<PAGE>   1
                                    FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                   FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1998

                                       OR

[   ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
        EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

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

Commission file number:   0-2572

                            STEEL CITY PRODUCTS, INC.
             (Exact name of registrant as specified in its charter)

          DELAWARE                                         55-0437067
State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization                            Identification No.)

      3513 CONCORD PIKE, SUITE 3527
        WILMINGTON, DELAWARE                                   19803
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code: (302) 478-9170

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

                                      NONE

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

<TABLE>

<S>                                                    <C>
          Title of each class                          Name of each exchange on which registered
          ------------------                           -----------------------------------------
COMMON STOCK, $0.01 PAR VALUE PER SHARE                                  NONE
</TABLE>


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X    No      
                                             ----     -----

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [ X ]

Aggregate market value at May 1, 1998 of the voting stock held by non-affiliates
of the registrant: $84,046

At May 1, 1998 the registrant had 3,238,061 shares of Common Stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None



<PAGE>   2
                                     PART I

ITEM 1.    BUSINESS

BACKGROUND OF STEEL CITY PRODUCTS, INC.

         Steel City Products, Inc. ("SCPI" or "the Company") was incorporated in
West Virginia in 1959, and in 1963 became known as Heck's, Inc. In 1969, the
"Steel City Products" automotive distribution business was acquired. The Company
was reincorporated in Delaware under the name Hallwood Industries Incorporated
in 1990, and in January 1993 the Company changed its name to Steel City
Products, Inc.

         For many years prior to 1990, Heck's, Inc. operated a Retail Division
consisting of a chain of discount department stores. In September 1990, all of
the assets of the Retail Division were sold to Retail Acquisition Corp.
("RAC").

         Continuing operations of SCPI comprise the distribution of automotive
parts and accessories under the name "Steel City Products". In 1996, SCPI
established a division to distribute non-food pet supplies.

FORMATION OF OAKHURST COMPANY, INC.

         Oakhurst Company, Inc. ("Oakhurst") was formed as part of a merger
transaction in July 1991, in which SCPI became a majority-owned subsidiary of
Oakhurst. In accordance with the merger agreement, Oakhurst owns 10% of the
outstanding common stock of SCPI and all of the SCPI Series A Preferred Stock,
with the result that the aggregate fair market value of SCPI's common stock and
Series A Preferred Stock owned by Oakhurst is equal to approximately 90% of the
aggregate fair market value of all the issued and outstanding capital stock of
SCPI; consequently, Oakhurst owns 90% of the voting stock of SCPI.

         Pursuant to the merger, SCPI became a special, limited purpose
subsidiary that concentrates on its historical distribution business, while any
future growth and expansion opportunities are expected to be pursued by Oakhurst
or its subsidiaries. Because Oakhurst's ownership of SCPI is primarily in the
form of preferred stock, Oakhurst retains the value of SCPI, and Oakhurst's
income from SCPI is determined by the Series A Preferred stock dividend.
Oakhurst's ownership of SCPI facilitates the preservation and utilization of
SCPI's and Oakhurst's net operating tax loss carry-forwards, which amount to
approximately $154 million.

OPERATIONS

         SCPI primarily distributes automotive accessories. These products
include functional and decorative car and truck accessories (such as floor mats,
seat covers, mirrors, running boards and lights), car care products (including
waxes and paints), chemicals (such as antifreeze, windshield washer fluid and
motor oil) and car repair and maintenance items (including spark plugs,
windshield wipers, and air and oil filters). In fiscal 1996, the product
selection was expanded to include selected "hard parts" such as brake rotors,
and in fiscal 1997, SCPI introduced non-food pet supplies to its merchandise
selection, and opened a division ("Wing-Tech") that distributed automotive
"wings" or spoilers. Although pet supplies are not typical of SCPI's historical
merchandise mix, management determined that the availability of existing
customers which sell both pet supplies and automotive accessories, combined with
SCPI's distribution expertise and infrastructure, offered an opportunity for
increased sales, but there can be no assurance that this will lead to new sales.
In June 1997, the Wing-Tech division was sold. For about twenty-seven years,
SCPI's operations were conducted from the same facility in Pittsburgh until
December 1997, when the building was sold, and SCPI's operations were moved to a
newer, leased facility in McKeesport, Pennsylvania.

         Certain of SCPI's business is performed on a service basis, which
involves visits by its sales personnel to customers' stores to count and
re-order merchandise; generally, these re-orders are transmitted electronically
to 





                                      -1-

<PAGE>   3


SCPI's offices in Pittsburgh and shipments are either made directly to each of
the customers' stores or pre-packed for onward shipment to stores by the
retailers' own distribution centers. Certain customers electronically transmit
their orders to SCPI's headquarters. Because many orders are generated
electronically and are shipped within a few days of receipt, the size of SCPI's
order backlog is not relevant to an understanding of the business. SCPI also
provides price ticketing and associated services to those of its customers who
request such services.

Sources of Supply

         SCPI acquires its merchandise from a large number of suppliers, none of
which accounts for more than 15% of its revenues. Many of the products sold by
SCPI carry nationally-advertised brand names, but because of the diversity and
number of suppliers and products carried, the business is not generally
dependent on the continued availability of individual products or continued
dealings with existing supply sources. From time to time, market or seasonal
conditions may affect the availability of certain merchandise, but not to the
extent that the Company believes would materially impact its business.

         Steel City generally carries in inventory only those products that its
customers have identified as necessary for their own merchandising needs, and
does not acquire significant quantities of other merchandise.

Seasonality

         SCPI's automotive business is seasonal, being slower in the early
winter months than at other times of the year. In anticipation of higher sales
volume in the spring and summer, SCPI carries higher automotive inventories,
beginning in February. As is customary in the automotive aftermarket, many
suppliers allow extended payment terms for such inventory build-ups and in turn,
SCPI grants extended payment terms to many of its customers to facilitate their
inventory build-ups.

         SCPI's pet supply business experiences somewhat different seasonal
trends from its automotive business, but the effect of this is not expected to
be material until this business more fully develops.

         SCPI's needs for working capital are affected by these seasonal
fluctuations (see Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources").

Customer Base

         SCPI's customers include general merchandise retail chains, automotive
specialty stores, supermarket chains, drug stores, hardware stores, variety
stores and other automotive accessory distributors. Most customers are based in
the northeastern United States, although stores operated by some customers are
located outside the northeastern states. There are no foreign sales.

         SCPI's customers are continually affected by changes in the retail
environment, including the recent competitive pressures facing regional mass
merchandisers and the growing influence of national automotive specialty chains.
These have led to fluctuations in the level of business that SCPI enjoys with
individual customers. In fiscal 1996, SCPI lost two significant customers and
since, has suffered reductions in business as certain customers have closed
stores in the face of competition, have been forced into bankruptcy, or have
reduced their automotive merchandise selection. Furthermore, some customers have
changed their buying practices to acquire certain merchandise direct from
manufacturers rather than through distributors such as Steel City Products.

         In its efforts to offset these trends, SCPI has added new customers,
expanded its product offerings to certain customers, enlarged the territory that
it serves and introduced new categories of products. These efforts have helped
to stabilize the erosion of SCPI's customer base so that sales in fiscal 1998
were substantially the same as those in fiscal 1997, however, they have not
returned SCPI's sales to the revenue levels of fiscal 1996. SCPI continues to
pursue new customer relationships that, if concluded, could increase sales in
fiscal 1999; however, there can be no assurance that new business can be
secured.






                                      -2-

<PAGE>   4



         The following table shows sales to each of SCPI's customers that
individually accounted for more than 10% of sales during any of the latest three
fiscal years (dollars in thousands):


<TABLE>
<CAPTION>


                              Fiscal Year Ended         Fiscal Year Ended        Fiscal Year Ended
                              February 28, 1998         February 28, 1997        February 29, 1996
                            --------------------       ------------------      --------------------
                                        % of                      % of                       % of
                            Sales    Total Sales       Sales  Total Sales      Sales    Total Sales
                            -----    -----------       -----  -----------      ------   -----------
<S>                        <C>       <C>               <C>    <C>              <C>      <C>
     Ames                  $2,178        12%           $2,290      13%          $  780        3%
     Forest City              --         --               --       --           $4,641       19%
     Jamesway                 --         --               --       --           $3,975       16%
</TABLE>


         Jamesway Corporation ("Jamesway") filed for Chapter 11 bankruptcy
protection in July 1993, emerged in January 1995, and continued to be one of
SCPI's largest customers until the second quarter of fiscal 1996, when Jamesway
began experiencing new financial difficulties. In October 1995 Jamesway again
filed for bankruptcy protection and announced that it would close all of its
stores.

         During the third quarter of fiscal 1996, Forest City Auto Parts, Inc.
("Forest City") informed SCPI that it had decided to change its source of
supply, and sales to Forest City ended in January 1996.

         None of SCPI's business is based on government contracts, and there are
no long-term sales contracts with any customers.


Competition

         Both the automotive parts and accessories distribution industry and the
non-food pet supply industry are highly competitive, with several similar
companies operating in SCPI's market place, and many of SCPI's suppliers also
offer their products directly to retailers. Management is unable to quantify
SCPI's relative size in the distribution industry or in relation to its
competitors. SCPI competes on the basis of the breadth of merchandise offered,
price, level of service, order fill rates and order turnaround times. Management
believes that SCPI's long history, good reputation, experienced management,
product variety, pricing, service levels and high order fill rates enable it to
compete favorably with other distributors.


Regulation

         SCPI's management does not anticipate that existing or known pending
environmental legislation or other regulations will require major capital
expenditures or will affect its operations.


Employees

         SCPI employs approximately 55 persons, of whom about 45 are employed in
the headquarters office and distribution facility in McKeesport. Most of the
others are field personnel. Senior executives, including Bernard Frank (a
founder of Steel City Products in 1947), have many years of service with SCPI
and some are employed under long-term contracts.

         The warehouse and certain office employees of SCPI are represented by
Local 636 of the International Brotherhood of Teamsters. SCPI believes that it
has experienced generally good labor relations, and no significant labor
disputes have affected its business in recent years. Renewal negotiations
related to the union agreement have continued beyond its expiration in November
1995.








                                      -3-

<PAGE>   5



ITEM 2.           PROPERTIES

         SCPI operates its business from a leased, 67,000 square-foot building
located in a new industrial park in McKeesport, Pennsylvania.

ITEM 3.           LEGAL PROCEEDINGS

         There are no material legal proceedings pending against the company.


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 of the fiscal year ended February 28, 1998.




                                      -4-

<PAGE>   6



                                     PART II

ITEM 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
           MATTERS

         As a result of the merger transaction with Oakhurst in fiscal 1992 (see
Item 1, "Business - Formation of Oakhurst Company, Inc."), most of the Company's
value is vested in Oakhurst. As a result of the merger, the Company's stock
price fell below the NASDAQ minimum bid price of $1.00 per share and on July 14,
1992 the Company's common stock was removed from listing by NASDAQ.

         No common stock dividends were paid by the Company during fiscal 1998,
1997 or 1996. Dividend payments are restricted by the covenants under the
Company's line of credit.

         Through its ownership of the Company, primarily in the form of Series A
Preferred Stock, Oakhurst controls the Company and receives substantially all of
the benefit of the Company's operations through preferred stock dividends, which
are required to be paid before any common stock dividends may be paid.

         There were approximately 3,800 holders of record of SCPI's common stock
on May 1, 1998.






                                      -5-


<PAGE>   7



ITEM 6.    SELECTED FINANCIAL DATA

     The following table sets forth selected financial and other data of Steel
City Products, Inc. and should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations, which
follows, and with the Financial Statements and related Notes.

<TABLE>
<CAPTION>


                                               FEBRUARY 28,      FEBRUARY 28,      FEBRUARY 28,      FEBRUARY 28,      FEBRUARY 28,
                                                  1998 (a)          1997              1996               1995             1994
                                               ------------      ------------      ------------      ------------      ------------
                                                          (DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                                            <C>               <C>               <C>               <C>               <C>         
OPERATING RESULTS:

Sales ....................................     $     17,879      $     18,031      $     24,647      $     27,335      $     32,003
                                               ============      ============      ============      ============      ============
Income (loss) income from continuing
       operations before income taxes ....     $      1,402      $       (153)     $       (206)     $      1,260      $      1,024

Current income tax (expense) benefit .....               --                (9)              136               (87)              (87)
Deferred income tax expense (c) ..........           (1,000)           (1,093)           (1,500)             (339)             (317)

                                               ------------      ------------      ------------      ------------      ------------
Income (loss) from continuing operations .              402            (1,255)           (1,570)              834               620

Income from discontinued operations (d) ..               --                --                43                90                --

Series A Preferred Stock Dividends (b) ...           (1,014)           (1,014)           (1,016)           (1,019)           (1,135)
                                               ------------      ------------      ------------      ------------      ------------

Net loss attributable
          to common stockholders .........     $       (612)     $     (2,269)     $     (2,543)     $        (95)     $       (515)
                                               ============      ============      ============      ============      ============

BASIC AND DILUTED PER SHARE AMOUNTS:
Income (loss) from continuing operations
       after preferred stock dividends ...     $      (0.19)     $      (0.70)     $      (0.80)     $      (0.06)     $      (0.18)
Income from discontinued operations ......               --                --              0.01              0.03                --
                                               ------------      ------------      ------------      ------------      ------------

Net loss attributable
       to common stockholders ............     $      (0.19)     $      (0.70)     $      (0.79)     $      (0.03)     $      (0.18)
                                               ============      ============      ============      ============      ============

BALANCE SHEET STATISTICS:
Total assets .............................     $     14,136      $     15,297      $     14,531      $     19,040      $     17,506
Long-term obligations ....................     $      2,132      $      3,581      $      2,216      $      2,718      $      1,429
Series A Preferred Stock face value (b) ..     $     10,135      $     10,135      $     10,135      $     10,135      $     11,379
</TABLE>


(a)    In fiscal 1998, SCPI sold its 88,000 square foot warehouse in Pittsburgh,
       Pennsylvania for a gross sale price of approximately $2.8 million in
       cash. SCPI recognized a pre-tax gain of approximately $1.8 million in
       connection with the sale. See Note 4 to the Financial Statements.

(b)    The Series A Preferred Stock has a dividend rate of $0.5228 per share and
       is redeemable at SCPI's option at $5.2282 per share plus any cumulative
       dividends in arrears. Through fiscal 1998, dividends of approximately
       $7.2 million have accumulated since the effective date of the merger; of
       this amount, approximately $2.8 million and $786,000 were declared by the
       Company's Board of Directors in fiscal 1995 and 1993, respectively, and
       approximately $3.6 million of undeclared dividends in arrears are
       outstanding as of February 28, 1998. In accordance with the merger
       agreement with Oakhurst, a revaluation of the Company was completed as of
       fiscal 1994 that resulted in a reduction in the number of Series A
       Preferred shares outstanding. Revaluations as of fiscal 1997, 1996 and
       1995 have not yet been completed. Management expects that revaluations as
       of the end of fiscal 1997 and 1996, when complete, will result in further
       decreases in the valuation of SCPI, and that additional Series A
       Preferred shares outstanding and related dividends may be canceled once
       such valuations are complete. See Note 2 to the Financial Statements.

(c)    Results for fiscal 1998, 1997 and 1996 include non-cash deferred tax
       charges of $1 million, $ 1.2 million and $1.5 million, respectively,
       relating primarily to increases in the Company's valuation allowance of
       its deferred tax asset (see Note 7 to the Financial Statements).

(d)    In fiscal 1991, SCPI sold its Retail Division to RAC as discussed in Note
       8 to the Financial Statements. SCPI remained contingently liable for most
       mortgage debt, and for many lease obligations of the Retail Division
       following the sale. RAC was forced into bankruptcy in March 1991. RAC's
       Reorganization Plan (the "RAC Plan") contained provision for releases in
       favor of SCPI together with an injunction against further actions by
       contingent creditors against SCPI. Accordingly, SCPI was released from
       further liability except for payment of the Creditor Notes as further
       described in Notes 5 and 8 to the Financial Statements.



    The accompanying notes are an integral part of these financial statements
                                       -6-


<PAGE>   8

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
           RESULTS OF OPERATIONS


OVERVIEW

         SCPI is a special, limited purpose, majority-owned subsidiary of
Oakhurst. SCPI is expected to concentrate on its historical distribution
business, while any future growth and expansion opportunities are expected to be
pursued by one or more subsidiaries of Oakhurst. Through Oakhurst's ownership of
SCPI, primarily in the form of preferred stock, Oakhurst retains substantially
all the value of SCPI, and receives substantially all of the benefit of
operations through dividends on the preferred stock. Oakhurst's ownership of
SCPI is designed to facilitate the preservation and utilization of SCPI's and
Oakhurst's net operating tax loss carry-forwards which amount to approximately
$154 million.


SIGNIFICANT EVENTS AND TRENDS

         SCPI's customers are continually affected by changes in the retail
environment, including the recent competitive pressures facing regional mass
merchandisers and the growing influence of national automotive specialty chains.
These have led to fluctuations in the level of business that SCPI enjoys with
individual customers. In fiscal 1996, SCPI lost two significant customers and
has since suffered reductions in business as certain customers have closed
stores in the face of competition, have been forced into bankruptcy, have
reduced their automotive merchandise selection, or have changed their buying
practices to acquire certain merchandise direct from manufacturers rather than
through distributors such as SCPI.

         In its efforts to offset these trends, SCPI strengthened its sales team
to help identify new customers and better serve existing customers, expanded its
product offerings to certain customers and enlarged the territory that it
serves. In fiscal 1996, SCPI began offering certain "hard parts" such as brake
rotors, and in fiscal 1997, SCPI introduced a new merchandise category of
non-food pet supplies, and began a new division ("Wing-Tech") to distribute
automotive wings (or spoilers). Although the pet supplies are not typical of
SCPI's historical merchandise mix, management determined that the availability
of existing customers which sell both pet supplies and automotive accessories,
combined with SCPI's distribution expertise and infrastructure, offered an
opportunity for increased sales. In June 1997, SCPI sold the Wing-Tech business
to the buyer of Oakhurst's Puma Products subsidiary.

         Since fiscal 1996, SCPI has added new customers and expanded sales to
certain other customers, and during the latter part of fiscal 1997, SCPI began
to ship pet supplies to an existing significant automotive customer, Giant
Eagle, and added a supermarket chain, Kroger, as an automotive customer. These
efforts have helped to stabilize the erosion of SCPI's customer base so that
sales in fiscal 1998 were substantially the same as fiscal 1997, however, they
have not returned SCPI's sales to the same levels of fiscal 1996. SCPI continues
to pursue new customer relationships that, if concluded, could increase sales in
fiscal 1999, however, there can be no assurance that these efforts will be
successful.


LIQUIDITY AND CAPITAL RESOURCES

FINANCING AND LINE OF CREDIT

         In addition to cash derived from operations, SCPI's liquidity and
financing requirements are determined principally by the working capital needed
to support its level of business, together with the need for capital
expenditures and the cash required to repay its debt. SCPI also receives cash
payments pursuant to a note receivable from Oakhurst. SCPI's working capital
needs fluctuate primarily in relation to the amounts of inventory it carries
which can change seasonally, the size and timeliness of payment of receivables
from its customers to 




                                      -7-

<PAGE>   9

which from time to time SCPI grants extended payment terms for their seasonal
inventory builds, and the amount of credit extended to SCPI by its suppliers. At
February 28, 1998, SCPI's debt primarily consisted of the Creditor Notes (see
below) and revolving debt of $2.1 million under a credit agreement that is cross
collateralized with Oakhurst, and is largely offset by receivables from Oakhurst
for advances made by SCPI that bear interest at the same rate as the revolving
debt.

         In March 1996, Oakhurst obtained financing from an institutional
lender, replacing its then existing credit arrangement, that provided a total
facility for Oakhurst and its subsidiaries of $9.5 million, comprised of a SCPI
term loan of $1.5 million (the "Fixed Asset Loan") and a maximum revolving
credit facility of $8 million (the "Revolver") (collectively, the "Credit
Facility"). The Credit Facility requires that any loans be made directly to
Oakhurst's subsidiaries, including SCPI. The initial funding of the Revolver
resulted in a loan to SCPI of approximately $2.1 million. SCPI immediately
advanced these funds to Oakhurst to enable it to repay a portion of the amounts
outstanding under the previous revolving debt. The advance bears interest at the
same rate as the Credit Facility.

         Borrowings under the Credit Facility bear interest at the higher of the
Citibank N.A. base rate plus 1.5%, or $5,000 per month, and borrowings under the
Revolver are subject to a borrowing base that is calculated according to defined
levels of Oakhurst's subsidiaries' accounts receivable and inventories. The
Credit Facility contains certain restrictive financial and non-financial
covenants, including the maintenance of defined subsidiary and consolidated
tangible net worth levels and consolidated current ratios, and limitations on
common stock cash dividends. The Credit Facility is secured by the accounts
receivable, inventories, and fixed assets of all of Oakhurst's subsidiaries.

         In June 1997, Oakhurst and SCPI entered into an agreement with the
lender to amend the Credit Facility to reflect certain subsidiary dispositions
by Oakhurst. The agreement principally reduced the maximum amount available
under the Revolver to $7 million subject to a borrowing base, and amended
certain financial covenants, including the elimination of the consolidated
tangible net worth covenant. In September 1997, Oakhurst and its subsidiaries
reached an agreement to extend the Revolver beyond its initial two year term to
April 1999, and paid a fee of $35,000 in connection with the renewal. The Credit
Facility provides for subsequent automatic renewal terms of one year each upon
payment of a renewal fee of 0.5% of the entire line, unless earlier terminated
as provided for in the Agreement.

         In part to substantially reduce its overall debt level, in December
1997 SCPI sold its 88,000 square foot warehouse in Pittsburgh, Pennsylvania to
an unrelated third party for a gross purchase price of approximately $2.8
million in cash. Accordingly, in the fourth quarter of fiscal 1998 SCPI recorded
a pre-tax gain of approximately $1.8 million in connection with the sale. After
repayment of the Fixed Asset Loan secured by the property, the net proceeds of
approximately $1.6 million were used to cover the expenses of moving to newer,
leased premises comprising approximately 67,000 square feet, to make certain
improvements to such premises, to increase SCPI's levels of working capital and
to reduce the Revolver.

         At February 28, 1998, SCPI held a promissory note receivable from
Oakhurst (the "Oakhurst Note") (see Note 3 to the financial statements) that was
issued in connection with acquisitions by Oakhurst, with a remaining balance of
approximately $1 million. The Oakhurst Note bears interest at the prime rate
plus 1.5% and provides for eight quarterly installments of principal and
interest of $96,000 each, with a balloon payment of approximately $1 million in
April 1998. In May 1998, SCPI reached an agreement with Oakhurst to extend the
note for an additional two years with a continuation of the same quarterly
installments.

         The creditor notes that were issued by SCPI in connection with the
bankruptcy of Retail Acquisition Corp., (the "Creditor Notes") (see Note 8 to
the financial statements) are payable in six equal annual installments through
July 1998. The Creditor Notes have been discounted using an imputed interest
rate of 7.5%.

         Management believes that the Revolver will provide adequate funding for
SCPI's working capital requirements for the next twelve months assuming no
material deterioration in current sales or gross profit margins.








                                      -8-



<PAGE>   10


At the present time, Oakhurst's ability to repay advances from SCPI is dependent
on the operating results of Oakhurst's other subsidiary and on financing
available to that subsidiary, and Oakhurst's continued ability to repay such
loans and advances will depend on an improvement in the results of operations of
such subsidiary.


CAPITAL EXPENDITURES AND YEAR 2000

          The Company has no outstanding significant commitments for capital
expenditures. However, in fiscal 1998, management undertook an extensive review
and evaluation of the Company's critical operating systems to determine
compliance with the year 2000 issue. It was determined that the certain of the
Company's current software programs are not year 2000 compliant, and
accordingly, management has developed a year 2000 plan (the "Year 2000 Plan")
that addresses this issue. The Year 2000 Plan includes the complete replacement
of SCPI's current operating system with a newer, integrated system that is year
2000 compliant. The Year 2000 Plan schedules the purchase and implementation of
this system in mid fiscal 1999, with total costs anticipated between $150,000 to
$200,000. The majority of these costs will be capital in nature. Management is
currently on schedule with the timetable set forth in the Year 2000 Plan. The
Company is also contacting its suppliers to obtain their assurance of year 2000
compliance.

TAX LOSS CARRY-FORWARDS

         At February 28, 1998, SCPI and Oakhurst had net operating tax loss
carry-forwards (the "Tax Benefits") of approximately $154 million, which expire
in the years 2001 through 2012, which shelter most of SCPI's income from federal
income taxes. A change in control of SCPI or Oakhurst in any three-year period
exceeding 50% may lead to the loss of the majority of the Tax Benefits. In order
to reduce the likelihood of such a change of control occurring, SCPI's and
Oakhurst's Certificates of Incorporation include restrictions on the
registration of transfers of stock resulting in, or increasing, individual
holdings exceeding 4.5% of each company's common stock..

         Since the regulations governing the Tax Benefits are highly complex and
may be changed from time to time, and since SCPI's and Oakhurst's attempts to
reduce the likelihood of a change of control occurring may not be successful,
management is unable to determine the likelihood of the continued availability
of the Tax Benefits. However, management believes that the Tax Benefits are
currently available in full and intends to take all appropriate steps to help
ensure that they remain available. Should the Tax Benefits become unavailable to
SCPI or Oakhurst, most future income of SCPI and any consolidated affiliate
would not be shielded from federal taxation, thus reducing funds otherwise
available for corporate purposes (see Note 7 to the financial statements).

FORWARD LOOKING STATEMENTS

         From time to time the information provided by the Company or statements
made by its directors or employees may contain so-called "forward looking"
information that involves risks and uncertainties. In particular, statements
contained in Item 1 - "Business" and in this Item 7 - "Management's Discussion
and Analysis of Financial Condition and Results of Operations," which are not
historical facts (including, but not limited to statements concerning
anticipated sales, profit levels, customers and cash flows) are forward looking
statements. The Company's actual future results may differ significantly from
those stated in any forward looking statements. Factors that may cause such
differences include, but are not limited to the factors discussed above as well
as the accuracy of the Company's internal estimates of revenue and operating
expense levels. Each of these factors and others are discussed from time to time
in the Company's Securities and Exchange Commission filings.


RESULTS OF OPERATIONS

         Continuing operations include the results of SCPI's operating division,
Steel City Products, a distributor of automotive parts and accessories and of
non-food pet supplies, based in McKeesport, Pennsylvania.






                                      -9-


<PAGE>   11


Fiscal Year Ended February 28, 1998 Compared with Fiscal Year Ended February 28,
1997

         Compared with the prior year, sales decreased by $152,000. Sales to
existing automotive customers decreased by $2.9 million, primarily as a result
of bankruptcies, downsizing and competitive pressures encountered by certain of
SCPI's customers. This was partially offset by sales to new automotive customers
of approximately $1.6 million and by sales of pet supplies (see below).

         Sales of non-food pet supplies were $1.4 million in fiscal 1998,
compared with $157,000 in the prior year. Sales of pet supplies first began in
the second quarter of the prior year, and new customers have been added in the
current fiscal year.

         Notwithstanding the net decrease in sales, gross profits increased by
$136,000 in fiscal 1998 compared with the prior year. The effect of the lower
levels of sales was offset by a slight improvement in gross margin, together
with reductions in buying and occupancy expenses.

         Operating, selling and administrative expenses increased by $199,000
when compared with the prior year, resulting from non-recurring fees of $132,000
paid to Oakhurst for its management services rendered in connection with the
sale of the building, lease negotiations, and the transfer of SCPI's operations
to the new facility. There were also moving expenses of approximately $90,000.

         In fiscal 1998, SCPI sold its owned real estate for a cash sale price
of approximately $2.8 million. The net gain resulting from the sale was
approximately $1.8 million.

         Compared with the prior year, there was an increase in the provision
for doubtful accounts of $168,000. The provision increase in the current year
related to the bankruptcies and liquidations of certain of the Company's
customers, whereas the prior year reflected a net recovery on a previously
reserved doubtful account.

Fiscal Year Ended February 28, 1997 Compared with Fiscal Year Ended February 29,
1996

         When compared with fiscal 1996, sales decreased by approximately $6.6
million, primarily as a result of the loss of two large customers. These two
customers accounted for a decrease in sales in fiscal 1997 of approximately $8.5
million. Sales to other existing customers decreased by approximately $780,000.
These reductions were only partially offset by the addition of new customers and
new product lines, which together accounted for sales of approximately $2.7
million.

         Other income increased by $105,000 over fiscal 1996, due to primarily
to higher interest income on advances to Oakhurst. However, this increase is
offset by higher interest expense.

         Compared with fiscal 1996, gross profits decreased by approximately
$1.2 million, attributable entirely to the sales decrease discussed above. Gross
profit margins in fiscal 1997 were consistent with those in fiscal 1996.

         Operating, selling and administrative expenses decreased by $769,000
when compared with fiscal 1996, and resulted principally from management's
efforts to reduce SCPI's work force and other expenses in reaction to the lower
levels of sales.

         There was a decrease of $445,000 in the provision for doubtful accounts
compared with fiscal 1996, when the Company recorded provisions for the
bankruptcies of several customers, including one of its largest customers in the
second quarter.

         Interest expense reflected an increase over fiscal 1996 of $182,000,
primarily resulting from interest in connection with the Credit Facility.
However, interest on the Credit Facility is offset by interest earned on the
Oakhurst Notes and Oakhurst advances which is included in other income.





                                      -10-

<PAGE>   12

<TABLE>
<CAPTION>


<S>      <C>                                                                                       <C>
ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Independent Auditors' Report.......................................................        F-1

         Balance Sheets: February 28, 1998 and February 28, 1997............................        F-2

         Statements of Operations for the fiscal years ended
           February 28, 1998,  February 28, 1997 and February 29, 1996......................        F-3

         Statements of Stockholders' Equity for the fiscal years ended
           February 28, 1998,  February 28, 1997 and February 29, 1996 .....................        F-4

         Statements of Cash Flows for the fiscal years ended
            February 28, 1998,  February 28, 1997 and February 29, 1996 ....................        F-5

         Notes to Financial Statements......................................................        F-6

         Supplementary Financial Data:

           Selected Quarterly Financial Data (unaudited) for the fiscal years ended
             February 28, 1998 and February 28, 1997 .......................................        F-14

         Financial Statement Schedules for the fiscal years ended February 28,
             1998, February 28, 1997 and February 29, 1996:

             Schedule II - Valuation and Qualifying Accounts................................        F-15
</TABLE>




ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE

            NONE







                                      -11-


<PAGE>   13



                                    PART III


ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The by-laws of the Company currently provide for such number of
directors (but no less than five) as is determined from time to time by the
Board of Directors. Certain vacancies arose in December 1995 and July 1996, and
the Board of Directors elected to set the number of directors at six. The
following table lists the names and ages of the directors, and the year in which
each was first elected a director of the Company or its predecessor.


<TABLE>
<CAPTION>


                                                                  DIRECTOR
NAME                                                AGE            SINCE
----                                                ---           --------
<S>                                                 <C>           <C>
Bernard H. Frank                                     77             1993
John D. Abernathy                                    61             1996
Terrance W. Allan                                    44             1993
Mark Auerbach                                        60             1996
Robert M. Davies                                     47             1989
Joel S. Lever                                        46             1996
</TABLE>


BUSINESS HISTORY OF DIRECTORS

Messrs. Frank and Allan have been executives of the Company for more than the
last five years. Mr. Frank is a founder of the business and has been associated
with it for approximately 46 years. For more than the last five years, Mr. Frank
has been Chief Executive Officer and In May 1994, he was elected Executive Vice
President and Chief Operating Officer of the Company's parent, Oakhurst Company,
Inc. ("Oakhurst"). Mr. Allan has been with the Company since 1987 and was
elected Executive Vice President in January 1993.

Mr. Abernathy. Mr. Abernathy has been Executive Director of Patton Boggs,
L.L.P., a Washington DC law firm, since January 1995. From March 1991 to
February 1994 he was the Managing Director of Summit, Solomon & Feldesman, a New
York City law firm, and from July 1983 until June 1990, Mr. Abernathy was
Chairman and Chief Executive Partner of BDO Seidman, a public accounting firm.
Mr. Abernathy is a director of Barringer Technologies, Inc., a manufacturer of
high sensitivity analytical instruments for chemical sensing and also serves as
a director of Oakhurst.

Mr. Auerbach. Mr. Auerbach was Chairman, President and Chief Executive Officer
of Oakhurst from December 1995 to May 1997. He has been Chief Financial Officer
of the Company and of Oakhurst since December 1995. He has also been Senior Vice
President and Chief Financial Officer since April 1993 of Central Lewmar, L.P.,
a fine paper merchant. From September 1992 until April 1993, he was a partner of
Marron Capital, L.P., an investment banking company. Prior to that, he was
President, Chief Executive Officer and Chairman of the Board of Implant
Technology, Inc., a manufacturer of artificial hip systems, from 1990 to 1992.
He is a director of Pharmaceutical Resources, Inc., a generic drug manufacturer
and continues to serve as a director of Oakhurst. Mr.
Auerbach is a certified public accountant.

Mr. Davies. Mr. Davies has been Chairman, President and Chief Executive Officer
of Oakhurst since May 1997. Mr. Davies was a Vice President of Wexford Capital
Corporation, which acts as the investment manager to several private investment
funds from 1994 to March 1997. From November 1995 to March 1997 Mr. Davies also
served as Executive Vice President of Wexford Management LLC, a private
investment management company. From September 1993 to May 1994 he was a Managing
Director of Steinhardt Enterprises, Inc., an investment banking company, and
from 1987 to August 1993, he was Executive Vice President of The Hallwood Group
Incorporated, a merchant banking firm. Mr. Davies serves as a director of
Industrial Acoustics Company, Inc., a New York based engineered products group
specializing in noise control products and systems, and of Maxicare Health Plan,
Inc., a health maintenance organization based in California.

Mr. Lever. Mr. Lever has been associated with the law firm of Kurzman &
Eisenberg or its predecessor since 1980, and became a member of the firm in
1984. Mr. Lever specializes in transactional business matters with particular






                                      -12-

<PAGE>   14


emphasis on fine arts publishing, distribution and investment, and the sale and
acquisition of commercial real estate entities. Prior to 1980, Mr. Lever was an
Assistant District Attorney for Kings County, New York. Mr. Lever is a director
of Oakhurst, as well as a director of several private companies.



SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities ("Insiders") to file reports
of ownership and certain changes in ownership with the Securities and Exchange
Commission and to furnish the Company with copies of those reports.

        Based solely on a review of those reports and amendments thereto
furnished to the Company during its most recent fiscal year or written
representations by Insiders that no Forms 5 were required to be filed, the
Company believes that during the fiscal year ended February 28, 1998 all Section
16(a) filing requirements applicable to the Company's Insiders were satisfied.



ITEM 11.    EXECUTIVE COMPENSATION


        This item contains information about compensation, stock options grants
and employment arrangements and other information concerning certain of the
executive officers and the directors of the Company.


SUMMARY COMPENSATION TABLE

        The following table sets forth the compensation the Company paid or
accrued for services rendered in the Company's 1998, 1997 and 1996 fiscal years
by the Chief Executive Officer and the only other executive officer of the
Company whose compensation exceeded $100,000 in fiscal 1998 and who was serving
at the end of the 1998 fiscal year.


<TABLE>
<CAPTION>


                                                                                              Long Term
                                               Annual Compensation                     Compensation Awards
                                ------------------------------------------------    ------------------------------
                                                                    Other
                                                                    Annual             Securities          All
                                                                    Compen-            Underlying         Other
      Name and Principal                       Salary      Bonus    sation              Options**      Compensation
            Position               Year          ($)        ($)       ($)*                (#)               ($)
------------------------------------------------------------------------------------------------------------------
<S>                               <C>          <C>        <C>      <C>                 <C>             <C>
Bernard H. Frank (1)               1998         50,050      7,364      --                     --            13,908,(2)
Chairman & Chief                   1997         50,243     16,000      --                 68,327            13,908
Executive Officer                  1996         82,775         --      --                     --            19,151

Terrance W. Allan                  1998        115,001     15,000      --                     --                --
Executive Vice President           1997        126,490     14,000      --                 24,333                --
                                   1996        106,160         --      --                  5,000             6,498
</TABLE>


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

*        Excludes perquisites and other personal benefits if the aggregate
         amount of such items of compensation was less than the lesser of either
         $50,000 or 10% of the total annual salary and bonus of the named
         executive officer.

**       These options relate to shares of Oakhurst, not the Company.

(1)      Mr. Frank, who is also Executive Vice President and Chief Operating
         Officer of Oakhurst, and Mr. Allan are compensated only by the Company
         except with respect to stock options and stock awards.






                                      -13-

<PAGE>   15


(2)      This amount consists of $6,504, $5,508 and $1,896 that Mr. Frank
         received under three substantially identical agreements amended in 1987
         in consideration of the waiver by Mr. Frank of his bankruptcy claims
         for annuity rights in the Company's predecessor's bankruptcy.



COMPENSATION AGREEMENTS

Mr. Frank and Mr. Allan. The Company has three-year employment agreements with
each of Messrs. Frank and Allan (sometimes hereinafter referred to as the
"executive") commencing September 1, 1993 that provide for base salaries of
$100,000 (Mr. Frank) and $96,200 increasing to $115,050 (Mr. Allan). The
agreements provide for the payment of annual management bonuses based upon the
defined profits of the Company's operating division, with Mr. Frank entitled to
a minimum bonus of fifteen percent of base salary. The aggregate amount of such
management bonuses payable each year to the executives and to all other
executives is not to exceed 8% of such defined profits and the allocation
thereof is made by the Compensation Committee of the Company based on
recommendations of Mr. Frank as Chief Executive Officer. Mr. Allan is also
entitled to an executive bonus calculated as a percentage of defined annual
profits of the Company that exceed $2,000,000. The Agreements were extended in
August 1996 on a year to year basis, and will continue under the same terms
unless a notice of non-renewal is given by either party 90 days prior to the
anniversary date of such renewal, or unless replaced by a new agreements.

In the event of non-renewal of the agreements, the executive is entitled to an
aliquot portion of the bonuses he would have earned during the year of
non-renewal, since the contract year does not coincide with the fiscal year of
the Company. The agreements also provide that if the executive's employment
terminates by reason of his death or disability, he is entitled to the greater
of two years' salary (one year for Mr. Allan) or the salary for the balance of
the term of the agreement and the minimum bonus for such period in the case of
Mr. Frank and the management bonus that would otherwise have been paid in the
case of Mr. Allan. If the executive's employment is otherwise terminated without
cause, he is entitled to his salary and bonuses for the greater of one year or
the balance of the term of the agreement.

The agreements provide for car allowances, and the executives are eligible to
participate in all defined contribution plans, survivor and supplemental
benefits, short and long-term disability benefits, and all other benefit plans
and perquisites available now or in the future to the senior executives of the
Company.

The agreements also provide for certain termination rights in the event of a
change in control of the Company. Change in control is defined to include
certain changes in the make-up of the Company's board of directors or a sale of
the Company's assets or business. Each executive has the right to terminate his
employment within a defined period (ranging up to one year) following a change
in control and (i) to be paid his base salary for a period of up to 24 months
following such termination; (ii) to continue to receive for a like period the
benefits that he is entitled to receive under his agreement and (iii) to be paid
25% of base salary in lieu of all bonus entitlement. The agreements also provide
for substantially the same payments and benefits in the event the executive's
employment is terminated by the Company without cause as a result of a change in
control. In the event of any termination other than for cause, or voluntary
resignation in the absence of a change in control, the executive's options
become fully exercisable for a period of seven months following termination. If
a change in control had occurred on May 1, 1998, and if each of Messrs. Frank
and Allan had exercised his rights of termination, payments by the Company would
have been approximately $535,000 in the aggregate.

Mr. Frank. In fiscal 1997, in light of the Company's financial performance, Mr.
Frank voluntarily reduced his annual salary by 50%. In February 1998, Mr.
Frank's annual base salary was set by agreement at $50,000; he was granted
participation in a deferred compensation program commencing March 1, 1998
providing for the payment to him of $5,000 per month for twenty-four months to
compensate him for the portion of his salary voluntarily foregone by him; and
commencing March 1, 1998, Mr. Frank was made eligible to participate in a bonus
program pursuant to which the Compensation Committee of the Board of Directors
in its discretion and after reviewing the 





                                      -14-


<PAGE>   16

Company's performance and cash position may grant to him on a quarterly basis a
bonus not to exceed $25,000 in the aggregate in any one fiscal year.

Mr. Frank also receives compensation of $13,908 per year, in the aggregate,
under three substantially identical agreements amended in 1987 in consideration
of the waiver by Mr. Frank of his bankruptcy claims for annuity rights in the
Company's predecessor's bankruptcy. The amended agreements provide for payments
to be made for a period of fifteen years subsequent to January 1988 of $6,504,
$5,508 and $1,896 per year for the three agreements, respectively.

STOCK OPTION GRANTS

         During fiscal 1998, no option grants relating to the Company's shares
were made to any of the named executives officers.

AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

         During fiscal 1998, no options were exercised by any of the named
executive officers.

         The following table sets forth certain information at February 28,
1998, the Company's fiscal year end, based upon (i) the average of the bid and
asked price per share of the Company's common stock ($0.03) on that date, and
(ii) the closing price per share of Oakhurst's common stock, ($1.125) on that
date, as they relate to stock options held at that date by each of the
individuals named in the Summary Compensation Table. The "value" of unexercised
in-the-money options is the difference between the market value of the common
stock subject to the options at February 28, 1998 and the exercise (purchase)
price of the option shares.

<TABLE>
<CAPTION>



                                           Number of Securities                Value of Unexercised
                                          Underlying Unexercised              in-the-Money Options at
                                        Options at Fiscal Year End                Fiscal Year End
                                      ------------------------------        ---------------------------
   Name                               Exercisable      Unexercisable        Exercisable   Unexercisable
   ----                               -----------      -------------        -----------   -------------
<S>                                   <C>              <C>                  <C>           <C>
THE COMPANY'S COMMON STOCK

Bernard H. Frank...............          23,141              --                   --           --
Terrance W. Allan..............           9,257              --                   --           --

OAKHURST COMMON STOCK

Bernard H. Frank...............          68,327              --                   --           --
Terrance W. Allan..............          28,081           1,250                   --           --
</TABLE>


REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION FOR THE FISCAL
YEAR ENDED FEBRUARY 28, 1998

         This report has been prepared by the Compensation Committee of the
Board of Directors of the Company and addresses the Company's compensation
policies with respect to the Chief Executive Officer and executive officers of
the Company in general for the 1998 fiscal year. Except for Mr. Frank, each
member of the Committee is a non-employee director.


COMPENSATION POLICY

         The overall intent of the Committee in respect of executive officers is
to establish levels of compensation that provide appropriate incentives in order
to command high levels of individual performance and thereby increase the value
of the Company to its stockholders, and that are sufficiently competitive to
retain and attract the skills 






                                      -15-


<PAGE>   17

required for the success and profitability of the Company. The principal
components of executive compensation are salary, bonus and stock options.


CHIEF EXECUTIVE OFFICER'S COMPENSATION

         The chief executive officer's salary was determined in the same manner
as Mr. Allan's, described below.


OTHER EXECUTIVE OFFICERS

         Each executive is compensated under a written employment agreement. The
agreement was reviewed by Oakhurst's Compensation Committee and approved by the
Company's Compensation Committee with Mr. Frank abstaining from voting on his
own agreement.

MESSRS. FRANK AND ALLAN

Salary. Both executives are long term employees of the Company and its
predecessor, and Mr. Frank is a founder of the original business. Accordingly,
the salary of each executive was based on the level of his prior salary and the
subjective judgement of the members of the Committee as to the value of the
executive's past contribution and potential future contribution to the
profitability of the business.

Bonuses. Bonus were paid pursuant to each executive officer's employment
agreement described above under the heading "Compensation Agreements," above.

Stock Options. No stock options relating to the Company's common stock were
granted to the executive officers on account of individual or Company
performance during fiscal 1998. The Committee believes that it is important in
aligning management's and stockholders' interests in the enhancement of
stockholder value over the long term.

Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code (enacted in 1993) generally disallows a tax deduction to
public companies for compensation over $1 million paid to its chief executive
officer and its four other most highly compensated executives. The Company's
compensation payable to any one executive officer (including potential income
from outstanding stock options) is currently and for the foreseeable future
unlikely to reach that threshold. In addition, because of the significant net
operating loss carry-forwards of the Company, the deductibility of compensation
payments is not currently an issue. However, should circumstances change, the
Compensation Committee will study the matter and make recommendations to the
Board of Directors.

The Compensation Committee:         Robert M. Davies
                                    Joel S. Lever
                                    Bernard H. Frank

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         Mr. Frank is a director, executive officer and employee of the Company
and a director and executive officer of Oakhurst. Messrs. Abernathy, Auerbach,
Davies and Lever also serve as directors of Oakhurst.

DIRECTORS' COMPENSATION

         No fees are paid to directors for attendance at board or committee
meetings. However, board members are entitled to reimbursement of out-of-pocket
expenses incurred in attending such meetings.

         The Performance Graph and the Report of the Compensation Committee on
Executive Compensation in 







                                      -16-

<PAGE>   18



this Item 11 are not and shall not be deemed incorporated by reference into any
filings of the Company with the Securities and Exchange Commission by
implication or by any reference in any such filings to this Proxy Statement.

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

PERFORMANCE GRAPH

         The following graph assumes an investment of $100 on February 29, 1994
and compares annual changes thereafter in the market price of the Company's
Common Stock with (i) the Dow Jones Global US Market Index (a broad market
index), and (ii) the Dow Jones Retailers - Other Specialty Index, a group of
companies whose marketing strategy is focused on a limited product line, such as
automotive parts. Both indices are published in the Wall Street Journal.


                              [PERFORMANCE GRAPH]

<TABLE>
<CAPTION>

                                    1994       1995      1996      1997      1998

<S>                                <C>       <C>       <C>       <C>       <C>
Steel City Products, Inc.          100.00     38.00     24.00     12.00     12.00
DJ Global US                       100.00    107.31    144.58    181.68    246.35
Dow Jones Retailers - Other        100.00     96.29     95.16    113.19    173.11
</TABLE>

                                      -17-

<PAGE>   19



ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT.

         The following table sets forth certain information regarding beneficial
ownership of the Common Stock at May 1, 1998 by (i) each person known by the
Company to own beneficially more than 5% of the outstanding Common Stock; (ii)
each of the directors of the Company; (iii) the executive officers named in the
Summary Compensation Table, in Item 11, above; and (iv) all directors and
executive officers as a group. Except as otherwise indicated in the footnotes,
the Company believes that the beneficial owners of the Common Stock listed
below, based on information furnished by such owners, have sole investment and
voting power with respect to the shares of Common Stock shown as beneficially
owned by them.

<TABLE>
<CAPTION>



Name and Address                                       Number of Shares of           Percentage of
of Beneficial Owner                                   Series A Preferred Stock          Class
-------------------                                   ------------------------       -------------
<S>                                                   <C>                            <C>
Oakhurst Company, Inc.                                        1,938,526                   100%
3513 Concord Pike Suite 3527
Wilmington, Delaware 19803
</TABLE>

<TABLE>
<CAPTION>


Name and Address                                        Number of Shares of          Percentage of
of Beneficial Owner                                        Common Stock                 Class
-------------------                                     -------------------          -------------
<S>                                                   <C>                            <C>
Oakhurst Company, Inc.                                          286,955                  10.0%
3513 Concord Pike Suite 3527
Wilmington, Delaware 19803

Special Situations                                              200,000                   6.2%
Fund, L.P.  (1)
625 Madison Avenue
New York, New York  10022
</TABLE>




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

(1)  By agreement with the Company dated June 25, 1990, as amended, Special
     Situations Fund, LLP agreed not to increase its beneficial ownership of the
     Common Stock of the Company or Oakhurst above 8.2% of the then outstanding
     shares except in transactions to which the Company or Oakhurst, as the case
     may be, is a party or under certain other circumstances.

SECURITY OWNERSHIP OF MANAGEMENT

         The following table sets forth information regarding beneficial
ownership of the Company's Common Stock (including Common Stock issuable upon
exercise of outstanding options) by each director, each executive officer named
in the "Summary Compensation Table," below, and by all directors and executive
officers of the Company as a group. The information has been furnished by the
directors and officers of the Company themselves.
No director or officer owns any shares of Preferred Stock of the Company.

<TABLE>
<CAPTION>



Name and Address                                                Number of Shares           Percentage of
of Beneficial Owner                                              of Common Stock              Class
-------------------                                             ----------------           ------------

<S>                                                             <C>                        <C>
Bernard H. Frank ......................................              53,141(1)                 1.6%
Terrance W. Allan .....................................               9,257(1)                   *
John D. Abernathy .....................................                 -0-                     --
Mark Auerbach .........................................                 -0-                     --
Joel S. Lever .........................................              40,819                    1.2%
Robert M. Davies ......................................              15,000                      *

All directors and
executive officers as a group, 5 persons ..............             124,378(1)                 3.6%
</TABLE>


---------------
*  Less than 1%

(1)   These shares are purchasable under outstanding stock options, exercisable
      at $0.625 per share.





                                      -18-


<PAGE>   20




ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Reference is made to "Compensation of Directors" and "Compensation Committee
Interlocks and Insider Participation" in Item 11, above.







                                      -19-

<PAGE>   21



                                     PART IV


ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


(a)  Documents filed as a part of this report.

     1.  Financial Statements:

         Independent Auditors' Report

         Balance Sheets: February 28, 1998 and February 28, 1997

         Statements of Operations for the fiscal years ended February 28, 1998,
              February 28, 1997, and February 29, 1996

         Statements of Stockholders' Equity for the fiscal years ended February
              28, 1998, February 28, 1997, and February 29, 1996

         Statements of Cash Flows for the fiscal years ended February 28, 1998,
              February 28, 1997, and February 29, 1996

         Notes to Financial Statements

         Supplementary Financial Data:

              Selected Quarterly Financial Data (unaudited) for the fiscal years
              ended February 28, 1998 and February 28, 1997


     2.  The following Financial Statement Schedules for the fiscal years ended
         February 28, 1998, February 28, 1997, and February 29, 1996 are
         submitted herewith:

           Schedule II - Valuation and Qualifying Accounts
           All other schedules are omitted because they are not applicable or 
           the required information is shown in the financial statements or the 
           notes thereto.


     3.  Exhibits.


Exhibit No.      Description

2.1      Heck's, Inc. Second Amended Joint Plan of Reorganization and Disclosure
         Statement (filed as Exhibits 2(a) and (b) to the Company's Annual
         Report on Form 10-K for the fiscal year ended February 25, 1989).

2.2      Agreement and Plan of Merger dated as of May 20, 1991 (filed as
         Appendix A to the Proxy Statement/Prospectus of Steel City Products,
         Inc. and the Company the dated April 16, 1991).






                                      -20-



<PAGE>   22






3.1      Restated Certificate of Incorporation (filed as Exhibit 3(a) to the
         Company's Annual Report on Form 10-K for the fiscal year ended February
         27, 1993).

3.2      By-laws of the Company as amended through May 17, 1993 (filed as
         Exhibit 3.2 to the Company's Annual Report of Form 10-K for the fiscal
         year ended February 26, 1994).

x/10.1   Employment Agreement with Bernard H. Frank dated as of September 1,
         1993 (filed as Exhibit 10.1 to the Company's Annual Report of Form 10-K
         for the fiscal year ended February 26, 1994).

x/10.2   Employment Agreement with Terrance W. Allan dated as of September 1,
         1993 (filed as Exhibit 10.3 to the Company's Annual Report of Form 10-K
         for the fiscal year ended February 26, 1994).

10.3     Agreement dated June 11, 1991 with Prudential-Bache Special Situations
         Fund (filed as Exhibit 10(q) to the Company's Annual Report on Form
         10-K for the fiscal year ended March 3, 1990).

x/10.4   Form of Option Agreement dated August 29, 1991 with directors and
         executive officers (filed as Exhibit 10(t) to the Company's Annual
         report on Form 10-K for the fiscal year ended February 29, 1992).

10.5     Note Agreements with William T. Apgar, Liquidating Trustee for the
         Retail Acquisition Corp. Amended Plan of Reorganization, (filed as
         Exhibit 10(w) the Company's Annual Report on Form 10-K for the fiscal
         year ended February 27, 1993).

10.6     Open-End Mortgage between Steel City Products, Inc. and FINOVA Capital
         Corporation dated March 28, 1996, (filed as exhibit #10.10 to the
         Company's Annual Report on Form 10-K for the fiscal year ended February
         29, 1996).

10.7     Combined and Amended Promissory Note between Steel City Products, Inc.
         and Oakhurst Company, Inc., dated March 28, 1996, (filed as exhibit
         #10.11 to the Company's Annual Report on Form 10-K for the fiscal year
         ended February 29, 1996).

10.8     Trademark & Trade Name License Agreement between Oakhurst Holdings,
         Inc. and Steel City Products, Inc., dated August 16, 1995, (filed as
         exhibit #10.12 to the Company's Annual Report on Form 10-K for the
         fiscal year ended February 29, 1996).

x/10.9   Corporate Services Agreement between Steel City Products, Inc. and
         Oakhurst Management Corporation dated June 1, 1995, (filed as exhibit
         #10.13 to the Company's Annual Report on Form 10-K for the fiscal year
         ended February 29, 1996).

10.10    Agreement of Sale and Purchase by and between Steel City Products, Inc.
         and Bearing Service Company of Pennsylvania dated as of August 18,
         1997, (filed as exhibit #10 to the Company's Form 10-Q for the quarter
         ended August 31, 1997).

10.11    Addendums to the Agreement of Sale and Purchase by and between Steen
         City Products, Inc. and Bearing Service company of Pennsylvania dated
         October 18, 1997, and December 17, 1997, respectively, (filed as
         exhibit #10 to the Company's Form 10-Q for the quarter ended November
         30, 1997).

10.12    Lease agreement by and between Regional Industrial Development
         Corporation of Southwestern Pennsylvania and Steel City Products, Inc.,
         dated November 11, 1997- filed herewith.




                                      -21-
<PAGE>   23



27       Financial Data Schedule (EDGAR transmission only) - filed herewith.


-----------------
x/       Management contract or compensatory plan or arrangement.

(b) Reports on Form 8-K:

         No Reports on Form 8-K were filed during the last quarter of the fiscal
year ended February 28, 1998.







                                      -22-

<PAGE>   24


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                    STEEL CITY PRODUCTS, INC.


Dated: May 27, 1998                 By:  /s/ Bernard H. Frank
                                       ---------------------------
                                       Bernard H. Frank, Chief Executive Officer
                                       (duly authorized officer)


         KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints each of Bernard H. Frank, Robert Davies,
and Roger M. Barzun jointly and severally his true and lawful attorneys-in-fact
and agent with full powers of substitution for him and in his name, place and
stead in any and all capacities to sign on his behalf, individually and in each
capacity stated below and to file any and all amendments to this Annual Report
on Form 10-K with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises as fully as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
their substitute or substitutes may lawfully do or cause to be done by virtue
thereof.

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

<TABLE>
<CAPTION>




         SIGNATURES                                           TITLES                        DATE
         ----------                                           ------                        ----

<S>                                                  <C>                               <C>
   /s/ Bernard H. Frank                              Chairman of the Board              May 27, 1998
------------------------------------------------     Chief Executive Officer
        Bernard H. Frank                             Director
                                                     

   /s/ Mark Auerbach                                 Chief Financial Officer            May 27, 1998
------------------------------------------------     (principal financial and
        Mark Auerbach                                accounting officer)
                                                       

   /s/ Terrance W. Allan                             Executive Vice President           May 27, 1998
------------------------------------------------     Director
        Terrance W. Allan                            


   /s/ Robert M. Davies                              Director                           May 27, 1998
------------------------------------------------
        Robert M. Davies


   /s/ John D. Abernathy                             Director                           May 27, 1998
------------------------------------------------
        John D. Abernathy


   /s/ Joel S. Lever                                 Director                           May 27, 1998
------------------------------------------------
        Joel S. Lever
</TABLE>





                                      -23-

<PAGE>   25
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Steel City Products, Inc.:


We have audited the accompanying balance sheets of Steel City Products, Inc. as
of February 28, 1998 and 1997, and the related statements of operations,
stockholders' equity, and cash flows for the years ended February 28, 1998,
February 28, 1997 and February 29, 1996. Our audits also included the financial
statement schedule listed in the Index at Item 14(a)(2). These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedule based on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Steel City Products, Inc. as of February 28,
1998 and 1997, and the results of its operations and its cash flows for the
years ended February 28, 1998, February 28, 1997, and February 29, 1996 in
conformity with generally accepted accounting principles. Also, in our opinion,
the financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.




 /s/ Deloitte & Touche LLP
------------------------------
Deloitte & Touche LLP

Pittsburgh, Pennsylvania
May 22, 1998


                                      -F1-

<PAGE>   26



                            STEEL CITY PRODUCTS, INC.
                                 BALANCE SHEETS
                (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)


                                     ASSETS


<TABLE>
<CAPTION>
                                                                                          FEBRUARY 28,   FEBRUARY 28,
                                                                                              1998           1997
                                                                                           ----------    -----------
<S>                                                                                         <C>           <C>     
Current assets:
     Cash .............................................................................     $      1      $      2
     Trade accounts receivable, less allowance of $355 and $389, respectively .........        2,698         2,558
     Notes receivable - Oakhurst Company, Inc .........................................          293           275
     Inventories ......................................................................        3,666         3,327
     Other ............................................................................           50           145
                                                                                            --------      --------
                       Total current assets ...........................................        6,708         6,307
                                                                                            --------      --------

Property and equipment, at cost .......................................................          951         2,005
     Less accumulated depreciation ....................................................         (618)         (951)
                                                                                            --------      --------
                                                                                                 333         1,054
                                                                                            --------      --------
Deferred tax asset, less valuation allowance of $52,360
     and $51,300, respectively ........................................................           --         1,000
Notes receivable - Oakhurst Company, Inc., long-term portion ..........................          723         1,008
Advances to Oakhurst Company, Inc .....................................................        5,706         5,400
Other assets ..........................................................................          666           528
                                                                                            --------      --------
                                                                                               7,095         7,936
                                                                                            --------      --------

                                                                                            $ 14,136      $ 15,297
                                                                                            ========      ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable .................................................................     $  3,926      $  4,085
     Accrued compensation .............................................................          380           271
     Current maturities of long-term obligations ......................................          543           755
     Due to affiliate .................................................................          462           284
     Other ............................................................................          150           180
                                                                                            --------      --------
                       Total current liabilities ......................................        5,461         5,575
                                                                                            --------      --------

Long-term obligations:
     Long-term debt ...................................................................        2,070         3,499
     Other long-term obligations ......................................................           62            82
                                                                                            --------      --------
                                                                                               2,132         3,581
                                                                                            --------      --------
Commitments and contingencies

Stockholders' equity:
     Preferred stock, par value $0.01 per share; authorized
        5,000,000 shares, issued 1,938,526 shares;
        liquidation preference $10,135 ................................................           19            19
     Common stock, par value $0.01 per share; authorized
        5,000,000 shares; issued 3,238,061 shares .....................................           32            32
     Additional paid-in capital .......................................................       43,824        43,824
     Deficit (Reorganized on August 26, 1989) .........................................      (37,331)      (37,733)
     Treasury stock, at cost, 207 common shares .......................................           (1)           (1)
                                                                                            --------      --------
                       Total stockholders' equity .....................................        6,543         6,141
                                                                                            --------      --------

                                                                                            $ 14,136      $ 15,297
                                                                                            ========      ========
</TABLE>

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


                                      -F2-



<PAGE>   27

<TABLE>
<CAPTION>

                            STEEL CITY PRODUCTS, INC.
                            STATEMENTS OF OPERATIONS
              (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                             FISCAL              FISCAL             FISCAL
                                                                           YEAR ENDED          YEAR ENDED         YEAR ENDED
                                                                           FEBRUARY 28,        FEBRUARY 28,      FEBRUARY 29,
                                                                              1998                1997               1996
                                                                         ---------------     --------------     --------------

<S>                                                                      <C>                 <C>                <C>           
Sales........................................................            $        17,879     $       18,031     $       24,647
Other income.................................................                        584                613                508
                                                                         ---------------     --------------     --------------
                                                                                  18,463             18,644             25,155
                                                                         ---------------     --------------     --------------
Cost of goods sold, including occupancy and
    buying expenses..........................................                     14,333             14,621             20,024
Operating, selling and administrative expenses...............                      4,150              3,951              4,720
Provision for doubtful accounts, net of recoveries...........                        138                (30)               415
Interest expense.............................................                        396                464                282
Gain on the sale of real estate..............................                     (1,760)                --                 --
                                                                         ---------------     --------------     --------------
                                                                                  17,257             19,006             25,441
                                                                         ---------------     --------------     --------------
Income (loss) from continuing operations
    before undistributed earnings of
    investment in affiliate and income taxes.................                      1,206               (362)              (286)
                                                                         ---------------     --------------     --------------
Undistributed earnings of investment in affiliate............                        196                209                 80
                                                                         ---------------     --------------     --------------
Income taxes:
    Current income tax (expense) benefit.....................                         --                 (9)               136
    Deferred income tax expense..............................                     (1,000)            (1,093)            (1,500)
                                                                         ---------------     --------------     --------------
                                                                                  (1,000)            (1,102)            (1,364)
                                                                         ---------------     --------------     --------------
Income (loss) from continuing operations.....................                        402             (1,255)            (1,570)

Discontinued operations:
    Income on disposal, less income tax expense
       of $22 in fiscal 1996.................................                         --                 --                 43
                                                                         ---------------     --------------     --------------
Net income (loss)............................................                        402             (1,255)            (1,527)

Effect of Series A Preferred Stock dividends.................                     (1,014)            (1,014)            (1,016)
                                                                         ---------------     --------------     --------------
Net loss attributable to common stockholders.................            $          (612)    $       (2,269)    $       (2,543)
                                                                         ===============     ==============     ==============
Basic and diluted per share amounts:
    Net loss from continuing operations
       after preferred stock dividends.......................            $         (0.19)             (0.70)             (0.80)
    Income from discontinued operations......................                         --                 --               0.01
                                                                         ---------------     --------------     --------------
    Net loss attributable to common
       stockholders after preferred stock dividends..........            $         (0.19)             (0.70)             (0.79)
                                                                         ===============     ==============     ==============
Weighted average number of shares outstanding
    used in computing per share amounts......................                  3,238,061          3,238,061          3,238,061
                                                                         ===============     ==============     ==============
</TABLE>

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



                                      -F3-

<PAGE>   28


<TABLE>
<CAPTION>

                            STEEL CITY PRODUCTS, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                          (DOLLAR AMOUNTS IN THOUSANDS)

                                                                                  ADDITIONAL     RETAINED
                                                        PREFERRED     COMMON       PAID-IN       EARNINGS     TREASURY
                                                         STOCK        STOCK        CAPITAL      (DEFICIT)      STOCK       TOTALS
                                                        ---------   -----------   -----------   -----------   ---------    --------
<S>                                                     <C>         <C>           <C>           <C>           <C>          <C>     
BALANCE AT FEBRUARY 28, 1995...............             $      19   $        32   $    43,824   $   (34,951)  $      (1)   $  8,923

Net loss...................................                                                          (1,527)                 (1,527)
                                                        ---------   -----------   -----------   -----------   ---------    --------
BALANCE AT FEBRUARY 29, 1996...............                    19            32        43,824       (36,478)         (1)      7,396

Net loss...................................                                                          (1,255)                 (1,255)
                                                        ---------   -----------   -----------   -----------   ---------    --------
BALANCE AT FEBRUARY 28, 1997...............                    19            32        43,824       (37,733)         (1)      6,141

Net income.................................                                                             402                     402
                                                        =========   ===========   ===========   ===========   =========    ========
BALANCE AT FEBRUARY 28, 1998...............             $      19   $        32   $    43,824   $   (37,331)  $      (1)   $  6,543
                                                        =========   ===========   ===========   ===========   =========    ========
</TABLE>


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


                                      -F4-
<PAGE>   29


                           STEEL CITY PRODUCTS, INC.
                            STATEMENTS OF CASH FLOWS
                         (DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                               FISCAL           FISCAL         FISCAL
                                                                             YEAR ENDED       YEAR ENDED     YEAR ENDED
                                                                             FEBRUARY 28,     FEBRUARY 28,  FEBRUARY 29,
                                                                                1998             1997           1996
                                                                             -----------      ----------    ------------
<S>                                                                          <C>              <C>           <C>          
   Cash flows from operating activities:
       Income (loss) from continuing operations............................. $       402      $   (1,255)   $     (1,570)
       Adjustments to reconcile income (loss) from continuing
           operations to net cash (used in) provided by operating activities:
                Depreciation and amortization................................        173             276             194
                Gain on the sale of real estate .............................     (1,761)             --              --
                Retirement of property and equipment.........................          2              --              26
                Deferred tax expense.........................................      1,000           1,093           1,522
                Undistributed earnings of investment in affiliate............       (196)           (209)            (80)
       Other changes in operating assets and liabilities:
                Accounts receivable..........................................       (140)            (46)          1,518
                Inventories..................................................       (339)          1,166           1,878
                Accounts payable.............................................       (159)            435          (2,027)
                Other........................................................        296             299            (175)
                                                                             -----------      ----------    ------------
   Net cash (used in) provided by operating activities of:
       Continuing operations.................................................       (722)          1,759           1,286
       Discontinued operations...............................................       (294)           (255)           (304)
                                                                             -----------      ----------    ------------
   Net cash (used in) provided by operating activities.......................     (1,016)          1,504             982
                                                                             -----------      ----------    ------------

   Cash flows from investing activities:
       Advances to Oakhurst Company, Inc.....................................       (306)         (3,349)           (985)
       Collection of note receivable - Oakhurst Company, Inc.................        267             248             675
       Proceeds from the sale of real estate.................................      2,656              --              --
       Additions to property and equipment...................................       (280)             (7)            (96)
       Other.................................................................         52              --              --
                                                                             -----------      ----------    ------------
   Net cash provided by (used in) investing activities.......................      2,389          (3,108)           (406)
                                                                             -----------      ----------    ------------

   Cash flows from financing activities:
       Net (repayments) borrowings under
          revolving credit agreement.........................................        (80)          2,150              --
       Proceeds from long-term borrowings....................................         --           1,500              --
       Principal payments on long-term obligations...........................     (1,294)         (1,921)           (602)
       Deferred loan costs...................................................         --            (126)             --
                                                                             -----------      ----------    ------------
   Net cash (used in) provided by financing activities.......................     (1,374)          1,603            (602)
                                                                             -----------      ----------    ------------

   Net decrease in cash......................................................         (1)             (1)            (26)
   Cash at beginning of year.................................................          2               3              29
                                                                             -----------      ----------    ------------
   Cash at end of year ..................................................... $         1      $        2    $          3
                                                                             ===========      ==========    ============

   Supplemental disclosures of cash flow information: Cash paid during the year
       for:
          Interest.......................................................... $       413      $      439    $        282
                                                                             ===========      ==========    ============
          Income taxes, net of refunds...................................... $        --      $       15    $        (93)
                                                                             ===========      ==========    ============

   Supplemental schedule of non-cash financing activities:
          Capital leases obligations incurred for new equipment............. $        --      $       --    $         79
                                                                             ===========      ==========    ============
</TABLE>

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


                                      -F5-
<PAGE>   30

                            STEEL CITY PRODUCTS, INC.
                          NOTES TO FINANCIAL STATEMENTS

1.  SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

   Business Activities:

         Steel City Products, Inc. ("SCPI" or "the Company") is a wholesale
distributor, operating under the trade name Steel City Products, selling
primarily to discount retail chains, hardware, drug and supermarket retailers
and to automotive specialty stores, based principally in the Northeastern United
States. In fiscal 1996, SCPI also began distributing non-food pet supplies,
primarily to supermarket retailers. SCPI is a majority-owned subsidiary of
Oakhurst Company, Inc., ("Oakhurst") (see Note 2).


   Use of Estimates:

         The financial statements have been prepared in conformity with
generally accepted accounting principals, which requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and the disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.


   Fiscal Year:

         The Company's fiscal year ends on the last day of February.


   Inventories:

         Inventories are stated at the lower of cost or market. Cost is
determined by the last in, first out method (LIFO). Had all of the inventories
been valued using the first-in, first-out (FIFO) method, inventories would have
been approximately $285,000 and $292,000 higher than reported at February 28,
1998 and 1997, respectively.


   Property and Equipment:

         Depreciation and amortization are computed using the straight-line
method. Estimated useful lives used for computing depreciation and amortization
are: building, 15-40 years; building improvements, 5-20 years; leasehold
improvements, 10 years; and office furniture and equipment, 3-10 years.
Depreciation expense was approximately $104,000, $199,000 and $190,000 in fiscal
1998, 1997 and 1996, respectively.


   Other Assets:

         Other assets include goodwill associated with the acquisition in 1969
of Steel City Products, which is being amortized over a 40 year period. The
unamortized values at February 28, 1998 and 1997 are approximately $154,000 and
$160,000, respectively. SCPI assesses whether its excess of costs over net
assets acquired and other long-lived assets are impaired at each balance sheet
date based upon an evaluation of undiscounted projected cash flow through the
remaining amortization period. If an impairment is

                                      -F6-

<PAGE>   31


determined, the amount of such impairment is calculated based upon the estimated
fair value of the asset. No such write-downs due to impairment were recorded in
fiscal 1998, 1997 and 1996.

   Revenue Recognition:

         Revenues are recognized at the time products are shipped.

   Federal Income Taxes:

         SCPI utilizes an asset and liability approach to accounting for income
taxes. Deferred tax liabilities and assets are recognized for the future tax
consequences of events that have already been recognized in the financial
statements or tax returns. Net deferred tax assets are recognized to the extent
that management believes that realization of such benefits is more likely than
not. Changes in enacted tax rates or laws may result in adjustments to the
recorded deferred tax assets or liabilities in the period that the tax law is
enacted (see Note 7).

         SCPI is included in the consolidated federal income tax return of
Oakhurst. For financial reporting purposes, income taxes are calculated on a
stand alone basis.

   Earnings Per Share:

         During fiscal 1998, SCPI adopted statement of Financial Accounting
Standards No. 128, "Earnings per Share". This standard requires presentation of
basic and diluted earnings per share and restatement of all prior period
earnings per share presented. Basic earnings or loss per share is computed by
dividing net earnings or loss by the weighted average number of common shares
outstanding during the year. The diluted earnings per share calculation assumes
the conversion of dilutive stock options into common shares. Loss per share
amounts do not include common stock equivalents since that would have an
antidilutive effect and reduce net loss per share. At February 28, 1998, there
were options to purchase 215,987 share of common stock outstanding that were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average market value of the common share.

   Stock Based Compensation:

         The Company accounts for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", and related interpretations.


2.  CORPORATE REORGANIZATION

         In accordance with a merger transaction in July 1991, SCPI issued to
Oakhurst shares of its common stock and Series A Preferred Stock so that the
aggregate fair market value of such stock owned by Oakhurst totaled
approximately 90% of the aggregate fair market value of SCPI. Accordingly,
Oakhurst controls approximately 90% of the outstanding voting power of SCPI and
receives substantially all of the benefit of operations through dividends on the
preferred stock.

         Under the merger transaction, SCPI is required for a period of five
years following the merger to issue to Oakhurst (or cancel) such number of
shares of Series A Preferred Stock and/or common stock as shall be necessary, in
accordance with periodic determinations, to maintain Oakhurst's aggregate stock
ownership of SCPI at 90%. Revaluations of the Company as of fiscal 1997, 1996
and 1995 have not yet

                                      -F7-

<PAGE>   32



been completed. Management expects that the revaluations as of the end of fiscal
1997 and 1996, when complete, will result in a decrease in the valuation of the
Company because of changes in the business climate and SCPI's customer base
which occurred primarily in fiscal 1996. Accordingly, Series A Preferred shares
outstanding and related dividends may be canceled once such valuations are
complete.

         The Series A Preferred Stock carries a dividend rate of $0.5228 per
share and has a redemption price and liquidation preference of $5.2282 per share
plus any accumulated dividends in arrears. Through February 28, 1998, dividends
of approximately $7.2 million have accumulated since the effective date of the
merger; of this amount, approximately $3.6 million has been declared by SCPI's
Board of Directors and paid. Approximately $3.6 million of undeclared dividends
in arrears was outstanding at February 28, 1998.


3. NOTES RECEIVABLE, ADVANCES AND DIVIDENDS PAID - OAKHURST COMPANY, INC.

         The Oakhurst Note bears interest at the prime rate plus 1.5% and
provides for eight quarterly principal and interest installments of $96,000,
with a balloon payment of approximately $1 million in April 1998. On February
28, 1998, SCPI reached an agreement with Oakhurst to extend the note for an
additional two years with a continuation of the same quarterly installments. The
Oakhurst Note is secured by the capital stock of an Oakhurst subsidiary,
Dowling's Fleet Service, Co., Inc. ("Dowling's").

         SCPI participates in a cash concentration system together with all the
subsidiaries of Oakhurst. Available cash that has been transferred to Oakhurst
has been reflected as an addition to the advances to Oakhurst. Advances to
Oakhurst bear interest at the Citibank base rate plus 1.5%, and have been
classified as a long-term asset as repayment is not anticipated prior to March
1, 1999.


4.  PROPERTY AND EQUIPMENT

         Property and equipment are summarized as follows (in thousands):

<TABLE>
<CAPTION>


                                                  FEBRUARY 28,      FEBRUARY 28,
                                                      1998              1997
                                                  ------------      ------------

<S>                                               <C>               <C>         
Land ........................................     $         --      $        170
Buildings ...................................               --               830
Building improvements .......................               --               348
Leasehold improvements ......................              302                22
Office furniture and equipment ..............              649               635
                                                  ------------      ------------
                                                           951             2,005
Less accumulated depreciation ...............             (618)             (951)
                                                  ------------      ------------
                                                  $        333      $      1,054
                                                  ============      ============
</TABLE>

         In December 1997, SCPI sold its warehouse in to an unrelated third
party for a gross purchase price of approximately $2.8 million in cash.
Accordingly, in the fourth quarter of the current fiscal year SCPI recorded a
pre-tax gain of approximately $1.8 million in connection with the sale. After
repayment of the term loan secured by the property, the net proceeds of
approximately $1.6 million were used to reduce revolving debt, to cover the
expenses of moving to newer, leased premises, and to make certain leasehold
improvements to such premises.



                                      -F8-

<PAGE>   33



5.  LONG-TERM OBLIGATIONS AND OAKHURST LINE OF CREDIT

         Long-term obligations, including the present value of the Creditor
Notes (see Note 8), consist of the following (in thousands):


<TABLE>
<CAPTION>

                                                                                FEBRUARY 28,     FEBRUARY 28,
                                                                                    1998            1997
                                                                                ------------     ------------

<S>                                                                             <C>              <C>         
Creditor Notes due annually through July 1998 .............................     $        522     $        809
Revolving Credit Agreement due in April 1999 ..............................            2,070            2,150
Capital lease obligations for computer and warehouse equipment,
      due monthly through August 2001 .....................................               23               43
Fixed Asset Loan, repaid in full in December 1997 .........................               --            1,268
Other .....................................................................               60               66
                                                                                ------------     ------------
                                                                                       2,675            4,336
Less current portion ......................................................              543              755
                                                                                ------------     ------------
                                                                                $      2,132     $      3,581
                                                                                ============     ============
</TABLE>


         On March 28, 1996, Oakhurst and its subsidiaries, including SCPI,
entered into a two year revolving credit agreement with an institutional lender
that provided for a total facility for Oakhurst and its subsidiaries of $9.5
million, comprised of a SCPI term loan of $1.5 million (the "Fixed Asset Loan"),
secured by a mortgage on SCPI's real estate, and a maximum revolving credit
facility of $8 million (the "Revolver") (collectively, the "Credit Facility").

         Borrowings under the Credit Facility bear interest at the higher of the
Citibank N.A. base rate plus 1.5%, or $5,000 per month, and borrowings under the
Revolver are subject to a borrowing base that is calculated according to defined
levels of Oakhurst's subsidiaries' accounts receivable and inventories. The
Credit Facility had an initial term of two years, and contains restrictive
financial covenants, including among other things, the maintenance of defined
subsidiary and consolidated tangible net worth levels and consolidated current
ratio, and limitations on annual cash dividends. The Credit Facility is secured
by the accounts receivable, inventories, and fixed assets of Oakhurst and its
subsidiaries, including SCPI, contains certain Revolver prepayment penalties,
and provides for the payment of loan management fees, unused Revolver facility
fees and examination fees.

         In June 1997, Oakhurst and SCPI entered into an agreement with the
lender to amend the Credit Facility to reflect certain subsidiary dispositions
by Oakhurst. The agreement principally reduced the total amount available under
the Revolver to $7 million, and amended certain financial covenants, including
the elimination of the consolidated tangible net worth covenant. In September
1997, Oakhurst and its subsidiaries reached an agreement to extend the Revolver
beyond its initial two year term to April 1999, and paid a fee of $35,000 in
connection with the renewal. The Credit Agreement provides for subsequent
automatic renewal terms of one year each upon payment of a renewal fee of 0.5%
of the entire line, unless earlier terminated as provided for in the Agreement.
At February 28, 1998, the borrowing base under the Revolver was $4.7 million.
During fiscal 1998, the borrowing base ranged from approximately $4.2 million to
$6 million, and averaged approximately $5.2 million.

         In December 1997, the Fixed Asset Loan was repaid in full, from the
proceeds of the sale of SCPI's warehouse.








                                      -F9-

<PAGE>   34



         Long-term obligations, mature during each fiscal year as follows (in
thousands):

<TABLE>
<CAPTION>


FISCAL
------
<S>                                <C>
1999 .........................     $        543
2000 .........................            2,090
2001 .........................               12
2002 .........................               11
2003 .........................               12
Thereafter ...................                7
                                   ------------
                                   $      2,675
                                   ============
</TABLE>


6.   FINANCIAL INSTRUMENTS

         Financial instruments at February 28, 1998 and 1997 consist of the
following (in thousands):



<TABLE>
<CAPTION>


                                       FEBRUARY 28, 1998            FEBRUARY 28, 1997
                                   -------------------------     -------------------------
                                    CARRYING        FAIR         CARRYING          FAIR
                                     VALUE          VALUE           VALUE         VALUE
                                   ----------     ----------     ----------     ----------

<S>                                <C>            <C>            <C>            <C>       
Oakhurst Notes ...............     $    1,016     $    1,016     $    1,283     $    1,283
Creditor Notes ...............     $      522     $      580     $      809     $      812
Revolver .....................     $    2,070     $    2,070     $    2,150     $    2,150
Fixed Asset Loan .............             --             --     $    1,268     $    1,268
</TABLE>


         The fair values of the instruments were based upon the rate available
to the Company for instruments of the same maturities. The Creditor Notes, which
are non-interest bearing, were discounted using a current market rate of 11.75%
to determine current fair value.


7.   INCOME TAXES AND DEFERRED TAX ASSET

         As of February 28, 1998, SCPI and Oakhurst had, for tax reporting
purposes, net operating tax loss carry-forwards of approximately $154 million
which expire in the years 2001 through 2012. Under SFAS No. 109, SCPI records as
an asset the future benefit of its net operating tax loss carry-forwards and
other tax benefits.

         Fluctuations in market conditions and trends warrant periodic
management reviews of the recorded valuation allowance to determine if an
increase or decrease in such allowance would be appropriate. During the year
ended February 29, 1996, SCPI experienced significant changes in its customer
base. As a result, management undertook an extensive review of SCPI's operations
to determine the impact of such changes on SCPI's future levels of revenues and
profits. This review, combined with management's consideration of current trends
and historical operations, led management to conclude that the current impact of
these events warranted an increase of $1.5 million in the deferred tax asset
valuation allowance, with a corresponding charge to deferred tax expense.

         Subsequently, the Board of Directors of Oakhurst made the decision to
dispose of two of its subsidiaries, and the consolidated income of Oakhurst
decreased, which led to further increases of approximately $588,000 and $1.2
million in the valuation allowance of the deferred tax asset for the periods
ended February 28, 1998 and 1997 respectively, primarily due to the loss of
potential revenues pursuant to a tax sharing agreement between SCPI and
Oakhurst. If future profit levels exceed current expectations, and economic or
business changes warrant upward revisions in the estimate of the realizable
value of net operating tax loss carry-forwards, the consequent reduction in the
valuation allowance would

                                      -F10-

<PAGE>   35
result in a corresponding deferred tax benefit in future results of operations
to the extent of the aggregate charges of $3.3 million to deferred tax expense
for fiscal 1998, fiscal 1997 and fiscal 1996, and any benefit in excess of such
charge would be reflected as an addition to paid-in capital. The accounting
treatment to increase paid-in capital results from SCPI's quasi-reorganization
accounting in 1990.

         The deferred tax effects of temporary differences are not significant,
and current income taxes payable represent state income taxes.


         Income tax expense consists of the following (in thousands):

<TABLE>
<CAPTION>



                                                         FISCAL          FISCAL          FISCAL
                                                       YEAR ENDED      YEAR ENDED      YEAR ENDED
                                                       FEBRUARY 28,   FEBRUARY 28,    FEBRUARY 29,
                                                          1998           1997             1996
                                                       ------------   ------------    ------------
<S>                                                    <C>             <C>             <C>        
Current tax expense (benefit) ....................     $      412      $        9      $     (136)
Current tax benefit from utilization of
  net operating tax loss carry-forwards ..........           (412)             --              --
                                                       ----------      ----------      ----------
                                                               --               9            (136)
Increase in valuation allowance
  of the deferred tax asset ......................            588           1,217           1,500
Deferred tax expense (benefit) ...................            412            (124)             --
                                                       ----------      ----------      ----------
Income tax expense ...............................     $    1,000      $    1,102      $    1,364
                                                       ==========      ==========      ==========
</TABLE>


         During the year ended February 29, 1996, SCPI settled a dispute over a
tax refund claimed from the state of Kentucky by SCPI's predecessor, and
accordingly, recorded a refund of approximately $142,000, including
approximately $35,000 of interest.

         The income tax provision differs from the amount using the statutory
federal income tax rate of 34% applied to income or loss from continuing
operations for the following reasons (in thousands):


<TABLE>
<CAPTION>


                                                     FISCAL           FISCAL            FISCAL
                                                   YEAR ENDED       YEAR ENDED        YEAR ENDED
                                                  FEBRUARY 28,      FEBRUARY 28,      FEBRUARY 29,
                                                      1998              1997              1996
                                                  ------------      ------------      ------------
<S>                                               <C>               <C>               <C>          
Tax expense (benefit) based on the
  U.S. federal statutory rate ...............     $        477      $        (52)     $        (70)
State income tax expense (benefit),
  net of refunds and federal benefit ........               --                 6               (90)
Undistributed investment income .............              (67)              (71)              (27)
Increase in deferred tax asset
  valuation allowance .......................              588             1,217             1,500
Non-deductible costs ........................                2                 2                51
                                                  ------------      ------------      ------------
    Income tax expense ......................     $      1,000      $      1,102      $      1,364
                                                  ============      ------------      ============
</TABLE>




         The availability of the net operating tax loss carry-forwards may be
adversely affected by future ownership changes of SCPI or Oakhurst; at this
time, such changes cannot be predicted. SCPI's and

                                      -F11-

<PAGE>   36



Oakhurst's estimated operating tax loss carry-forwards at February 28, 1998
expire as follows (in thousands):

<TABLE>
<CAPTION>



Fiscal
------
<S>                                   <C>
2002 ..........................       $  12,000
2003 ..........................          52,000
2004 ..........................          22,000
2005 ..........................          49,000
2006 ..........................          13,000
2011...........................           1,000
2012...........................           2,000
2013 ..........................           3,000
                                      ---------
                                      $ 154,000
                                      =========
</TABLE>



8.  DISCONTINUED RETAIL OPERATIONS

         SCPI disposed of its former Retail Division to an unrelated company,
Retail Acquisition Corp. ("RAC") in September 1990 when RAC acquired
substantially all the assets of the former division and assumed substantially
all of its liabilities. SCPI remained contingently liable for certain of these
liabilities. Subsequently, RAC was forced into bankruptcy, and in fiscal 1993,
SCPI participated in a global settlement pursuant to which SCPI issued $2.5
million of non-interest bearing notes (the "Creditor Notes") solely for the
benefit of contingent creditors. In return, SCPI and Oakhurst were relieved of
any further obligations to contingent creditors, except for payment on the
Creditor Notes.

         The Creditor Notes, which are non-interest bearing, are payable in
equal annual installments through July 1998. The Creditor Notes have been
discounted using an imputed interest rate of 7.5%. Imputed interest expense of
approximately $34,000, $56,000 and $76,000 is included in results of continuing
operations for fiscal 1998, 1997 and 1996, respectively.

         The accompanying statements of operations and cash flows reflect any
income or loss associated with the disposal of the former Retail Division as
discontinued operations. Income from discontinued operations of $43,000 for the
period ended February 29, 1996 primarily reflected a decrease in SCPI's reserve
for contingent liabilities relating to the former retail division, net of an
income tax provision of $22,000.


9.  STOCK OPTIONS

          In fiscal 1992, the Board of Directors granted options to purchase
215,986 shares of common stock to key employees and to members of the Board of
Directors. The exercise price of the options, which was equal to the market
value of the stock at the date of the grant, is $0.625. As of February 28, 1997,
no options had been exercised; all options are fully vested and will remain
exercisable through 2001.

10 .  EMPLOYEE PENSION PLAN

         Steel City Products, together with Oakhurst and its subsidiaries,
maintains a defined contribution profit-sharing retirement plan ("the Plan")
covering substantially all its employees, whereby employees may contribute a
percentage of compensation, limited to maximum allowed amounts under the
Internal Revenue Code. The Plan provides for discretionary employer
contributions, the level of which, if any, is to be determined annually by each
company's Board of Directors. There were no discretionary contributions made for
the years ended February 28, 1998, February 28, 1997 or February 29, 1996.

                                      -F12-

<PAGE>   37



11.  LEASES

         In December 1997, the Company entered into an operating lease for its
warehouse with an initial term that expires January 1, 2003, with one additional
five-year renewal option. The lease requires minimum rental payments of $246,876
per annum, and payment by the Company of certain expenses such as liability
insurance, maintenance and other operating costs. Total rent expense for the
period ended February 28, 1998 was approximately $41,000.



12.  COMMITMENTS AND CONTINGENCIES

         SCPI has employment agreements with two senior executives that provide
termination rights in the event of a change in control of SCPI, as defined. The
rights include payments ranging from six to twenty-four months of the
executives' base salaries, along with continuation of benefits and certain other
payments to each executive. Each agreement also provides for substantially the
same provisions in the event that the executive's employment were to be
terminated by SCPI without cause. The agreements were extended in August 1996 on
a year to year basis, and will continue under the same terms unless a notice of
non-renewal is given by either party 90 days prior to the anniversary date of
such renewal, or unless replaced by a new agreement.

         Management is unaware of any other significant contingencies.


13.  MAJOR CUSTOMERS

         Sales to each of those major customers representing individually more
than 10% of sales were as follows (in thousands):


<TABLE>
<CAPTION>



                            Fiscal Year Ended            Fiscal Year Ended      Fiscal Year Ended
                            February 28, 1998            February 28, 1997      February 29, 1996
                           --------------------         ------------------     -------------------
                                      % of                       % of                      % of
                             Sales  Total Sales          Sales Total Sales      Sales   Total Sales
                           -------- -----------         ------------------     -------  -----------
<S>                        <C>      <C>                 <C>     <C>            <C>        <C>
         Customer A        $2,178      12%              $2,290     13%         $   780       3%
         Customer B          --       --                  --      --            $4,641      19%
         Customer C          --       --                  --      --            $3,975      16%
</TABLE>


         During the third quarter of fiscal 1996, customer B informed SCPI that
it had decided to change its source of supply, and sales to customer B ended in
January 1996.

         In fiscal 1996, Customer C filed for protection under the United States
Bankruptcy Code and announced that it would close all its stores. The fiscal
1996 provision for doubtful accounts contains a write-off of approximately
$150,000 relating to this customer.


14.  RELATED PARTY TRANSACTIONS

         During fiscal 1996, SCPI transferred the rights to its Steel City
Products trademark and trade name to Oakhurst Holdings, Inc. ("OHI") in exchange
for 460 shares of stock of OHI. In August 1995, SCPI entered into a trademark
and trade name license agreement with OHI whereby OHI granted SCPI the exclusive
right to use the trade name in transacting its business. The agreement provides
for a quarterly

                                      -F13-

<PAGE>   38


license fee equal to 1% of gross sales. This fee was approximately $178,000,
$186,000 and $97,000 for fiscal 1998, fiscal 1997 and fiscal 1996, respectively.
SCPI's investment income from OHI was approximately $196,000, $209,000 and
$80,000 in fiscal 1998, fiscal 1997 and fiscal 1996, respectively.

         In June 1995, SCPI engaged Oakhurst Management Corporation ("OMC"), a
wholly-owned subsidiary of Oakhurst, to provide certain legal, management,
investor relations, accounting, and tax services. SCPI's results for the years
ended February 28, 1998, February 28, 1997 and February 29, 1996 include charges
of approximately $582,000, $461,000 and $365,000, respectively, for these
services.



15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Dollar amounts in thousands,
except per share data)

<TABLE>
<CAPTION>




FISCAL 1998                                              FIRST            SECOND            THIRD           FOURTH
-----------                                              -----            ------            -----           ------

<S>                                                   <C>              <C>              <C>              <C>        
Sales ...........................................     $     5,151      $     4,599      $     4,289      $     3,840
Gross profit ....................................             973              931              739              903
Net income (loss) ...............................              45                6             (196)             547
Series A Preferred Stock dividends ..............            (253)            (253)            (253)            (255)
Net (loss) income available
  to common stockholders ........................            (208)            (247)            (449)             292

Basic and diluted per share amounts:
  Net (loss) income attributable to common
    stockholders after preferred stock dividends      $      (.06)     $      (.08)     $      (.14)     $       .09
Average number of shares outstanding ............       3,238,061        3,238,061        3,238,061        3,238,061
</TABLE>



<TABLE>
<CAPTION>


FISCAL 1998                                              FIRST            SECOND            THIRD           FOURTH
-----------                                              -----            ------            -----           ------

<S>                                                   <C>              <C>              <C>              <C>        
Sales ...........................................     $     5,096      $     4,941      $     4,264      $     3,730
Gross profit ....................................             934              984              705              787
Net (loss) income ...............................             (29)              47             (207)          (1,066)
Series A Preferred Stock dividends ..............            (253)            (253)            (253)            (255)
Net loss available
  to common stockholders ........................            (282)            (206)            (460)          (1,321)

Basic and diluted per share amounts:
  Net loss attributable to common
     stockholders after preferred stock dividends     $      (.09)     $      (.06)     $      (.14)     $      (.41)
  Average number of shares outstanding ..........       3,238,061        3,238,061        3,238,061        3,238,061
</TABLE>


         SCPI sold its warehouse in December 1997, and accordingly, recorded a
pre-tax gain of approximately $1.8 million in the fourth quarter of fiscal 1998
in connection with the sale. The results of operations for the fourth quarter of
fiscal 1998 also include a deferred tax charge of approximately $1 million, of
which $588,000 related to an increase in the valuation allowance of the deferred
tax asset (see Note 7).

         The net loss in fourth quarter of fiscal 1997 was caused by a deferred
tax charge of $1.2 million related to an increase in the valuation allowance of
the deferred tax asset (see Note 7).



                                      -F14-

<PAGE>   39

                                                                    SCHEDULE II

                            STEEL CITY PRODUCTS, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                   COLUMN A                     COLUMN B                   COLUMN C                  COLUMN D          COLUMN E 
-----------------------------------------------------------------------------------------------------------------------------------
                                               BALANCE AT       CHARGED          CHARGES TO                             BALANCE
                                               BEGINNING        TO COSTS        OTHER ACCOUNTS     DEDUCTIONS          AT END
                 DESCRIPTION                   OF PERIOD       AND EXPENSES      - DESCRIBE         - DESCRIBE         OF PERIOD
===================================================================================================================================
Allowance for doubtful accounts deducted from trade accounts receivable:
<S>                                           <C>              <C>               <C>              <C>               <C>    
Years ended:
       February 28, 1998....................   $       389     $      138        $         --     $      172 (A)   $          355
                                               ===========     ==========        ============     ==========       ==============
       February 28, 1997....................   $       419     $      (30)       $         --     $       -- (A)   $          389
                                               ===========     ==========        ============     ==========       ==============
       February 29, 1996....................   $       194     $      415        $         --     $      190 (A)   $          419
                                               ===========     ==========        ============     ==========       ==============
</TABLE>

(A)  Amounts were deemed uncollectible.



                                      F-15
<PAGE>   40

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

Exhibit No.      Description

<S>       <C>
          2.1     Heck's, Inc. Second Amended Joint Plan of Reorganization and
                  Disclosure Statement (filed as Exhibits 2(a) and (b) to the
                  Company's Annual Report on Form 10-K for the fiscal year ended
                  February 25, 1989).

          2.2     Agreement and Plan of Merger dated as of May 20, 1991 (filed
                  as Appendix A to the Proxy Statement/Prospectus of Steel City
                  Products, Inc. and the Company the dated April 16, 1991).

          3.1     Restated Certificate of Incorporation (filed as Exhibit 3(a)
                  to the Company's Annual Report on Form 10-K for the fiscal
                  year ended February 27, 1993).

          3.2     By-laws of the Company as amended through May 17, 1993 (filed
                  as Exhibit 3.2 to the Company's Annual Report of Form 10-K for
                  the fiscal year ended February 26, 1994).

          +10.1   Employment Agreement with Bernard H. Frank dated as of
                  September 1, 1993 (filed as Exhibit 10.1 to the Company's
                  Annual Report of Form 10-K for the fiscal year ended February
                  26, 1994).

          +10.2   Employment Agreement with Terrance W. Allan dated as of
                  September 1, 1993 (filed as Exhibit 10.3 to the Company's
                  Annual Report of Form 10-K for the fiscal year ended February
                  26, 1994).

          10.3    Agreement dated June 11, 1991 with Prudential-Bache Special
                  Situations Fund (filed as Exhibit 10(q) to the Company's
                  Annual Report on Form 10-K for the fiscal year ended March 3,
                  1990).

          +10.4   Form of Option Agreement dated August 29, 1991 with directors
                  and executive officers (filed as Exhibit 10(t) to the
                  Company's Annual report on Form 10-K for the fiscal year ended
                  February 29, 1992).

          10.5    Note Agreements with William T. Apgar, Liquidating Trustee for
                  the Retail Acquisition Corp. Amended Plan of Reorganization,
                  (filed as Exhibit 10(w) the Company's Annual Report on Form
                  10-K for the fiscal year ended February 27, 1993).

          10.6    Open-End Mortgage between Steel City Products, Inc. and FINOVA
                  Capital Corporation dated March 28, 1996, (filed as exhibit
                  #10.10 to the Company's Annual Report on Form 10-K for the
                  fiscal year ended February 29, 1996).

          10.7    Combined and Amended Promissory Note between Steel City
                  Products, Inc. and Oakhurst Company, Inc., dated March 28,
                  1996, (filed as exhibit #10.11 to the Company's Annual Report
                  on Form 10-K for the fiscal year ended February 29, 1996).

          10.8    Trademark & Trade Name License Agreement between Oakhurst
                  Holdings, Inc. and Steel City Products, Inc., dated August 16,
                  1995, (filed as exhibit #10.12 to the Company's Annual Report
                  on Form 10-K for the fiscal year ended February 29, 1996).

          +10.9   Corporate Services Agreement between Steel City Products, Inc.
                  and Oakhurst Management Corporation dated June 1, 1995, (filed
                  as exhibit #10.13 to the Company's Annual Report on Form 10-K
                  for the fiscal year ended February 29, 1996).
</TABLE>

<PAGE>   41

<TABLE>
<S>       <C>                                                             
          10.10   Agreement of Sale and Purchase by and between Steel City
                  Products, Inc. and Bearing Service Company of Pennsylvania
                  dated as of August 18, 1997, (filed as exhibit #10 to the
                  Company's Form 10-Q for the quarter ended August 31, 1997).

          10.11   Addendums to the Agreement of Sale and Purchase by and between
                  Steen City Products, Inc. and Bearing Service company of
                  Pennsylvania dated October 18, 1997, and December 17, 1997,
                  respectively, (filed as exhibit #10 to the Company's Form 10-Q
                  for the quarter ended November 30, 1997).

          10.12   Lease agreement by and between Regional Industrial Development
                  Corporation of Southwestern Pennsylvania and Steel City
                  Products, Inc., dated November 11, 1997- filed herewith.

          27      Financial Data Schedule (EDGAR transmission only) - filed herewith.
</TABLE>

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

+         Management contract or compensatory plan or arrangement.