<PAGE>
                                    FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

             FOR THE FISCAL YEAR ENDED ............................

                                       OR

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

        FOR THE TRANSITION PERIOD FROM MARCH 1, 2001 TO DECEMBER 31, 2001

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 IDENTIFICATION NUMBER
 INCORPORATION OR ORGANIZATION

             2751 CENTERVILLE ROAD SUITE 3131
                   WILMINGTON, DELAWARE                                 19803
          ADDRESS OF PRINCIPAL EXECUTIVE OFFICES                       ZIP CODE
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (817) 416-0717

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                               TITLE OF EACH CLASS
                               -------------------
                     COMMON STOCK, $0.01 PAR VALUE PER SHARE

         INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECOND 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 MARCH 1, 2002 OF THE VOTING STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT: $57,345

AT MARCH 1, 2002, THE REGISTRANT HAD 3,238,061 SHARES OF COMMON STOCK
OUTSTANDING

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None



                                       1

<PAGE>

                                     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. 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").

         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.

         The Steel City Products automotive distribution business was founded in
1947 and was acquired in 1969. All operations of SCPI are conducted under the
name Steel City Products. In fiscal 1996, SCPI established a division to
distribute non-food pet supplies. In fiscal 2000, SCPI broadened its
distribution business to include lawn and garden products.

FORMATION OF STERLING CONSTRUCTION COMPANY, INC. ("STERLING"), FORMERLY OAKHURST
COMPANY, INC.

         Oakhurst was formed as part of a merger transaction in 1991, in which
SCPI became a majority-owned subsidiary. In accordance with the merger
agreement, Oakhurst owns 10% of the outstanding SCPI common stock and all of the
SCPI Series A Preferred Stock. In July 2001, Oakhurst completed a transaction in
which it acquired an 80.1% equity interest in Sterling Construction Company, a
heavy civil construction company based in Houston that specializes in municipal
and state highway contracts for paving, bridge, water and sewer, and light rail.
To better reflect the change of focus of the company, in October 2001, the
shareholders of Oakhurst approved a name change to Sterling Construction
Company, Inc and the company formerly bearing that name was renamed Sterling
Houston Holdings, Inc. ("SHH").

         On November 1, 2001, the Board of Directors of the Company voted to
change the Company's fiscal year end from the last day of February to December
31. Accordingly, this report covers the period from March 1, 2001 to December
31, 2001 ("Fiscal 2001"). Information about prior fiscal years is referred to as
"Fiscal 2000" (twelve months ended February 28, 2001), "Fiscal 1999" (twelve
months ended February 29, 2000), "Fiscal 1998" (twelve months ended February 28,
1999) and "Fiscal 1997" (twelve months ended February 28, 1998).

         Because Sterling's ownership of SCPI is primarily in the form of
preferred stock, Sterling retains most of the value of SCPI. The structure of
Sterling's ownership of SCPI facilitates the preservation and utilization of
SCPI's and Sterling's net operating tax loss carry-forwards, which aggregated
approximately $161 million at December 31, 2001.

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, lights and wheel covers), 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, SCPI
introduced non-food pet supplies to its merchandise selection. Although pet
supplies were 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 to increase sales by opening a pet
supplies division. Sales of pet supplies in fiscal 2001 represented
approximately 17% of SCPI's total sales. In fiscal 2000 management developed a
plan to broaden its merchandise base further with the introduction of lawn and
garden products, and began the distribution of these products in the third
quarter of that year. SCPI's automotive and pet operations are conducted from
leased facilities in McKeesport, Pennsylvania and its lawn and garden operations
are conducted in leased facilities in Glassport, Pennsylvania.



                                       2
<PAGE>

         Historically, much of SCPI's business has been 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 SCPI's central offices. In recent years a growing proportion
of its customers electronically transmit their own orders to SCPI's
headquarters. Since 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. Shipments are either made directly to each
of the customers' stores or are pre-packed for onward shipment to stores by the
retailers' own distribution centers. 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, the
largest of which accounted for 16% of its purchases for the ten months ended
December 31, 2001. 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.

         SCPI 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 and lawn and garden businesses are seasonal, being
slowest 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 inventories of these products beginning in the winter months. As is
customary in the automotive aftermarket and in the lawn and garden business,
some suppliers allow extended payment terms to SCPI for such inventory
build-ups.

         SCPI's pet supply business experiences different seasonal trends from
its automotive and lawn and garden businesses, but the effect of this is not
material to the overall business.

         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 supermarket chains, drug stores, general
merchandise retail chains, automotive specialty 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 of that area. Since February 2000 SCPI has sold to the west
coast distribution facility of one of its major customers. There are no foreign
sales.

         SCPI's customers are continually affected by changes in the retail
environment, including the 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. Some customers 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 has added new customers,
especially in the supermarket and drug store sectors, has expanded its product
offerings to certain customers, has enlarged the territory that it serves and
has introduced new categories of products. Management believes that these
efforts have resulted in a more diverse and financially secure customer base,
although in August 2001 SCPI's largest remaining discount chain customer, Ames



                                       3

<PAGE>

Department Stores ("Ames"), filed for Chapter 11 bankruptcy protection.

         Sales for the 10 months ended December 31, 2001 totaled $17.5 million,
compared with $17.2 million in the same ten-month period of the prior fiscal
year.

         The following table shows sales to 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
                                 December 31, 2001          February 28, 2001           February 29, 2000
                                 -----------------          -----------------           -----------------
                                   (ten months)
<S>                             <C>         <C>             <C>         <C>            <C>        <C>
                                Sales       % of sales      Sales       % of sales     Sales      % of sales
Ames                            $3,217           18%        $3,746          18%        $3,144         16%
Kroger                          $2,758           16%        $2,057          10%        $2,037         10%
Giant Eagle                     $2,313           13%        $2,055          10%        $1,523           8%
Warehouse Sales                 $2,193           13%             *           *              *           *
American Sales                  $1,863           11%             *           *              *           *
*represents less than 10% of sales
</Table>

         In August 2001, Ames filed for Chapter 11 protection. SCPI has
continued to ship to Ames as debtor-in-possession under strict payment terms.
Pre-petition sales to Ames (mostly of automotive products) totaled $1.5 million,
of which approximately $680,000 was unpaid at the time of Ames bankruptcy
filing. Post-petition sales to Ames aggregated $1.7 million, primarily as a
result of the addition of sales of pet supplies. In fiscal 2000, Ames acquired
additional stores through a merger.

         SCPI's five largest customers accounted for approximately
three-quarters of its total revenues in the 10 months ended December 31, 2001.
Management has no reason to believe that its business with any of these
customers will be terminated in the foreseeable future, as evidenced by the
continuing increases in sales to each of them, although in the longer term
continued sales to Ames are dependent on that customer eventually developing a
successful reorganization plan and emerging from Chapter 11. In the event that
one of its largest customers ceased doing business with SCPI, the resulting
reduction in revenues could significantly reduce profitability, unless a
replacement customer were identified.

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

Competition

         SCPI's distribution lines of automotive parts and accessories, non-food
pet supplies and lawn and garden products 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 but believes it is one of the larger independent distributors of
automotive accessories in the Northeastern United States. In recent years, a
number of significant competitors of SCPI have gone out of business and some of
SCPI's customers have chosen to purchase some products directly from
manufacturers. SCPI competes on the basis of its management's merchandise
expertise, the breadth of merchandise offered, prices, level of service, order
fill rates and order turnaround times. Management believes that SCPI's long
history, good reputation, experienced management, product selection, pricing,
service levels and traditionally 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 adversely affect its operations.



                                       4
<PAGE>

Employees

         SCPI employs approximately 50 persons, of which about 40 are employed
in the headquarters office and distribution facilities in McKeesport and
Glassport. Most of the others are field personnel. Senior executives, including
the Chairman, Bernard H. Frank (a founder of Steel City Products in 1947) and
President, Terrance Allan, have many years of service with SCPI and are employed
under long-term contracts.

         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. The union contract was renewed for a
three-year term through November 2002.

ITEM 2. PROPERTIES

         SCPI has operated its business from a leased, 67,000 square-foot
building located in an industrial park in McKeesport, Pennsylvania since
December 1997 when its former warehouse in Pittsburgh was sold. With additional
business generated from the distribution of lawn and garden products, SCPI
entered into a lease agreement for approximately 43,000 square feet of
additional warehouse space in Glassport, Pennsylvania in December 2000.

ITEM 3. LEGAL PROCEEDINGS

         There are no material legal proceedings pending against the Company or
to which the Company is a party or to which any of its property is subject.

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

         No matters were submitted to a vote of security holders during the
final four months of the fiscal year ended December 31, 2001.



                                       5
<PAGE>



                                     PART II

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

         As a result of the merger transaction with Sterling (then Oakhurst
Company, Inc.) in fiscal 1992 (see Item 1, "Business - Formation of Oakhurst
Company, Inc."), most of the Company's value is vested in Sterling. 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.

     The Company's stock trades on the OTC Bulletin Board under the symbol SCTP.
The following table sets forth the high and low bid price for the Company's
stock for the last two fiscal years.

<Table>
<Caption>
                                         Fiscal 2001                                  Fiscal 2000
                            Quarterly High         Quarterly Low         Quarterly High         Quarterly Low
                            --------------         -------------         --------------         -------------
<S>                         <C>                    <C>                   <C>                    <C>
Quarter 1                       $0.06                  $0.04                 $0.20                  $0.03
Quarter 2                       $0.10                  $0.02                 $0.05                  $0.03
Quarter 3                       $0.03                  $0.01                 $0.23                  $0.03
Quarter 4                       $0.02                  $0.01                 $0.13                  $0.06
</Table>

         Such quotations reflect inter-dealer prices without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.

         No common stock dividends were paid by SCPI during fiscal 2001, 2000 or
1999. Dividend payments are restricted by the covenants under the Company's line
of credit agreement.

         Through its ownership of SCPI, primarily in the form of Series A
Preferred Stock, Sterling controls the Company and receives substantially all of
the benefit of the Company's operations through the right to receive 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 March 1, 2002.



                                       6
<PAGE>


ITEM 6. SELECTED FINANCIAL INFORMATION

     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>
                                                Fiscal 2001   December 31,
                                                December 31,     2000       Fiscal 2000   Fiscal 1999   Fiscal 1998   Fiscal 1997
                                                  2001(f)    (ten months)   February 28,  February 29,   February 28,  February 28,
                                               (ten months)   (unaudited)     2001           2000          1999         1998(a)(b)
                                               ------------- ------------   ------------  ------------  ------------- -------------
                                                               (Dollar amounts in thousands, except per share data)
<S>                                             <C>           <C>           <C>           <C>           <C>           <C>

OPERATING RESULTS:
Sales ........................................  $   17,467    $   17,256    $   20,694    $   20,142    $   18,092    $   17,879
                                                ==========    ==========    ==========    ==========    ==========    ==========
(Loss)income before income taxes(g) ..........  $     (192)   $      591    $      581    $      333    $      161    $    1,395
Current income tax expense ...................          14             5            27            10             8            --
Deferred income tax benefit (expense)(d) .....         800            --            --            --            --        (1,000)
                                                ----------    ----------    ----------    ----------    ----------    ----------
Net income ...................................         594           585           554           323           153           395
Series A Preferred Stock dividends(c) ........        (850)         (850)       (1,014)       (1,014)       (1,014)       (1,014)
                                                ----------    ----------    ----------    ----------    ----------    ----------
Net loss attributable to common
stockholders .................................  $     (256)   $     (265)   $     (460)   $     (691)   $     (861)   $     (619)
                                                ==========    ==========    ==========    ==========    ==========    ==========

BASIC AND DILUTED PER SHARE AMOUNTS:
Net loss attributable to common
stockholders..................................  $    (0.08)   $    (0.08)   $    (0.14)   $    (0.21)   $    (0.27)   $    (0.19)
                                                ==========    ==========    ==========    ==========    ==========    ==========
Cash dividends declared ......................  $    (0.00)   $    (0.00)   $    (0.00)   $    (0.00)   $    (0.00)   $    (0.00)

BALANCE SHEET STATISTICS:
Total assets(e) ..............................  $    7,134    $    6,343    $    7,438    $    7,910    $    7,807    $    7,699
Long-term obligations ........................  $    3,135    $    3,368    $    3,633    $    3,352    $    3,029    $    2,132
Series A Preferred Stock face value ..........  $   10,135    $   10,135    $   10,135    $   10,135    $   10,135    $   10,135
</Table>


(a)      In fiscal 1998, SCPI elected to change its method of inventory
         reporting from LIFO to FIFO. The above data for fiscal 1997 has been
         restated to reflect this change as if it had occurred at the beginning
         of fiscal 1997.

(b)      In fiscal 1997, SCPI sold its 88,000 square foot warehouse in
         Pittsburgh, Pennsylvania for a gross sales price of approximately $2.8
         million in cash. SCPI recognized a pre-tax gain of approximately $1.8
         million in connection with the sale.

(c)      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 2001, dividends of
         approximately $10.6 million have accumulated since the effective date
         of the merger; of this amount, approximately $3.6 million were declared
         by the Company's Board of Directors prior to fiscal 1996. Approximately
         $7 million of undeclared dividends in arrears are outstanding at
         December 31, 2001.

(d)      Results for fiscal 1997 include non-cash deferred tax charges of $1
         million relating primarily to increases in the Company's valuation
         allowance of its deferred tax asset. In December 2001, SCPI recognized
         a deferred tax asset of $800,000. (See Note 7 to the Financial
         Statements).

(e)      Advances made to Sterling with a balance of $9.4 million at December
         31, 2001 are classified as a component of stockholders' equity. The
         above data for periods prior to fiscal 2001 have been revised to
         reflect a similar treatment as of each respective balance sheet date.

(f)      In November 2001, the Board of Directors voted to change the Company's
         fiscal year end to December 31. Results for the transition period
         include the ten months from March 1, 2001 to December 31, 2001.

(g)      The loss before income taxes for the ten months ended December 31, 2001
         included bad debt expense of $469,000 related to the bankruptcy filing
         of Ames, a significant customer of SCPI, in August 2001.



                                       7
<PAGE>



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
Sterling. Through Sterling's ownership of SCPI, primarily in the form of
preferred stock, Sterling retains substantially all the value of SCPI, and
receives substantially all of the benefit of operations through its entitlement
to dividends on the preferred stock. Sterling's ownership of SCPI is designed to
facilitate the preservation and utilization of SCPI's and Sterling's net
operating tax loss carry-forwards that amount to approximately $161 million at
December 31, 2001.

         Until fiscal 2000, SCPI distributed automotive accessories and non-food
pet products. In fiscal 2000, SCPI began the distribution of lawn and garden
supplies. SCPI utilizes three operating segments, Auto, Pet and Lawn. The
allocation of financial resources is determined by SCPI's President, Terrance
Allan, and its Chief Financial Officer, Maarten Hemsley, who assess resources
based on the operating profitability and working capital needs of each segment.

LIQUIDITY AND CAPITAL RESOURCES

         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's working capital
needs fluctuate primarily in relation to the amounts of inventory it carries
that can change seasonally, the size and timeliness of payment of receivables
from its customers, and the amount of credit extended to SCPI by its suppliers.

         Management does not believe that inflation has had a material negative
impact on the Company's operations or financial results during recent years.

FINANCING AND LINE OF CREDIT

         In March 1996, Sterling and its subsidiaries (including SCPI) obtained
financing from an institutional lender (the "Credit Facility"). The Credit
Facility initially provided for a revolving credit agreement and a term loan on
SCPI's warehouse facility. The term loan was repaid in fiscal 1998 upon SCPI's
sale of its warehouse. Over time, the revolving credit agreement was amended to
provide for the sale or disposition of certain of Sterling's subsidiaries,
reduce the maximum credit line and amend certain financial covenants.

         Due to concerns stemming from the institutional lender's filing for
bankruptcy, SCPI obtained a replacement line of credit in July 2001. This new
revolving line (the "Revolver") was for a term of two years in the amount of
$4.5 million, subject to a borrowing base. The Revolver initially carried an
interest rate equal to prime plus 1%. Following the bankruptcy filing of Ames in
August 2001, the Revolver was amended to shorten the term of the line and
increase the interest rate to prime plus 1.5%. Upon satisfaction to the lender
of SCPI's ability to obtain new customers and maintain sales levels and
profitability, the Revolver was again amended in December 2001 to provide for a
line of $5.0 million, subject to a borrowing base, and to extend the term to May
31, 2003. At December 31, 2001, the outstanding balance on the Revolver was $2.5
million.

         In October 1998, SCPI obtained a loan from the Redevelopment Authority
of the City of McKeesport (the "Subordinated Loan"). The Subordinated Loan,
which is subordinated to the Revolver, was in the amount of $98,000 and bears
interest at the rate of 5% per annum. The loan was used to fund leasehold
improvements and is being repaid in monthly installments through October 2003.
The balance outstanding on the loan at December 31, 2001 was approximately
$39,000.

         In December 2001, in conjunction with the December 2001 amendment to
the SCPI Revolver and in order to strengthen SCPI's working capital position
through the purchase of additional inventory, Sterling funded SCPI $500,000
through a subordinated promissory note (the "Subordinated Sterling Loan"). The
note, which is repayable in a single installment in December 2004, bears
interest at 12% per annum, payable monthly.



                                       8
<PAGE>

         Management believes that the Revolver and the Subordinated Sterling
Loan will provide adequate funding for SCPI's working capital, debt service and
capital expenditure requirements, including seasonal fluctuations for at least
the next twelve months, assuming no material deterioration in current sales or
profit margins.

TAX LOSS CARRY-FORWARDS

         At December 31, 2001, SCPI and Sterling had net operating tax loss
carry-forwards (the "Tax Benefits") aggregating approximately $161 million,
which expire in the years 2002 through 2021, which shelter most of SCPI's income
from federal income taxes. A change in control of SCPI or Sterling exceeding 50%
in any three-year period 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 Sterling'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 Sterling'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 Sterling, 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). The
Company considers its accounting for income taxes a critical accounting policy.

         In December 2001, management determined that it was more likely than
not that the Company will continue to operate profitably. Previously, the
consolidated group that includes SCPI and Sterling was not profitable and
therefore the ability to utilize the net operating loss carryforwards was
restricted. It is expected that the consolidated tax return of the group will
show taxable income in excess of SCPI's. Therefore, management determined that
the future operations of SCPI warranted a decrease in the valuation allowance to
the extent that SCPI recorded a net deferred tax asset of $800,000 in the
interim period ended December 31, 2001.

CASH FLOWS

         Net cash provided by operating activities for fiscal 2001 increased by
approximately $540,000 from fiscal 2000. Cash was generated in the current year
due to lower levels of accounts receivable and inventory combined with slightly
higher levels of accounts payable. In fiscal 2000 cash provided by operating
activities increased by approximately $242,000 from fiscal 1999 due to improved
operating profits and reduced inventory levels, which was offset by increases in
accounts receivable and reductions in vendor payables.

         Cash used in investing activities decreased in fiscal 2001 by $26,000
due to fewer purchases of equipment in the year. For fiscal 2000 and fiscal
1999, net cash used in investing activities was $55,000 and $69,000,
respectively. The decrease was due to lower capital expenditures in fiscal 2000.

         In fiscal 2001, the Company's financing activities used cash of
$909,000, an increase of $460,000 compared with fiscal 2000. The increase was
due principally to a reduction in the line of credit balance in the current year
and to advances to Sterling. These increases were offset in part by the advance
of $500,000 from Sterling pursuant to the Subordinated Sterling Loan. For fiscal
2000 and fiscal 1999, the Company's financing activities used cash of $449,000
and $264,000, respectively, principally due to advances to Sterling offset by
additional borrowings under the credit agreement.

FORWARD LOOKING STATEMENTS

         From time to time the information provided by the Company or statements
made by its directors, officers or



                                       9
<PAGE>

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, cash flows and availability of financing) 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

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

Fiscal Year Ended December 31, 2001 (ten months) (Fiscal 2001) Compared with
Fiscal Year Ended February 28, 2001 (Fiscal 2000)

     Automotive segment

         For the ten month fiscal period ended December 31, 2001, sales of
automotive accessories were $13.6 million, a decrease of approximately $4.0
million compared with fiscal 2000, which included twelve months. Sales to
existing customers decreased by approximately $4.2 million, due largely to the
bankruptcy filing of Ames in August 2001 and to more customers purchasing
product directly from the manufacturer and to the shorter fiscal year. Sales to
new automotive customers totaled approximately $200,000 in fiscal 2001.

         Gross profits decreased by approximately $876,000, due to reduced sales
and to the shorter fiscal year.

         Operating profits for the automotive segment decreased by approximately
$541,000. Although savings in expenses were realized due to reductions in
personnel, these were offset by a significant charge to bad debt expense
resulting from the Ames bankruptcy.

     Pet supplies segment

         Sales of pet supplies in the ten month period of fiscal 2001 totaled
$2.9 million, an increase of approximately $344,000 compared with fiscal 2000,
which included twelve months. Most of the increase resulted from sales to new
customers, which included Ames after its bankruptcy filing. Sales to existing
customers decreased by approximately $300,000, due to the shorter fiscal period.

         Gross profits increased by approximately $72,000, principally as a
result of the increased sales.

         Operating profits for the pet segment increased by approximately
$114,000, due to the increase in gross profits and to lower expenses, including
personnel reductions in the current year.

     Lawn and garden segment

         SCPI established a lawn and garden division in fiscal 2000. For the ten
month period ended December 31, 2001, sales of lawn and garden products totaled
$836,000, compared with sales of $399,000 in fiscal 2000.

         Gross profits increased by approximately $75,000 due to the higher
sales volume.

         The segment reported an operating loss of approximately $55,000 in
fiscal 2001, compared with an operating profit of $44,000 in fiscal 2000. Fiscal
2000 included only four months of operations of the segment and



                                       10
<PAGE>

two months of rental expense on the Glassport lawn and garden warehouse.

         Interest expense decreased by approximately $158,000 in fiscal 2001
compared with fiscal 2000 due to the shorter reporting period, to significantly
lower borrowing levels in the current year and to lower interest rates.

Results for the ten months ended December 31, 2001 (unaudited) compared with the
ten months ended December 31, 2000 (unaudited)

     As Fiscal 2001 includes ten months compared with twelve months in Fiscal
2000, a separate discussion below compares results of Fiscal 2001 with the
comparable ten month period (unaudited) in Fiscal 2000.

<Table>
<Caption>
                               Automotive                        Pet                      Lawn & Garden
                               ----------                        ---                      -------------
(in thousands)          December 31,   December 31,   December 31,    December 31,   December 31,   December 31,
                           2001           2000           2001           2000            2001           2000
<S>                     <C>            <C>             <C>            <C>             <C>             <C>
Sales                   $  13,645      $ 15,070        $ 2,986        $ 2,163         $  836          $   22
Gross profit            $   2,425      $  2,890        $   891        $   657         $   23          $    3
Operating profit        $     (21)     $    651        $   471        $   257         $  (55)         $    3
</Table>

Automotive segment

         Comparing results for the ten months ended December 31, 2001 with the
ten months ended December 31, 2000, sales of automotive products decreased by
$1.4 million, due primarily to the bankruptcy filing of Ames in August 2001.
Gross profits decreased by approximately $465,000, due to the sales decrease and
to pressure placed on the Company to reduce margins to larger customers.
Although savings were realized in operating and selling expenses due to a
reduction in personnel, these were offset by an increase of approximately
$469,000 in bad debt expense due to the bankruptcy filing of Ames.

Pet supplies segment

         Sales for the ten months ended December 31, 2001 increased by
approximately $822,000 or 38% compared with the ten month period ended December
31, 2000, due to sales to new customers, which included Ames after its
bankruptcy filing. Gross profit as a percentage of sales remained equal to the
comparable ten month period in the prior year. Operating profits increased by
$214,000 due to the higher sales and to personnel reductions in the current
year.

Lawn and garden

         Sales in this segment began in November 2000.


Fiscal Year Ended February 28, 2001 (Fiscal 2000) Compared with Fiscal Year
Ended February 29, 2000 (Fiscal 1999)

     Automotive segment

         For the fiscal year ended February 28, 2001, sales of automotive
accessories were $17.6 million, a decrease of approximately $218,000 compared
with the prior year. Sales to existing customers decreased by approximately $1.6
million, due largely to the loss of a customer late in fiscal 1999 that had been
acquired by another company and to more customers purchasing product directly
from the manufacturer. Sales to new automotive customers totaled approximately
$1.4 million in fiscal 2000.

         Gross profits increased by approximately $130,000, or about 1%, due to
lower freight related costs and to better margins earned on certain products.



                                       11
<PAGE>

         Operating profits for the automotive segment increased by approximately
$97,000. Higher broker commissions paid reduced the increase in gross profits.
Savings in general office expenses and a reduction in staff offset these higher
fees.

     Pet supplies segment

         Sales of pet supplies in fiscal 2000 totaled $2.6 million, an increase
of approximately $371,000 compared with fiscal 1999. Most of the increase
resulted from increasing sales to existing customers, which accounted for about
$340,000 of the increase. Sales to new customers totaled approximately $31,000
for the year.

         Gross profits increased by approximately $100,000, principally as a
result of the increased sales.

         Operating profits for the pet segment increased by approximately
$35,000. The improvement in gross profits was offset in part by higher expenses
directly resulting from the higher sales volumes, as more sales were subject to
broker fees. Also in fiscal 2000, a higher percentage of salary expense was
allocated to this segment due to the increased sales.

     Lawn and garden segment

         Partly in response to the growing needs of its customers, SCPI
established a lawn and garden division in fiscal 2000. Sales of lawn and garden
products totaled $399,000 for the fiscal year.

         The newly established division reported an operating profit of
approximately $44,000 for fiscal 2000.

         Interest expense increased by $93,000 in fiscal 2000 compared with
fiscal 1999 due to higher borrowing levels on the revolver in the current year.

ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         SCPI is exposed to certain market risks from transactions that are
entered into during the normal course of business. The Company's policies do not
permit active trading of or speculation in, derivative financial instruments.
The Company's primary market risk exposure relates to interest rate risk. SCPI
manages its interest rate risk by attempting to balance its exposure between
fixed and variable rates while attempting to minimize its interest costs. An
increase of 1% in the market rate of interest would have increased the Company's
interest expense in fiscal 2001 by approximately $56,000.

         Because the Company derives no revenues from foreign countries or
otherwise has no obligations in foreign currency, the Company experiences no
foreign currency exchange rate risk.



                                       12
<PAGE>



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<Table>
<S>                                                                                                 <C>
         Independent Auditors' Reports......................................................        23

         Consolidated Balance Sheets: December 31, 2001 and February 28, 2001...............        25

         Consolidated Statements of Operations for the fiscal periods ended
           December 31, 2001, February 28, 2001 and February 29, 2000.......................        26

         Consolidated Statements of Stockholders' Deficiency for the fiscal periods ended
           December 31, 2001, February 28, 2001 and February 29, 2000 ......................        27

         Consolidated Statements of Cash Flows for the fiscal periods ended
            December 31, 2001, February 28, 2001 and February 29, 2000 .....................        28

         Notes to Consolidated Financial Statements.........................................        29

             Schedule II - Valuation and Qualifying Accounts................................        41
</Table>



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

                  None



                                       13
<PAGE>


                                    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. In July 2001, upon the resignation of certain directors who
also resigned as directors of Sterling, the Board voted to decrease the number
of directors from seven to six. The following table lists the names and ages (at
February 1, 2002) of the directors, and the year in which each was elected a
director of the Company or its predecessor.

<Table>
<Caption>
                 Name                                  Age       Director Since
                 ----                                  ---       --------------
<S>                                                    <C>       <C>
                 John D. Abernathy                      64            1996
                 Terrance W. Allan                      48            1993
                 Robert M. Davies                       51            1996
                 Bernard H. Frank                       81            1993
                 Joseph Harper, Sr.                     55            2001
                 Maarten D. Hemsley                     52            1998
</Table>

BUSINESS HISTORY OF DIRECTORS

         Messrs. Frank and Allan have been executives of the Company for more
than the last five years. Mr. Frank was a founder of the Steel City Products
business more than 50 years ago. For more than the last five years, Mr. Frank
has been Chief Executive Officer of the Company and in May 1994, he was elected
Executive Vice President of the Company's parent, Sterling Construction Company,
Inc. ("Sterling"). In July 2001, when Sterling increased its ownership of
Sterling Houston Holdings, Inc. ("SHH"), Mr. Frank resigned as a director and
officer of Sterling. Mr. Allan has been employed by the Company since 1987 and
was elected President in June 2000.

         Mr. Abernathy. Mr. Abernathy has been Chief Operating Officer of Patton
Boggs, LLP, 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.
He is a director of Pharmaceutical Resources, Inc., a generic drug manufacturer
and also serves as a director of Sterling. Mr. Abernathy is a certified public
accountant.

         Mr. Davies. Mr. Davies was Chairman and Chief Executive Officer of
Sterling from May 1997 to July 2001 and was its President from May 1997 to
January 1999. He has served as a director of Sterling since May 1997 and
previously served as a director of SCPI and Sterling from 1991 through 1994. 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.
Mr. Davies is a managing director of e3Convergence, L.L.C., which provides
financial and investment consultancy services to corporations with interests
primarily in energy-related fields. He is also a director of Industrial
Acoustics Company, Inc.

         Mr. Harper. Mr. Harper is Chief Financial Officer, Treasurer and
Secretary of Sterling Houston Holdings, a subsidiary of Sterling, and has been
employed by that company since 1972. He has performed both estimating and
project management functions as well as his primary role as Chief Financial
Officer. Prior to joining the business, Mr. Harper worked for Price Waterhouse
and received his CPA license in 1970. He holds a Bachelor's degree from St.
Joseph College. Mr. Harper was elected a director and the President of Sterling
and a director of the Company in July 2001 in connection with the closing of the
transaction in which Sterling's ownership of SHH increased to 80.1%.



                                       14
<PAGE>

         Mr. Hemsley. Mr. Hemsley was re-elected to the Board of Directors of
the Company and of Sterling in December 1998. He had been an employee and
director of SCPI or Sterling for many years prior to 1995. In December 1995, he
resigned his positions with SCPI and Sterling and served as a consultant to SCPI
and Sterling through his wholly owned financial consultancy company, Bryanston
Management, Ltd. of which he has been President since 1993. Mr. Hemsley
currently serves as Chief Financial Officer of Sterling and of SCPI. He also
serves as a director of Industrial Acoustics Company, Inc.

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 December 31, 2001 all Section
16(a) filing requirements applicable to the Company's Insiders were satisfied.

REPORT OF THE AUDIT COMMITTEE FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001.

        The Audit Committee of Sterling reviews the Company's financial
reporting process on behalf of the Board of Directors. The Committee operates
under a written Charter adopted by the Board in June 2000. Management has the
primary responsibility for the financial statements and the reporting process.
The Company's independent auditors are responsible for expressing an opinion on
the conformity of the Company's financial statements with generally accepted
accounting principles and whether the Company's financial statements present
fairly, in all material respects, the financial position and results of
operations of the Company.

        In this context, the Audit Committee has reviewed and discussed with
management and the independent auditors the audited financial statements. The
Audit Committee has discussed with the independent auditors the matters required
to be discussed by Statement on Accounting Standards No. 61 ("Communication with
Audit Committees"). In addition, the Audit Committee has received from the
independent auditors the written disclosures required by Independence Standards
Board No. 1 ("Independence Discussions with Audit Committees") and discussed
with them their independence from the Company and its management.

        In September 2001, the Company elected to change its independent
auditors to Grant Thornton LLP.

        The following table sets forth the aggregate fees, both billed and
unbilled to the Company for the year ended December 31, 2001 by its current
independent auditors, Grant Thornton LLP:

<Table>
<S>                                                                    <C>
Grant Thornton LLP
Audit fees                                                             $55,000
Financial information system design and implementation                      --
All other fees                                                              --
</Table>

        In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved that
the audited financial statements be included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2001 for filing with the Securities
and Exchange Commission.



                                       15
<PAGE>

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 2001, 2000 and 1999 fiscal years
by the Chief Executive Officer and the other executive officers of the Company
whose compensation exceeded $100,000 in fiscal 2001 and who were serving at the
end of the 2001 fiscal year.

<Table>
<Caption>
                                                         Annual Compensation                   Long-term Compensation Awards
                                              ------------------------------------------    ------------------------------------
Name and  Principal                                                         Other Annual       Securities             All other
Position                             Year       Salary          Bonus      Compensation*    Underlying Options**    Compensation
--------                             ----     ----------     ----------    -------------    --------------------    ------------
<S>                                  <C>      <C>            <C>           <C>              <C>                     <C>
Bernard H. Frank(1) ......           2001     $   49,075     $   20,833         --                   --               $   11,590(2)
Chairman & Chief                     2000     $   50,242     $   25,000         --                   --               $   13,908
Executive Officer                    1999     $  110,434     $   25,000         --                7,750               $   13,908



Terrance W. Allan ........           2001     $  124,385     $   40,771         --                   --                       --
President                            2000     $  132,072     $   60,515         --                   --                       --
                                     1999     $  115,885     $   15,000         --                9,750                       --

</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 Sterling Construction Company, Inc.
         ("Sterling"), not the Company.

(1)      All the above officers are compensated only by the Company except with
         respect to stock options.

(2)      This amount consists of $6,504, $5,508 and $1,896 that Mr. Frank
         receives annually 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. For the ten months ended December 31, 2001, Mr. Frank was
         paid $11,590.

COMPENSATION AGREEMENTS

         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 previously 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 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. In fiscal 2001, Mr. Frank was paid $6,250
in respect of this bonus plan. After a significant customer filed for bankruptcy
in August 2001, Mr. Frank voluntarily deferred payment of all of his annual base
salary. Such deferral has been reflected as an accrued liability of the Company,
and Mr. Frank began receiving his regular salary in January 2002.

         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.



                                       16
<PAGE>

         Mr. Allan. The Company has an employment agreement with Mr. Allan
(sometimes hereinafter referred to as the "executive") which commenced May 1,
2000 that provides for a base salary of $133,000 with annual salary increases.
Payment of the increase due in September 2001 and part of his regular salary was
voluntarily deferred by Mr. Allan in light of the Chapter 11 filing of Ames, one
of the Company's largest customers. The deferral has been reflected as an
accrued liability of the Company. In January 2002, Mr. Allan began receiving his
entire regular salary, but the increase due him in September 2001 has not been
paid. The agreement provides for the payment of an annual management bonus based
upon the defined profits of the Company's operating division. The aggregate
amount of such management bonus payable each year to the executive 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 initial term of the agreement
expires on September 30, 2003, and may be extended on a year-to-year basis.

         The agreement also provides that if the executive's employment
terminates by reason of his death or disability, he is entitled to the greater
of one year's salary or the salary for the balance of the term of the agreement
and the management bonus that would otherwise have been paid to him. 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 agreement also provides 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. The executive has the right to terminate his
employment within six months following a change in control and be paid his base
salary for a period of up to 24 months following such termination. 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 one-year following termination. If a change in control had occurred on
December 31, 2001, and if Mr. Allan had exercised his rights of termination,
payments by the Company would have been approximately $180,000 in the aggregate.

STOCK OPTION GRANTS.

         During fiscal 2001 no option grants relating to the Company's shares
were made to any of the named executives officers. In August 1999, 9,750 and
7,750 options for shares of Sterling stock were granted to Messrs. Allan and
Frank, respectively. These options vest over a four-year period, with
one-quarter of the total immediately exercisable.

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

         During fiscal 2001, no options were exercised by any of the named
executive officers.

         The following table sets forth certain information at December 31,
2001, the Company's fiscal year end, based upon (i) the average of the bid and
ask price per share of the Company's common stock ($0.02) on that date, and (ii)
the closing price per share of Sterling's common stock, ($1.68) 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 December 31, 2001 and the exercise (purchase) price of the
option shares.

<Table>
<Caption>
                                                Number of Securities                 Value of Unexercised
                                               Underlying Unexercised                In-The-Money Options
                                             Options at Fiscal Year End               at Fiscal Year End
                                           Exercisable      Unexercisable       Exercisable       Unexercisable
                                           -----------      -------------       -----------       -------------
<S>                                        <C>              <C>                 <C>               <C>
THE COMPANY'S COMMON STOCK
Bernard H. Frank                              23,141              --                --                 --
Terrance W. Allan                              9,257              --                --                 --

STERLING COMMON STOCK
Bernard H. Frank                              72,202            3,875             $12,553            $1,317
Terrance W. Allan                             36,644            2,437             $11,423            $1,658
</Table>



                                       17
<PAGE>

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2001.

         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 2001 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 required for the success and profitability of the
Company. The principal components of executive compensation are salary and
bonus.

CHIEF EXECUTIVE OFFICER'S AND OTHER EXECUTIVE OFFICER'S COMPENSATION

         Messrs. Frank and Allan are compensated under a written employment
agreement. These agreements are reviewed by Sterling'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 is paid pursuant to the terms of each executive
officer's employment agreement described above under the heading "Compensation
Agreements."

         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 tax 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
                                    Bernard H. Frank

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         Mr. Frank is a director, executive officer and employee of the Company.
Mr. Davies also serves as a director of Sterling.



                                       18
<PAGE>

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 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 December 31, 1996
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.
Sterling owns 100% of the preferred stock of the Company and 10% of the
outstanding common stock, thus Sterling retains most of the value of SCPI.

                                    [GRAPH]

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

         The following tables set forth certain information regarding beneficial
ownership of the Common Stock at March 1, 2002. Except as otherwise indicated in
the footnotes, the Company believes that the beneficial owners of the Common
Stock listed in this Item 12, 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.



                                       19
<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS

         This table sets forth certain information regarding beneficial
ownership of the Common Stock by each person known by the Company to own
beneficially more than 5% of the outstanding Common Stock.

<Table>
<Caption>
Name and Address                                         Number of Shares of            Percentage of
of Beneficial Owner                                   Series A Preferred Stock              Class
-------------------                                   ------------------------          -------------
<S>                                                   <C>                               <C>

Sterling Construction Company, Inc.                          1,938,526                       100%
2751 Centerville Road, Suite 3131
Wilmington, Delaware 19808
</Table>

<Table>
<Caption>
Name and Address                                      Number of Shares of               Percentage of
of Beneficial Owner                                      Common Stock                       Class
-------------------                                   -------------------               -------------
<S>                                                   <C>                               <C>

Sterling Construction Company, Inc.                            286,955                      10.0%
2751 Centerville Road, Suite 3131
Wilmington, Delaware 19808
</Table>

SECURITY OWNERSHIP OF MANAGEMENT

         This 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" in Item 11, above, and by all directors and
executive officers of the Company as a group. The directors and officers of the
Company have furnished the information themselves. No director or officer owns
any shares of Preferred Stock of the Company.

<Table>
<Caption>
                                          Number of Shares of    Percentage of
Name                                          Common Stock           Class
----                                      -------------------    -------------
<S>                                           <C>                   <C>
Maarten D. Hemsley .....................      113,419(1)            3.4%
Bernard H. Frank .......................       23,141(1)              *
Terrance W. Allan ......................        9,257(1)              *
John D. Abernathy ......................           --                --
Robert M. Davies .......................           --                --

All directors and executive officers
as a group, 5 persons ..................      145,817(1)            4.4%
</Table>

*        Less than 1%

(1)      These shares are purchasable under outstanding stock options,
         exercisable at $0.625 per share, which expired January 2002.

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.



                                       20
<PAGE>



                                     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' Reports

         Consolidated Balance Sheets: December 31, 2001 and February 28, 2001

         Consolidated Statements of Operations for the fiscal periods ended
              December 31, 2001, February 28, 2001, and February 29, 2000

         Consolidated Statements of Stockholders' Deficiency for the fiscal
              periods ended December 31, 2001, February 28, 2001, and February
              29, 2000

         Consolidated Statements of Cash Flows for the fiscal periods ended
              December 31, 2001, February 28, 2001, and February 29, 2000

         Notes to Consolidated Financial Statements

2.       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

<Table>
<Caption>
Exhibit No.      Description
<S>               <C>
     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 on Form 10-K for
                  the fiscal year ended February 26, 1994).

   #10.1          Employment Agreement with Bernard H. Frank dated as of April
                  1, 1998 (filed as Exhibit 10.1 to the Company's Annual Report
                  on Form 10-K for the fiscal year ended February 28, 1999).

   #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).

   #10.4          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).
</Table>



                                       21
<PAGE>

<Table>
<S>               <C>
    10.6          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).

    10.7          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).

    10.8          Lease agreement by and between Regional Industrial Development
                  Corporation of Southwestern Pennsylvania and Steel City
                  Products, Inc., dated November 11, 1997- (filed as exhibit #10
                  to the Company's Form 10-K for the year ended February 28,
                  1998)

    10.9          Lease agreement by and between SPEDD, Inc. and Steel City
                  Products, Inc. dated November 21. 2000. (filed as exhibit 10.9
                  to the Company's Form 10-K for the year ended February 28,
                  2001)

   10.10          Employment Agreement with Terrance W. Allan dated as of May 1,
                  2000. (filed as exhibit 10.10 to the Company's Form 10-K for
                  the year ended February 28, 2001)

   10.11          Revolving Credit Agreement dated July 13, 2001 between
                  National City Bank of Pennsylvania and Steel City Products,
                  Inc. (filed as exhibit 10.1 to the Company's Form 10-Q for the
                  quarter ended May 31, 2001)

   10.12          Amendment to the Revolving Credit Agreement dated September
                  12, 2001 between National City Bank of Pennsylvania and Steel
                  City Products, Inc. (filed as exhibit 10.1 to the Company's
                  Form 10-Q for the quarter ended August 31, 2001)

  *10.13          Second Amendment to the Revolving Credit Agreement between
                  National City Bank of Pennsylvania and Steel City Products,
                  Inc. dated December 12, 2001.

      21          Subsidiaries at December 31, 2001:
                      Oakhurst Holdings, Incorporated - Delaware
</Table>


----------

#        Management contract or compensatory plan or arrangement.

*        Filed herewith


(b)  Reports on Form 8-K:

         8-K dated November 1, 2001 reporting change in fiscal year end



                                       22
<PAGE>



INDEPENDENT AUDITORS' REPORT

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


We have audited the accompanying consolidated balance sheet of Steel City
Products, Inc. and subsidiary as of December 31, 2001, and the related
consolidated statements of operations, stockholders' deficiency, and cash flows
for the ten months then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Steel City Products,
Inc. and subsidiary as of December 31, 2001 and the results of their operations
and their cash flows for the ten months then ended in conformity with accounting
principles generally accepted in the United States of America.

We also audited Schedule II for the ten months ended December 31, 2001. In our
opinion, this schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information therein.



/s/ Grant Thornton LLP

Southfield, Michigan
February 1, 2002





                                       23
<PAGE>



INDEPENDENT AUDITORS' REPORT

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


We have audited the accompanying consolidated balance sheet of Steel City
Products, Inc. and subsidiary as of February 28, 2001 and the related
consolidated statements of operations, stockholders' deficiency, and cash flows
for the years ended February 28, 2001 and February 29, 2000. Our audits also
included the consolidated financial statement schedule listed at Item 14(a)(2)
for the years ended February 28, 2001 and February 29, 2000. These consolidated
financial statements and consolidated financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the consolidated financial statements and consolidated financial
statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 consolidated financial statements present fairly, in all
material respects, the financial position of Steel City Products, Inc. and
subsidiary as of February 28, 2001 and the results of their operations and their
cash flows for the years ended February 28, 2001 and February 29, 2000 in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, the consolidated financial statement schedule for
the years ended February 28, 2001 and February 29, 2000, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth herein.



/s/ Deloitte and Touche LLP

Pittsburgh, Pennsylvania
July 6, 2001



                                       24
<PAGE>



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


<Table>
<Caption>
                                                                                  December 31,   February 28,
                                                                                      2001           2001
                                                                                  ------------   ------------
<S>                                                                               <C>            <C>

                                      ASSETS
Current assets:
     Cash ......................................................................   $      263    $       83
     Trade accounts receivable, less allowance of $588 and $191, respectively ..        1,963         2,591
     Inventories ...............................................................        3,533         4,151
     Deferred tax asset ........................................................          170            --
     Other .....................................................................           91            66
                                                                                   ----------    ----------
               Total current assets ............................................        6,020         6,891

Property and equipment, at cost ................................................        1,315         1,286
     Less accumulated depreciation .............................................         (988)         (901)
                                                                                   ----------    ----------
                                                                                          327           385
Deferred tax asset, long term ..................................................          630            --
Other assets ...................................................................          157           162
                                                                                   ----------    ----------
                                                                                   $    7,134    $    7,438
                                                                                   ==========    ==========

                     LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
     Accounts payable ..........................................................   $    4,323    $    4,389
     Accrued compensation ......................................................          324           356
     Current maturities of long-term obligations................................           83            77
     Other .....................................................................          130           108
                                                                                   ----------    ----------
               Total current liabilities .......................................        4,860         4,930

Long-term obligations:
     Long-term debt ............................................................        2,535         3,464
     Long-term debt, due to parent .............................................          500            --
     Other long-term obligations ...............................................          100           169
                                                                                   ----------    ----------
                                                                                        3,135         3,633

Commitments and contingencies ..................................................           --            --

Stockholders' deficiency:
     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 ...................................................................      (35,422)      (36,016)
     Advances to Sterling Construction Company, Inc. (See Note 3) ..............       (9,313)       (8,983)
     Treasury stock, at cost, 207 common shares.................................           (1)           (1)
                                                                                   ----------    ----------
               Total stockholders' deficiency ..................................         (861)       (1,125)
                                                                                   ----------    ----------
                                                                                   $    7,134    $    7,438
                                                                                   ==========    ==========
</Table>

    The accompanying notes are an integral part of these financial statements



                                       25
<PAGE>

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



<Table>
<Caption>
                                                                          Fiscal Year    Fiscal Year     Fiscal Year
                                                                             Ended          Ended           Ended
                                                                         December 31,    February 28,    February 29
                                                                             2001            2001            2000
                                                                         ------------    ------------    ------------
                                                                          (ten months)

<S>                                                                      <C>             <C>             <C>
Sales ................................................................   $     17,467    $     20,694    $     20,142
Other income .........................................................            379             864             711
                                                                         ------------    ------------    ------------
                                                                               17,846          21,558          20,853
                                                                         ------------    ------------    ------------

Cost of goods sold, including occupancy and buying expenses ..........         14,129          16,538          16,255
Operating, selling and administrative expenses .......................          3,151           3,976           3,859
Provision for doubtful accounts ......................................            483              30              57
Interest expense .....................................................            275             433             349
                                                                         ------------    ------------    ------------
                                                                               18,038          20,977          20,520
                                                                         ------------    ------------    ------------
Income (loss) before undistributed earnings of affiliate
    and income taxes .................................................           (192)            581             333

Current income tax (expense) .........................................            (14)            (27)            (10)

Deferred income tax benefit ..........................................            800              --              --
                                                                         ------------    ------------    ------------
     Total tax benefit (expense) .....................................            786             (27)            (10)
                                                                         ------------    ------------    ------------

Net income ...........................................................            594             554             323

Effect of Series A Preferred Stock dividends .........................           (850)         (1,014)         (1,014)
                                                                         ------------    ------------    ------------

Net loss attributable to common stockholders .........................   $       (256)   $       (460)   $       (691)
                                                                         ============    ============    ============

Basic and diluted net loss per share:
     Net loss attributable to common stockholders after
          preferred stock dividends ..................................   $      (0.08)   $      (0.14)   $      (0.21)
                                                                         ============    ============    ============

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



                                       26
<PAGE>



                            STEEL CITY PRODUCTS, INC.
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                             (DOLLARS IN THOUSANDS)


<Table>
<Caption>
                                                                                            Advances
                                                                                               to
                                                                                            Sterling
                                                                 Additional               Construction
                                        Preferred     Common      Paid-In      Retained      Company,      Treasury
                                          stock       stock       Capital       Deficit        Inc.          stock         Totals
                                       ----------   ----------   ----------   ----------  -------------    ----------    ----------
<S>                                    <C>          <C>          <C>          <C>         <C>             <C>           <C>
BALANCE AT FEBRUARY 28, 1999 .......   $       19   $       32   $   43,824   $  (36,893)   $   (7,807)   $       (1)   $     (826)
Change in advances to Sterling
Construction Company, Inc. .........                                                              (523)                       (523)
Net income .........................           --           --           --          323            --            --           323
                                       ----------   ----------   ----------   ----------    ----------    ----------    ----------
BALANCE AT FEBRUARY 29, 2000 .......           19           32       43,824      (36,570)       (8,330)           (1)       (1,026)

Change in advances to Sterling
Construction Company, Inc. .........                                                              (653)                       (653)
Net income .........................           --           --           --          554            --            --           554
                                       ----------   ----------   ----------   ----------    ----------    ----------    ----------
BALANCE AT FEBRUARY 28, 2001 .......           19           32       43,824      (36,016)       (8,983)           (1)       (1,125)

Change in advances to Sterling
Construction Company, Inc. .........                                                              (330)                       (330)
Net income .........................           --           --           --          594            --            --           594
                                       ----------   ----------   ----------   ----------    ----------    ----------    ----------
BALANCE AT DECEMBER 31, 2001 .......   $       19   $       32   $   43,824   $  (35,422)   $   (9,313)   $       (1)   $     (861)
                                       ==========   ==========   ==========   ==========    ==========    ==========    ==========
</Table>

    The accompanying notes are an integral part of these financial statements



                                       27
<PAGE>



                            STEEL CITY PRODUCTS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (DOLLAR AMOUNTS IN THOUSANDS)


<Table>
<Caption>
                                                               Fiscal Year   Fiscal Year
                                                                  Ended        Ended          Fiscal Year
                                                               December 31,  February 28,       Ended
                                                                   2001         2001       February 29, 2000
                                                               ------------  ------------  -----------------
                                                               (ten months)
<S>                                                            <C>           <C>            <C>

Cash flows from operating activities:
      Net income ...........................................   $      594    $      554     $      323
      Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization .....................          120           144            176
         Bad debt expense ..................................          483            --             --
         Deferred tax benefit ..............................         (800)           --             --
         Other .............................................           --          (164)            (5)
      Other changes in operating assets and liabilities:
         Accounts receivable ...............................          145          (113)          (305)
         Inventories .......................................          618           644           (848)
         Accounts payable ..................................          (66)         (480)           934
         Other .............................................           24            (5)            63
                                                               ----------    ----------     ----------

Net cash provided by operating activities ..................        1,118           580            338
                                                               ----------    ----------     ----------

Cash flows from investing activities:
      Additions to property and equipment ..................          (29)          (55)           (69)
                                                               ----------    ----------     ----------

Cash flows from financing activities:
      Net borrowings/(repayments) under revolving
      credit agreement .....................................         (929)          292            386
      Net increase in advances to Sterling Construction
      Company, Inc. ........................................         (330)         (653)          (523)
      Proceeds from related-party long-term
      borrowings ...........................................          500            --             --
      Principal payments on long-term obligations ..........          (63)          (68)           (67)
      Deferred loan costs ..................................          (87)          (20)           (60)
                                                               ----------    ----------     ----------
Net cash used in financing activities ......................         (909)         (449)          (264)
                                                               ----------    ----------     ----------

Net increase in cash .......................................          180            76              5
Cash at beginning of year ..................................           83             7              2
                                                               ----------    ----------     ----------
Cash at end of year ........................................   $      263    $       83     $        7
                                                               ==========    ==========     ==========

Supplemental disclosures of cash flow information:
      Cash paid during the year for:
      Interest .............................................   $      284    $      452     $      343
                                                               ==========    ==========     ==========
      Income taxes, net of refunds received ................   $       13    $        1     $        1
                                                               ==========    ==========     ==========

Supplemental disclosure of non-cash financing activities:
      Capital lease obligations for new equipment ..........   $       --    $       71     $       --
                                                               ==========    ==========     ==========
</Table>


    The accompanying notes are an integral part of these financial statements



                                       28
<PAGE>



                            STEEL CITY PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation:

         The accompanying consolidated financial statements include the accounts
of subsidiaries for which the Company has a greater than 50% ownership interest
and all significant intercompany accounts and transactions have been eliminated
in consolidation.

Business Activities:

         Steel City Products, Inc. ("SCPI" or "the Company") is a wholesale
distributor primarily of automotive accessories, operating under the trade name
Steel City Products, selling mainly to supermarket retailers, drug stores,
discount retail chains, hardware and automotive specialty stores, based
principally in the Northeastern United States. In fiscal 1997, SCPI also began
distributing non-food pet supplies, primarily to supermarket retailers and in
fiscal 2000, expanded its distribution business to include lawn and garden
products. SCPI is a majority-owned subsidiary of Sterling Construction Company,
Inc., ("Sterling") (see Note 2).

Use of Estimates:

         The financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, 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. Significant estimates
included in the Company's financial statements include the allowance for
doubtful accounts and estimates for the use of the Company's net operating loss
carryforwards. Actual results could differ from those estimates.

Fiscal Year:

         Historically, the Company's fiscal year ended on the last day of
February. In November 2001, the Company's directors approved a change in its
fiscal year end to December 31. The period ended December 31, 2001 is referred
to as fiscal 2001, the twelve months ended February 28, 2001 is referred to as
fiscal 2000, the twelve months ended February 29, 2000 is referred to as fiscal
1999 and the twelve months ended February 28, 1998 is referred to as fiscal
1997.

Concentration of Credit Risk:

         Financial instruments, such as accounts receivable, potentially subject
the Company to credit risk. The Company performs ongoing credit evaluations of
its customers' financial condition, and maintains a provision for potential
credit losses based upon expected collectibility of all accounts receivable. At
December 31, 2001 four customers carried accounts receivable balances in excess
of 10% of total accounts receivable, aggregating 75% of total accounts
receivable. At February 28, 2001, three customers carried accounts receivable
balances in excess of 10% of total accounts receivable, which aggregated 37% of
total accounts receivable.

Inventories:

         Inventories are valued at the lower of cost, as determined by the
first-in first-out (FIFO) method, or market.



                                       29
<PAGE>

Property and Equipment:

         Depreciation and amortization are computed using the straight-line
method. Estimated useful lives used for computing depreciation and amortization
are: leasehold improvements, 10 years; and office furniture, warehouse equipment
and vehicles, 3-10 years. Depreciation expense was approximately $88,000 for the
fiscal year ended December 31, 2001 and $118,000 and $109,000 in fiscal 2000 and
1999, respectively.

Other Assets:

         Other assets include goodwill associated with the acquisition of Steel
City Products, which is being amortized on a straight-line basis over a 40-year
period, beginning in 1982. The unamortized carrying value at December 31, 2001
and February 28, 2001 is approximately $129,000 and $135,000, respectively.
Accumulated amortization at December 31, 2001 and February 28, 2001 is
approximately $127,000 and $121,000, respectively.

         SCPI periodically evaluates its long-lived assets to assess whether the
carrying values have been impaired, using the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". No
write-downs due to impairment were recorded in fiscal 2001, 2000 or 1999.

Equipment Under Capital Leases:

         The Company accounts for capital leases, which transfer substantially
all the benefits and risks incident to the ownership of the property to the
Company, as the acquisition of an asset and the incurrence of an obligation.
Under this method of accounting, the cost of the leased asset is amortized
principally using the straight-line method over its estimated useful life and
the obligation, including interest thereon, is liquidated over the life of the
lease. Depreciation expense on leased equipment and the related accumulated
depreciation is included with that of owned equipment.

Revenue Recognition:

         Revenues are recognized when all of the following criteria are met:

                  -        There is persuasive evidence that an arrangement
                           exists

                  -        Shipment has occurred

                  -        The sales price to the buyer is fixed and
                           determinable, and

                  -        Collectibility is reasonably assured.

         The Company provides appropriate provisions for uncollectible accounts
and credit for returns.

Shipping and Handling:

         Shipping costs are included as cost of goods sold.

         Expenses incurred for handling goods in preparation for shipment to
customers totaled $658,000, $815,000 and $790,000 during fiscal 2001, 2000 and
1999, respectively. These expenses are primarily related to warehouse personnel
and are presented in the financial statements as part of operating, selling and
administrative expenses.

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).



                                       30
<PAGE>

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

Earnings Per Share:

         Basic earnings or loss per share is computed by dividing the net
earnings or net loss attributable to common stockholders by the weighted average
number of common shares outstanding during the year. Loss per share amounts do
not include shares of common stock issuable upon the exercise of stock options
since that would have an antidilutive effect and reduce net loss per share. At
December 31, 2001, February 28, 2001 and February 29, 2000, there were options
to purchase 126,198 shares of common stock outstanding. These options expired in
January 2002.

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.

Change in Method of Accounting:

         Effective March 1, 2001, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities" as amended by SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities".
These standards require the Company to recognize all derivatives as either
assets or liabilities at fair value in its balance sheet. The accounting for
changes in the fair value of a derivative depends on the use of the derivative.

         There was no effect on the financial statements upon adoption of these
new standards on March 1, 2001.

New Accounting Pronouncements:

         During June 2001, the Financial Accounting Standards Board issued two
new accounting standards, Statement of Financial Accounting Standards ("SFAS")
No. 141 "Business Combinations" and SFAS No. 142, "Goodwill and Other
Intangibles".

         SFAS No. 141 eliminates the pooling of interests method of accounting
for business combinations initiated prior to July 2001. SFAS No. 142, which
becomes effective March 1, 2002, discontinues the requirement for amortization
of goodwill and indefinite-lived intangible assets, and instead requires an
annual review of the impairment of those assets. Impairment is to be examined
more frequently if certain indicators appear. Intangible assets with a
determinable life will continue to be amortized. The Company is currently
evaluating the impact the adoption of these statements will have on its
financial statements.

         In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 143 "Accounting for Asset Retirement
Obligations", which addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. The standard is effective for fiscal years beginning
after June 15, 2002. The Company does not expect this pronouncement to have an
impact on its consolidated financial statements.

         In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets", which addresses implementation
issues related to SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of". This standard is effective
for fiscal years beginning after December 31, 2001. The Company does not expect
this pronouncement to have an impact on its consolidated financial statements.



                                       31
<PAGE>

2. CORPORATE REORGANIZATION

         In accordance with a merger transaction in 1991, SCPI issued to
Sterling shares of its common stock and Series A Preferred Stock so that the
aggregate fair market value of such stock owned by Sterling totaled
approximately 90% of the aggregate fair market value of SCPI. Sterling 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.

         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 December 31, 2001, dividends
of approximately $10.5 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 $7.0 million of undeclared dividends
in arrears were outstanding at December 31, 2001. The Series A Preferred Stock
has voting rights that are ten times greater than the common stock voting
rights.

3. ADVANCES TO STERLING CONSTRUCTION COMPANY, INC.

         SCPI participates in a cash concentration system with Sterling.
Available cash that has been transferred to Sterling has been reflected as an
addition to the advances to Sterling. Advances to Sterling bear interest at a
rate sufficient to reimburse the Company for interest paid on its revolving line
of credit. Interest recorded for the periods ended December 31, 2001, February
28, 2001 and February 29, 2000 was $256,000, $415,000 and $329,000,
respectively.

         Advances made to Sterling of $9.3 million and $9.0 million as of
December 31, 2001 and February 28, 2001, respectively, are classified as a
component of stockholders' deficiency.

4. PROPERTY AND EQUIPMENT

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

<Table>
<Caption>
                                                                                     December 31, 2001      February 28, 2001
                                                                                     -----------------      -----------------
<S>                                                                                  <C>                    <C>
Leasehold improvements ............................................................      $    359               $    337
Office furniture, warehouse equipment and vehicles ................................           956                    949
                                                                                         --------               --------
                                                                                            1,315                  1,286
Less accumulated depreciation .....................................................          (988)                  (901)
                                                                                         --------               --------
                                                                                         $    327               $    385
                                                                                         ========               ========
</Table>

         Warehouse equipment financed under capital leases amounted to $232,500
and $253,900 for fiscal 2001 and fiscal 2000, respectively. Accumulated
depreciation related to such equipment was $158,985 and $138,376 at December 31,
2001 and February 28, 2001, respectively.



                                       32
<PAGE>

5.  LONG-TERM OBLIGATIONS

   Long-term obligations consist of the following (in thousands):

<Table>
<Caption>
                                                                                     December 31, 2001      February 28, 2001
                                                                                     -----------------      -----------------
<S>                                                                                  <C>                    <C>

Revolving Credit Agreement due in May 2003 .........................................      $  2,535              $  3,464
Subordinated promissory note due December 2004 .....................................           500                    --
Capital lease obligations for computer and warehouse equipment, due
monthly through December 2005 ......................................................           123                   160
Subordinated loan for leasehold improvements, due monthly through October
2003 ...............................................................................            39                    55
Other ..............................................................................            21                    31
                                                                                          --------              --------
                                                                                             3,218                 3,710
Less current portion ...............................................................            83                    77
                                                                                          --------              --------
                                                                                          $  3,135              $  3,633
                                                                                          ========              ========
</Table>


         In December 2001, in conjunction with the December 2001 amendment to
the SCPI Revolver and to improve the Company's working capital position through
the purchase of additional inventory, Sterling advanced $500,000 under a
subordinated promissory note (the "Subordinated Sterling Note"). The
Subordinated Sterling Note matures in a single installment in December 2004, and
bears interest at 12% per annum, payable monthly.

         In July 2001, the Company replaced its existing line of credit with
financing from an institutional lender (the "Revolver"). The Revolver was for a
term of two years in the amount of $4.5 million, subject to a borrowing base.
The Revolver initially carried an interest rate equal to prime plus 1%. Due to
concerns stemming from the bankruptcy filing of Ames in August 2001, the
Revolver was amended to shorten the term of the line and increase the interest
rate to the prime rate plus 1.5%. Upon satisfaction to the lender of SCPI's
ability to obtain new customers and maintain sales and profitability levels, the
Revolver was again amended in December 2001 to provide for a line of $5.0
million, subject to a borrowing base, and to extend the term to May 31, 2003. At
December 31, 2001, the outstanding balance on the Revolver was $2.5 million. The
rate of interest on the New Revolver at December 31, 2001 was the prime rate
plus 1.5% (effective rate of 6.25%). The Revolver is secured by the assets of
SCPI and is subject to the maintenance of certain financial covenants. At
December 31, 2001, the Company was in compliance with its financial covenants.

         At December 31, 2001, the borrowing base under the Revolver was
approximately $2.6 million. During fiscal 2001, the borrowing base ranged from
$3.1 million to $5.3 million, and averaged approximately $3.8 million.

         In October 1998, SCPI obtained a loan from the Redevelopment Authority
of the City of McKeesport (the "Subordinated Loan"). The Subordinated Loan,
which is subordinated to the Revolver, was in the amount of $98,000, bears
interest at the rate of 5% per annum and is being repaid in monthly installments
through October 2003.

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

<Table>
<Caption>
Fiscal
------
<S>                                        <C>
2002 ...................................   $     83
2003 ...................................      2,606
2004 ...................................        515
2005 ...................................         14
                                           --------
Total ..................................   $  3,218
                                           ========
</Table>

6. FINANCIAL INSTRUMENTS

         The carrying value of the Company's financial instruments, which
include accounts receivable, accounts payable, the Revolver, the Subordinated
Sterling Note, capital lease obligations and the Subordinated Loan approximate
their fair value at December 31, 2001 and February 28, 2001.



                                       33
<PAGE>

7. INCOME TAXES AND DEFERRED TAX ASSET

         At December 31, 2001, SCPI and Sterling had aggregate net operating tax
loss carry-forwards (the "Tax Benefits") of approximately $161 million, which
expire in the years 2002 through 2021, which will shelter most of SCPI's income
from federal income taxes. A change in control of SCPI or Sterling exceeding 50%
in any three-year period 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 Sterling'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.

         Under SFAS No. 109, SCPI records as an asset the tax effect of its net
operating tax loss carry-forwards and other tax benefits, reduced by a valuation
allowance which reduces the net asset to the amount management believes more
likely than not will be realized.

         Changes in business conditions and operating trends warrant periodic
management reviews of the recorded valuation allowance to determine if an
increase or decrease in such allowance would be appropriate.

         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 result in a corresponding deferred tax benefit in
future results of operations to the extent of the net cumulative aggregate
charges of $2.5 million to deferred tax expense through fiscal 2001, 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 fiscal 1990.

         In December 2001, management determined that it was more likely than
not that the Company will continue to operate profitably. Previously, the
consolidated group that includes SCPI and Sterling was not profitable and
therefore the ability to utilize the net operating loss carryforwards was
restricted. It is expected that the consolidated tax return of the group will
show taxable income in excess of SCPI's. Therefore, management determined that
the future operations of SCPI warranted a decrease in the valuation allowance to
the extent that SCPI recorded a net deferred tax asset of $800,000 in the
interim period ended December 31, 2001.

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

<Table>
<Caption>
                                                                       Fiscal Year Ended
                                                 December 31, 2001      February 28, 2001    February 29, 2000
                                                 -----------------      -----------------    -----------------
<S>                                              <C>                    <C>                  <C>
Current tax expense                                  $     14                $    225               $     96
Increase in deferred tax asset                           (800)
Current tax benefit from utilization of net
operating tax loss carry-forwards                          --                    (198)                   (86)
                                                     --------                --------               --------
Income tax (benefit) expense                         $   (786)               $     27               $     10
                                                     ========                ========               ========
</Table>

         The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
2001 and February 28, 2001 are as follows (in thousands):

<Table>
<Caption>
                                                         December 31, 2001     February 28, 2001
                                                         -----------------     -----------------
<S>                                                      <C>                   <C>

             Deferred tax assets:
                  Compensation                               $       50           $       34
                  Allowance for doubtful accounts                   200                   65
                  Other                                              37                   28
                  Net operating loss carryforward*               46,240               50,660
                                                             ----------           ----------
             Total deferred tax assets                       $   46,527           $   50,787
             Deferred tax asset valuation allowance             (45,727)             (50,787)
                                                             ----------           ----------
             Total net deferred tax asset                    $      800           $       --
                                                             ==========           ==========
</Table>


*        Represents net operating loss carryforwards prior to 1991 at the
         federal statutory rate. Because tax returns are filed on a consolidated
         basis with Sterling, management has not attempted to distinguish net
         operating loss carryforwards attributable only to the Company since
         1991.



                                       34
<PAGE>

         The income tax provision differs from the amount computed using the
statutory federal income tax rate of 34% applied to net income before taxes for
the following reasons (in thousands):

<Table>
<Caption>
                                                                        Fiscal Year Ended
                                                            December 31,    February 28,    February 29,
                                                                2001            2001            2000
                                                            ------------    ------------    ------------
<S>                                                         <C>             <C>             <C>

Tax (benefit) expense based on the U.S. federal
statutory rate                                                 $  (65)         $  198          $  113
State income tax expense net of refunds and federal
benefit                                                            14              22               7
Decrease in deferred tax asset valuation allowance               (732)           (198)            (86)
Other                                                              (3)              5             (24)
                                                               ------          ------          ------
Income tax (benefit) expense                                   $ (786)         $   27          $   10
                                                               ======          ======          ======
</Table>

         SCPI's and Sterling's aggregate net operating tax loss carry-forwards
for federal income tax purposes at December 31, 2001 expire as follows (in
thousands):

<Table>
<Caption>
        December
        --------
<S>                    <C>
          2002         $   52,000
          2003             22,000
          2004             49,000
          2005             13,000
          2010              1,000
          2011              2,000
          2012              3,000
       Thereafter          19,000
                       ----------
                       $  161,000
                       ==========
</Table>

8. STOCK OPTIONS

          In fiscal 1992, the Board of Directors granted options to purchase
215,987 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. In fiscal 1996, 89,789
options expired. As of December 31, 2001, no options had been exercised; all
options are fully vested and will remain exercisable through January 2002. Stock
options outstanding at December 31, 2001 and February 28, 2001 were 126,198.

9. EMPLOYEE PENSION PLAN

         Steel City Products, together with Sterling, maintains a profit-sharing
plan ("the Plan") covering substantially all of 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 by
the Company for the fiscal years ended December 31, 2001, February 28, 2001 or
February 29, 2000.



                                       35
<PAGE>

10. OPERATING LEASE

         In December 1997, the Company entered into an operating lease for its
McKeesport, PA warehouse with an initial term that expires January 1, 2003, with
one five-year renewal option. The lease requires minimum rental payments of
$247,000 per annum, and payment by the Company of certain expenses such as
liability insurance, maintenance and other operating costs. With the addition of
lawn and garden business in fiscal 2000, the Company entered into a lease
agreement for additional warehouse and office space in Glassport, PA with an
initial term of seven years, expiring December 2007, with one three-year renewal
option.

         Minimum annual rentals for all operating leases having initial
non-cancelable lease terms in excess of one year are as follows (in thousands):

<Table>
<Caption>
Fiscal
<S>                                                  <C>
2002 .............................................   $    386
2003 .............................................        160
2004 .............................................        171
2005 .............................................        182
2006 .............................................        192
Thereafter .......................................        193
                                                     --------
Total future minimum rental payments .............   $  1,284
                                                     ========
</Table>

         Total rent expense for the fiscal years ended December 31, 2001,
February 28, 2001 and February 29, 2000 was approximately $313,000, $268,000 and
$247,000, respectively.

11. SEGMENT INFORMATION

         The Company's historical business has been the distribution of
automotive related accessories. The distribution of pet supplies was added as a
product line in fiscal 1995, and in fiscal 2000 the Company began to distribute
lawn and garden products. The Company operates in three operating segments,
automotive products, ("Auto"), non-food pet products, ("Pet") and lawn and
garden products ("Lawn"). Terrance Allan, SCPI's President and Maarten Hemsley,
Chief Financial Officer, review the operating profitability of each segment and
its working capital needs to allocate financial resources. The non-food pet
operating segment assets and the lawn and garden segment assets consists solely
of their inventories.

FISCAL YEAR ENDED 12/31/01 (TEN MONTHS)

<Table>
<Caption>
Segments                                                          Auto         Pet         Lawn       Corporate        Total
                                                               ----------   ----------   ----------   ----------    ----------
<S>                                                            <C>          <C>          <C>          <C>           <C>
Net sales                                                      $   13,645   $    2,986   $      836                 $   17,467
                                                               ==========   ==========   ==========                 ==========
Operating profit                                               $      (21)  $      471   $      (55)  $     (568)         (173)

Interest income                                                                                              256           256
Interest expense                                                       15                                    260           275
                                                                                                                    ----------
Loss before taxes                                                                                                         (192)
Current income taxes                                                                                                       (14)
Deferred tax benefit                                                                                         800           800
                                                                                                                    ----------
Net income                                                                                                          $      594
                                                                                                                    ==========
Depreciation and amortization                                  $       87                             $       33    $      120
Segment assets                                                 $    5,040   $      461   $      433   $    1,200    $    7,134
Capital expenditures                                           $       29                                           $       29
</Table>



                                       36
<PAGE>

FISCAL YEAR ENDED 2/28/01

<Table>
<Caption>
Segments                                                          Auto         Pet         Lawn       Corporate       Total
                                                               ----------   ----------   ----------   ----------    ----------
<S>                                                            <C>          <C>          <C>          <C>           <C>
Net sales                                                      $   17,653   $    2,642   $      399                 $   20,694
                                                               ==========   ==========   ==========                 ==========
Operating profit                                               $      619   $      355   $       44   $     (361)          657
Interest income                                                                                              357           357
Interest expense                                                       17                                    416           433
                                                                                                                    ----------
Income before taxes                                                                                                        581
Income taxes                                                                                                                27
                                                                                                                    ----------
Net income                                                                                                          $      554
                                                                                                                    ==========
Depreciation and amortization                                  $      118                             $       26    $      144
Segment assets                                                 $    6,516   $      307   $      467   $      148    $    7,438
Capital expenditures                                           $      126                                           $      126
</Table>

FISCAL YEAR ENDED 2/29/00

<Table>
<Caption>
Segments                                                                       Auto         Pet       Corporate       Total
                                                                            ----------   ----------   ----------    ----------
<S>                                                                         <C>          <C>          <C>           <C>
Net sales                                                                   $   17,871   $    2,271                 $   20,142
                                                                            ==========   ==========                 ==========
Operating profit                                                            $      521   $      321   $     (549)          293
Interest income                                                                                              389           389
Interest expense                                                                                             349           349
                                                                                                                    ----------
Income before taxes                                                                                                        333
Income taxes                                                                                                                10
                                                                                                                    ----------
Net income                                                                                                          $      323
                                                                                                                    ==========
Depreciation and amortization                                               $      109                $       65    $      174
Segment assets                                                              $    7,451   $      306   $      153    $    7,910
Capital expenditures                                                        $       69                              $       69
</Table>

12. MAJOR CUSTOMERS

         Sales of principally automotive accessories to major customers
representing individually more than 10% of sales during any of the latest fiscal
years were as follows (in thousands):

<Table>
<Caption>
                                 Fiscal Year Ended             Fiscal Year Ended           Fiscal Year Ended
                                 December 31, 2001             February 28, 2001           February 29, 2000
                                 -----------------             -----------------           -----------------
                                   (ten months)
<S>                            <C>           <C>              <C>          <C>            <C>        <C>
                                Sales        % of sales        Sales       % of sales     Sales      % of sales
Ames                           $3,217           18%           $3,746           18%        $3,144          16%
Kroger                         $2,758           16%           $2,057           10%        $2,037          10%
Giant Eagle                    $2,313           13%           $2,055           10%        $1,523           8%
Warehouse Sales                $2,193           13%                *            *              *           *
American Sales                 $1,863           11%                *            *              *           *
*did not represent more than 10% of sales
</Table>

         In August 2001, Ames Department Stores filed for Chapter 11 protection.
SCPI has continued to ship to Ames as debtor-in-possession under strict payment
terms. Pre-petition sales to Ames (mostly of automotive products) totaled $1.5
million, of which approximately $686,000 remained unpaid at the time of the Ames
bankruptcy filing. Post-petition sales to Ames aggregated $1.7 million,
primarily as a result of the addition of sales of pet supplies.

13. RELATED PARTY TRANSACTIONS

         In June 1995, SCPI engaged Oakhurst Management Corporation ("OMC"), a
wholly-owned subsidiary of Sterling, to provide certain legal, management,
investor relations, accounting, and tax services. SCPI's results for the fiscal
years ended 2001, 2000 and 1999 include charges of approximately $398,000,
$475,000 and $469,000, respectively, for these services. Management believes
that the fees charged by OMC are reasonable for the services



                                       37
<PAGE>

provided although objective data regarding fees that would be charged by an
unaffiliated entity are not available. Fees are charged to the Company for
actual services and expenses rendered.

14. UNAUDITED SELECTED FINANCIAL DATA

         In November 2001, the Company elected to change its fiscal year end to
December 31. The following tables present condensed consolidated financial
information for the fiscal year ended December 31, 2001, which includes ten
months and certain unaudited condensed consolidated financial information for
the ten months ended December 31, 2000 (in thousands):

                 Condensed Consolidated Statements of Operations

<Table>
<Caption>
                                                                                December 31,
                                                               December 31,         2000
                                                                   2001         (ten months)
                                                               (ten months)     (unaudited)
                                                               ------------    ------------
<S>                                                            <C>             <C>
Net sales                                                      $     17,467    $     17,256
Expenses, including interest expense and net of
other income                                                         17,659          16,665
                                                               ------------    ------------
(Loss) income before income taxes                                      (192)   $        591
Current income tax expense                                               14               5
Deferred income tax benefit                                             800              --
                                                               ------------    ------------
Net income                                                              594             585
Series A Preferred dividends                                           (850)           (850)
                                                               ------------    ------------
Net loss attributable to common stockholders                   $       (256)   $       (265)
                                                               ============    ============

Net loss per share attributable to common
stockholders                                                   $      (0.08)   $      (0.08)
Weighted average shares outstanding                               3,238,061       3,238,061
</Table>

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

<Table>
<Caption>
Fiscal 2001 quarter ended                          May 31       August 31    November 30*  December 31*     Total
<S>                                              <C>           <C>           <C>           <C>           <C>

Sales                                            $    5,719    $    5,263    $    5,264    $    1,221    $   17,467
Gross profit                                          1,014         1,113           994           217         3,338
Net income                                               25          (204)           37           736           594
Preferred stock dividends                               255           255           255            85           850
Net (loss) income attributable to common
stockholders                                     $     (230)   $     (459)   $     (218)   $      651    $     (256)

Net (loss) income per share
 attributable to common stockholders             $    (0.07)   $    (0.14)   $    (0.07)   $     0.20    $    (0.08)
</Table>

<Table>
<Caption>
Fiscal 2000 quarter ended                          May 31       August 31    November 30   February 28      Total
<S>                                              <C>           <C>           <C>           <C>           <C>

Sales                                            $    5,745    $    5,285    $    4,631    $    5,033    $   20,694
Gross profit                                          1,243         1,047           892           974         4,156
Net income                                              253           299           (15)           17           554
Preferred stock dividends                               253           255           255           251         1,014
Net income/(loss) attributable to common
stockholders                                     $       --    $       44    $     (270)   $     (234)   $     (460)

Net loss per share
 attributable to common stockholders             $       --    $     0.01    $    (0.08)   $    (0.07)   $    (0.14)
</Table>



                                       38
<PAGE>

* In November 2001, the Board of Directors elected to change the Company's
fiscal year end from the last day of February to December 31. There was no
separately reported third quarter. Results for December include only one month.



                                       39
<PAGE>



                                   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: March 21, 2002                 By:   /s/ Bernard H. Frank
                                         --------------------------------------
                                      Bernard H. Frank, Chief Executive Officer
                                      (duly authorized officer)


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                    March 21, 2002
---------------------------------------             Chief Executive Officer
Bernard H. Frank                                    Director (principal
                                                    executive officer)

  /s/    Maarten D. Hemsley                         Chief Financial Officer                  March 21, 2002
---------------------------------------             (principal financial and
Maarten D. Hemsley                                  accounting officer)
                                                    Director

  /s/    Terrance W. Allan                          President                                March 21, 2002
---------------------------------------             Director
Terrance W. Allan


  /s/    John D. Abernathy                          Director                                 March 21, 2002
---------------------------------------
John D. Abernathy


  /s/    Robert M. Davies                           Director                                 March 21, 2002
---------------------------------------
Robert M. Davies


  /s/    Joseph P. Harper, Sr.                      Director                                 March 21, 2002
---------------------------------------
Joseph P. Harper, Sr.
</Table>



                                       40
<PAGE>



                                                                     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                        Charges to other
                          beginning of    Charged to costs      accounts -         Deductions -      Balance at end
      Description            period         and expenses         describe          describe(A)          of period
<S>                       <C>             <C>                <C>                   <C>               <C>
Allowance for doubtful accounts deducted from trade
accounts receivable:
Years ended:
December 31, 2001           $  191              483                 --                  86              $  588
February 28, 2001           $  230               30                 --                  69              $  191
February 29, 2000           $  244               51                 --                  65              $  230
</Table>

(A)  Amounts were deemed uncollectible



                                       41
<PAGE>

                               INDEX TO EXHIBITS

<Table>
<Caption>
Exhibit No.       Description
-----------       -----------
<S>               <C>
     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 on Form 10-K for
                  the fiscal year ended February 26, 1994).

   #10.1          Employment Agreement with Bernard H. Frank dated as of April
                  1, 1998 (filed as Exhibit 10.1 to the Company's Annual Report
                  on Form 10-K for the fiscal year ended February 28, 1999).

   #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).

   #10.4          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).
</Table>


<PAGE>

<Table>
<S>               <C>
    10.6          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).

    10.7          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).

    10.8          Lease agreement by and between Regional Industrial Development
                  Corporation of Southwestern Pennsylvania and Steel City
                  Products, Inc., dated November 11, 1997- (filed as exhibit #10
                  to the Company's Form 10-K for the year ended February 28,
                  1998)

    10.9          Lease agreement by and between SPEDD, Inc. and Steel City
                  Products, Inc. dated November 21. 2000. (filed as exhibit 10.9
                  to the Company's Form 10-K for the year ended February 28,
                  2001)

   10.10          Employment Agreement with Terrance W. Allan dated as of May 1,
                  2000. (filed as exhibit 10.10 to the Company's Form 10-K for
                  the year ended February 28, 2001)

   10.11          Revolving Credit Agreement dated July 13, 2001 between
                  National City Bank of Pennsylvania and Steel City Products,
                  Inc. (filed as exhibit 10.1 to the Company's Form 10-Q for the
                  quarter ended May 31, 2001)

   10.12          Amendment to the Revolving Credit Agreement dated September
                  12, 2001 between National City Bank of Pennsylvania and Steel
                  City Products, Inc. (filed as exhibit 10.1 to the Company's
                  Form 10-Q for the quarter ended August 31, 2001)

  *10.13          Second Amendment to the Revolving Credit Agreement between
                  National City Bank of Pennsylvania and Steel City Products,
                  Inc. dated December 12, 2001.

      21          Subsidiaries at December 31, 2001:
                      Oakhurst Holdings, Incorporated - Delaware
</Table>


----------

#        Management contract or compensatory plan or arrangement.

*        Filed herewith