U.S. 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, 1999
                                -----------------------------------


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

For the transition period from -------------- to --------------

     Commission file number         001-10287


                     LIFSCHULTZ INDUSTRIES, INC.
       ------------------------------------------------------
           (Name of small business issuer in its charter)


            DELAWARE                                 87-0448118
  -------------------------------                ------------------
  (State or other jurisdiction of                (I.R.S. Employer
  incorporation or organization)                 Identification No.)


              641 WEST 59TH STREET, NEW YORK, NY  10019
          --------------------------------------------------
          (Address of principal executive offices)(Zip Code)


Issuer's telephone number: (212) 397-7788



Securities registered under Section 12(b) of the Act:



<PAGE>



                                   Name of each exchange
Title of each class                 on which registered

NONE


Securities registered under Section 12(g) of the Act:

            COMMON STOCK, PAR VALUE $.001 PER SHARE

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

   YES    X       NO
       -------        -------

     Check if no  disclosure  of  delinquent  filers in  response to Item 405 of
Regulation S-B is 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 ]

     The issuer's revenues for its most recent fiscal year were $16,254,000.

     The aggregate  market value of the voting and  non-voting  common equity of
the issuer held by  non-affiliates,  based upon the closing  price of the Common
Stock on October  15,  1999 as  reported  on The  Nasdaq  SmallCap  Market,  was
approximately  $5,716,981  (Assumes:  (i) full conversion of all Preferred Stock
into Common Stock and (ii)  affiliates  include  only  officers,  directors  and
shareholders  known  to the  issuer  to  beneficially  own  10% or  more  of the
Company's Common Stock.)

     The  number of shares  of the  issuer's  common  equity  outstanding  as of
October 15, 1999 was: 1,117,519 shares of Common Stock, 5,200 shares of Series A
Convertible Preferred Stock (convertible into 1,040 shares of common stock), and
21,231 shares of Series E Convertible  Preferred Stock  (convertible  into 4,247
shares of common stock).

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the  issuer's  Annual  Report to  Shareholders  for fiscal year



<PAGE>


ended July 31, 1999, are  incorporated  into Parts I and II of this Form 10-KSB.
Portions  of the  registrant's  Proxy  Statement  provided  to  shareholders  in
conjunction  with its 1999 Annual Meeting of Shareholders to be held on or about
January 6, 2000, are incorporated into Part III of this Form 10-KSB.

Transitional Small Business Disclosure Format (check one):

      YES              NO     X
           ------          -------




                                PART I

TO THE  EXTENT  IDENTIFIED  BELOW,  THE  INFORMATION  CALLED  FOR  IN  PART I IS
INCORPORATED  BY  REFERENCE  FROM  THE   REGISTRANT'S   1999  ANNUAL  REPORT  TO
SHAREHOLDERS.

Item        1. Description of Business;  see 1999 Annual Report section entitled
            "Description  of  Business"  and  the  following   section  entitled
            "CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS".


     CAUTIONARY  FACTORS THAT MAY AFFECT FUTURE RESULTS  (Cautionary  Statements
Under the Private Securities Litigation Reform Act of
1995)

     The  disclosure and analysis set forth herein and in the 1999 Annual Report
to Shareholders of Lifschultz  Industries,  Inc. (the "Company") contain certain
forward-looking statements,  particularly statements relating to future actions,
performance  or results of current  and  anticipated  products,  sales  efforts,
expenditures,  and  financial  results.  From  time to time,  the  Company  also
provides forward-looking  statements in other publicly-released  materials, both
written and oral.  Forward-looking  statements  provide current  expectations or
forecasts of future events such as new products,  product  approvals,  revenues,
and financial performance. These statements are identified as any statement that
does not relate strictly to historical or current facts.  They use words such as
"plans",  "expects",  "will", and other words and phrases of similar meaning. In
all cases, a broad variety of risks and  uncertainties,  both known and unknown,
as  well  as  inaccurate   assumptions,   can  affect  the  realization  of  the
expectations or forecasts in those statements.  Consequently, no forward-looking
statement can be guaranteed. Actual future results may vary materially.




<PAGE>



     The  Company  undertakes  no  obligation  to update  any  forward-  looking
statements,  but investors are advised to consult any further disclosures by the
Company on this subject in its  subsequent  filings  pursuant to the  Securities
Exchange  Act of 1934.  Furthermore,  as  permitted  by the  Private  Securities
Litigation Reform Act of 1995, the Company provides these cautionary  statements
identifying  factors  that could cause the  Company's  actual  results to differ
materially from expected and historical  results.  It is not possible to foresee
or identify all such factors.  Consequently,  this list should not be considered
an exhaustive  statement of all potential  risks,  uncertainties  and inaccurate
assumptions.

     Competitive Environment

     The temperature  calibration  instrument industry is highly competitive and
subject to  significant  technological  change.  Participation  in the  industry
requires  ongoing  investment to keep pace with  technological  developments and
quality.  The industry consists of numerous companies,  ranging from start-up to
well-established  companies.  The competitors  and potential  competitors of the
Company may succeed in  developing or marketing  technologies  and products that
will be  preferred  in the  marketplace  over the  devices  manufactured  by the
Company  or  that  would  render  its  technology   and  products   obsolete  or
noncompetitive.

     Uncertain Market Acceptance of Products.

     There can be no assurance that the new products created by the Company will
gain any  significant  market  acceptance  and market share among its current or
potential  customers.  Market  acceptance  depends  on  a  variety  of  factors,
including educating customers on the benefits of new products. Market acceptance
and  market  share are also  affected  by the timing of market  introduction  of
competitive products. Accordingly, the relative speed with which the Company can
develop  products  and supply the  product  to the  market  are  expected  to be
important  factors in market  acceptance  and market  share.  The Company may be
unable to continue effective sales and marketing.  The failure by the Company to
gain market  acceptance of its products could have a material  adverse effect on
the Company.

     Product Obsolescence

     Technological  innovation  characterizes  the  marketplace  for temperature
calibration  equipment.  As a result,  the  Company  is  subject  to the risk of
product  obsolescence,  whether from prolonged development or the development of
improved  products  or  processes  by  competitors.  Any  development  adversely
affecting  the market for a product  manufactured  by the  Company  could have a
material adverse effect on the Company.




<PAGE>

     Product Development

     The success of the Company  will  depend to a  significant  extent upon its
ability to enhance and expand on its current  offering of  proprietary  products
and to develop and  introduce  additional  innovative  products that gain market
acceptance. While the Company maintains research and development programs, there
is no assurance  that the Company will be successful  in selecting,  developing,
manufacturing,  and marketing new products or enhancing its existing products on
a timely or cost-effective basis.  Moreover, the Company may encounter technical
problems in connection  with its efforts to develop or introduce new products or
product enhancements.  Some of the products currently under consideration by the
Company will require significant  additional  development and related investment
prior to their  commercialization.  There can be no assurance that such products
will be  successfully  developed,  be capable of being  produced  in  commercial
quantities at reasonable costs, or be successfully  marketed. The failure of the
Company  to develop or  introduce  new  products  or product  enhancements  that
achieve market acceptance on a timely basis could have a material adverse effect
on the Company.

     Design and Manufacturing Process Risks

     While the Company has substantial experience in designing and manufacturing
products,  the Company may still  experience  technical  difficulties and delays
with the design and manufacturing of its products. Such difficulties could cause
significant  delays in the Company's  production of products and have a material
adverse effect on the Company's revenues.  Potential  difficulties in the design
and  manufacturing  process  that could be  experienced  by the Company  include
difficulty  in meeting  required  specifications  and  difficulty  in  achieving
necessary manufacturing efficiencies.

     Expansion of Marketing; Limited Distribution

     The  Company   currently  has  a  limited   domestic  direct  sales  force,
complemented by a number of independent  distributors.  The Company  anticipates
that it will need to increase its marketing  and sales  capability to more fully
cover its target niche markets, particularly as new products become commercially
available.  There can be no  assurance  that the Company will be able to compete
effectively  in  attracting   and  retaining   qualified   sales   personnel  or
distributors  as needed.  There can be no  assurance  that the  Company  will be
successful in marketing or selling the Company's services and products.



<PAGE>

     Dependence Upon Management

     The Company is substantially dependent upon its key managerial,  technical,
and  engineering  personnel.  The Company  must also  attract and retain  highly
qualified engineering and technical personnel. Competition for such personnel is
intense, the available pool of qualified candidates is limited, and there can be
no assurance that the Company can attract and retain such personnel. The loss of
its  key  personnel  could  have a  material  adverse  effect  on the  Company's
business, results of operations, and financial condition.

     Suppliers and Shortages of Component Parts

     The Company relies on third-party suppliers for each of the component parts
used in  manufacturing  its customers'  devices.  Although  component  parts are
generally available from multiple suppliers, certain component parts may require
long lead times,  and the Company may have to delay the  manufacture of products
from time to time due to the  unavailability  of  certain  component  parts.  In
addition,  even if component  parts are available from an alternative  supplier,
the Company could experience  additional delays in obtaining  component parts if
the  supplier  has  not  met  the  Company's  vendor  qualifications.  Component
shortages for a particular  device may adversely affect the Company's ability to
satisfy customer orders for that device.

     Reliance on Efficiency of Distribution and Third Parties

     The Company believes its financial  performance is dependent in part on its
ability to provide prompt  delivery of products to its  customers.  Accordingly,
delays in distribution in its day-to-day operations or material increases in its
costs of procuring and  delivering  products could have an adverse effect on the
Company's  results of operations.  Any failure of either its computer  operating
system or its telephone system could adversely affect its ability to receive and
process  customer  orders and ship products on a timely basis.  Strikes or other
service  interruptions  affecting  Federal  Express  Corporation,  United Parcel
Service of America, Inc., the United States Post Office or other common carriers
used by the Company to receive  necessary  components  or other  materials or to
ship its products also could impair the Company's ability to deliver products on
a timely and cost-effective basis.

     Volatility of Revenues and Product Mix

     The  Company's  annual and  quarterly  operating  results are affected by a
number of factors, including the volume and timing of customer orders. Technical
difficulties  and  delays in the  design and  manufacturing  processes  may also




<PAGE>

affect such results.  The foregoing  factors may cause  fluctuations in revenues
and  variations in product mix,  which could in turn cause  fluctuations  in the
Company's gross margin.

     Limited Market for Common Stock

     Historically,  the market for the  Company's  Common Stock has been limited
due to the relatively low trading volume and the small number of brokerage firms
acting as market  makers.  No  assurance  can be given  that the  market for the
Common Stock will  continue or increase,  or that the prices in such market will
be maintained at their present levels.

     Possible Volatility of Stock Price

     Announcements of technological  innovations for new products by the Company
or its competitors,  or developments concerning the Company's proprietary rights
may have a material  adverse impact on the Company's  business and on the market
price of its Common Stock. The market price of the Company's Common Stock may be
volatile and may fluctuate based on a number of factors,  including  significant
announcements by the Company and its competitors,  quarterly fluctuations in the
Company's operating results,  and general economic conditions.  In addition,  in
recent  years  the  stock  market  has  experienced  extreme  price  and  volume
fluctuations,  which have had a substantial effect on the market prices for many
companies  and  are  often  unrelated  to  the  operating  performance  of  such
companies.

     Foreign Exchange, Currency, and Political Risk

     The  Company's  international  business  is  subject  to risks  customarily
encountered in foreign operations,  including changes in a specific country's or
region's political or economic conditions,  trade protection measures, import or
export licensing  requirements,  unexpected changes in regulatory  requirements,
and natural  disasters.  The  Company's  foreign  sales,  particularly  into Far
Eastern  markets,  could be adversely  affected by an  appreciation  of the U.S.
dollar  relative  to other  currencies,  which  in turn  could  have an  adverse
material effect on the Company's  consolidated  financial  position,  results of
operations, and the amount and timing of cash flows.

     Year 2000

     Many computer systems  experience  problems  handling dates beyond the year
1999.  Therefore,  some computer  hardware and software will need to be modified
prior to the year 2000 in order to remain  functional.  The Company has assessed
both the internal  readiness of its computer  systems and the  compliance of its




<PAGE>

computer  products and software sold to customers for handling the year 2000. At
the present  time,  the Company does not expect that its internal  operations or
any of its current products will experience any material problems as a result of
the year 2000. There can be no assurance,  however, that the vendors, suppliers,
or customers upon which the Company relies will not experience difficulties with
their  systems  or systems  upon  which  they rely,  which in turn could have an
adverse effect on the Company.

Item 2.    Description of Property;  see  1999 Annual  Report  sections entitled
           "Hart Scientific, Inc. - Manufacturing and Opera- tions", "Lifschultz
           Fast Freight, Inc.", and "Office Space".

Item 3.     Legal Proceedings

     Neither  the  Company  nor any of its  subsidiaries  is a party  to (or has
property which is the subject of) any material pending legal proceeding.

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

     Not applicable.

                                PART II

TO THE  EXTENT  IDENTIFIED  BELOW,  THE  INFORMATION  CALLED  FOR IN  PART II IS
INCORPORATED  BY  REFERENCE  FROM  THE   REGISTRANT'S   1999  ANNUAL  REPORT  TO
SHAREHOLDERS.

Item 5.    Market  for  Common Equity and  Related Stockholder Matters; see 1999
           Annual Report section entitled "Market for Company's Common Stock and
           Related Stockholder Matters".

Item 6.    Management's   Discussion  and  Analysis or  Plan of  Operation;  see
           1999 Annual Report  section  entitled  "Management's  Discussion  and
           Analysis of Financial Condition and Results of Operations".

Item 7.    Financial  Statements;  see attachment to 1999 Annual Report filed as
           an Exhibit hereto.

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

     Not applicable.




<PAGE>


                               PART III

TO THE EXTENT IDENTIFIED BELOW,  CERTAIN  INFORMATION  CALLED FOR IN PART III IS
INCORPORATED BY REFERENCE FROM THE  REGISTRANT'S  PROXY  STATEMENT,  TO BE FILED
WITH THE SECURITIES AND EXCHANGE  COMMISSION IN CONNECTION WITH THE REGISTRANT'S
1999 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OR ABOUT JANUARY 6, 2000.

Item 9.    Directors,  Executive   Officers,  Promoters  and  Control   Persons;
           Compliance  with  Section  16(a)  of  the  Exchange  Act;  see  Proxy
           Statement sections entitled  "Directors and Executive Officers of the
           Company",  "Significant  Employees",  and "Section  16(a)  Beneficial
           Ownership Reporting Compliance".

Item 10.   Executive  Compensation;  see  Proxy  Statement   sections   entitled
           "Executive  Compensation",  "Director Compensation",  and "Employment
           Agreements".

Item 11.   Security   Ownership  of Certain  Beneficial  Owners and  Management;
           see Proxy Statement sections entitled "Security  Ownership of Certain
           Beneficial Owners and Management".

Item 12.   Certain   Relationships   and   Related   Transactions;   see   Proxy
           Statement  section  entitled   "Certain   Relationships  and  Related
           Transactions".

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

     (a)    The following Exhibits are attached hereto or incorporated herein by
            reference as indicated in the table below:

Exhibit                                         Location if other
  No.    Title of Document                      than attached hereto
-------  ------------------                     --------------------
3.01*    Certificate of Incorporation              1998 Form 10-KSB
         (as amended to date)                      Exhibit 3.01

3.04*    Bylaws                                    1991 Form 10-K,
                                                   page 74
4.01*    Certificate  of  Designations,  Series A  1991  Form  10-K,
         Convertible Preferred Stock (as amended)  page 94

4.02*    Certificate of Designations, Series E     1994 Form 10-KSB,
         Convertible Preferred Stock               Exhibit 4.05

10.01#   Employment Agreement for Dennis Hunter    1998 Form 10-KSB
                                                   Exhibit 10.01

10.02*#  Employment Agreement for James Triplett   1997 Form 10-KSB,
                                                   Exhibit 10.2


<PAGE>


10.03*#  Employment Agreement for Randy Owen       1997 Form 10-KSB,
                                                   Exhibit 10.3

10.04*#  Employment Agreement for Michael Hirst    1997 Form 10-KSB,
                                                   Exhibit 10.4

10.05*   Stock Purchase Agreement (with Lease      1991 Form 10-K,
         Amendment attached as Exhibit A)          page 143
         (Lifschultz/Penn Yards)

10.06*   Shareholder Voting Agreement              1991 Form 10-K,
         (Lifschultz/Penn Yards)                   page 190

10.07*#  Employee Stock Option Agreement;          1995 Form 10-KSB,
         Standard Form                             Exhibit 10.07

10.08*#  1989 Stock Option Agreement for           1995 Form 10-KSB,
         Dennis Hunter                             Exhibit 10.08

10.09*   Lease of Premises for Calorimetry         1995 Form 10-KSB,
         Sciences Corporation                      Exhibit 10.09

10.10*   Lease of Premises for Hart Scientific,    1995 Form 10-KSB,
         Inc.                                      Exhibit 10.11

10.11*   Amendment to Lease of Premises for Hart   1996 Form 10-KSB,
         Scientific, Inc.                          Exhibit 10.11

10.12*#  Hart Scientific, Inc. Executive Bonus     1995 Form 10-KSB,
         Plan                                      Exhibit 10.12

10.13*#  Hart Scientific, Inc. 401(k) Plan         1995 Form 10-KSB
                                                   Exhibit 10.13

13.01+   1999 Annual Report to Shareholders

21.01    List of Subsidiaries of the Registrant

23.01    Consent of Independent Public Accountants

27.01    Financial Data Schedule

------------------
* Denotes exhibits specifically incorporated in this Form 10-KSB by reference to
other  filings of the  Company  pursuant to the  provisions  of  Securities  and
Exchange  Commission  Rule  12b-32 and  Regulation  S-B,  Item  10(f)(2).  These
documents are located  under File No.  33-17286 at, among other  locations,  the
Securities and Exchange Commission,  Public Reference Branch, 450 5th St., N.W.,
Washington, D.C. 20549.

# Identifies management or compensatory plans, contracts, or arrangements.

+ Certain  portions of the  Company's  1999 Annual Report to  Shareholders,  set
forth in Exhibit 13.01, are incorporated by reference into Items 1, 2, 5, 6, and
7 of this Form  10-KSB  and,  except as so  incorporated,  the Annual  Report to
Shareholders is not deemed to be filed as part of this Form 10-KSB.

     (b)     Reports on Form 8-K during last quarter of fiscal year 1999.

       None.




<PAGE>


                             SIGNATURES

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





                                     LIFSCHULTZ INDUSTRIES, INC.

Date November 3, 1999                /s/ DAVID K. LIFSCHULTZ
                                     -------------------------
                                     David K. Lifschultz
                                     Chief Executive Officer

                      POWER OF ATTORNEY
                      -----------------
     Know all men by these presents,  that each person whose  signature  appears
below constitutes and appoints each of David K. Lifschultz and Dennis R. Hunter,
jointly and severally, his true and lawful attorney in fact and agent, with full
power of substitution  for him and in his name,  place and stead, in any and all
capacities,  to sign any or all  amendments to this report on Form 10-KSB and to
file the same,  with all  exhibits  thereto and other  documents  in  connection
therewith  with the  Securities and Exchange  Commission,  hereby  ratifying and
confirming  all that each said attorney in fact or his  substitute(s)  may do or
cause to be done by virtue hereof.

     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.

     SIGNATURE                      TITLE                  DATE
     ---------                      -----                  ----

/s/ DAVID K LIFSCHULTZ       Chairman and Chief       November 3, 1999
--------------------------   Executive Officer
David K. Lifschultz





<PAGE>



/s/ DENNIS R HUNTER          Director, President      November 4, 1999
--------------------------   and Chief Financial
Dennis R. Hunter             Officer


/s/ SIDNEY B. LIFSCHULTZ     Director                 November 3, 1999
--------------------------
Sidney B. Lifschultz


                             Director                 November __, 1999
--------------------------
James E. Solomon


/s/ JOSEPH C. FATONY         Director                 November 4, 1999
--------------------------
Joseph C. Fatony


/s/ TIMOTHY O. PONT          Controller               November 4, 1999
--------------------------
Timothy O. Pont