7,271)   $(1,285   $ 7,465
                                     =======  =======    =======    =======   =======
</TABLE>

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

                                       5
<PAGE>
 
                      JG INDUSTRIES, INC. AND SUBSIDIARIES
                      ------------------------------------
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                -----------------------------------------------
          FOR THE QUARTERS ENDED OCTOBER 26, 1996 AND OCTOBER 28, 1995
          ------------------------------------------------------------
                                  (UNAUDITED)
                                  -----------
<TABLE>
<CAPTION>
                                                                 39 Weeks Ended
                                                        -------------------------------
                                                         October 26,      October 28,
                                                             1996            1995
                                                        --------------  ---------------
                                                                (in thousands)
<S>                                                     <C>             <C>
Cash flows from operating activities:
 
   Loss from continuing operations                            $(1,721)         $(3,808)
   Income from discontinued operations                                           6,682
                                                              -------           -------
 
      Net (loss) income                                        (1,721)           2,874
 
 Adjustments to reconcile net income (loss)
   to net cash (used in) provided by
   operating activities:
      Depreciation and amortization                               894            2,051
      Deferred income taxes                                                        766
      Minority interest                                            69            1,197
      Provision for store closing                                 435
      Gain on sale of assets and
        discontinued operations                                  (933)          (6,078)
      Loss on issuance of stock
        by subsidiary                                                               23
      Changes in assets and liabilities;
        net of effects of discontinued
        operations
         Receivables                                             (530)           3,627
         Merchandise inventories                               (2,648)          (5,451)
         Other assets (current)                                   (40)             120
         Other assets (noncurrent)                                (11)             (69)
         Accounts payable and accrued liabilities                 279           (1,095)
                                                              -------          -------
 
      Net cash used in operating activities                    (4,206)          (2,035)
                                                              -------          -------
 
Cash flows from investing activities:
 
      Net proceeds from sale of assets and
        discontinued operations                                 6,544           11,827
      Capital expenditures                                       (690)          (1,361)
                                                              -------          -------
 
        Net cash provided by investing activities               5,854           10,466
                                                              -------          -------
 
Cash flows from financing activities:
 
        Net short-term borrowings                                 550            3,469
        Principal payments of long-term debt                   (2,475)          (2,231)
        Proceeds from exercise of stock options                                      4
        Proceeds from exercise of stock options
          at subsidiary                                                             13
        Purchase of treasury shares                                                 (6)
                                                              -------          -------
 
          Net cash (used in ) provided by
            financing activities                               (1,925)           1,249
                                                              -------          -------
 
Net (decrease) increase in cash and cash equivalents             (277)           9,680
 
Cash and cash equivalents at beginning of year                  3,792            2,048
                                                              -------          -------
 
Cash and cash equivalents at end of
  thirty-nine week period                                     $ 3,515          $11,728
                                                              =======          =======
</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                       6
<PAGE>
 
                      JG INDUSTRIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1)  Merchandise inventories are stated at the lower of cost or market. Cost is
    determined on the last-in, first-out (LIFO) basis for approximately 87% of
    the inventory as of October 26, 1996, January 27, 1996 and October 28, 1995,
    using the retail method. The remaining inventory is valued on the first-in,
    first-out (FIFO) basis using the retail method. If the FIFO method had been
    used to value all inventories, cost would have been $469,000, $406,000, and
    $390,000 higher at October 26, 1996, January 27, 1996, and October 28, 1995,
    respectively.

2)  Receivables are presented net of allowances for cancellation reserves and
    doubtful accounts of approximately $42 at October 26, 1996 and January 27,
    1996, and $0 at October 28, 1995.

3)  Leasehold rights are shown net of accumulated amortization of $36,000 at
    October 26, 1996, $31,000 at January 27, 1996 and $2,517,000 at October 28,
    1995.

4)  Certain reclassification have been made to the October 28, 1995 amounts in
    order to conform to classifications at October 26, 1996 and January 27,
    1996.

5)  Effective July 11, 1996 Goldblatt's Department Stores, Inc. ("Goldblatt's",
    a wholly-owned subsidiary of the Company), sold three of its properties and
    its inventory for approximately $6,544,000, net of expenses. A pre-tax gain
    of approximately $933,000 resulted from this transaction. Goldblatt's used
    the proceeds from the transaction to repay all debt outstanding under its
    mortgage loan of approximately $1,980,000 plus interest and to repay
    borrowings on the line of credit of $2,750,000.

6)  During fiscal 1995, Sussex Group, Ltd. ("Sussex", an indirect majority owned
    subsidiary of the Company), transferred or sold a total of 800,000 shares of
    Huffman Koos Inc. ("H-K") common stock to Jupiter Industries, Inc.
    ("Jupiter").

    Effective May 23, 1995, the Company through Sussex sold an additional
    150,000 shares of H-K common stock to Jupiter for $1,125,000. As a result of
    the sale of these shares, the Company recognized a gain of $176,000. This
    gain was recorded as an increase to paid-in capital and represents the
    difference between cash received and the amount of H-K net equity
    represented by these shares. The Company used $625,000 of the proceeds from
    the May 23, 1995 stock sale to make payments on JG's $7,125,000 term loan.

    Pursuant to the terms of the various stock purchase agreements (the
    "Agreements"), Sussex has been granted an option to repurchase any or all of
    the 950,000 H-K shares for a purchase price ranging from $7.25 to $8.00 per
    share plus interest on such amount. The Agreements also contained a
    provision which required Jupiter to vote the 950,000 H-K shares for the
    election of a majority of the Board of Directors of H-K as Sussex shall
    direct. As a result of this voting provision, the Company through Sussex,
    retained effective control of H-K. Jupiter and Sussex collectively owned
    approximately 55.9% of the total issued and outstanding H-K shares at
    October 27, 1995.

    Pursuant to an Agreement and Plan of Merger dated September 18, 1995,
    stockholders of H-K stock received a tender offer from an unrelated third
    party on September 25, 1995 to acquire all of the issued and outstanding H-K
    shares at a per share purchase price of $9.375 in cash. Upon consumption of
    the tender offer on October 27, 1995, Sussex sold the 1,250,000 H-K shares
    held directly by it for an aggregate cash consideration of approximately
    $11,719,000. On October 27, 1995, pursuant to an agreement dated September
    18, 1995 between Jupiter and Sussex, Sussex also exercised its option to
    repurchase the 950,000 H-K shares for the total purchase price of $7,000,000
    plus interest of approximately $641,000, and instructed Jupiter to tender
    the 950,000 H-K shares. As a result of the repurchase, the Company recorded
    a $1,530,000 loss as a decrease to paid-in capital. This loss represents the
    difference between the total cash due to Jupiter and the amount of H-K
    equity represented by these shares. The Company also recorded a receivable
    from Jupiter of approximately $1,265,000. This receivable represents the
    difference between proceeds from the sale of $8,906,000 and $7,641,000 owed
    to Jupiter by Sussex.

    On October 30, 1995, the Company used proceeds received by Sussex from the
    transaction to repay all debt outstanding under the Company's term loan of
    approximately $6,250,000 plus interest, and to deposit $3,500,000 as
    collateral on the Goldblatt's line of credit.


                                       7
<PAGE>
 
                      JG INDUSTRIES, INC. AND SUBSIDIARIES
                      ------------------------------------
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              ----------------------------------------------------
                                  (UNAUDITED)
                                  -----------


As a result of the transactions described above, previously issued consolidated
statements of operations have been restated to reflect H-K as a discontinued
operation.

Summarized results of H-K business for the period ended October 28, 1995 are as
follows:

<TABLE>
<CAPTION>
                                    13 WEEKS  39 WEEKS
                                    --------  --------
<S>                                 <C>       <C>
 
   Net sales                         $30,978   $84,808
 
   Cost and expenses                  29,527    82,894
                                     -------   -------
 
      Income before income taxes       1,451     1,914
 
   Income taxes                          581       766
                                     -------   -------
 
      Net income                     $   870   $ 1,148
                                     =======   =======
 
</TABLE>

5)  During the first and second quarters of fiscal 1996 and 1995, options to
    purchase 13,480 and 3,800 shares, respectively, of common stock of H-K were
    exercised. Losses of $23,000 and $6,000, respectively, on the issuance of
    these shares were recorded by the Company with an increase to minority
    interest as H-K's net book value per share exceeded the option prices.

6)  Loss per share applicable to common and common equivalent shares is computed
    after recognition of the dividend requirements on redeemable preferred stock
    of $346,000 in fiscal 1997 and $200,000 in fiscal 1996.

                                       8
<PAGE>
 
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                -----------------------------------------------
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                 ---------------------------------------------

                        LIQUIDITY AND CAPITAL RESOURCES
                        -------------------------------

Cash and cash equivalents decreased by $277,000 during the nine months ended
October 26, 1996 which included approximately $4,206,000 of net cash used in
operating activities. Accounts receivable increased by $530,000 due to an
increase in layaway receivables.  Inventories increased by approximately
$2,648,000 due to normal, seasonal increases.

Goldblatt's Department Stores, Inc. ("Goldblatt's") spent approximately $383,000
on capital expenditures during the first nine months of fiscal 1996 related to
normal capital maintenance and $307,000 on the remodeling of the new corporate
location. Goldblatt's capital expenditures for the balance of fiscal 1996 will
be minimal as no new store openings or major store renovations are planned.
Goldblatt's had remaining availability of $2,750,000 under its line of credit as
of October 26, 1996. The Company believes that Goldblatt's working capital and
line of credit will be adequate to fund current operations and service the
Company's indebtedness through fiscal 1997.

Goldblatt's used the proceeds received from the sale of its properties and
inventory to repay all debt outstanding under Goldblatt's mortgage loan of
approximately $1,980,000 plus interest, and to repay borrowings on the line of
credit of $2,750,000.

The Company used the proceeds  received by  Sussex  from sale of the Huffman
Koos, Inc. ("H-K") common stock to repay all debt outstanding under the
Company's term loan of approximately $6,250,000 plus interest and to deposit
$3,500,000 as collateral on the Goldblatt's line of credit.

The sale of H-K gave rise to an obligation of the Company under the Series A 9%
Cummulative Preferred Stock Designations to redeem all of the issued and
outstanding shares of that class of stock. The redemption price for all of the
Series A Preferred Stock is $3,183,000 plus unpaid accrued and additional
dividends of $1,100,000 as of October 26, 1996. A mandatory obligation to redeem
shares of Series A Preferred Stock having a liquidation value of at least
$1,500,000 was scheduled on May 1, 1996.  The Directors not affiliated with
Jupiter, on recommendation of management of the Company, have determined to
defer any redemption of the Series A Preferred Stock until such time as it may
do so without materially adversely affecting the financial condition of the
Company, as contemplated by applicable state law. Pending satisfaction of any
such redemption obligation, in accordance with the Preferred Stock Designations,
the dividend rate on the Series A Preferred Stock  increased from 9% to 12% per
annum, compounded quarterly.  Jupiter is seeking redemption of the Series A
Preferred Stock.
                                                                
Effective February 22, 1996, Goldblatt's line of credit was amended.  The line
is guaranteed by the Company, and is collateralized by a Certificate of Deposit
("CD")in the amount of $3,500,000 held by the financial institution.  Interest
is payable monthly at the CD rate plus 1%.

                                       9
<PAGE>
 
                             RESULTS OF OPERATIONS
                             ---------------------


THIRTEEN WEEKS ENDED OCTOBER 26, 1996 (FISCAL 1997) VS.
-------------------------------------------------------
THIRTEEN WEEKS ENDED OCTOBER 28, 1995 (FISCAL 1996)
---------------------------------------------------

Net sales decreased 23.8% over the prior year, while comparable store sales
decreased 4.8% over the prior year. This decrease is largely due to a sluggish
retail environment. Both apparel and hardlines suffered during the quarter.

Gross profit percentage increased  to 35.2% of sales from 34.3% of sales. This
improvement is due to a merchandise control program implemented during the
fourth quarter of fiscal 1996, which resulted in more opportunistic purchases,
lower inventory levels and less markdowns.  Management intends to maintain
inventory levels at approximately $1,000,000 below fiscal 1496 inventory levels.

Selling, general and administrative expenses ("SG&A") increased to 36.7% of
sales from 35.9% of sales in the prior year. The fixed nature of costs
associated with operating stores, coupled with the store sales decline, was the
main reason for the increase in Goldblatt's SG&A percentage.

Interest expense decreased due to the repayment of the Company's term loan after
the sale of H-K in fiscal 1996 and the repayment of Goldblatt's mortgage loan.
Effective July 11, 1996, Goldblatt's sold three properties and the inventory for
approximately $6,544,000 net of expenses. A pre-tax gain of approximately
$933,000 resulted from this transaction.

The Company is currently negotiating a release from one of Goldblatt's store
leases.   A provision of $407,000 for store closing for the loss on the sale of
the inventory and loss on the book value of capitalized assets has been
recorded. An additional provision of $28,000 for a loss on the book value of
capitalized assets has been recorded in the third quarter of fiscal 1997.



THIRTY-NINE WEEKS ENDED OCTOBER 26, 1996 (FISCAL 1997) VS.
----------------------------------------------------------
THIRTY-NINE WEEKS ENDED OCTOBER 28, 1995 (FISCAL 1996)
------------------------------------------------------

Net sales 14.4% over the prior year while comparable store sales decreased by
6.7%.  This decrease is due to unseasonable weather conditions and a sluggish
retail environment.

Gross profit percentage increased by to 33.1% of sales from 32.3% in the prior
year. This improvement is due to a merchandise control program implemented
during the e fourth quarter of fiscal 1996, which resulted in more opportunistic
purchases, lower inventory levels and less markdowns.

SG&A increased to 37.8% of sales from 37.1% of sales in the prior year. The
increase in SG&A expense as a percentage of sales was due to the sales decline.
Actual SG&A expenses were down due to the sale of the three Goldblatt's
properties as well as an expense reduction program implemented in February 1996.

Interest expense decreased due to the repayment of the Company's term loan after
the sale of H-K in fiscal 1996 and the Goldblatt's mortgage loan after the sale
of the three Goldblatt's properties.

Effective July 11, 1996, Goldblatt's sold three properties and the inventory for
approximately $6,544,000 net of expenses.  A pre-tax gain of approximately
$933,000 resulted from this transaction.
                                                          
The Company is currently negotiating a release from one of the Goldblatt's store
leases. A provision of $435,000 for store closing for the loss on the sale of
the inventory and a loss on the book value of capitalized assets has been
recorded.

                                       10
<PAGE>
 
                          PART II - OTHER INFORMATION
                          ---------------------------



Item 5 - Other Information

         None


Item 6 - Exhibits and Reports on Form 8-K

 (a)  Exhibits - None

 (b)  Reports on Form 8-K -- None

                                       11
<PAGE>
 
                                   SIGNATURES
                                   ----------



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the under-
signed thereunto fully authorized.


                                            JG INDUSTRIES, INC.
                                            -------------------
                                               (Registrant)



Date:    December 9, 1996
         -------------------

                                            /s/ Clarence Farrar
                                            --------------------------
                                            Clarence Farrar
                                            President and
                                            acting Chief Financial Officer

                                       12