Item 1.	Business
Introduction
	The company was organized in the State of Delaware in September 1983 under the name Make-Up Center Manufacturing Corp. It's name was subsequently changed to Allure Cosmetics, Ltd. in December 1984.
	 Allure discontinued all distribution and marketing of its products in January 1990.
Products
	Allure discontinued all distribution and marketing of its products in January 1990.
Distribution and Marketing
	Allure discontinued all distribution and marketing of its products in January 1990.
Product Returns
	Allure discontinued all distribution and marketing of its products In January 1990.
Backlog
	None
Manufacturing
	None
Proprietary Protection
	The Company does not have any patents or patents pending on any of its cosmetic or skin care products.
Competition
	Not applicable
Product Development
	Allure does not maintain a research and development program nor are material funds expended for independent research or development.
Employees
	The Company's officer is the sole employee and is now engaged on a part-time basis.
Item 2.

Item 2.	Property
	Allure shares approximately 70 square feet of office space with The Gattini Corporation in L.I.C., New York on a month-to- month basis. This facility serves as the company's principal executive and administrative office. Rental for the facility is approximately $2,400 per annum payable in equal monthly installments.
Item 3.

Item 3.	Legal Proceedings
	On or about January 15, 1989 Allure sued Kurt Tauss in connection with a promissory note in the principal amount of $128,597.00 and Make-Up Center of 55th Street, Ltd. in connection with a promissory note in the principal amount of $250,000.00 and in connection with a debt for products sold in the amount of $399,145.20.
	On February 22, 1990 Allure Cosmetics, Ltd entered into a settlement with Make-Up Center of 55th Street Ltd., Kurt Tauss and Catherine Tauss with the following terms and conditions:
a) The Payment of $105,800.43 and
b) 360 Monthly installments of $1,100.00 commencing on the first day of March 1990 and payable on the first day of every month until the full amount of $396,000.00 is paid.
	The proceeds received by Allure Cosmetics, Ltd. were used to pay taxes, rent, legal fees, salary and various loans made by Pietro Gattini to the Company.
	On July 12, 1990 The Securities and Exchange Commission filed a complaint vs. Allure Cosmetics, Ltd., Kurt Tauss, Gattini Corporation and Pietro Gattini. ("See copy of Form 8-K filed September 18, 1991 as of May 28, 1988").
	Allure has settled the complaint of the Securities and Exchange Commission and has agreed to bring its filing up to date. The Company has been granted permission to file unaudited Financial Statements because of its financial difficulties, in addition the Company has agreed to entry of an injunction against it prohibiting future violations of the anti fraud, periodic reporting, books and records and internal control provision of the Federal Securities Laws.
	On June 6, 1991 all of the company inventory, furniture and fixtures held in storage by A Space Station was sold at an auction for a total amount of $590.00 and proceeds were applied to outstanding rent charges. The proceeds received did not satisfy the company's obligation and left a balance due in the amount of $2,217.00.
	On September 27, 1989 a Judgment was obtained by Milton Samuels Advertising Agency, Inc. and as a result of said Judgment all monthly installments by Make-Up Center of 55th Street Ltd. were subject to Garnishment. On or about June 7, 1991 the judgment was executed and monthly installments are not being received by Allure Cosmetics, Ltd.
	On June 26, 1991 an Executive with notice to Garnishee was filed with Manufacturers Hanover Trust thereby rendering the company inoperable without the access to its checking account. ("See copy of Form 8-K file September 18, 1991 as of May 28, 1988").
	 On August 15, 1993 Allure Cosmetics, Ltd. made a final payment $4505.00 to Milton Samuels Advertising Agency, Inc. representing the full Settlement of the Judgment obtained on September 27, 1989.
Item 4.

Item 4.	Submission of Matters to a Vote of security 	Holders
	On May 28, 1993 at a special meeting of the shareholders of Allure Cosmetics, Ltd., Pietro Gattini acquired the PROMISSORY NOTE DATED FEBRUARY 22, 1990 signed by Make-Up Center of 55th Street, Ltd. along with all rights, terms and conditions of the SETTLEMENT AGREEMENT of February 22, 1990, among Allure Cosmetics, Ltd., Make-Up Center of 55th Street Ltd., Kurt Tauss, Catherine Tauss, Pietro Gattini and Gattini Corporation, the ESCROW AGREEMENT made February 22, 1990 and the GUARANTY AGREEMENT made February 22, 1990.
	Pietro Gattini is the President and Chief Executive Officer of Allure Cosmetics, Ltd.
	As at May 28, 1993 Allure Cosmetics, Ltd. owed Pietro Gattini $217,900.00 in back salary.
	Consideration received by Allure Cosmetics, Ltd. and given by Mr. Pietro Gattini was 700,000 shares of Gattini Corporation common stock owned by Mr. Gattini, the forgiveness of Debt in the amount of $217,900.00 owed to Mr. Gattini and the assumption of the Long Term Debt of Allure Cosmetics, Ltd in the amount of $54,065.00 by Mr. Gattini. (" See copy of Form 8-K filed July 12, 1993 as of May 28, 1993").
Item 5.

Item 5.	Market for the Registrant's Common Equity and Related Stockholders Matters
(a) Units of the Company consisting of one share of Common Stock and one Class A Common Stock Purchase Warrant ("Warrants") were first offered to the public on June 17, 1986 at a price of $1.00 per Unit. Trading in the Units, Common Stock, and Warrants commenced on July 25,1986 at a bid price of 1 3/16 and a closing asked price of 1 5/16 for the Common Stock, a bid price of 1/16 and a closing asked price of 3/16 for the Warrants and a bid price of 1 1/4 and an asked price 1 7/16 for true Units. On May 15, 1989 the Class A and Class B Common Stock Purchase Warrants expired and on August 31, 1994 to the best of the Company's knowledge there were no market makers for the company's Units, Common Stock and Common Stock Purchase Warrants.
There has been, and is now, only a limited market in the company's securities, which may be attributable to the small public "float" (the securities held by public purchases), the small number of stockholders and market-makers.
(b) As of August 31, 1996, the approximate number of holders of record of Common Stock of the registrant was 300.
Item 6.

Item 6.	Selected Financial Data
	The selected financial data presented below are derived from the company's financial statement. The financial statements as of August 31, 1992, 1993, 1994, 1995 and 1996 are Unaudited. This data should be read in conjunction with financial statements and notes thereto appearing elsewhere herein. The Company has never paid cash dividends.
Income Statement Data
Year Ended August 31,		__ 1992 1993 1994 1995 1996 (Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Net Sales $ 0 $ 0 $ 0 $ 0 $ 0
Cost of Sales 0 0 0 0 0
Gross Profit 0 0 0 0 0
Operating Expenses 76,026 57,029 17,174 17,735 12,709
Net Income Or (Loss) (76,026) (57,029) (17,174) (17,735) (12,709) before extra- ordinary item.
Extraordinary Item (81,524)
Net Income Or (Loss) (76,026) (138,553) (17,174) (17,735) (12,709)
Net (Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited) Income (Loss) per Share $(.0055) $(.0059) $(.0013) $(.0013) $(.0009) before extra- ordinary item
Net Income (Loss) per Share $(.0055) $(.01) $(.0013) $(.0013) $(.0009)
Selected Balance Sheet Data:
August 31, 1995 1996 (Unaudited) (Unaudited)
Total Assets $ 2,714 $ 700
Total Liabilities $101,449 $ 112,144
Working Capital (deficiency) ($101,435) ($ 112,144)
Stockholders' Equity ($ 98,735) ($ 111,444)
Item 7.

Item 7.	Management's Discussion and Analysis of Financial 	Condition and Results of Operations
Results of Operations
	Currently Allure Cosmetics, Ltd. is not doing any business and it is the intention of management to try to reorganize, while the Company has no specific plans at this time, it is the intention of management to explore the possibility of reorganization without the use of the protection afforded under bankruptcy laws, however it does not rule out the possibility should it choose to do so.
	The Company had zero sales for the year ended August 31, 1996 the same as the year ended August 31, 1995 and operating losses decreased to 12,709 for the year ended August 31, 1996 as compared to a loss of $17,735 the prior year. Due to the cancellation of old debts.
Liquidity and Capital Resources
	The company had working capital deficit of $112,144 at August 31, 1996 compared to a working capital deficit of 101,435 at August 31, 1995. The working capital ratio was 0.00:1 at August 31, 1996 as compared to working capital of 0.00:1 at August 31, 1995. At August 31, 1996, the Company had $0 available for use. ("See Certain Transactions").
Item 7A.

Item 7A.	Quantitative and Qualitative Disclosures About 	Market Risk.
None.
Forward-Looking Statement
The statements contained in this report on Form 10-K that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, but are not limited to, continued compliance with government regulations, customer demand, management of growth, intensity of competition from other cosmetic product vendors, timing and acceptance of new product introductions, general economic conditions and regulatory changes. As well as other relevant risks detailed in the Company's filings with the Securities Exchange Commission, including its Annual Report on Form 10-K for the period ended August 31, 1995, and the information set forth herein should be read in light of such risks.
PART III
Item 10.

Item 10.	Directors and Executive Officers of the Registrant
Name Age Position
Pietro Gattini 52 President, Chief Executive Officer, Secretary/Treasurer and Director
	Each director is elected for a one year period ending on the dated of the next annual meeting of stockholders of the Company, and until his successor is duly elected and qualified. Officers serve at the will of the Board of Directors.
	Pietro Gattini has been President, Chief Executive Officer, Secretary/Treasurer and Director of the Company since the Resignation of all Officers and Directors and the acquisition of the Controlling Interest by The Gattini Corporation in May, 1988 from Mr. Kurt Tauss and Mrs. Catherine Tauss. ("See Certain Transactions").
Item 11.

Item 11. Executive Compensation
	The Company has retained Mr. Pietro Gattini as the Company's President, Chairman and Chief Executive Officer and is currently the only Director, Officer and Employee. Compensation to be paid by the Company is $5,000 per month in addition to the use of the Company's Automobile. Mr. Gattini was also granted an option to purchase 7,000,000 shares of Allure Cosmetics, Ltd. common stock for $14,000. The option was exercised on July 14, 1988.
	The Company on June 1, 1993 has changed the compensation of Pietro Gattini to $1,000 per month in addition to the use of the Company's Automobile.
	The company has accrued and owes $12,000 to all officers and directors of the company (1 person) for the fiscal year ending August 31, 1996.
Item 12.

Item 12.	Security Ownership of Certain Beneficial Owners and 	Managers
	The Following table sets forth certain information regarding the beneficial ownership of the company's Common Stock as of August 31, 1996 by (1) each person who is known by the Company to own beneficially more than 5% of the Company's outstanding Common Stock; (2) each of the company's officers and directors; and (3) directors and officers of the Company as a group. Except as otherwise specified, the named beneficial owner has sole voting and investment power.
Amount and Nature Of Beneficial Percentage of Name and Address__ Ownership (1) Ownership(2)
*Pietro Gattini (2) 7,000,000 50.8% 1119 Dutchess Turnpike Poughkeepsie, New York 12603
*Gattini Corporation 3,000,000 21.8% 31-51 Steinway Street Astoria, New York 11103
Officers and Directors 7,000,000 50.8% As a group (1 person) ______________________ (1) Does not include up to 300,000 shares of Common Stock which may be granted to officers, shareholders and other persons affiliated with the company pursuant to the Company's Stock Option Plan.
(2) Pietro Gattini is the President and shareholder of the Gattini Corporation. As such, Mr. Gattini and The Gattini Corporation may act in concert with respect to voting their 10,000,000 shares. Together, Mr. Gattini and The Gattini Corporation have approximately 72.6% of the voting control of the Company.
*May be deemed a "Parent" and "Promoter" of the Company as those terms are defined in the Rules and Regulations under the Securities Act of 1933.
Item 13.

Item 13.	Certain Relationships and Related Transactions
	On May 27, 1988 all of the company's directors resigned and Pietro Gattini was appointed sole director.
	On May 27, 1988 at a Meeting of the shareholders of Allure Cosmetics, Ltd., the Gattini Corporation acquired controlling interest of Allure Cosmetics, Ltd. and Pietro Gattini was nominated and unanimously approved as director of the Company. (See Copy of Form 13-d Filed March 1, 1991 as of May 27, 1988).
	Pietro Gattini was retained as President and Chief Executive officer and is currently the only Director, Officer and Employee. Compensation to be paid by the Company is $5,000 per month in addition to the use of the company's automobile. Mr. Gattini was also granted an option to purchase 7,000,000 shares of Allure Cosmetics, Ltd. common stock for $14,000. The option was exercised by Mr. Gattini on July 14, 1988.
	On or about January 15, 1989 Allure sued Kurt Tauss in connection with a promissory note in the principal amount of $128,597.00 and Make-Up Center of 55th Street, Ltd. in connection with a promissory note in the principal amount of $250,000.00 and in connection with a debt for products sold in the amount of $399,145.20.
	 On February 22, 1990 Allure Cosmetics, Ltd. entered into a settlement with Make-Up Center of 55th Street, Ltd., Kurt Tauss and Catherine Tauss with the following terms and conditions:
a) The Payment of $105,800.43 and
b) 360 Monthly installments of $1,100.00 commencing on the first day of March 1990 and payable on the first day of every month until the full amount of $396,000.00 is paid. 	The proceeds received by Allure Cosmetics, Ltd. were used to pay taxes, rent, legal fees, salary and various loans made by Pietro Gattini to the Company.
	On September 27, 1989 a Judgment was obtained by Milton Samuels Advertising Agency, Inc. and as a result of said Judgment all monthly installments by Make-Up Center of 55th Street Ltd. were subject to Garnishment. On or about June 7, 1991 the judgment was executed and monthly installments are not being received by Allure Cosmetics, Ltd.
	On June 26, 1991 an Executive with notice to Garnishee was filed with Manufacturers Hanover Trust thereby rendering the company inoperable without the access to its checking account.
On June 6, 1991 all of the company inventory, furniture and fixtures held in storage by A Space Station was sold at an auction for a total amount of $590.00 and proceeds were applied to outstanding rent charges. The proceeds received did not satisfy the company's obligation and left a balance due in the amount of $2,217.00.
Currently Allure Cosmetics, Ltd. is not doing any business and it is the intention of management to try to reorganize, while the Company has no specific plans at this time, it is the intention of management to explore the possibility of reorganization without the use of the protection afforded under bankruptcy laws, however it does not rule out the possibility should it choose to do so.
	On August 15, 1993 Allure Cosmetics, Ltd. made a final payment $4505.00 to Milton Samuels Advertising Agency, Inc. representing the full Settlement of the Judgment obtained on September 27, 1989.
	On May 28, 1993 at a special meeting of the shareholders of Allure Cosmetics, Ltd., Pietro Gattini acquired the PROMISSORY NOTE DATED FEBRUARY 22, 1990 signed by Make-Up Center of 55th Street, Ltd. along with all rights, terms and conditions of the SETTLEMENT AGREEMENT of February 22, 1990, among Allure Cosmetics, Ltd., Make-Up Center of 55th Street Ltd., Kurt Tauss, Catherine Tauss, Pietro Gattini and Gattini Corporation, the ESCROW AGREEMENT made February 22, 1990 and the GUARANTY AGREEMENT made February 22, 1990.
	Pietro Gattini is the President and Chief Executive Officer of Allure Cosmetics, Ltd. 	As at May 28, 1993 Allure Cosmetics, Ltd. owed Pietro Gattini $217,900.00 in back salary.
	Consideration received by Allure Cosmetics, Ltd. and given by Mr. Pietro Gattini was 700,000 shares of Gattini Corporation common stock owned by Mr. Gattini, the forgiveness of Debt in the amount of $217,900.00 owed to Mr. Gattini and the assumption of the Long Term Debt of Allure Cosmetics, Ltd in the amount of $54,065.00 by Mr. Gattini. (" See copy of Form 8-K filed July 12, 1993 as of May 28, 1993").
PART IV
Item 14.

Item 14.	Exhibits, Financial Statements, Schedules, and Reports 	On Form 8-K
(a) Document filed as part of this report:
1. Financial Statements:
All other financial statements and schedules not listed have been omitted since the required information is included in the financial statements or the notes thereto, or is not applicable or required.
(b) A report on Form 8-K was filed from May 27, 1988 to August 31, 1991 on September 18, 1991 the last quarter of the fiscal year ended August 31, 1991.
(c) A report on Form 13-d was filed from May 27, 1988 to February 28, 1991 on March 1, 1991.
(d) A report on Form 8-K was filed on July 12, 1993 the last quarter of the fiscal year ended August 31, 1993 as of May 28, 1993 covered by this report.
	(e)	Exhibits Required by Item 601 of Regulation S-K and by paragraph (c) of this Item:
	3.1 - Certificate of Incorporation of the registrant.
	3.2 - Certificate of amendment to the Certificate of Incorporation.
	3.3 - By-Laws of the Registrant
10.5 - Stock Option Plan
FOOTNOTES
1. Reference is made to Exhibit 3.1 to the Company's Form S-1 Registration Statement File Number 33-3424 filed by the Company with the Securities and Exchange Commission on February 24, 1986, and is hereby incorporated herein.
2. Reference is made to Exhibit 3.2 to the Company's Form S-1 Registration Statement File Number 33-3424 filed by the Company with the Securities and Exchange Commission on February 24, 1986, and is hereby incorporated herein.
3. Reference is made to Exhibit 3.3 to the Company's Form S-1 Registration Statement File Number 33-3424 filed by the Company with the Securities and Exchange Commission on February 24, 1986, and is hereby incorporated herein.
4. Reference is made to Exhibit 10.5 to the Company's Form S-1 Registration Statement File Number 33-3424 filed by the Company with the Securities and Exchange Commission on February 24, 1986, and is hereby incorporated herein.
5. Reference is made to Form 8-K filed by the Company with the Securities and Exchange Commission on September 18, 1991, and is hereby incorporated herein.
6. Reference is made to Form 13-d filed by the Company with the Securities and Exchange Commission on March 1, 1991, and is hereby incorporated herein.
7. Reference is made to Form 8-K filed by the Company with the Securities and Exchange Commission on May 28, 1993, and is hereby incorporated herein.
SIGNATURES
Pursuant to the requirements of the securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and State of New York on the 14th day of December 2001.
ALLURE COSMETICS, LTD. (Registrant)
By: /S/ Pietro Gattini__________ Pietro Gattini, President and Chief Executive Officer
	Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated:
Signature
(I) Principal Executive Officer
/S/ Pietro Gattini_______ President and Chief December 14, 2001 Pietro Gattini Executive Officer
(II) Principal Financial Accounting Officer
/S/ Pietro Gattini ______ Treasurer December 14, 2001 Pietro Gattini
(III) Majority of the Board of Directors
/S/ Pietro Gattini ______ Director December 14, 2001 Pietro Gattini
	Supplemental Information to be furnished with reports filed pursuant to Section 15(d) of the Act by Registrants, which have not registered securities pursuant to Section 12 of the Act.
	No annual report to security holders covering the Company's last fiscal year has been sent to the Company's shareholders with regard to any annual or other meeting of security holders. An annual meeting of security holders will be held on March 14, 2002, prior to which time the Company shall furnish to the Commission any annual report, proxy statement, form of proxy and/or other proxy soliciting material sent to security holders.
STATEMENT OF FINANCIAL CONDITION
To the Stockholders of Allure Cosmetics, Ltd.
As shown in the Unaudited financial statements, the company incurred net losses of $12,709 and $17,174 for the years ended August 31, 1996 and 1995, respectively. These factors, among others, as discussed in Note 10, indicate that the Company may be unable to continue in existence. The financial statements do not indicate any adjustments relating to the recoverability and classification of recorded assets amounts or the amounts and classification of liabilities that might be necessary should the company be unable to continue existence.
In managements opinion, subject to the effects on the financial statements of such adjustments, if any, as might have been required had the outcome of the uncertainty about the recoverability and classifications of recorded assets and the amounts and classifications of liabilities referred to in the preceding paragraph been known, the financial statements referred to above present fairly the financial position of its operations and the changes in its financial position for the three years then ended, on a basis consistent with that of the preceding year.
ALLURE COSMETICS, LTD.
/S/ Pietro Gattini_____ Pietro Gattini, President
New York, New York December 14, 2001
ALLLURE COSMETICS, LTD. BALANCE SHEETS
ASSETS
AT AUGUST 31, ------------------------- (UNAUDITED) (UNAUDITED) 1995 1996
CURRENT ASSETS: CASH $ 14 $ 0 ---------- -------- TOTAL CURRENT ASSETS 14 0 ---------- -------- PROPERTY PLANT AND EQUIPTMENT: AUTOMOTIVE EQUIPTMENT 29,446 0 ---------- -------- LESS ALLOWANCE FOR DEPRECIATION 27,446 0 ---------- -------- NET PROPERTY PLANT AND EQUIPTMENT 2,000 0 ---------- --------
OTHER ASSETS: INVESTMENT - GATTINI CORPORATION 700 700 ---------- -------- TOTAL OTHER ASSTES 700 700 ---------- -------- $2,714 $700 ========== ========
The accompanying notes are an integral part of these financial statements.
ALLURE COSMETICS, LTD. BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY
AT AUGUST 31, ------------------------- (UNAUDITED) (UNAUDITED) 1995 1996 CURRENT LIABILITIES ACCOUNTS PAYABLE (NOTE 9) $ 63,377 $ 72,565 ACCRUED LIABILITIES (NOTE 9) 16,450 18,417 TAXES OTHER THAN INCOME TAX (NOTE 9) 21,622 21,162 -------- -------- TOTAL CURRENT LIABILITIES 101,449 112,144 -------- --------
LONG-TERM LIABILITIES SETTLEMENT M.U.C.-LEGAL 0 0 -------- -------- TOTAL LONG-TERM LIABILITIES 0 0 -------- -------- TOTAL LIABILITIES $101,449 $112,144
STOCKHOLDERS EQUITY (DEFICIT) COMMON STOCK, $.001 PAR VALUE 20,000,000 SHARES AUTHORIZED; 13,775,000 AND 13,775,000 SHARES ISSUED AND OUTSTANDING 13,775 13,775
ADDITIONAL PAID CAPITAL 1,997,704 1,997,704 ACCUMULATED DEFICIT (2,092,479) (2,122,923) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY (98,734) (111,444) ---------- ---------- $2,714 $700 ========== ==========
The accompanying notes are an integral part of these financial statements.
ALLURE COSMETICS, LTD. STATEMENT OF INCOME
YEAR ENDED AUGUST 31, -------------------------------------------------- 1993 1994 1995 1996 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
NET SALES (NOTES 2,3) CUSTOMERS $ 0 $ 0 $ 0 $ 0 MAKE-UPCENTER 55TH ST. LTD. 0 0 0 0 0 0 0 0
COST OF SALES CUSTOMERS 0 0 0 0 MAKE-UP CENTER 55TH ST. LTD. 0 0 0 0 0 0 0 0 GROSS PROFIT 0 0 0 0 ----- ------- ------ ------
OPERATING EXPENSES SELLING 0 0 0 0 ADMINISTRATIVE 57,029 17,174 17,735 12,709 TOTAL OPERATING EXPENSES 57,029 17,174 17,735 12,709 ------ ------- ------ ------
OPERATING PROFIT (LOSS) (57,029) (17,174) (17,735) (12,709)
OTHER INCOME (EXPENSE) INTEREST INCOME 0 0 0 0 INTEREST EXPENSE 0 0 0 0 TOTAL OTHER INCOME (EXPENSE) 0 0 0 0 ------ ------ ------ ------ INCOME (LOSS) BEFORE INCOME TAXES (57,029) (17,174) (17,735) (12,709) ------ ------ ------ ------ INCOME TAX EXPENSE 0 0 0 0 ------ ------ ------ ------ INCOME (LOSS) BEFORE EXTRADINARY ITEM (57,029) (17,174) (17,735) (12,709) INCOME (LOSS) EXTRADINARY ITEM (NOTE 11) 0 0 0 0 ------ ------ ------ ------ NET INCOME (LOSS) ($138,553) ($17,174) ($17,735) ($12,709) ========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE BEFORE EXTRADINARY ITEM ($0.0059) ($0.0013) ($0.0013) ($0.0009) ========== ========== ========== ========== NET INCOME (LOSS) PER SHARE ($0.0059) ($0.0013) ($0.0013) ($0.0009) ========== ========== ========== ========== WEIGTHED AVER. NUMBER OF SHARES OUTSTANDING 13,775,000 13,775,000 13,775,000 13,775,000 ========== ========== ========== ========== The accompanying notes are an integral of these financial statements. ALLURE COSMETICS, LTD. STATEMENT OF CHANGES IN FINANCIAL POSITION YEAR ENDED AUGUST 31, ---------------------------------- 1994 1995 1996 (UNAUDITED) (UNAUDITED) (UNAUDITED) WORKING CAPITAL PROVIDED FROM NET INCOME (LOSS) ($17,174) ($17,735) ($12,709) ITEMS NOT REQUIRING THE USE OF WORKING CAPITAL; FURNITURE AND FIXTURES SALE 0 0 2,000 DEPRECIATION AND AMORTIZATION 0 0 0 AMORTIZATION OF PROMOTIONAL EXPENSE 0 0 0 SECURITY DEPOSITS 0 0 0 TOTAL WORKING CAPITAL PROVIDED (17,174) (17,735) (10,709) USE OF WORKING CAPITAL ACQUISTION OF FIXED ASSETS 0 0 0 NOTES RECEIVABLE SETTLEMENT AGREEMENT 0 0 0 STOCKHOLDER LOAN 0 0 0 GATTINI CORPORATION INVESTMENT 0 0 0 INSTANT WEAVE INVESTMENT 0 0 0 TOTAL WORKING CAPITAL USED 0 0 0 INCREASE (DECREASE) IN WORKING CAPITAL (17,174) (17,735) (10,709) ======= ======= =======
CHANGES IN WORKING CAPITAL ITEMS: INCREASE (DECREASE) IN CURRENT ASSETS: CASH $259 $35 $14 ACCOUNTS RECIEVABLE - CUSTOMERS 0 0 0 ACCOUNTS RECEIVABLE - MAKE-UP CENTER 0 0 0 INVENTORIES 0 0 0 PREPAID EXPENSES 0 0 0 259 35 14
(INCREASE) DECREASE IN CURRENT LIABILITIES ACCOUNTS PAYABLE 15,815 16,950 8,728 ACCRUED LIABILITIES 0 0 0 TAXES OTHER THAN INCOME 0 0 0 LOAN PAYABLE TO OFFICER P GATTINI 1,100 750 1,967 16,915 17,700 10,695
(INCREASE) DECREASE IN LONG-TERM LIABILITIES SETTLEMENT AGREEMENT LEGAL 0 0 0 0 0 0 ($17,174) ($17,735) ($10,709)
The accompanying notes are an integral part of these financial statements.
ALLURE COSMETICS, LTD. STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE YEARS ENDED AUGUST 31, 1988, 1989, 1990, 1991, 1992, 1993, 1994, 1995 AND 1996
ADDITIONAL COMMON STOCK PAID-IN ACCUMULATED SHARES AMOUNT CAPITAL DEFICIT TOTAL --------- ------ ---------- ----------- --------- BALANCE AUGUST 31, 1988 13,775,000 13,775 $1,997,704 ($1,265,542) $ 745,937 NET LOSS __________ ______ _________ (58,723) (58,723) BALANCE AUGUST 31, 1989 13,775,000 13,775 $1,997,704 ($1,324,265) $ 687,214 NET LOSS __________ ______ __________ 166,102_ (166,102) BALANCE AUGUST 31, 1990 13,775,000 13,775 $1,997,704 ($1,490,367) $ 521,112 ADJUSTMENT FOR ROUNDING OFF 3 3 NET LOSS __________ ______ __________ (370,362) (370,962) BALANCE AUGUST 31, 1991 13,775,000 13,775 $1,997,704 ($1,860,726) $ 150,753 NET LOSS __________ ______ __________ (76,026) (76,026) BALANCE AUGUST 31, 1992 13,775,000 13,775 $1,997,704 ($1,936,752) $ 74,727 NET LOSS __________ ______ __________ (138,553) (138,553) BALANCE AUGUST 31, 1993 13,775,000 13,775 $1,997,704 ($2,075,305) ($63,826) NET LOSS __________ ______ __________ (17,174) (17,174) BALANCE AUGUST 31, 1994 13,775,000 13,775 $1,997,704 ($2,092,479) ($81,000) NET LOSS __________ ______ __________ (17,735) (17,735) BALANCE AUGUST 31, 1995 13,775,000 13,775 $1,997,704 ($2,110,214) ($98,735) NET LOSS __________ ______ __________ (12,709) (12,709) BALANCE AUGUST 31, 1996 13,775,000 13,775 $1,997,704 ($2,122,923) ($111,444) ========== ====== ========== ============ ==========
The accompanying notes are an integral part of these financial statements.
ALLURE COSMETICS, LTD. NOTES TO FINANCIAL STATEMENTS YEARS ENDED AUGUST 31, 1995 AND 1996
1. ORGANIZATION AND NATURE OF OPERATIONS
Allure Cosmetics, Ltd. (the "Company") was incorporated on September 15, 1983 in the State of Delaware as the Make-Up Center Manufacturing Corporation. The name was subsequently changed to Cosmetics Center Manufacturing Corporation on November 9, 1984 and on December 5, 1984, the name was changed to Allure Cosmetics, Ltd.
The Cosmetics operation ceased in December 1988 and distribution and marketing of its products in January 1990.
2. SUMMARY IF SIGNIFICANT ACCOUNTING POLICIES
(a) Fiscal Year
The Company's fiscal year end is August 31.
(b) Revenue Recognition
Generally, revenues are recorded when goods have been shipped. Returns of damaged or defective merchandise are recorded when received.
(c) Inventory
Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method.
(d) Income Taxes
The Company has no Federal income tax liability. The Company plans to carry forward their losses from previous years.
(e) Fixed Assets
Fixed assets are recorded at cost. Depreciation is provided on the straight line basis on an estimated useful life of five years. Leasehold improvements are amortized on a straight- line basis over the term of the lease. ALLURE COSMETICS, LTD. NOTES TO FINANCIAL STATEMENTS YEARS ENDED AUGUST 31, 1995 AND 1996
(f) Income (Loss) Per Share
Net Income (Loss) per share is computed by dividing net income (Loss) by the weighted average number of shares outstanding.
3. RELATED PARTY TRANSACTIONS
On May 27, 1988 all of the company's directors resigned and Pietro Gattini was appointed sole director.
On May 27, 1988 at a Meeting of the shareholders of Allure Cosmetics, Ltd., the Gattini Corporation acquired controlling interest of Allure Cosmetics, Ltd. and Pietro Gattini was nominated and unanimously approved as director of the Company. (See Copy of Form 13-d Filed March 1, 1991 as of May 27, 1988)
The Company granted to Pietro Gattini, the President of the Company an option to purchase 7,000,000 shares of the company's common stock for $14,000. The option was exercised on July 14, 1988.
On or about January 15, 1989 Allure sued Kurt Tauss in connection with a promissory note in the principal amount of $128,597.00 and Make-Up Center of 55th Street, Ltd. in connection with a promissory note in the principal amount of $250,000.00 and in connection with a debt for products sold in the amount of $399,145.20.
On February 22, 1990 Allure Cosmetics, Ltd. entered into a settlement with Make-Up Center of 55th Street, Ltd., Kurt Tauss and Catherine Tauss with the following terms and conditions:
a) The Payment of $105,800.43 and
b) 360 Monthly installments of $1,100.00 commencing on the first day of March 1990 and payable on the first day of each month until the full amount of $396,000.00 is paid.
ALLURE COSMETICS, LTD. NOTES TO FINANCIAL STATEMENTS YEARS ENDED AUGUST 31, 1995 AND 1996
The proceeds received by Allure Cosmetics, Ltd. were used to pay taxes, rent, legal fees, salary and various loans made by Pietro Gattini to the Company.
On May 28, 1993 at a special meeting of the shareholders of Allure Cosmetics, Ltd., Pietro Gattini acquired the PROMISSORY NOTE DATED FEBRUARY 22, 1990 signed by Make-Up Center of 55th Street, Ltd. along with all rights, terms and conditions of the SETTLEMENT AGREEMENT of February 22, 1990, among Allure Cosmetics, Ltd., Make-Up Center of 55th Street Ltd., Kurt Tauss, Catherine Tauss, Pietro Gattini and Gattini Corporation, the ESCROW AGREEMENT made February 22, 1990 and the GUARANTY AGREEMENT made February 22, 1990.
Pietro Gattini is the President and Chief Executive Officer of Allure Cosmetics, Ltd.
As at May 28, 1993 Allure Cosmetics, Ltd owed Pietro Gattini $217,900.00 in back salary.
Consideration received by Allure Cosmetics, Ltd. and given by Mr. Pietro Gattini was 700,000 shares of Gattini Corporation common stock owned by Mr. Gattini, the forgiveness of Debt in the amount of $217,900.00 owed to Mr. Gattini and the assumption of the Long Term Debt of Allure Cosmetics, Ltd in the amount of $54,065.00 by Mr. Gattini. (" See copy of Form 8-K filed July 12, 1993 as of May 28, 1993").
Allure shares approximately 70 square feet of office space with The Gattini Corporation in L.I.C., New York on a month-to-month basis. This facility serves as the company's principal executive and administrative office. Rental for the facility is approximately $2,400 per annum payable in equal monthly installments.
4. BUSINESS SEGMENT INFORMATION
Currently Allure Cosmetics, Ltd. is not doing any business and it is the intention of management to try to reorganize, while the Company has no specific plans at this time, it is the intention of management to explore the possibility of reorganization without the use of the protection afforded under
ALLURE COSMETICS, LTD. NOTES TO FINANCIAL STATEMENTS YEARS ENDED AUGUST 31, 1995 AND 1996
bankruptcy laws, however it does not rule out the possibility should it choose to do so.
5. PREPAID EXPENSES
Prepaid expenses consisted of:
August 31, 1994 August 31, 1995 August 31, 1996
$ 0 $ 0 $ 0 ------- ------- -------
6. EXECUTIVE COMPENSATION
The Company has retained Mr. Pietro Gattini as the Company's President, Chairman and Chief Executive Officer and is currently the only Director, Officer and Employee. Compensation to be paid by the Company is $5,000 per month in addition to the use of the Company's Automobile. Mr. Gattini was also granted an option to purchase 7,000,000 shares of Allure Cosmetics, Ltd. common stock for $14,000. The option was exercised on July 14, 1988.
The Company on June 1, 1993 has changed the compensation of Pietro Gattini to $1,000 per month in addition to the use of the Company's Automobile.
7. PLANT AND EQUIPMENT
On June 6, 1991 all of the company inventory, furniture and fixtures held in storage by A Space Station was sold at an auction for a total amount of $590.00 and proceeds were applied to outstanding rent charges. The proceeds received did not satisfy the company's obligation and left a balance due in the amount of $2,217.00.
8. COMMITMENTS AND LEASES
The Company shares approximately 70 square feet of office space with The Gattini Corporation in L.I.C., New York. This facility serves as the company's principal executive and administrative office. Rental for the facility is approximately $2,400 per annum payable in equal monthly installments.
ALLURE COSMETICS, LTD. NOTES TO FINANCIAL STATEMENTS YEARS ENDED AUGUST 31, 1995 AND 1996
9. ACCRUED EXPENSES
Accrued expenses consists of the following:
August 31, 1995 August 31, 1996
Payroll Tax $ 21,622 $ 21,162 SEC Filing Fees 1,500 1,500 Compensation Payable P. Gattini 27,000 39,000 Rent Payable-Gattini Corp. 12,600 15,000 Loan Pay to P. Gattini 2,350 4,317 Loan Pay to Gattini Corp. 14,100 14,100 $ 76,822 $ 95,079 ====== ======
10. DESCRIPTION OF FACTORS AFFECTING CONTINUED EXISISTENCE OF THE COMPANY
During the last three years the Company has sustained substantial operating losses. These losses in addition to the non collection of the receivables from Kurt Tauss the Make-Up Center of West 55th Street Ltd. and Instant Weave, including the sale at public auction by a Space Station of the Company's Inventory, Furniture and Fixtures have caused a drain on cash. This indicates that the Company may be unable to continue in existence.
Since the outcome of this uncertainty cannot presently be reasonably estimated, the financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the company be unable to continue in existence.
11. EXTRAORDINARY LOSS
The year ended 1993 loss of $138,553 included extraordinary charges of $81,524 consisting of the loss incurred on the sale of the PROMISSORY NOTE DATED FEBRUARY 22, 1990 to Mr. Gattini the Company's President and Chief Executive Officer.
ALLURE COSMETICS, LTD. NOTES TO FINANCIAL STATEMENTS YEARS ENDED AUGUST 31, 1995 AND 1996
Allure Cosmetics, Ltd. Supplementary Income Statement Information
Item
Charged to Costs and Expenses Year Ended August 31,
1993 1994 1995 1996
Rent 2,400 2,400 2,400 2,400 Commissions 0 0 0 0 Utilities 0 0 0 0 Professional Fees 0 0 0 0 P. Gattini Compensation 48,000 12,000 12,000 12,000


ITEM 1. BUSINESS -----------------
INTRODUCTION ------------
On June 23, 1992 the stockholders of FI Liquidating Company, Inc. (the "Company") (formerly Flextronics, Inc.) approved a plan of complete liquidation and dissolution and a change of name. The Company filed a Certificate of Dissolution with the Delaware Secretary of State on January 8, 1993 and is in the process of completing the liquidation of its assets during the period authorized by Section 278 of the Delaware General Corporation law. On December 13, 1995, the Company extended the period within which it is authorized to liquidate until June 30, 1997.
The Company has no remaining operations. Its principal assets consist of 244,076 shares of Flextronics International Ltd., a Singapore corporation, which provides contract electronics manufacturing services, as well as cash of $560,602. On June 3, 1996 the Company distributed to its shareholders as a liquidating dividend the 244,076 shares of Flextronics International Ltd.
COMPANY BACKGROUND ------------------
In 1980, the Company was founded to acquire its predecessor, which was then a consignment manufacturer located in Northern California. During the 1980's, the Company shifted its focus to full service turnkey manufacturing and expanded the scope of its operations.
The Company also expanded geographically. Such expansion was accomplished in the United States by acquisition of operations located in California, Massachusetts and South Carolina. The Company established facilities in Singapore and Hong Kong in 1982 and 1983, respectively, and in the Peoples' Republic of China in 1988.
Faced with significant excess capacity and operating losses, which began with the late 1988 downturn in industries served by it and the need to fund the Company's debts, in fiscal 1991 the Company sold a majority interest in its Asian operations and subsequently decided to completely wind down its domestic operations. In fiscal 1992, the Company sold its last remaining operating assets, and, consequently, now has no direct operations. The Company continues to liquidate its assets and settle its debts.
RESTRUCTURING OF BUSINESS DURING THE YEAR -----------------------------------------
Prior to fiscal 1996 the Company had closed all its operating facilities and established reserves for the final wind up of its activities. The Company had also negotiated settlements with substantially all of its creditors including those creditors which held senior security interests in its assets. As a result, at March 31, 1995 the Company's main assets consisted of 359,576 shares of Flextronics International Ltd.
During fiscal 1996, the Company continued the process of liquidating assets and winding up operations.
The Company sold 115,500 shares of Flextronics International Ltd. during fiscal 1996 for $2,376,594. At March 31, 1996 the Company owned a total of 244,076 shares of Flextronics International Ltd.
155,843 shares acquired by the Company upon the exercise of an option from Flextronics International Ltd. were "restricted securities" as that term is defined in Rule 144 under the Securities Act of 1933 (the "Act"). Consequently, the Company could not resell in the public market any of these shares until November 18, 1996 unless the shares were registered under the Act or an exemption from registration became available. The 88,233 shares acquired through cashless exchange with certain shareholders of Flextronics International Ltd. were also "restricted securities" under the Act and the Company could not resell these shares in the public market until February 17, 1996. The reported fair value of Flextronics International Ltd. shares reflects discounts due to the aforementioned restrictions as well as discounts due to the limited trading activity of the shares. These 244,076 restricted securities were registered under the Securities Act of 1933 effective June 3, 1996 and distributed to the shareholders of the Company that day.
The Company has been unsuccessful in its attempts to sell the building in South Carolina ("Assets held for sale"). The estimated recovery from the property has been reduced to $75,000, an amount approximately equal to the unpaid property taxes. The property is under foreclosure for delinquent taxes and is anticipated to be auctioned in Fall 1996.
The Company is making current payments for operating expenses and, management believes, has accumulated sufficient liquidity to effect an orderly liquidation. The amount and timing of the final liquidating distributions to the shareholders of the Company is dependent on the clearance of the remaining restrictions and administrative requirements.
CURRENT ACTIVITIES ------------------
Management is disposing of the Company's remaining assets and performing routine tasks of administration in order to wind up the affairs of the Company. On June 3, 1996 the Company distributed to its shareholders as a liquidating dividend the 244,076 shares of Flextronics International Ltd. it owned.
EMPLOYEES ---------
On March 31, 1996, the Company had no employees. The Company had retained a consulting firm that has provided the part-time services of two individuals each of whom devoted approximately 5% of his time to the affairs of the Company.
ITEM 2.

ITEM 2. PROPERTIES --------------------
At March 31, 1996 the Company had no remaining operations. The Company is the owner of a vacant 266,000 square foot industrial building in Great Falls, South Carolina. The property taxes on the building are delinquent and it is anticipated that the building will be sold at a foreclosure auction in Fall 1996.
ITEM 3.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -------------------------------------------------------------
No matters were submitted to a vote of security holders during the fourth quarter ended March 31, 1996.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED ----------------------------------------------------------- STOCKHOLDERS' MATTERS ---------------------
Since January 1994 the Company has had very limited trading. Market information is available by reference to the "NASDAQ Bulletin Board".
The number of stockholders of record for the Company's common stock as of May 31, 1996 was 272.
The Company paid a liquidating cash dividend of $.23 per share on January 4, 1996. The Company also distributed 244,076 shares of Flextronics International Ltd. to its shareholders on June 3, 1996. A final liquidating dividend is expected to be made after all regulatory approvals have been obtained and all remaining obligations satisfied.
ITEM 6

ITEM 6 - SELECTED FINANCIAL DATA --------------------------------
Since the Company has ceased operations during the period and is in liquidation the foregoing data is not comparable on a year to year basis.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW - --------
As noted in Item 1, "Business - Restructuring of Business During the Year", the Company has substantially completed a major restructuring and wind down of its worldwide business and in June 1992 adopted a plan of liquidation. As a result of these activities, the Company's financial position at March 31, 1996 and its operating results for the three years then ended, are not indicative of the Company's expected operating performance and liquidity and capital resource needs. The restructuring and wind down results in eliminating revenues and expenses other than general and administrative expenses needed to manage its assets and creditor relations. The liquidation activities of the Company will be the orderly disposal of its remaining assets to fund its remaining obligations. At March 31, 1996 its principal assets were 244,076 shares of Flextronics International Ltd. as well as cash of $560,602.
RESULTS OF OPERATIONS - ---------------------
Because of the restructuring and recapitalization described in the preceding Overview, any comparison of net revenues and operating expenses for fiscal 1996 to those for fiscal 1995 and for fiscal 1995 to those for fiscal 1994 is, in the opinion of management, not meaningful.
FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995 - ---------------------------------------------
In fiscal 1996 realized and unrealized gain on Flextronics International Ltd. of $3,913,000 was recognized. (See Note 3 to the financial statements.) This reflects increasing the carrying value of the Company's remaining 244,076 shares to their fair value at March 31, 1996 and the net gain from the sales of 115,500 shares during the year. The market close for Flextronics International Ltd. common shares on March 31, 1996 was $30.50 and the market close on March 31, 1995 was $13.75. In fiscal 1995 realized and unrealized gain on Flextronics International Ltd. of $1,567,000 was recognized. This reflects increasing the carrying value of the Company's 359,576 shares held at March 31, 1995 to their fair value and the net gain from the sales of 55,500 shares during fiscal 1995. The market close for Flextronics International Ltd. common shares on March 31, 1995 was $13.75 and the market close on March 31, 1994 was $12.50.
Other income of $301,000 in fiscal 1996 primarily consisted of a reversal of provisions principally for tax claims against the Company which can no longer be asserted of $274,000 and interest income of $87,000, net of a loss on rental activities of $61,000. Other income of $662,000 in fiscal 1995 primarily consisted of a reversal of provisions principally for tax claims against the company which can no longer be asserted of $867,000 net of a reduction in the estimated recovery on the assets held for sale of $125,000, additional net losses on realization of receivables of $39,000, and a loss on rental activities of $37,000.
The provision for taxes on income was $1,380,000 in fiscal 1996 versus $772,000 in fiscal 1995. The provisions are based on income before extraordinary credits at the statutory rates and reflect the charge equivalent to tax benefits resulting from utilization of net operating loss carryforwards.
FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994 - ---------------------------------------------
In fiscal 1995 realized and unrealized gain on Flextronics International Ltd. of $1,567,000 was recognized. (See Note 3 to the financial statements.) This reflects increasing the carrying value of the Company's remaining 359,576 shares, after the exercise of the options, to their fair value at March 31, 1995 and the net gain from the sales of 55,500 shares during the year. The market close for Flextronics International Ltd. common shares on March 31, 1995 was $13.75 and the market close on March 31, 1994 was $12.50. In fiscal 1994 unrealized gain on Flextronics International Ltd. of $1,931,000 was recognized. The carrying values of the 171,000 shares and options to acquire additional 266,222 shares were adjusted to their fair value at March 31, 1994. At March 31, 1994 the market close for Flextronics International Ltd. common shares was $12.50 while at March 31, 1993 the fair value of Flextronics International Ltd. was based on private financing.
Other income of $662,000 in fiscal 1995 primarily consisted of a reversal of provisions principally for tax claims against the company which can no longer be asserted of $867,000 net of a reduction in the estimated recovery on the assets held for sale of $125,000, additional net losses on realization of receivables of $39,000, and a loss on rental activities of $37,000. Other income of $618,000 in fiscal 1994 primarily consisted of interest income from notes receivable of $86,000, recovery of accounts receivable previously written off of $112,000 and a reversal of provisions principally for tax claims of $403,000 which can no longer be asserted.
There was no interest expense in fiscal 1995 compared to $457,000 in fiscal 1994. Substantially all interest bearing debt was settled and discharged in June 1993.
The provision for taxes on income was $772,000 in fiscal 1995 versus $667,000 in fiscal 1994. The provisions are based on income before extraordinary credits at the statutory rates and reflect the charge equivalent to tax benefits resulting from utilization of net operating loss carryforwards.
CAPITAL RESOURCES AND LIQUIDITY - -------------------------------
For fiscal 1996 cash increased by $551,000 as compared to decreases of $35,000 in 1995 and $473,000 in 1994. Cash outflows from operating activities during the period primarily relate to the costs of closing down the operations and liquidating the assets. The cash outflow from financing activities reflects the first liquidating cash dividend of $.23 per share in fiscal 1996 and payments in final settlement of debts in fiscal 1994.
The Company's balance sheet at March 31, 1996 shows a shareholders' equity of $5,716,000. The Flextronics International Ltd. shares owned by the Company are carried on the financial statements at $5,262,000 which is its fair value based on the closing market price on NASDAQ on March 31, 1996 of $30.50 per share reduced for the significant restrictions on transfer. (See Note 3 to financial statements.) These shares were distributed as a liquidating dividend to the shareholders of the Company on June 3, 1996.
The Company is making current payments for expenses related to its liquidation and administration. The Company has cash at March 31, 1996 of $561,000. Such amount should be sufficient to complete an orderly liquidation.
The timing for the Company to complete the liquidation is dependent upon its ability to obtain the necessary regulatory clearances and on the disposition of assets. The amount of the liquidating distribution is primarily dependent on the Company's ability to dispose of its remaining assets and obligations.
ITEM 8.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------
In order to obtain audited financial statements for the fiscal years ended March 31, 1996, 1995 and 1994 the Company would be required to expend a very substantial sum in relation to the Company's resources. The quotes previously received were very significant. In view of the Company's dissolution, the Company believes that obtaining such audits would involve unreasonable effort and expense and that it is not reasonably available to the Company. Accordingly, the Consolidated Financial Statements are not audited. The Company believes that the statements have been prepared in accordance with generally accepted accounting principles on a liquidating basis. For further information about the Company's method of accounting see Notes 1, 2 and 3.
CONSOLIDATED BALANCE SHEET (Unaudited)
See accompanying notes.
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
See accompanying notes.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY) (Unaudited)
See accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
See accompanying notes.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (unaudited)
1. BASIS OF PRESENTATION:
The accompanying financial statements as of March 31, 1996 and March 31, 1995 and for the three years ended March 31, 1996 have been prepared on a liquidating basis of accounting with assets and liabilities stated at fair value. The Company has wound down and sold all its operations and is continuing to implement the formal plan of liquidation approved by the Shareholders in June 1992.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION. The accompanying consolidated financial statements include the accounts of FI Liquidating Company, Inc. and its wholly-owned subsidiaries for all periods presented after elimination of all significant intercompany balances and transactions.
ASSETS HELD FOR SALE. Assets held for sale represent the net realizable value of property which management expects to dispose of in fiscal 1997. Accordingly, the amount is classified as a current asset.
INVESTMENT IN FLEXTRONICS INTERNATIONAL LTD. At March 31, 1996, 1995 and 1994, the Company's interest in Flextronics International Ltd. was adjusted to reflect fair value. (See Note 4.)
NET INCOME PER SHARE. Net income per share is computed based on the weighted average number of common shares and dilutive common stock equivalents.
CONCENTRATIONS OF CREDIT RISK. Financial instruments which potentially subject the Company to concentrations of credit risk consist of the investment in Flextronics International Ltd.
3. INVESTMENT IN FLEXTRONICS INTERNATIONAL LTD.
Prior to fiscal 1994, the Company consummated the recapitalization and sale of a portion of its Asian operations. The Company retained ownership of approximately 44% and reported the investment at its fair value.
Following a settlement with the holders of the Company's senior notes in fiscal 1994 (see Note 5), the Company retained the present equivalent of 171,000 shares in Flextronics International Ltd. In addition, the Company obtained an option from Flextronics International Ltd. to purchase the present equivalent of 155,843 of its shares at an exercise price of $3.21 per share, as well as an option from certain shareholders of Flextronics International Ltd. to acquire the present equivalent of 110,379 of its shares at an exercise price of $3.16 per share. Flextronics International Ltd. filed a registration statement with the Securities and Exchange Commission covering the sale of up to 3,162,500 shares. The registration became effective on March 22, 1994 and 2,500,000 shares were issued at an initial public offering price of $14.00 per share.
During fiscal 1995, the Company sold 55,500 shares of Flextronics International Ltd. for $772,375. The Company exercised its options from Flextronics International Ltd. and purchased 155,843 shares for $500,000. The Company also negotiated a cashless exchange with the shareholders of Flextronics International Ltd. whereby the Company acquired 88,233 shares of Flextronics International Ltd. for the surrender of that option. During fiscal 1996, the Company sold 115,500 shares of Flextronics International Ltd. for $2,376,594.
The 88,233 shares acquired by the Company for the option from shareholders of Flextronics International Ltd. and the 155,843 shares acquired from Flextronics International Ltd. were "restricted securities" as that term is defined in Rule 144 under the Securities Act of 1933 (the "Act") and could not be resold until February 17, 1997 and November 18, 1996, respectively, unless the shares were registered under the Act or an exemption from registration became available. At March 31, 1996 the closing price for Flextronics International Ltd. as reported on NASDAQ was $30.50 per share. At March 31, 1996 the shares which the Company could not resell under Rule 144 until February 17, 1997 and November 18, 1996 reflect discounts of 34% and 27%, respectively, from the closing price reported on the NASDAQ National Market System due to aforementioned restrictions on transfer. These 244,076 restricted securities were registered under the Securities Act of 1933 effective June 3, 1996 and distributed as a liquidating dividend to the shareholders of the Company that day.
4. STOCKHOLDERS' EQUITY
STOCK OPTION PLANS. The Company has a 1982 Non-Qualified Stock Option Plan and has reserved a total of 2,445,000 shares of common stock for issuance under the Plan. Under the Non-Qualified Plan, key employees and others may be granted options to purchase the Company's authorized but unissued common stock at fair market value on the date of grant. Options become exercisable over varying periods and expire no later than ten years and two days after the date of the grant. No options remain outstanding under the Plan,
and the Company does not anticipate issuing any options. At March 1996, 1995 and 1994 no options were outstanding and 2,003,000 shares were available for grant.
STOCK PURCHASE WARRANTS. During fiscal year 1990, the Company issued to a bank warrants to purchase 30,000 shares of the Company's common stock at $.75 per share, which warrants expire in the year 2000. In May 1996 the Company purchased the warrants for $13,875.
5. GAIN ON DEBT SETTLEMENT
At March 31, 1993, the Company's Senior Notes were secured by substantially all the Company's assets. The Company was in payment default as well as not being in compliance with certain financial covenants. The Senior Note holders had not agreed to any alternative arrangements and had issued a demand and acceleration notice to the Company. The Company was also in payment default on its arrangements with substantially all other creditors.
In order to make satisfactory arrangements with its creditors and avoid seeking protection under the provisions of the bankruptcy laws, on June 30, 1993 the Company reached settlements with the holder of the Senior Notes and most of its other unsecured creditors.
The holder of the Senior Notes discharged all debt from the Company, including accrued interest, in exchange for the transfer of the Company's interests in Flextronics International Ltd. except for 171,000 shares which the Company retained, and, as part of the settlement, the Company obtained options to acquire additional shares of Flextronics International Ltd. (See Note 3.)
Cash payments of $369,000 were made by the Company on June 30, 1993 in complete settlement of other unsecured credit obligations totalling $3,659,000 plus accrued interest. Subsequently in fiscal 1994, the Company reached settlements with certain other creditors by paying $24,000 in settlement of obligations totalling $74,000 plus accrued interest.
6. RESTRUCTURING ACTIVITIES
RESTRUCTURING. Prior to fiscal 1994, the Company had closed or sold all its operations and restructuring reserves were established for all remaining closure costs. Disposal costs have been charged against restructuring reserves during fiscal 1996, 1995 and 1994.
7. PROVISIONS FOR DOUBTFUL ACCOUNTS
Provisions for doubtful accounts were approximately $39,000 1995. No additional provision was made in fiscal 1996 of fiscal 1994.
8. TAXES ON INCOME
The provision for taxes on income consists of the following:
The provision for taxes on income is computed by applying the statutory federal income tax rate to income before provision for taxes on income in each year.
For federal income tax purposes, the Company has available approximately $157,000 of investment tax credit carryforwards expiring in 1997 through 2000, and approximately $343,000 of other tax credit carryforwards expiring in 1997 through 1998. Also, for federal tax purposes, the Company has net operating loss carryforwards of approximately $12,891,000 and capital loss carryforwards of approximately $4,227,000 expiring in 1997 through 2005.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON --------------------------------------------------------- ACCOUNTING AND FINANCIAL DISCLOSURE -----------------------------------
No accountants have been retained during the period covered by this Annual Report.
PART III ---------
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ------------------------------------------------------------
NON-DIRECTOR EXECUTIVE OFFICERS - -------------------------------
Information concerning executive officers of the Company at March 31, 1996 who were not also Directors, is set forth below:
Mr. John C. Roberts, age 57, joined the Company as President in March 1991. In June 1992 he was appointed Chief Executive Officer. He is a partner in Management Resource Partners, a professional management firm engaged by the Company in October 1990. From 1978 to March 1991, he served as a consultant to numerous entities and individuals. Concurrently, from 1980 to the present he has been Managing General Partner of Centennial Petroleum Company.
Mr. Michael R. Ramelot, age 51, joined the Company as Chief Financial Officer in March 1991. He is a partner in Management Resource Partners, a professional management firm engaged by the Company in October 1990. From 1988 to March 1991 he served as consultant with numerous companies. From 1980 to 1988, he served in various management functions for Dynatech Computer Systems, the most recent being Chief Operating Officer.
Themistocles G. Michos, age 64, has served as Secretary of the Company since 1984. Mr. Michos has been a partner in the law firm of Collette & Erickson since 1976. Collette & Erickson has served as general legal counsel to the Company since March 1980.
DIRECTORS - ---------
The names of the Directors at March 31, 1996, together with their ages, tenure, positions and offices held by each with the Company and the number of shares of Common Stock of the Company beneficially owned by each of them at May 31, 1996 are indicated in the following table.
(1) Includes 280,000 shares held by two trusts of which two of Mr. Todd's children are beneficiaries.
Robert G. Todd, Jr. has served as a Director since April 1980. He served as Chairman of the Board from April 1980 and as Chief Executive Officer of the Company from March 1984 until he resigned from both positions June 18, 1990 to become Chief Executive Officer of Flextronics International Ltd. He also served as the Company's Secretary from 1980 to 1984; as the Company's Chief Financial Officer from 1984 to 1987; and as the Company's President from March 1984 to July 1989. In May 1991, Mr. Todd resigned as Chief Executive Officer of Flextronics International Ltd. but continued as Chairman of the Board of Flextronics International Ltd. until June 30, 1993. Mr. Todd currently is President and Chief Executive Officer of Computer Aided Services, Inc., a privately held company that provides computer diagnostic systems to the automobile service industry.
Joseph E. Sullivan has served as a Director of the Company since April 1980 and as Chairman of the Board and Chief Executive Officer from June 18, 1990 to June 25, 1992. He served as President of the Company from 1980 to 1984 and as Senior Vice President and Chief Sales and Marketing Officer of the Company from 1980 through March 1986. He is now a consultant to private companies. Effective June 18, 1990, Mr. Sullivan also became Chairman of the Board of Flextronics International Ltd. In April 1991, he resigned as Chairman of the Board of Flextronics International Ltd., but continued as a Director of that company until June 30, 1993.
Directors were paid a retainer of $1,000 monthly and any out-of-pocket travel expenses incurred in connection with attendance at meetings of the Board of Directors.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION --------------------------------
The following table sets forth the cash compensation paid by the Company to each of its executive officers, and to all executive officers as a group, for services rendered in their capacities as executive officers during the fiscal year ended March 31, 1995:
(1) The Company has no pension, retirement, annuity, savings or similar benefit plan. No officer received other compensation in excess of the lesser of $25,000 or 10% of such officer's cash compensation, and all executive officers as a group did not receive other compensation in excess of the lesser of $50,000 or 10% of the aggregate compensation of the group.
(2) From and after July 1, 1992, Messrs. Roberts and Ramelot were no longer compensated directly by the Company. Instead, Management Resource Partners, a partnership in which Messrs. Roberts and Ramelot are each general partners, was compensated on a per diem basis as services were provided by Messrs. Roberts and Ramelot. Amounts paid to Management Resource Partners are not included in the table but are set forth under Item 13, Certain Transactions, below.
ITEM 12.

ITEM 12. PRINCIPAL STOCKHOLDERS --------------------------------
The following table provides certain information as of May 31, 1996 as to each person who, to the Company's knowledge, beneficially owns more than 5% of the outstanding shares of the Company's Common Stock and by all officers and directors as a group:
(1) See footnote 1 to table under "Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT".
(2) S&M Machine Service, Inc. owned by the Griner Family owns 631,000 shares; Frank W. Griner, Sr. and Lorrein Griner own 175,600 shares; Lorrein Griner owns 23,000 shares; Frank W. Griner, Jr. owns 24,500 shares; Frank W. Griner, III owns 13,250 shares; William R. Griner owns 6,700 shares; Anne Griner owns 3,300 shares; Sarah Griner owns 5,900 shares; and Lewis Griner owns 1,700 shares.
ITEM 13.

ITEM 13. CERTAIN TRANSACTIONS ------------------------------
John C. Roberts, the Company's President, and Michael R. Ramelot, the Company's Chief Financial Officer, are general partners in the management consulting firm of Management Resource Partners. In November, 1990 the Company entered into a management consulting agreement with Management Resource Partners to provide financial and strategic services and interim management support to the Company. Effective March 1, 1991, the terms of the consulting agreement were terminated and the Company hired Messrs. Roberts and Ramelot. At the same time, the Company issued to Management Resource Partners a warrant to purchase 80,000 shares of the Company's Common Stock at an exercise price of $0.3750 per share. On June 20, 1995 this warrant was canceled and a bonus arrangement was entered into with Management Resource Partners. In May, 1991 the Company entered into an arrangement with Management Resource Partners whereby it would provide office space and administrative services to the Company. Effective July 1, 1992 the employment agreements with Messrs. Roberts and Ramelot were terminated and amounts paid for their services began, instead, to be paid to Management Resource Partners. Management Resource Partners was paid $49,500 by the Company for contract officers' services, office space and administrative services provided during fiscal 1996.
PART IV -------
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND ----------------------------------------------------- REPORTS ON FORM 8-K -------------------
(a) 1. Financial Statements --------------------
The financial statements listed in the accompanying index to financial statements and financial statement schedules are filed as part of this Annual Report on Form 10-K.
2. Financial Statement Schedules -----------------------------
The financial statement schedules listed in the accompanying index to financial statements and financial statement schedules are filed as part of this Annual Report on Form 10-K.
3. Exhibits --------
The exhibits listed in the accompanying Exhibit Index on pages 30-32 are filed or incorporated by reference as part of this Annual Report on Form 10-K.
(b) Reports on Form 8-K -------------------
The Company did not file any reports on Form 8-K during the fourth quarter, which ended on March 31, 1996.
FI LIQUIDATING COMPANY, INC. ---------------------------- INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES --------------------------------------------------------------- (ITEM 14(A) (1) AND (2))
All other schedules have been omitted because they are not applicable or submission of the schedules is not required, or because the information required is included in the financial statements or notes thereto.
FI LIQUIDATING COMPANY, INC. SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS (in thousands)
SIGNATURES ----------
Pursuant to the requirements of Section 13 of 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 thereunder duly authorized.
FI LIQUIDATING COMPANY, INC.
Date: June 28, 1996 By: /s/Michael R. Ramelot ------------------------ Michael R. Ramelot Chief Financial Officer
POWER OF ATTORNEY -----------------
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints John C. Roberts and Michael R. Ramelot, jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
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/John C. Roberts President, Chief Executive June 28, 1996 - --------------------- (John C. Roberts) Officer (Principal Executive Officer)
/s/Michael R. Ramelot Chief Financial Officer June 28, 1996 - --------------------- (Michael R. Ramelot) (Principal Financial Officer)
/s/Joseph E. Sullivan Director June 28, 1996 - --------------------- (Joseph E. Sullivan)
/s/Robert G. Todd, Jr. Director June 28, 1996 - ---------------------- (Robert G. Todd, Jr.)
FI LIQUIDATING COMPANY, INC. ---------------------------- EXHIBIT INDEX -------------
(ITEM 14(A)(3))
Exhibit Number Description - ------ -----------
2.0(5) Plan of Complete Liquidation and Dissolution.
3.0(3) Amendment to the By-laws of the Company.
3.1(1) Certificate of Incorporation of the Company, as amended.
3.2(1) By-Laws of the Company, as amended and restated.
3.3(2) Amendment to the By-laws of the Company.
3.4(3) Amendment to the By-laws of the Company.
3.5(6) Certificate of Amendment to Certificate of Incorporation to change the name of the Registrant as filed with Delaware Secretary of State on June 24, 1992.
3.6(7) Certificate of Dissolution of the Registrant as filed with the Delaware Secretary of State on January 1, 1993.
4.1(3) Warrant Purchase Agreement, between the Company and The First National Bank of Boston dated as of March 1, 1990, pursuant to which the First National Bank of Boston acquired warrants to purchase 30,000 shares of common stock.
4.2(4) Warrant Purchase Agreement dated as of February 28, 1991 between the Company and Management Resource Partners, pursuant to which Management Resource Partners acquired warrants to purchase 80,000 shares of common stock.
10.1(1) The Company's 1982 Non-Qualified Stock Option Plan, as amended, and related form of non-qualified stock option agreement.
10.2(1) Purchase Agreement dated July 11, 1983 relating to the sale by the Company of 650,000 shares of Series A Preferred Stock (now Class A Redeemable Common Stock).
10.3(1) Purchase Agreement dated January 20, 1984 relating to the sale by the Company of 1,301,675 shares of Series B Preferred Stock and the sale by Robert G. Todd, Jr., Joseph E. Sullivan and Jack L. Watts of 185,961 shares of Common Stock.
10.4(1) Series C Preferred Stock Purchase Agreement dated October 18, 1984 relating to the sale by the Company of 521,739 shares of Series C Preferred Stock.
10.5(1) Form of Indemnification Agreement between the Company and its officers and directors.
10.6(2) Third amendment to the Company's 1982 Incentive Stock Option Plan and the sixth amendment to the Company's 1982 Non-Qualified Stock Option Plan.
10.7(7) Waiver and Consent to Foreclosure among the Registrant, certain subsidiaries of the Registrant and CLG Partners, L.P., dated as of June 30, 1993.
10.8(7) Option Agreement between the Registrant and CLG Partners, L.P., dated as of June 30, 1993.
10.9(7) Acquisition and Subscription Agreement among the Registrant, CLG Partners, L.P., Flex Holdings Pte. Ltd. and certain other investors dated as of June 30, 1993.
10.10(7) Shareholders Agreement among the Registrant, CLG Partners, L.P., Flex Holdings Pte. Ltd. and certain other investors dated as of July 8, 1993.
10.11(7) Registration Rights Agreement among the Registrant, CLG Partners, L.P., Flex Holdings Pte. Ltd. and certain other investors dated as of July 8, 1993.
10.12(7) Option Agreement between the Registrant and Flex Holdings Pte. Ltd. dated as of July 8, 1993
10.13(7) Form of Settlement Agreement and Mutual Release of Claims entered into between the Registrant and certain of its unsecured creditors.
10.14(8) Lock-Up Agreement for Initial Public Offering of Flextronics International Pte. Ltd. between the Registrant and Montgomery Securities and Cowen & Company of January 24, 1994.
10.15(8) Waiver of Registration Rights among the Registrant and Flex Holdings Pte. Limited as of January 24, 1994.
10.16(8) Amendment to Option Agreement between the Registrant and Flex Holdings Pte. Limited dated as of February 18, 1994.
10.17(9) Amendment to Option Agreement between the Registrant and CLG Partners, L.P. dated as of September 18, 1994.
10.18(10) Bonus Agreement by and between the Registrant and Management Resource Partners dated as of July 20, 1995.
21 Subsidiaries of Registrant.
Footnotes to Exhibits ---------------------
(1) Incorporated by reference to exhibits to Registration Statement on Form S- 1, No. 33-16365.
(2) Incorporated by reference to exhibits to 1989 10-K Annual Report filed on June 26, 1989.
(3) Incorporated by reference to exhibits to 1990 10-K Annual Report filed on July 14, 1990.
(4) Incorporated by reference to exhibits to 1991 10-K Annual Report filed on July 11, 1991.
(5) Incorporated by reference to Registrant's Proxy Statement date May 14, 1992 as filed on May 15, 1992.
(6) Incorporated by reference to exhibits to 1992 10-K Annual Report filed on December 22, 1992.
(7) Incorporated by reference to exhibits to 1993 10-K Annual Report filed on August 16, 1993.
(8) Incorporated by reference to exhibits to 1994 10-K Annual Report filed on June 29, 1994.
(9) Incorporated by reference to exhibits to September 30, 1994 10-Q Quarterly Report filed on November 14, 1994.
(10) Incorporated by reference to exhibits to September 30, 1995 10-Q Quarterly Report filed on November 14, 1995.