<PAGE>   1





                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K

       For Annual and Transition Reports Pursuant to Sections 13 or 15(d)
                     of the Securities Exchange Act of 1934

(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         FOR THE FISCAL YEAR ENDED JANUARY 31, 1998

                                       or

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         FOR THE TRANSITION PERIOD FROM _______ TO _______

                         COMMISSION FILE NUMBER 0-26732

                                 GADZOOKS, INC.
             (Exact name of registrant as specified in its charter)

       TEXAS                                                74-2261048    
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                            Identification No.)
                                                          
4121 INTERNATIONAL PARKWAY
CARROLLTON, TEXAS                                                 75007
(Address of principal executive offices)                        (Zip Code)
                                                               

              REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
                                 (972) 307-5555

Securities Registered Pursuant to Section 12(b) of the Act:

     TITLE OF EACH CLASS               NAME OF EACH EXCHANGE ON WHICH REGISTERED

Common Stock, $0.01 par value                     The Nasdaq Stock Market

Securities Registered Pursuant to Section 12(g) of the Act:  NONE

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

         Indicate by check mark if disclosure of delinquent filers pursuant to
item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. 
                             ----

         The aggregate market value of Common Stock held by non-affiliates of
the registrant on April 13, 1998 was approximately $191,963,408.  All
outstanding shares of voting stock, except for shares held by executive
officers and members of the Board of Directors and their affiliates, are deemed
to be held by non-affiliates.

    On April 13, 1998, the registrant had 8,817,757 shares of Common Stock
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

         Part II incorporates information by reference from the registrant's
Annual Report to Shareholders for the fiscal year ended January 31, 1998, filed
herewith as Exhibit 13.

         Part III incorporates information by reference from the definitive
Proxy Statement for the 1998 Annual Meeting of Shareholders, to be filed with
the Commission no later than 120 days after the end of the registrant's fiscal
year covered by this Form 10-K.
<PAGE>   2
                                     PART I

ITEM 1.  BUSINESS.

         Gadzooks, Inc. (the "Company" or "Gadzooks") is a rapidly growing,
mall-based specialty retailer of casual apparel and related accessories for
young men and women, principally between the ages of 13 and 19.  The Company
currently operates 275 stores in both metropolitan and middle markets in 32
states throughout the, Southwest, Midwest, Southeast, Mid-Atlantic and
Northeast regions of the United States.  The Company opened 67 new stores
during fiscal 1997.  In addition, the Company plans to open approximately 70 to
75 new stores in fiscal 1998, 26 of which have been opened as of April 1998.

         Management believes that current demographic trends provide the
Company with the opportunity to continue its rapid store expansion program.
According to the U.S. Census Bureau, there are approximately 25 million
teenagers in the United States today and the number is expected to grow to
approximately 31 million by the year 2010.  Management believes that teenagers
represent both a growing part of the U.S. population and an increasing source
of purchasing power.

         The Company was incorporated in Texas in 1982, its executive offices
are located at 4121 International Parkway, Carrollton, Texas 75007, and its
telephone number is (972) 307-5555.

BUSINESS STRATEGY

         The Company is a leading retailer of brand name casual apparel and
related accessories to teenagers.  The principal elements of the Company's
business strategy are:

    o    Focus on the Male and Female Teenage Customer.  The Gadzooks concept
    focuses on providing fashionable casual apparel and accessories to both
    male and female teenage customers.  By offering merchandise for both sexes,
    Gadzooks believes that it serves a much broader customer base than many of
    its specialty store competitors and that it reduces the potential fashion
    risk of concentrating on one gender exclusively.  Furthermore, Gadzooks
    believes that it attracts additional customers by creating a shopping
    environment where it is comfortable for both males and females to shop as
    couples or with friends, as well as on their own.

    o    Multiple Merchandise Categories.  A key component of the Company's
    merchandising strategy is to reduce its dependence on any one fashion,
    style, brand or item by offering products in a broad range of categories.
    Each Gadzooks store carries approximately 2,500 stock-keeping units or
    "SKUs" (excluding different sizes of the same item), including woven and
    knit tops, jeans, shorts, junior dresses, swimwear, t-shirts, footwear,
    sunglasses, watches, costume jewelry and other accessory items.  The
    Company regularly monitors store sales by classification, SKU and size to
    identify emerging fashion trends, and manages the product mix in its stores
    to respond to the spending patterns of its customers.  The Company believes
    that its success to date has been largely attributable to its ability to
    meet the changing fashion preferences of its customers.

    o    Emphasis on Brand Name Merchandise.  Another key feature of the
    Company's merchandising strategy is to offer a wide variety of popular
    brand name merchandise based on its belief that its customers shop
    primarily for recognized labels and designs.  The Company's merchandise
    includes high visibility names such as JNCO, Dr. Marten, Kikwear, Adidas
    and BC Ethic and other popular fashions and brand name merchandise.  The
    Company concentrates on merchandise that appeals to the mainstream teenager
    rather than relying on "cutting edge" products.  The Company believes that
    this strategy is consistent with its philosophy of responding to its
    customers' fashion preferences as opposed to attempting to establish
    fashion trends.


                                      2
<PAGE>   3
    o    Metropolitan and Middle Market Locations.  A central aspect of the
    Company's strategy has been the development of a store concept that is
    successful in both metropolitan and middle markets.  The Company believes
    that teenagers throughout the United States frequently have similar fashion
    preferences as a result of the influence of television programs, MTV and
    music and fashion magazines.  As a result, the Company has been able to
    operate stores successfully across a broad range of demographic and
    geographic markets, increasing the number of potential sites available to
    the Company.

    o    Attentive Customer Service.  The Company is committed to offering
    professional, attentive and personalized customer service.  Gadzooks hires
    young, energetic, service-oriented sales associates who understand
    teenagers and can relate to their changing needs and preferences.  The
    Company strives to give its teenage customers the same level of respect and
    attention that is generally given to adult customers at other retail
    stores.  The Company trains sales associates to greet each customer
    personally, to inform the customer about new fashion trends and to suggest
    merchandise to suit the customer's wardrobe and lifestyle needs.  The
    Company believes that the high level of service given to its teenage
    customers differentiates Gadzooks from its competition.

    o    Entertaining Store Environment.  The Company believes that its stores
    are visually appealing and provide a fun and enjoyable shopping experience
    for its customers.  Gadzooks stores are designed to create a high energy,
    fun environment using neon lighting, television monitors featuring popular
    music videos, playful mannequins and creative, eye-catching signage.  The
    Company's signature Volkswagen Beetle, decorated with merchandise, is a
    feature attraction in the stores.  The Company believes that its
    entertaining store design encourages customers to visit the stores more
    frequently and to shop in the stores for longer periods of time.  While
    Gadzooks stores are designed to appeal primarily to the teenage customer,
    the Company also strives to create a shopping environment that is
    comfortable for adults.

    o    Investment in Systems and Personnel.  The Company is committed to
    investing in information systems and using current technology to help
    execute its merchandising strategy.  The Company's systems provide its
    buyers and merchandise planners with daily sales and inventory information
    by store, SKU and size, allowing Gadzooks to respond to changing customer
    preferences and to stock the appropriate quantities and styles of
    merchandise at each store.  The Company is also committed to attracting and
    retaining highly-qualified, service-oriented management and sales
    associates and providing them with career advancement opportunities.  The
    corporate culture at Gadzooks promotes the open exchange of new ideas and
    information between all levels of the Company thereby enabling management
    to supplement the data from its information systems with the practical
    experience of its employees.

    o    Distribution Capabilities.  The Company opened a new 110,000
    square-foot distribution center in May 1997 that is three times the size of
    its previous distribution center.  The new facility can support the
    merchandising needs of about 500 stores, providing for our continued store
    expansion into the next century.  The Company believes the new distribution
    center is a critical element in its future growth plans.





                                       3
<PAGE>   4
STORE LOCATIONS

         As of April 17, 1998, the Company operated 275 stores in 32 states.
The Company's existing stores are located in metropolitan markets such as
Dallas, Chicago, Atlanta, Kansas City and Cincinnati, as well as middle markets
such as Amarillo, Texas; Tupelo, Mississippi; and Roanoke, Virginia.  The
following store list shows the number of stores that Gadzooks operates in each
state and the cities in which Gadzooks stores are located.


<TABLE>
<CAPTION>
<S>                        <C>                         <C>                       <C>                         <C>
         ALABAMA                    KANSAS                   MISSOURI                   OKLAHOMA                TEXAS (CONT.)
         -------                    ------                   --------                   --------                -------------
       Huntsville                    Hays                    Columbia                     Enid                    San Angelo
         Mobile                   Hutchinson                  Joplin                     Lawton                San Antonio (4)
       Montgomery                 Manhattan               Kansas City (3)                Norman                    Sherman
        ARKANSAS                    Salina                  Springfield            Oklahoma City (4)                Temple
        --------                    Topeka                  St. Louis (3)               Shawnee                   Texarkana
      Fayetteville               Wichita (2)                  NEBRASKA                  Tulsa (2)                   Tyler
        Ft. Smith                  KENTUCKY                   --------                PENNSYLVANIA                 Victoria
        Jonesboro                  --------                 Grand Island              ------------                   Waco
     Little Rock (2)               Ashland                     Lincoln                  Altoona                 Wichita Falls
         FLORIDA                Bowling Green                 Omaha (2)                   Erie                     VIRGINIA
         -------            Florence (Cincinnati)          NEW HAMPSHIRE               Johnstown                   --------  
      Jacksonville                Owensboro                -------------               Lancaster                Charlottesville
       Orlando (2)                Lexington                 Manchester              Philadelphia (2)               Chesapeake
        Pensacola               Louisville (2)                 Salem                    Scranton                 Christianburg
       Tallahassee                 Paducah                  NEW JERSEY               State College              Fredericksburg
         GEORGIA                  LOUISIANA                 ----------               SOUTH CAROLINA              Harrisonburg
         -------                  ----------                 Freehold                --------------                Manassas
         Athens                   Alexandria                Livingston               Charleston (2)              Newport News
       Atlanta (7)             Baton Rouge (2)                Paramus                 Columbia (2)                 Roanoke
         Augusta                    Houma                    Rockaway                  Greenville                Springfield
          Macon                   Lafayette                 NEW MEXICO                Myrtle Beach              Virginia Beach
        ILLINOIS                 Lake Charles               ----------                Spartanburg                 Winchester
        --------                    Monroe                Albuquerque (2)             SOUTH DAKOTA              WEST VIRGINIA
       Bloomington             New Orleans (3)              Las Cruces                ------------              -------------
       Carbondale               Shreveport (2)               Santa Fe                 Sioux Falls                 Bridgeport
        Champaign                  MARYLAND                  NEW YORK                  TENNESSEE                  Charleston
      Chicago (12)                 --------                  --------                  ---------                  Huntington
Fairview Heights (St. Louis)    Baltimore (2)                 Albany                  Chattanooga                Parkersburg
         Moline                   Frederick                   Nanuet                    Jackson                   WISCONSIN
         Peoria                 MASSACHUSETTS                Rochester                 Kingsport                  ---------
        Rockford                -------------              Staten Island             Knoxville (2)                 Appleton
       Springfield                Boston (2)                 Syracuse                 Memphis (3)                 Eau Claire
         INDIANA                   MICHIGAN               NORTH CAROLINA             Nashville (3)                Green Bay
         -------                   --------               ---------------               TEXAS                    Madison (2)
         Elkhart                    Flint                  Charlotte (2)                -----                   Milwaukee (3)
       Evansville                  Portage                   Concord                   Abilene                      Wausau
        Ft. Wayne                  Saginaw                 Fayetteville                Amarillo
      Indianapolis                MINNESOTA                 Greensboro                Austin (2)
        Lafayette                 ---------                   Hickory                   Beaumont
      Merrillville                 Mankato                  High Point              College Station
         Muncie           Minneapolis / St. Paul (3)    Raleigh-Durham (3)           Corpus Christi
       Terre Haute                St. Cloud                Winston-Salem         Dallas / Ft. Worth (9)
          IOWA                   MISSISSIPPI                   OHIO                      Denton
          ----                   -----------                   ----                   El Paso (3)
    Cedar Rapids (2)                Biloxi                Cincinnati (2)               Harlingen
     Council Bluffs              Hattiesburg               Cleveland (4)              Houston (12)
        Davenport                  Jackson                   Columbus                   Killeen
     Des Moines (3)                Meridian                   Dayton                     Laredo
         Dubuque                    Tupelo                     Heath                    Longview
       Fort Dodge                                            Lancaster                  Lubbock
       Sioux City                                              Lima                     McAllen
                                                             Mansfield                  Midland
                                                               Niles                     Odessa
                                                             Sandusky                 Port Arthur
                                                          St. Clairsville
                                                              Toledo                               
</TABLE>



                                       4
<PAGE>   5
Expansion Strategy

    The following table provides a history of the Company's store expansion
program over the past five fiscal years.

<TABLE>
<CAPTION>
                                                                                  Fiscal Year               
                                                                 -------------------------------------------
                                                                  1993     1994      1995     1996     1997   
                                                                 -------  -------   -------  -------  -------
<S>                                                                 <C>       <C>      <C>      <C>     <C>
Number of stores open at beginning of period  . . . . . . .         43        65        90      126     183
Number of new stores opened . . . . . . . . . . . . . . . .         23        26        39       57      67
Number of stores closed . . . . . . . . . . . . . . . . . .          1         1         3       --      --
                                                                 -------  -------   -------  -------  -------
Number of stores open at end of period  . . . . . . . . . .         65        90       126      183     250
                                                                 =======  =======   =======  =======  =======
</TABLE>


    The Company's expansion strategy is to continue to open stores in enclosed
shopping malls in both metropolitan markets and middle markets primarily in its
existing markets, and to continue developing the northeast market where the
Company made its initial entry at the end of 1997.  The Company expects to open
approximately 70 to 75 new stores during fiscal 1998, 26 of which have been
opened as of April 1998.  The Company believes that the broad appeal of the
Gadzooks concept enables it to operate successfully in diverse geographic and
demographic markets, thereby increasing the total number of potential sites
available to the Company.

    The Company selects locations for new store openings to achieve a balance
between (i) test markets where the Company has had no previous operating
experience, (ii) new markets where the Company has tested a Gadzooks store and
believes that the Company can successfully expand, and (iii) mature markets
where the Company desires to add new stores at attractive locations as they
become available.  In general, the Company will open the highest number of
stores in new markets where the Company's concept has recently been introduced
and where the Company believes that it can capitalize on the potential of these
markets.  The Company typically expands from existing markets into contiguous
new markets and attempts to cluster its stores within a market area in order to
achieve management and operating efficiencies and to enhance its name
recognition.  In addition, from time to time the Company analyzes stores for
potential closing.

    The Company has from time to time analyzed potential acquisitions of small
chains of stores that serve its target customer in order to provide the Company
with more rapid access to desirable locations and new markets and may consider
such acquisitions again in the future.  Except for a limited number of stores
acquired from former franchisees, the Company has never made any such
acquisitions and does not currently have any agreements for any in the future.

STORE-LEVEL ECONOMICS

    In 1997, the Company's 250 stores averaged $794,437 in annualized net sales
and produced annualized net sales per square foot of approximately $341.
Stores which were opened during all of fiscal 1997, a total of 183 stores,
generated average net sales of $785,797 and average store-level operating cash
flow (defined as store operating income before depreciation and excluding
changes in working capital) of approximately $134,000, or 17.0% of average net
sales.  In general, the Company's newer stores typically generate lower sales
volumes and operating cash flow than its more mature stores.  Capital
expenditures, including leasehold improvements and furniture and fixtures, for
the 67 new stores opened during fiscal 1997 averaged approximately $186,000
(approximately $116,000 net of all landlord allowances), and initial gross
inventory requirements (which were partially financed by trade credit) averaged
approximately $100,000 per store.  Pre-opening costs ranged from $9,000 to
$13,000 for travel, hiring and training, and other miscellaneous costs
associated with the set-up of a new store prior to its opening for business.
Inventory requirements vary at new stores depending on the season during which
they are opened and current fashion trends.  There can be no assurance that in
the future, the average store-level sales and operating cash flow will not vary
from historical results or that the total estimated capital expenditures for
new stores will not increase.





                                       5
<PAGE>   6


MERCHANDISING

    The Company's merchandising strategy is to provide a wide range of brand
name casual apparel and related accessories that reflect the fashion
preferences of young men and women principally between the ages of 13 and 19.
Each store typically carries an inventory of approximately 2,200 SKUs, with
most merchandise selling at prices ranging between $15 and $30.

    The Company's merchandise includes high visibility names such as JNCO, Dr.
Marten, Kikwear, Adidas, BC Ethic and other popular fashions and brand name
merchandise.  The Company concentrates on merchandise that appeals to the
mainstream teenager rather than relying on "cutting edge" products.  The
Company believes that this strategy is consistent with its philosophy of
responding to its customers' fashion preferences as opposed to attempting to
establish fashion trends.

    The Company classifies all of its merchandise into one of five categories
as follows:

<TABLE>
            <S>                            <C>
            o Young Men:                   The Young Mens category includes casual sportswear separates reflecting
                                           current fashion trends, such as woven and knit tops and bottoms made of denim
                                           and other fabrics.  The key vendors in this category include JNCO, Airwair,
                                           Kikwear, BC Ethic and Adidas.
            o Juniors (Young Women):       The Juniors category includes casual sportswear separates designed for the
                                           fashion-current young woman, such as knit tops, woven shirts and vests,
                                           denim, dresses and swimwear.  Key vendors in this category include JNCO,
                                           Kikwear, Mudd, BAI, Anxiety and Younique Clothing.
            o  Accessories:                The Accessories category includes a variety of male, female and unisex
                                           accessories including sunglasses, watches, wallets, key chains, handbags,
                                           earrings, necklaces, hats and other accessories.  Key vendors in this
                                           category include Fossil, Oakley, Storm, Black Flys and Adidas.
            o  Unisex Apparel:             The Unisex category consists primarily of t-shirts with logos containing
                                           current topics and humorous designs and phrases.  This category includes
                                           merchandise from various vendors, including Logotel, as well as a small
                                           selection of Company-designed products.  Periodically, the Company will
                                           supplement this category with other apparel appropriate for both sexes.
            o  Footwear:                   The Company offers a limited selection of male, female and unisex footwear
                                           including sandals and active footwear.  Key vendors in this category include
                                           Airwair, Adidas, Skechers, Espirit and Converse.
</TABLE>

    The following table sets forth the Company's merchandise by category as an
approximate percentage of net sales for fiscal 1997:

<TABLE>
<CAPTION>
                                                                                  Percentage of Net Sales
                                                                                  -----------------------
         <S>                                                                               <C>
         Juniors (Young Women)  . . . . . . . . . . . . . . . . . . . . . . . .             29%
         Young Men  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              26
         Accessories  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              17
         Unisex Apparel   . . . . . . . . . . . . . . . . . . . . . . . . . . .              17
         Footwear   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              11
                                                                                          -----
                                                                                           100%
                                                                                           === 
</TABLE>





                                       6
<PAGE>   7
    By offering products in multiple categories, the Company is able to shift
its merchandise emphasis among and within its core categories to respond to
changing customer preferences.  For example, in response to increased demand
for young men's apparel in fiscal 1997, the Company increased its emphasis in
these merchandise categories and decreased its emphasis in the junior
merchandise category.  The Company expects to continue to adjust its emphasis
in particular categories in response to changing fashion trends and, therefore,
its merchandise mix may vary slightly from time-to-time.

    In an effort to keep the stores fresh and exciting, the Company's
merchandising staff provides specific floor sets and merchandising ideas to the
stores and regularly instructs district and store managers on the creative
display of merchandise.  The merchandise presentation in the stores is
significantly changed three times each year to highlight specific merchandise
for each of the Company's three peak selling seasons and to maintain a current
look.  In addition, the Company maintains a constant flow of new merchandise to
the stores through shipments from its distribution center on a daily basis to
encourage our customers to frequently visit our stores.  To reduce the risk
associated with the introduction of new products, the Company tests products in
selected stores before determining if it will purchase the product for a
broader group of stores.

PURCHASING

    The Company's purchasing staff consists of a General Merchandising Manager,
two divisional merchandising managers, buyers, and associate buyers.  The
General Merchandising Manager, divisional merchandise managers and the buyers
analyze current fashion directions by visiting major fashion markets and
maintaining close relationships with the Company's vendors in order to identify
styles and trends.  In addition, the Company's buyers regularly attend concerts
and other events attended by teenagers.  The General Merchandising Manager,
divisional merchandising managers and the buyers constantly monitor merchandise
flow through the stores and strive to maintain the appropriate merchandise mix
to meet customer demand.  Several of the buyers were formerly district managers
or store managers of the Company and are familiar with the Company's customers
and their merchandise preferences.

    Due to changes in fashion trends and seasonality, the Company purchases
merchandise from numerous vendors throughout the year.  During fiscal 1997, the
Company did business with approximately 750 vendors.  Of those vendors, JNCO,
accounted for approximately 12% of the Company's merchandise purchases.  No
other single vendor accounted for more than 10% of merchandise purchases.
Certain of the Company's vendors have limited financial resources and
production capabilities.  The Company believes that its relationships with its
vendors are good.

ALLOCATION AND DISTRIBUTION OF MERCHANDISE

    The Company continually strives to improve its merchandising, distribution,
planning and allocation methods to manage its inventory more efficiently.  The
Company's Director of Planning and Allocation and the staff in the planning and
allocation department work closely with merchandise buyers and store personnel
to meet the requirements of individual stores for appropriate merchandise in
sufficient quantities.  The Company divides its stores into different
categories based on, among other things, geographic location, demographics and
sales volume.  Product allocation and distribution are based in part on an
analysis of the stores by category.  Information from the Company's
point-of-sale computer system is regularly reviewed and analyzed to assist in
making merchandise allocation and markdown decisions.

    In May 1997, the Company relocated its headquarters to a larger site, in
the Dallas metropolitan area, which includes a distribution facility of
approximately 110,000 square feet.  Merchandise is delivered by the vendors to
this facility, where it is inspected, entered into the Company's computer
system, allocated to stores, ticketed (to the extent that it was not
pre-ticketed by the vendor) and boxed for distribution to the Company's stores.
Merchandise is typically shipped to stores daily via United Parcel Service,
providing Gadzooks stores with a steady flow of new merchandise.  For key
products, the Company maintains a backstock at its distribution center that is
allocated and distributed to the stores through an automatic replenishment
system.





                                       7
<PAGE>   8


STORE OPERATIONS

    Gadzooks stores are open seven days a week during normal mall hours.  The
Company's store operations are managed by a Senior Vice President of Store
Operations, Director of Store Operations, regional managers and district
managers, who generally have responsibility for 8 to 10 stores within a
geographic district.  Individual stores are managed by a store manager and two
assistant store managers.  A typical store has 6 to 12 part time sales
associates, depending on the season.  Gadzooks compensates its district and
store managers with a base salary, a performance bonus based on store sales,
payroll expense control and loss prevention.  In addition, stock options are
granted to district managers at the time they assume this position, with
additional grants each year thereafter.  Sales associates are compensated on an
hourly basis.

    The Company believes that its continued success is dependent in part on its
ability to attract, retain and motivate quality employees.  In particular, the
success of the Company's store expansion program will be dependent on its
ability to promote and/or recruit qualified district and store managers.  To
date, the vast majority of the Company's district managers were previously
Gadzooks store managers.  The Company has an established training program for
future district managers.  Store managers, many of whom are selected from among
the Company's sales associates, currently complete a two-week training program
at a designated training store before taking responsibility for a store.  The
hiring and training of new sales associates are the responsibility of store
managers, and the Company has established training and operations manuals to
assist them in this process.  The Company is developing enhanced training
programs for its store managers, assistant managers and sales associates.

    Management considers its employees' knowledge of the Company's customers
and merchandise to be significant to its marketing approach and customer
satisfaction.  While all Gadzooks store employees are responsible for the
general appearance of the store, restocking of shelves and merchandise
presentation, the Company's major emphasis in training its store employees is
to give priority to customer service and assistance.  Sales associates
regularly act as greeters, meeting customers as they enter the store, handing
out promotional materials and offering assistance.  The Company trains its
sales associates to inform the customer about new fashion trends and to suggest
merchandise that suits the customer's wardrobe and lifestyle needs.  The
Company monitors the customer service level at each store through various
programs, including its "I Spy" program of unannounced visits to the stores by
shoppers who are unknown by the store employees and by regularly reviewing and
responding to comment cards and e-mails received from its customers.

STORE ENVIRONMENT

    The Company believes that its stores are visually appealing and provide a
fun and enjoyable shopping experience for its customers.  Gadzooks stores are
designed to create a high energy, fun environment using neon signs, video
monitors featuring popular music videos, playful mannequins and creative,
eye-catching signage.  Store entrances are typically decorated with a
checkerboard floor, and a Volkswagen Beetle, decorated with merchandise, is a
feature attraction in the stores.  The Company typically displays a significant
amount of merchandise on the walls of the store, with male merchandise along
one side, female merchandise along the other and t-shirts along part of the
back wall.  In the center of the store, lower fixtures are used to display
merchandise in order to maintain an open feeling.  Stores typically feature
large windows along the mall which provide an open view of the entire store to
mall traffic and are merchandised to draw customers into the store.  While
Gadzooks stores are designed to appeal primarily to the teenage customer, the
Company also strives to create a shopping environment that is comfortable for
adults.

SITE SELECTION

    Based on its results to date in both metropolitan and middle markets, the
Company believes that it can operate successfully in markets with a broad range
of geographic and demographic profiles.  The Company takes into account certain
demographic factors such as population density, concentration of teenagers,
income levels, lifestyle characteristics and the performance of other retailers
to identify attractive new markets, evaluate specific shopping malls and
project individual store sales volumes.





                                       8
<PAGE>   9

    Within each shopping mall, the Company typically seeks a highly visible
location and often locates its stores near major fashion-oriented department
stores, food courts and other specialty stores catering to teenage customers.
The Company's existing stores average approximately 2,300 square feet.  The
Company typically seeks a location of approximately 2,000 to 2,500 square feet
with significant store frontage.  However, the Company's flexible store design
enables it to take advantage of well-situated sites with more unique layouts.
Once a site is approved, the Company, with the assistance of an outside
architect, designs the store to meet the specific site characteristics.  The
Company's construction department seeks competitive bids from outside
contractors for the build-out of each store and oversees the construction
process.  The Company typically requires six to eight weeks to open a new store
after the beginning of build-out.

MANAGEMENT INFORMATION SYSTEMS

    Each Gadzooks store is linked to the Company's headquarters through a
point-of-sale system that interfaces with an IBM RS6000 computer equipped with
an integrated merchandising, distribution and accounting software package.  The
Company's point-of-sale computer system has several features, including
merchandise scanning, "price look-up," the ability to compile preferred
customer lists and on-line credit card approval.  These features improve
transaction accuracy, speed and checkout time, increase overall store
efficiency, and enable the Company to track the productivity of individual
sales associates.

    The Company's management information and control systems enable the
Company's corporate headquarters to promptly identify sales trends, replenish
depleted store inventories, reprice merchandise and monitor merchandise mix and
inventory shrinkage at individual stores and throughout the Company's store
network.  Management believes that these systems provide a number of benefits,
including improved store inventory management, better in-stock availability,
higher operating efficiency and fewer markdowns.

    The Company's merchandising, distribution and accounting software system
was installed in late 1993, and the point-of-sale software system was
installed during the second quarter of fiscal 1995.  In 1997, a new planning
and allocation software system was installed to enhance store level planning
and to further monitor product sales and inventory levels.  In addition, a new
reporting package was integrated with the planning and  allocation software
system to maximize its utilization.  The Company estimates that its current
management information and control systems are adequate to support the
Company's planned expansion, but has plans to continue to improve and enhance
numerous functions on a continuing basis.

    The Company's business depends in part upon its ability to store, retrieve,
process and manage significant databases and, periodically, to expand and
upgrade its information processing capabilities.  The Company recognizes the
need to ensure that its operations will not be adversely impacted by Year 2000
software failures.  The Company has reviewed and continues to review, on a
regular basis, its computer equipment and software systems with regard to Year
2000 problems.  To a lesser extent, the Company is also relying on its computer
equipment and software suppliers' ability to ensure that all products provided
by them are Year 2000 compliant. The Company has formulated a plan and
methodology for addressing Year 2000 problems and is currently implementing
such plan.  The cost of implementing this plan is not expected to have a
material impact on the Company's results of operations or financial position.

ADVERTISING AND PROMOTION

    The Company relies primarily on the enthusiasm of its sales associates and
existing customers, highly visible store locations and eye-catching signage to
attract new customers to the stores.  The Company has generally found this
approach to be more cost effective than more traditional media advertising.
The Company plans the opening of new stores to coincide with peak shopping
seasons and mall grand openings when customer traffic is greater.  The Company
also uses promotions to generate repeat visits to its stores, such as a
"preferred customer program" that entitles high volume customers to attend
private sale events held twice each year.  The Company advertises to a limited
extent in national magazines, such as Seventeen and YM, in cooperation with
certain of its vendors.  The Company also benefits from advertising by its
vendors, especially where Gadzooks is listed as a retailer of their products.





                                       9
<PAGE>   10
TRADEMARKS

    The Company has registered on the Principal Register of the United States
Patent and Trademark Office "Gadzooks" (in various formats) and "Gatitude", and
has an application pending for "Cool Stuff for Teens."  Each federal
registration is renewable indefinitely if the mark is in use at the time of the
renewal.  The Company is not aware of any claims of infringement or other
challenges to the Company's right to use its marks in the United States.

Competition

    The teenage retail apparel and accessories industry is highly competitive.
The Company competes with other retailers for customers, suitable retail
locations and qualified management personnel.  Gadzooks currently competes with
traditional department stores, with national specialty chains such as The Gap
and certain divisions of The Limited, with numerous other teen retailers such
as The Buckle, Pacific Sunwear, Rave, Contempo, Wet Seal, Hot Topic and
American Eagle, with local specialty stores in certain markets, and to a lesser
extent, with mass merchandisers.  Many of the Company's competitors are larger
and have substantially greater financial, marketing and other resources than
the Company.  The principal factors of competition in the Company's business
are fashion, merchandise selection, customer service, store location and price.

EMPLOYEES

    At April 13, 1998, the Company had 1,007 full-time employees and 2,265
part-time employees.  Of the Company's 3,272 employees, 151 were corporate
personnel, 98 were distribution center employees and 3,023 were store
employees.  The number of part-time employees fluctuates with seasonal needs.
None of the Company's employees is covered by a collective bargaining
agreement.  The Company seeks to create a casual and supportive working
environment and considers its employee relations to be excellent.





                                       10
<PAGE>   11
                                  RISK FACTORS

    This Report contains certain forward looking statements about the business,
operations and financial condition of the Company.  The actual results of the
Company could differ materially from those forward looking statements.  The
following information sets forth certain factors that could cause the actual
results of the Company to differ materially from those contained in the forward
looking statements.

AGGRESSIVE GROWTH STRATEGY; FUTURE OPERATING RESULTS

    The Company's net sales and net income have grown significantly during the
past several years, primarily as a result of the opening of new stores and, to
a lesser extent, increases in comparable store sales.  The Company intends to
continue to pursue an aggressive growth strategy for the foreseeable future,
and its future operating results will depend largely upon its ability to open
and operate new stores successfully and to manage a larger business profitably.
The Company anticipates opening approximately 70 to 75 new stores during fiscal
1998, which will result in a significant increase in the number of stores
operated by the Company.  The Company also plans to enter several new markets
in various regions of the United States.  Expansion into new markets may
present competitive and merchandising challenges that are different from those
currently encountered by the Company in its existing markets.  As an additional
part of its growth strategy, the Company has occasionally analyzed the
acquisition of other retailers that serve the Company's target customer and may
consider such acquisitions again in the future.  Except for a limited number of
stores acquired from former franchisees, the Company has never made any such
acquisitions and does not currently have any agreements for any in the future.
There can be no assurance that the operations of any acquired entities could be
successfully integrated with the Company's existing operations or that the
combined business would be profitable.

    The Company is subject to a variety of business risks generally associated
with rapidly growing companies.  The Company's ability to open new stores will
depend upon many factors, including, among others, the ability to identify and
enter new markets, locate suitable store sites, negotiate acceptable lease
terms, hire and train store managers and sales associates and obtain adequate
capital resources on acceptable terms.  There can be no assurance that the
Company will be able to integrate successfully new stores into its operations
or that new stores will achieve sales and profitability levels comparable to
the Company's existing stores.  In addition, there can be no assurance that the
Company's expansion within its existing markets will not adversely affect the
individual financial performance of the Company's existing stores or its
overall results of operations.  Furthermore, the Company will need to
continually evaluate the adequacy of its store management and management
information and distribution systems to manage its planned expansion.  There
can be no assurance that the Company will anticipate all of the changing
demands that its expanding operations will impose on such systems and
facilities, and the failure to adapt its systems, facilities and procedures
could have a material adverse effect on the Company's business.  There can be
no assurance that the Company will successfully achieve its planned expansion
or, if achieved, that the expansion will result in profitable operations.  See
"Business -- Store Locations" and "-- Expansion Strategy."

    The Company anticipates that it will spend approximately $9.4 million for
capital expenditures and approximately $5.0 million for initial inventories to
open approximately 70 to 75 new stores and to remodel 5 to 7 existing stores in
fiscal 1998.  The actual costs that the Company will incur in connection with
opening new stores cannot be predicted with precision because such costs will
vary based upon, among other things, geographic location, the size of the store
and the extent of the build-out required at the selected site.  The Company
believes that its existing cash balances, cash generated from operations, net
proceeds received by the Company from its public offerings and funds available
under the Company's revolving line of credit will be sufficient to fund its
expansion requirements through at least 1998.  There can be no assurance that
the Company may not be required to seek additional sources of funds for such
expansion.





                                       11
<PAGE>   12
FLUCTUATIONS IN COMPARABLE STORE SALES RESULTS

    A variety of factors affect the Company's comparable store sales results
including, among others, economic conditions, fashion trends, the retail sales
environment, sourcing and distribution of products and the Company's ability to
execute its business strategy efficiently.  The Company's quarterly comparable
store sales results have fluctuated significantly in the past.  The Company's
comparable store sales results were 7.3%, 8.6%, 5.9% and 3.9% in the first,
second, third and fourth quarters of fiscal 1996, respectively, and 4.4%,
(3.6%), 3.3% and 3.1% in the first, second, third and fourth quarters of fiscal
1997 respectively.  The Company has recorded comparable store sales decreases
in past months and quarters, and there can be no assurance that comparable
store sales for any particular month, quarter or fiscal year will not decrease
in the future.  The Company's comparable store sales results could cause the
price of the Common Stock to fluctuate substantially.

CHANGES IN FASHION TRENDS

    The Company's profitability is largely dependent upon its ability to
anticipate the fashion tastes of its customers and to provide merchandise that
appeals to their preferences in a timely manner.  The fashion tastes of the
Company's customers may change frequently, and the Company's failure to
anticipate, identify or react appropriately to changes in styles, trends or
brand preferences could lead to, among other things, excess inventories and
higher markdowns, which could have a material adverse effect on the Company's
business.  In addition, fashion misjudgments could materially and adversely
affect the Company's operating results, comparable store sales results and
image with its customers.  See "Business -- Merchandising."

IMPACT OF ECONOMIC CONDITIONS

    Certain economic conditions affect the level of consumer spending on
merchandise offered by the Company, including, among others, business
conditions, interest rates, taxation and consumer confidence in future economic
conditions.  If the demand for apparel and related merchandise by teenagers
were to decline, the Company's business, comparable store sales results and
results of operations would be materially and adversely affected.  Although the
Company advertises in national magazines to a limited extent through
cooperative agreements with certain of its vendors, its stores rely principally
on mall traffic for customers.  Therefore, the Company is dependent upon the
continued popularity of malls as a shopping destination and the ability of mall
anchor tenants and other attractions to generate customer traffic for its
stores.  A decrease in mall traffic or a decline in economic conditions in the
markets in which the Company's stores are located would adversely affect the
Company's growth, net sales, comparable store sales results and profitability.
See "Business."

QUARTERLY RESULTS AND SEASONALITY

    The Company's quarterly results of operations may fluctuate materially
depending on, among other things, the timing of new store openings and related
pre-opening expenses, net sales contributed by new stores, increases or
decreases in comparable store sales, shifts in timing of certain holidays and
changes in the Company's merchandise mix.  The Company's business is also
subject to seasonal influences, with heavier concentrations of sales during the
Christmas holiday, back-to-school and spring break seasons.  As is the case
with many apparel retailers, the Company's net sales and net income are
typically lower in the first quarter.  The Company has experienced first
quarter losses in the past and may experience such losses in the future.
Because of these fluctuations in net sales and net income, the results of
operations of any quarter are not necessarily indicative of the results that
may be achieved for a full fiscal year or any future quarter.

DEPENDENCE ON KEY VENDORS

    The Company's business depends on its ability to purchase current season,
brand name apparel in sufficient quantities at competitive prices.  During the
Company's 1997 fiscal year, JNCO, accounted for approximately 12% of the
Company's merchandise purchases.  Of the Company's other vendors, no single
vendor accounted for more than 10% of the Company's merchandise purchases.  The
inability or failure of key vendors to supply the Company with adequate
quantities of desired





                                       12
<PAGE>   13
merchandise, the loss of one or more key vendors or a material change in the
Company's current purchase terms could have a material adverse effect on the
Company's business.  Many of the Company's smaller vendors have limited
resources, production capacities and operating histories, and many have limited
the distribution of their merchandise in the past.  The Company has no
long-term purchase contracts or other contractual assurances of continued
supply, pricing or access to new products.  There can be no assurance that the
Company will be able to acquire desired merchandise in sufficient quantities on
terms acceptable to the Company in the future.  See "Business -- Merchandising"
and "-- Purchasing."

DEPENDENCE ON KEY PERSONNEL

    The Company's success will depend largely on the efforts and abilities of
senior management, particularly Gerald R. Szczepanski, the Chairman of the
Board and Chief Executive Officer and a founder of the Company.  The loss of
his services or the services of other members of senior management could have a
material adverse effect on the Company's business.  The Company has a
$1,000,000 key-man life insurance policy on Mr. Szczepanski.  There can be no
assurance that the Company's existing management team will be able to manage
the Company or its growth or that the Company will be able to attract and
retain additional qualified personnel as needed in the future.

COMPETITION

    The Company operates in a highly competitive environment.  The Company
currently competes with traditional retail department stores, with national
specialty chains such as The Gap and certain divisions of The Limited, with
numerous regional chains such as The Buckle, Pacific Sunwear, Rave, Contempo,
Wet Seal, Hot Topic and American Eagle, with smaller chains and local specialty
stores, and to a lesser extent, with mass merchandisers.  Many of these
competitors are larger and have substantially greater resources than the
Company.  Direct competition with these and other retailers may increase
significantly in the future, which could require the Company, among other
things, to lower its prices and/or increase its advertising expenses.
Increased competition could have a material adverse effect on the Company's
operations and comparable store sales results.  See "Business -- Competition."

STOCK PRICE VOLATILITY

    The market price of the Company's Common Stock has risen substantially
since the Company's initial public offering in October 1995.  The Company's
Common Stock is quoted on The Nasdaq Stock Market, which has experienced and is
likely to experience in the future significant price and volume fluctuations
which could adversely affect the market price of the Common Stock without
regard to the operating performance of the Company.  In addition, the Company
believes that factors such as quarterly fluctuations in the financial results
of the Company, the Company's comparable store sales results, announcements by
other apparel retailers, the overall economy and the condition of the financial
markets could cause the price of the Common Stock to fluctuate substantially.

ANTI-TAKEOVER MATTERS

    The Company's Restated Articles and its Bylaws contain provisions that may
have the effect of delaying, deterring or preventing a takeover of the Company
that shareholders may consider to be in their best interests.  The Company's
Restated Articles and Bylaws provide for a classified Board of Directors
serving staggered terms of three years, the prohibition of shareholder action
by written consent in certain circumstances and certain "fair price
provisions." Additionally, the Board of Directors has the authority to issue up
to 1,000,000 shares of preferred stock having such rights, preferences and
privileges as designated by the Board of Directors without shareholder
approval.





                                       13
<PAGE>   14
ITEM 2.  PROPERTIES.

    All of the existing stores are leased by the Company, with lease terms
(excluding renewal option periods exercisable by the Company at escalating
rents) expiring between April 1998 and January 2009.  The leases for most of
the existing stores are for terms of 10 years and provide for contingent rent
based upon a percent of sales in excess of specified minimums.

    In May 1997, the Company relocated its office and distribution center to a
larger site in the Dallas metropolitan area in order to accommodate its
expanding operations.  The Company's new office and distribution center is
located in Carrollton, Texas and will be occupied under a lease covering
approximately 150,000 square feet, which is scheduled to expire on May 1, 2007.

ITEM 3.  LEGAL PROCEEDINGS.

    In the ordinary course of its business, the Company is periodically a party
to lawsuits.  The Company believes that any resulting liability from existing
legal proceedings, individually or in the aggregate, will not have a material
adverse effect on its operations or financial condition.

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

    No matters were submitted to a vote of the Company's shareholders during
the fourth quarter of the fiscal year covered by this report.


                                    PART II

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

    The Common Stock is traded on The Nasdaq Stock Market under the symbol
"GADZ." The following table sets forth, for the Company's fiscal periods
indicated and is adjusted to give retroactive effect to the Company's
three-for-two Common Stock split paid on May 30, 1996, the high and low sale
prices per share for the Common Stock, as reported on The Nasdaq Stock Market.

<TABLE>
<CAPTION>
                                                                                  High           Low  
                                                                                ---------     ---------
    <S>                                                                        <C>           <C>
    1996
    ----
    First Quarter   . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $ 30 5/8     $ 15 13/16
    Second Quarter  . . . . . . . . . . . . . . . . . . . . . . . . . . . .       41           23 1/4
    Third Quarter   . . . . . . . . . . . . . . . . . . . . . . . . . . . .       39 3/4       22
    Fourth Quarter  . . . . . . . . . . . . . . . . . . . . . . . . . . . .       34 1/4       17 1/2

    1997
    ----
    First Quarter   . . . . . . . . . . . . . . . . . . . . . . . . . . . .       36 1/4       24 1/4
    Second Quarter  . . . . . . . . . . . . . . . . . . . . . . . . . . . .       36           16 13/16
    Third Quarter   . . . . . . . . . . . . . . . . . . . . . . . . . . . .       25 3/4       15 3/8
    Fourth Quarter  . . . . . . . . . . . . . . . . . . . . . . . . . . . .       30 1/2       19 5/16
</TABLE>

    On April 13, 1998, the last sale price of the Common Stock as reported on
The Nasdaq Stock Market was $22 3/4 per share.  As of April 13, 1998, there
were approximately 92 holders of record of the Common Stock, although the
Company believes the number of beneficial holders is substantially greater.





                                       14
<PAGE>   15
    The Company intends to retain its earnings, if any, to finance the growth
and development of its business and does not anticipate paying cash dividends
on its Common Stock in the foreseeable future.  The payment of any future
dividends will be at the discretion of the Company's Board of Directors and
will depend upon, among other things, the future earnings, operations, capital
requirements and financial condition of the Company.  In addition, the
Company's current revolving line of credit ("Revolving Line") contains various
financial covenants, including covenants relating to net worth, which may have
the effect of restricting the Company's ability to pay dividends.

ITEM 6.  SELECTED FINANCIAL DATA.

    The selected financial and operating data in response to Item 6 is
contained in the section entitled "Selected Financial Data," located on page 13
of the registrant's 1997 Annual Report to Shareholders, filed as Exhibit 13 to
this Report.  Such Selected Financial Data is incorporated herein by reference.

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

    The information in response to item 7 is contained in the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," located on pages 14 to 19 of the registrant's 1997 Annual Report
to Shareholders, filed as Exhibit 13 to this Report.  Such Management's
Discussion and Analysis of Financial Condition and Results of Operations are
incorporated herein by reference.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

    The Company does not engage in trading market risk sensitive instruments
and does not purchase as investments, as hedges, or for purposes "other than
trading" instruments that are likely to expose the Company to market risk,
whether it be from interest rate, foreign currency exchange, commodity price or
equity price risk.  The Company has issued no debt instruments, entered into no
forward or futures contracts, purchased no options and entered into no swaps.

    The Company's primary market risk exposure is that of interest rate risk.
A change in LIBOR or the Prime Rate as set by Wells Fargo Bank (Texas),
National Association, would affect the rate at which the Company could borrow
funds under its Revolving Line.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

    The information in response to item 8 is contained in the registrant's 1997
Annual Report to Shareholders, filed as Exhibit 13 to this Report.  Such
information is incorporated herein by reference.  A cross-reference for
location of the requested information is below.

<TABLE>
<CAPTION>
                                                                                        Page Number(s) in
Financial Statements and Supplementary Data                                              Annual Report*
-------------------------------------------                                              --------------
<S>                                                                                          <C>
Unaudited Quarterly Financial Data  . . . . . . . . . . . . . . . . . . . . . . . . . . . .    17
Balance Sheets at January 31, 1998 and February 1, 1997 . . . . . . . . . . . . . . . . . .    20
Statements of Income for the Years Ended January 31, 1998,
     February 1, 1997, and January 27, 1996   . . . . . . . . . . . . . . . . . . . . . . .    21
Statements of Stockholders' Equity for the Years Ended January 31, 1998,
     February 1, 1997, and January 27, 1996   . . . . . . . . . . . . . . . . . . . . . . .    22
Statements of Cash Flows for the Years Ended January 31, 1998,
     February 1, 1997, and January 27, 1996   . . . . . . . . . . . . . . . . . . . . . . .    23
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24 -32
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    33
</TABLE>

*The indicated pages of the Company's 1997 Annual Report to Shareholders are
filed as Exhibit 13 to this Report.  Such Exhibit is incorporated herein by
reference.





                                       15
<PAGE>   16
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

    None.


                                    PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    Information with respect to this item is incorporated by reference from the
registrant's definitive Proxy Statement to be filed with the Commission not
later than 120 days after the end of the registrant's fiscal year.

ITEM 11.     EXECUTIVE COMPENSATION.

    Information with respect to this item is incorporated by reference from the
registrant's definitive Proxy Statement to be filed with the Commission not
later than 120 days after the end of the registrant's fiscal year.

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

    Information with respect to this item is incorporated by reference from the
registrant's definitive Proxy Statement to be filed with the Commission not
later than 120 days after the end of the registrant's fiscal year.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    Information with respect to this item is incorporated by reference from the
registrant's definitive Proxy Statement to be filed with the Commission not
later than 120 days after the end of the registrant's fiscal year.


                                    PART IV

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

<TABLE>
<S>      <C>
(a) 1.   The financial statements as cross-referenced in Item 8 of this Report, together with the report thereon of
         Price Waterhouse LLP dated March 6, 1998, appearing in the accompanying 1997 Annual Report to Shareholders are
         incorporated by referenced in this Report.  With the exception of the aforementioned information and
         information incorporated in Items 6 and 7, the 1997 Annual Report to Shareholders is not deemed filed as part
         of this Report.

    2.   Financial statement schedules are omitted because they are not applicable or the required information is shown
         in the financial statements or notes thereto.

    3.   Exhibits included or incorporated herein:

         See Exhibit Index.
</TABLE>

(b) Reports on Form 8-K

    There were no reports on Form 8-K filed during the last quarter of the
fiscal year covered by this report.





                                       16
<PAGE>   17





    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 April 24, 1998 on its behalf by the undersigned, thereunto duly authorized.

                                 GADZOOKS, INC.



                                 By  /s/ Gerald R. Szczepanski                
                                     ------------------------------------------
                                         Gerald R. Szczepanski,
                                         Chairman of the Board, President
                                         and Chief Executive Officer

         Each person whose signature appears below hereby authorizes Gerald R.
Szczepanski and Monty R. Standifer or either of them, as attorneys-in-fact to
sign on his behalf, individually, and in each capacity stated below and to file
all amendments and/or supplements to the Annual Report on Form 10-K.

         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>
           Signature                                       Title                             Date
           ---------                                       -----                             ----
<S>                                               <C>                                        <C>
/s/ Gerald R. Szczepanski                         Chairman of the Board, President           April 24, 1998
------------------------------------------                                                                 
           Gerald R. Szczepanski                  and Chief Executive Officer
                                                  (Principal Executive Officer)

/s/ Monty R. Standifer                            Senior Vice President, Chief               April 24, 1998
------------------------------------------                                                                 
            Monty R. Standifer                    Financial Officer, Treasurer and
                                                  Secretary (Principal Financial and
                                                  Accounting Officer)

/s/ Alan W. Crites                                 Director                                  April 24, 1998
------------------------------------------                                                                 
              Alan W. Crites

/s/ G. Michael Machens                             Director                                  April 24, 1998
------------------------------------------                                                                 
            G. Michael Machens

/s/ Robert E.M. Nourse                             Director                                  April 24, 1998
------------------------------------------                                                                 
            Robert E.M. Nourse

/s/ Lawrence H. Titus, Jr.                         Director                                  April 24, 1998
------------------------------------------                                                                 
          Lawrence H. Titus, Jr.

</TABLE>






                                       17
<PAGE>   18



                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 Exhibit
   No.                                     Description of Documents                                                     Page
---------                                  ------------------------                                                     ----
   <S>      <C>                                                                                                          <C>
    3.1  --  Second Restated Articles of Incorporation of the Company (filed as Exhibit 4.1 to the Company's
             Form S-8 (No. 33-98038) filed with the Commission on October 12, 1995 and incorporated herein
             by reference).

    3.2  --  Amended and Restated Bylaws of the Company (filed as Exhibit 4.2 to the Company's Form S-8 (No.
             33-98038) filed with the Commission on October 12, 1995 and incorporated herein by reference).

    3.3  --  First Amendment to the Amended and Restated Bylaws of the Company (filed as Exhibit 3.3 of the
             Company's Quarterly Report on Form 10-Q for the quarter ended August 2, 1997 filed with the
             Commission on September 16, 1997 and is incorporated herein by reference).

    4.1  --  Specimen Certificate for shares of Common Stock, $.01 par value, of the Company (filed as
             Exhibit 4.1 to the Company's Amendment No. 2 to Form S-1 (No. 33-95090) filed with the
             Commission on September 8, 1995 and incorporated herein by reference).

   10.1  --  Purchase Agreement dated as of January 31, 1992 among the Company, Gerald R. Szczepanski,
             Lawrence H. Titus, Jr. and the Investors listed therein (filed as Exhibit 10.1 to the Company's
             Form S-1 (No. 33-95090) filed with the Commission on July 28, 1995 and incorporated herein by
             reference).

   10.2  --  Purchase Agreement dated as of May 26, 1994 among the Company, Gerald R. Szczepanski, Lawrence
             H. Titus, Jr. and the Investors listed therein (filed as Exhibit 10.2 to the Company's Form S-1
             (No. 33-95090) filed with the Commission on July 28, 1995 and incorporated herein by
             reference).

   10.3  --  Credit Agreement dated as of January 30, 1997 between the Company and Wells Fargo Bank (Texas),
             National Association (filed as Exhibit 10.3 to the Company's 1996 Annual Report on Form 10-K
             filed with the Commission on April 23, 1997 and incorporated herein by reference).

   10.4  --  Form of Indemnification Agreement with a schedule of director signatories (filed as Exhibit
             10.5 to the Company's Form S-1 (No. 33-95090) filed with the Commission on July 28, 1995 and
             incorporated herein by reference).

   10.5  --  Employment Agreement dated January 31, 1992 between the Company and Gerald R. Szczepanski, as
             continued by letter agreement (filed as Exhibit 10.6 to the Company's Form S-1 (No. 33-95090)
             filed with the Commission on July 28, 1995 and incorporated herein by reference).

   10.6  --  1992 Incentive and Nonstatutory Stock Option Plan dated February 26, 1992, and Amendments No. 1
             through 3 thereto (filed as Exhibit 10.8 to the Company's Form S-1 (No. 33-95090) filed with
             the Commission on July 28, 1995 and incorporated herein by reference).

   10.7  --  1994 Incentive and Nonstatutory Stock Option Plan for Key Employees dated September 30, 1994
             (filed as Exhibit 10.9 to the Company's Form S-1 (No. 33-95090) filed with the Commission on
             July 28, 1995 and incorporated herein by reference).
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<TABLE>
  <S>        <C>
   10.8  --  1995 Non-Employee Director Stock Option Plan (filed as Exhibit 10.10 to the Company's Form S-1
             (No. 333-00196) filed with the Commission on January 9, 1996 and incorporated herein by
             reference).

   10.9  --  Gadzooks, Inc. Employees' Savings Plan (filed as Exhibit 10.11 to the Company's Form S-1 (No.
             33-95090) filed with the Commission on July 28, 1995 and incorporated herein by reference).

   10.10 --  Severance Agreement dated September 5, 1996 between the Company and Gerald R. Szczepanski
             (filed as Exhibit 10.10 to the Company's 1996 Annual Report on Form 10-K filed with the
             Commission on April 23, 1997 and incorporated herein by reference).

   10.11 --  Form of Severance Agreement with a schedule of executive officer signatories (filed as Exhibit
             10.11 to the Company's 1996 Annual Report on Form 10-K filed with the Commission on April 23,
             1997 and incorporated herein by reference).

   10.12 --  Amendment No. 4 to the Gadzooks, Inc. 1992 Incentive and Nonstatutory Stock Option Plan (filed
             as Exhibit 10.14 to the Company's Amendment No. 3 to Form S-1 (No. 33-95090) filed with the
             Commission on September 27, 1995 and incorporated herein by reference).

   10.13 --  Amendment No. 5 to the Gadzooks, Inc. 1992 Incentive and Nonstatutory Stock Option Plan dated
             September 12, 1996 (filed as Exhibit 10.13 to the Company's 1996 Annual Report on Form 10-K
             filed with the Commission on April 23, 1997 and incorporated herein by reference).

   10.14 --  Amendment No. 1 to the 1994 Incentive and Nonstatutory Stock Option Plan for Key Employees
             dated September 12, 1996 (filed as Exhibit 10.14 to the Company's 1996 Annual Report on Form
             10-K filed with the Commission on April 23, 1997 and incorporated herein by reference).

   10.15 --  Gadzooks, Inc. Employee Stock Purchase Plan (filed as Exhibit 4.5 to the Company's Form S-8
             (No. 333-50639) filed with the Commission on April 21, 1998 and incorporated herein by
             reference).

   10.16*--  Gadzooks, Inc., Deferred Compensation Plan.

   10.17*--  Lease Agreement between Gadzooks, Inc. (Lessee) and CB Midway International, LTD. (Lessor)
             dated August 23, 1996.

   13*   --  Pages 13-33 of the Company's 1997 Annual Report to Shareholders.

   23.1* --  Consent of Price Waterhouse LLP.

   24*   --  Power of Attorney (included on signature page of this report).

   27*   --  Financial Data Schedule.
</TABLE>                 
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*  Filed herewith (unless otherwise indicated exhibits are previously filed).





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