SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549

                                       FORM 10-K
                                     ANNUAL REPORT

                          Pursuant to Section 13 or 15(d) of
                          the Securities Exchange Act of 1934

                      For the fiscal year ended December 31, 1996
                              Commission File No. 0-20498

                               TOPS APPLIANCE CITY, INC.
                (Exact name of registrant as specified in its
charter)

New Jersey                                        22-3174554      
    
(State of Incorporation)                 (I.R.S. Employer ID No.)

45 Brunswick Avenue, Edison, NJ                     08818         
    
(Address of principal executive                (Zip Code)
 offices)

Registrant's phone number, including area code:   (908) 248-2850  
  
Securities registered pursuant to Section 12(b) of the Act:  None 
    

Securities registered pursuant to Section 12(g) of the Act:Common
Stock, No
Par Value
                                                                  
      

     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 (of
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      

     The aggregate market value of Common Stock held by
non-affiliates based upon the average price of such stock as quoted
on NASDAQ for April 14, 1997, and reported by the National
Quotation Bureau, Inc. was $1,173,373.  Shares of Common Stock held
by each officer and director, and each person who owns 5% of more
of the outstanding Common Stock have been excluded in that such
persons may be deemed to be affiliates.

     Registrant's Common Stock (no par value) outstanding at April
11, 1997, was 7,277,229 shares.

     Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein and
will not, to the best of the Registrant's knowledge, be contained
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. ___  


                                          Total Number of Pages: 59
                                          Exhibit List:  Page 20

Documents Incorporated by Reference:  Proxy Statement for 
                                      1997 Annual Meeting

<PAGE>                             TABLE OF CONTENTS



          ITEM                                                    
         PAGE

1.        Business. . . . . . . . . . . . . . . . . . . . . . . .1

2.        Properties. . . . . . . . . . . . . . . . . . . . . . .11

3.        Legal Proceedings . . . . . . . . . . . . . . . . . . .11

4.        Submission of Matters to a Vote of Security Holders . .11

5.        Market for the Registrant's Common Stock and Related
          Stockholder Matters . . . . . . . . . . . . . . . . . .12

6.        Selected Financial Data . . . . . . . . . . . . . . . .12

7.        Management's Discussion and Analysis of
          Financial Condition and Results of Operations . . . . .15

8.        Financial Statements and Supplementary Data . . . . . .19

9.        Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure . . . . . . . . . .19

10.       Directors and Executive Officers of the Registrant. . .19

11.       Executive Compensation. . . . . . . . . . . . . . . . .19

12.       Security Ownership of Certain Beneficial Ownership
          and Management. . . . . . . . . . . . . . . . . . . . .19

13.       Certain Relationships and Related Transactions. . . . .19

14.       Exhibits, Financial Statement Schedule 
          and Reports on Form 8-K . . . . . . . . . . . . . . . .20
<PAGE>
                                  PART I

ITEM 1.  Business

General

          Tops Appliance City, Inc. ("Tops" or the "Company") is a
leading retailer of home appliances and consumer electronics in New
Jersey and New York, serving a customer base within the Greater New
York Metropolitan Area.  The Company operates eight retail
megastores, ranging in size from 43,000 to 120,000 square feet, in
heavily populated locations in New Jersey and in New York.  The
Company also operates a commercial division, selling to small
independent retailers, builders and landlords, corporate buying
groups, major corporations and municipalities, which accounted for
approximately 11% of its net sales and service revenues in fiscal
1996 and fiscal 1995.

          Tops' stores display a broad selection of high quality,
nationally recognized brand names in each of its product
categories.  The Company's primary products include major
appliances, such as refrigerators, washers and dryers, electronics
including televisions, VCRs, camcorders, room air conditioners,
consumer electronics, home and car audio equipment, personal
computers, small electronic appliances, and other related products
such as vacuum cleaners, seasonal goods, home fitness, housewares,
related accessories and extended service plans.  The Company
maintains a knowledgeable, well-trained sales force which builds
and reinforces customer confidence in Tops' value-driven
merchandising strategy. As part of that strategy, the Company
offers a number of customer services, such as home delivery and
removal of old appliances.  Tops emphasizes competitive pricing in
its advertising and guarantees the lowest price on its products
through a 45 day, best price guarantee.

          The Company has continued to experience significant
declines in comparable store sales. These declines were mostly
attributable to the continuing weak retail environment in the
appliance and electronic industry and increased competition.  The
fiscal period ending December 31, 1996 was also severely impacted
by the unseasonably cooler weather in the northeast during the
summer months which affected sales of room air conditioners. 
Substantial  price deflation in Video and Home Office products also
contributed to the sales dollar decline.

          The weak retail environment has created an intense
competitive environment in the Metro New Jersey/New York area. 
This competitive environment has put pressure on gross margins as
retailers focus on maintaining market share.  In addition, the
recent demand for consumer electronics has decreased due to the
lack of new products brought to market.  Research also indicates
that high consumer debt levels have also reduced consumer spending
on non-essential items.

          The Company has put forward several initiatives to offset
the impact on operating results of the declining sales.  In 1997
payroll and payroll related expenses have been additionally reduced
as well as many other operating expenses including net advertising,
credit card processing, occupancy and corporate overhead.  The
Company instituted a 45 day, best price guarantee during the fourth
quarter of 1995.  It appears to have been widely accepted by our
customers and recent trends indicate a leveling off of same store
sales declines.  There can be no assurance that this action will
have the desired effect on same store sales declines.



Business Strategy

          Tops' business strategy is to be the dominant retailer of
home appliances and consumer electronics in each of its markets by
developing customer loyalty through a marketing program that
emphasizes price, service and selection.  Management believes that
the Company's strong sales and customer loyalty are a result of
Tops' pricing, customer service and relations, product selection,
advertising strategy, store environment, store locations and the
quality and experience of its personnel.

          Pricing.  The Company's policy is to offer its products
at low prices in each of its markets.  The Company monitors prices
at competing stores on a daily basis and adjusts its prices as
necessary to adhere to its "everyday best price" strategy. The
Company believes that a "sale" oriented marketing strategy is still
necessary in this competitive category and marketplace.  The
Company offers a 45 day, best price guarantee.

          Customer Service and Relations.  The Company is committed
to a high level of service for its customers, providing both value
and responsiveness.  Included among the services it offers are home
delivery and removal of old appliances, cartons and packaging.  The
Company also offers a liberal return and exchange policy.  Tops
maintains a staff of customer service representatives who answer
telephone inquiries six (6) days per week regarding product use,
delivery, service, warranties and other customer concerns.  The
Company also has customer service representatives present in each
store who deal with the same types of questions and an "electronic
hospital" staffed during store hours by trained technical advisors
who are responsible for free instructional assistance, product
analysis and customer service.

          Product Selection.  Tops offers a broad range of high
quality, nationally recognized brand names within each product
category and at all price points, with greater inventory depth at
the middle to higher price level than most retailers.  The
Company's stores display in excess of 5,000 products and maintain
over 9,000 products in inventory.  The Company offers the full line
of models from each of its vendors in all of the Company's major
product categories.  The Company's policy is to maintain all
products in stock for immediate availability to the customer.

          Advertising.  The Company utilizes an advertising
strategy that stresses the offering of nationally recognized brands
at significant savings.  The Company generally advertises weekly in
8 to 14 regional and local newspapers, and supplements this with
radio and billboard advertising.  In addition, Tops operates a
direct mail program to approximately 350,000 Tops charge card
customers.  The Company also uses a variety of promotional sales
and sales events to increase traffic in its stores.

          Store Environment.  Tops' in-store environment seeks to
create an atmosphere of excitement through the intensity of its
visual merchandising, sales promotion, signage and layout, and the
quality, value and variety of product assortment.  The stores have
an open, clean, bright, exciting atmosphere, with disciplined
product presentation, attractive in-store displays and efficient
check-out procedures, designed to create a friendly, convenient
shopping experience.  Tops' sales force is given extensive and
ongoing training to provide customers with knowledgeable, prompt
and courteous assistance.

          Store Locations.  The Company's strategy is to locate its
stores in heavily populated areas that are easily accessible from
major highways and have adequate parking for high sales volume.

          Personnel Development.  The Company devotes significant
resources to training its employees, both to ensure basic selling
skills and product knowledge and to enhance customer relations. 
The Company emphasizes promoting employees from within the
organization.  This policy, combined with above-average
compensation, comprised of salary, commission and incentives for
its sales force, has produced loyal, motivated employees with a low
turnover record.  The Company believes that its employees are among
the most qualified and experienced in its industry.

Products

          The Company's stores stock over 9,000 home appliance and
consumer electronic products.  The Company sells brand-name
products, offering its customers a large selection of styles and
price points in each of its product categories.  The Company sells
no private label or house brands.  The Company displays in excess
of 5,000 products in its stores, in the following categories:

CATEGORY            PRODUCTS           PRINCIPAL BRAND NAMES

Major Appliances    Refrigerators,     Admiral, Frigidaire, General
                    Dishwashers,       Electric, Hotpoint,
                    Washers/Dryers     Jenn-Air, KitchenAid, Magic
                                       Chef, Maytag, Roper, Sub
                                       Zero, Viking, Westinghouse,
                                       Whirpool

Televisions                            Hitachi, JVC, Magnavox,
                                       Proscan, RCA, Samsung,
                                       Sharp, Panasonic, Quasar,
                                       Sanyo, Sony, Zenith

Video               VCRs,              Hitachi, JVC, Panasonic, 
                    Camcorders         RCA, Samsung, Sony, Zenith

Ranges/
Microwaves          Ranges,            General Electric, Jenn-Air
                    Cooktops,          Magic Chef, Panasonic, Sharp
                    Range Hoods,       Tappan, Thermadore, Viking,
                    Microwaves         Whirlpool

Air Conditioners                       Carrier, Emerson, Fedders,
                                       Friedrich, General Electric,
                                       Samsung, Whirlpool

Audio                Stereo Systems,   Advent, Aiwa, Bose,        
                     Components and    Infinity, JBL, JVC, Kenwood,
                     Speakers          Onkyo, Pioneer, RCA, Sony
                                       ES, Technics

Electronics          Cameras,          AT&T, Alpine, Blaupunkt,
                     Walkman,          General Electric, Hitachi,
                     Radar Detectors   JVC, Kenwood, Magnavox,
                     Portable Radios,  Minolta, Olympus, Panasonic,
                     Audio and Car     Sony, Yashica
                     Alarms, Telephones,
                     Cellular Phones

Home Office          Computers,             Apple, AST, Brother,
Products             Printers, Fax          Canon, Compaq, Epson,
                     Printers, Fax          Hewlett Packard,
                     Machines,              IBM, Lexmark
                     Wordprocessors,
                     Typewriters,
                     Copiers

Vacuums,Seasonal     Vacuum Cleaners,       Braun, Black and
Items/Housewares     Humidifiers,           Decker, Eureka,
                     Fans,                  General Electric,
                     Space Heaters,         Hoover, Krups, Sanyo,
                     Small Electrical       Sharp, Sunbeam,
                     Appliances             Thermos, Weber,
                     (coffee makers,        Westinghouse
                     blenders, etc.),
                     Barbecue Grills

Home Fitness          Treadmills,            BMI, D.P., Pro-Form,
Products              Skiers, Gyms,          Roadmaster
                      Stairclimbers          

          The Company tailors its product mix to meet the needs of
its customers by regularly evaluating sales and profit performance
for each of its products through its computerized perpetual
inventory system.  Product mix by category has remained relatively
stable over the past five years.  Management believes that this
stability makes the Company less vulnerable to short term product
trends and changing economic conditions.  The following chart
demonstrates the percentage of retail and commercial sales
represented by each of the Company's product categories during the
past three years:

<TABLE>
<CAPTION>
                                           Total Merchandise Sales
Product Category                            1994    1995    1996
<S>                                         <C>     <C>     <C>
Major Appliances (Refrigerators,
  Washers, Dryers)........................  22.3%   20.5%   21.4%
Ranges/Microwaves/Dishwashers.............   13.1    12.4   13.4
Air Conditioners..........................    9.7    12.0    7.2
Vacuums/Seasonal Items/Housewares.........    4.6     5.0    5.3
   Subtotal...............................   49.7    49.9   47.3

Televisions...............................   15.0    14.4   14.7
Video/Projection Televisions..............   10.4    10.8   11.2
Audio.....................................    7.8     7.3    6.9
Home Office and Other
  Consumer Electronics....................   11.8    13.2   15.6
   Subtotal...............................   45.0    45.7   48.4

Extended Service Plans and
  Miscellaneous Income....................    5.3     4.4    4.3
                                            100.0%  100.0% 100.0%
</TABLE>
Extended Service Plans

          The Company offers extended service plans for most
categories of its retail products.  The extended service plans
cover services or time periods not covered by the manufacturer's
warranty on such products and are non-cancelable.  These plans are
administered for the Company by Warrantech Corporation, an
unaffiliated third party, which performs the repair services
required by the plans through factory authorized service centers. 
Warrantech is required by its agreement with the Company to
maintain insurance to protect the Company in the event that
Warrantech fails to fulfill its obligations under the extended
service plans.  The Company sells the extended service plans to
Warrantech on a non-recourse basis.  In 1990, the Company began
offering customers who purchase five-year extended service plans
vouchers entitling them to certain store discounts, subject to
certain restrictions, if the customer does not utilize the extended
service contract during the five-year term.  The Company has
established a reserve on its balance sheet to cover the potential
cost of honoring these vouchers. Gross margins from the sale of
extended service plans are higher than gross margins from the sale
of the Company's other products.

Purchasing

          The Company offers a broad range of name brands within
each product category at all price points, with a greater inventory
depth at the middle to higher price level than most retailers. 
Because Tops purchases complete product lines in large volumes,
with an emphasis on middle to higher priced models, the Company is
able to obtain quality products at competitive prices and
discretionary advertising subsidies from vendors to promote the
sale of their products.  Although certain vendors are significant
to the Company's business because of their name recognition, the
Company does not believe that its business is dependent upon any
one vendor or particular group of vendors.  In fiscal 1996, no
vendor accounted for more than 10% of the Company's purchases. 
Tops purchases over 75% of its products from the 15 vendors shown
in the following chart.

                         Top 15 Vendors

Fedders                    JVC               Sony
Freiderich                 Kenwood           Thomson/RCA
Frigidaire                 Maytag            Whirlpool/KitchenAid
G.E./Hotpoint              Samsung           Zenith
Hitachi                    Sharp
Jenn-Air/Magic Chef




          The Company's merchandise purchasing is managed through
its buying and merchandising group, consisting of the Senior Vice
President/Chief Operating Officer and a staff of eight buyers. 
Each buyer is responsible for purchasing products within specified
product categories.  Within each category, the buyer is responsible
for choosing the product mix, insuring product availability based
upon the rate of sale, and negotiating prices, payment terms and
other vendor support items.  The buyers are also responsible for
analyzing potential new business.  

          The Company generally orders inventory one month in
advance of delivery dates, but provides key vendors with 120 day
rolling forecasts to ensure availability of important items.


Advertising

          The Company uses a "price and item" approach in its
advertising, stressing the offering of nationally recognized brands
at significant savings.  The emphasis of the Company's advertising
is to stress the Company's low prices as well as its customer
service features, such as home delivery and disposal of old
appliances and removal of cartons and packaging.  Advertisements
are placed in 8 to 14 regional newspapers weekly and on billboards
and radio.  The Company also uses a circular program showing a
broader selection of advertised product.  The Company is not
currently utilizing television advertising, although it has
utilized it in the past.  Advertisements are complemented by
in-store signage highlighting brand-name products and values.  The
Company's advertising strategy includes a series of special events,
such as computer expos, home theater expos and private sales
throughout the year to generate traffic and to maintain a sense of
shopping excitement.  Tops also employs a monthly direct mailing to
its credit card holders and to other selected groups.

          Tops employs a six-person staff to coordinate its
advertising and develop promotional strategies.  Certain
manufacturers provide the Company with various discretionary
funding subsidies to promote the sale of their products.  

Customer Service and Relations

          Tops places a strong emphasis on customer service and
relations as part of its business strategy.  The Company offers a
number of services such as home delivery, removal and disposal of
old appliances and packaging of delivered products.  The Company
emphasizes the quality of its sales force, devoting significant
resources to training, and is committed to having sufficient sales
people available at all times to service all customers in a store.

          The Company maintains a staff of customer service
representatives who respond to customer calls six days per week. 
The customer service representatives are trained to answer
questions regarding product use, delivery, service, warranties and
other customer concerns.  Tops has regular contacts at each of its
vendors who enable Tops to respond promptly to specific product
questions.

Customer Credit

          Tops' customers may pay for their purchases with the Tops
proprietary credit card, Visa, Master Card, American Express,
Discover, cash, check or debit card.  The Company periodically
offers extended payment term financing programs which are often
sponsored by manufacturers.

          Since 1987, when the Company initiated its own
proprietary credit card, the Company has increased the number of
its credit card accounts to in excess of 350,000.  As of December
31, 1996, approximately 30% of Tops' credit card holders had
outstanding balances.  The Company has made a significant
investment in its credit card program since Tops credit card
holders generally constitute its most loyal and active customers. 
As part of its growth strategy, the Company intends to increase the
number of Tops credit card holders while maintaining existing
credit standards.  No assurances can be given that the Company will
be able to accomplish this goal.  In addition, the Company believes
that its credit card is a particularly productive tool for targeted
marketing and presents an excellent opportunity to analyze and
better understand its customers' shopping patterns and trends.

          Purchases made with a Tops credit card involve lower
costs to the Company than other credit cards, with no greater risk
to the Company.  The following table summarizes the percentage of
total retail sales generated by type of payment for the fiscal
years 1994, 1995 and 1996.

                                              1994   1995   1996

          Tops Credit Card................... 23.1%  25.3%  25.4%
          Visa, MasterCard, American
            Express, Discover................ 51.0%  50.3%  48.3%
          Cash, Check, Debit Card, Other..... 25.9%  24.4%  26.3%

          The Company's credit card program is administered by
Monogram Credit Card Bank of Georgia, a subsidiary of General
Electric Capital Corporation ("GE Capital").  The Account Financing
Agreement between the Company and GE Capital requires GE Capital to
purchase Tops' customer accounts receivable on a non-recourse
basis.  GE Capital pays Tops a monthly fee based upon total average
receivable balances of the Tops portfolio.  Tops pays GE Capital
monthly for all finance charge reversals incurred by Tops
customers.

          Additionally, GE Capital offers insurance and other
products to Tops' credit card customers and distributes a portion
of the income derived from the marketing of such products to Tops.

Warehousing and Distribution

          The Company operates a 431,000 square foot warehouse and
distribution center at its Edison, New Jersey headquarters, from
which it serves all eight of its stores.  The center has three
subdivisions, devoted to receiving, storage and home delivery,
respectively.  The Company believes this facility has the capacity
to service existing stores and commercial operations and two
additional stores.  A portion of the facility is leased from the
Company's former Chairman, who remains a director and principal
shareholder.  See Item 13 - Certain Relationships and Related
Transactions.

          The Company purchases in bulk and utilizes distribution
personnel and systems to transfer merchandise to store locations
and to manage the quantities moved into and out of the warehouse. 
The distribution system supports the Company's advertising strategy
by prioritizing and processing needed merchandise through the
distribution center.  Store inventory levels are reviewed and
adjusted constantly toward calculated targets in most product
categories.

          Tops makes approximately 3,500 product deliveries per
week, to customers' homes from its distribution center, using
trucks owned by independent owner-operators and administered by
Merchants Home Delivery Service ("Merchants") and Westbury
Terminals, Inc. of Georgia ("WTI").  The Company uses a
computerized delivery system to coordinate routing and increase
efficiencies.  In addition, the Company makes deliveries to its
stores every day to support inventories of items that customers can
take with them.  The Company pays only for completed deliveries
and, at a lower rate, for certain uncompleted deliveries.  The
Company's agreements provide that Merchants and WTI assume the risk
of loss for merchandise upon taking delivery from the Company.  The
Company has also contracted with WTI for the transportation of
merchandise between its distribution center and store locations.

Commercial Sales Division

          The Company operates a commercial sales division which
accounted for approximately 11% of the Company's net sales and
service revenues in fiscal 1996 and 1995.  The commercial
operations are made up of five categories: (i) sales to small
independent retailers; (ii) telemarketing sales through several
corporate benefit buying clubs in which the Company participates;
(iii) sales to builders and landlords; (iv) sales to major
corporations for their various gift and incentive programs, and (v)
sales to exporters.  These sales are generally made at lower gross
margins than the Company's retail sales, but are made with less
operating expense to the Company.

Management Information and Control Systems

          The Company has placed substantial emphasis on its
management information and control systems.  Control of the
Company's merchandising activities is maintained by a sophisticated
set of on-line systems, including a point-of-sale and sales
reporting system.  These systems are completely integrated and
track merchandise from order through sale.  They are used to
compare actual to planned results and to highlight areas requiring
management attention.

          All operational data is fully integrated with the
Company's financial systems.  The inventory information in the
systems is verified through a program of cycle counting and
testing.

          The Company upgrades its management information and
control systems on an on-going basis.  The Company believes that
the systems it has implemented are an important factor in enabling
it to achieve its goal of superior execution in all aspects of the
Company's operations and that its existing computer systems are
fully capable of further technical enhancements
with minimal conversion effort.

Expansion Strategy

          The Company continues to evaluate expansion plans in new
and existing markets within the Greater New York Metropolitan Area.

The Company has plans for a ninth store in Brooklyn, New York,
which it intends to open during the fourth quarter 1997.  The
availability of financial resources may limit the Company's
expansion plans, and no assurances can be given that the Company
will expand.  

          In evaluating new markets to enter, the Company considers
a number of criteria, including proximity to its existing stores
and the size, strength and merchandising philosophy of potential
competitors.  In selecting a site, the Company searches for
buildings which are between 45,000 - 60,000 square feet with ample
customer parking areas to support high sales volumes.  The Company
also considers local demographics, traffic patterns and overall
retail activity.  Although the Company seeks locations that are
conveniently reached and highly visible from major highways, the
stores need not be located in the most important retail location in
the particular market.

Competitors 

          The Company operates in a highly competitive marketplace.

The Company faces competition for customers from traditional
department stores and from specialty and other retailers.  Some of
these competitors are units of large national or regional chains
that may have greater financial and other resources than the
Company.  Circuit City, a national retailer of consumers
electronics, music and appliances, has recently announced plans to
open stores in the New Jersey/New York marketplace during 1997. 
Circuit City currently does not operate any stores in this region. 
Although most of the Company's competitors have more stores than
the Company, the stores are generally smaller and the Company
believes that they produce lower sales than the Company on a per
store basis.

          Competition within the Company's industry is based upon
breadth of product selection, product quality, customer service and
price.  The Company believes that it is comparable with or superior
to all of its competitors in each of these categories.

Employees

          As of December 31, 1996, the Company had approximately
950 full time and 650 part-time employees.  The Company also
employs additional part-time salespersons and cashiers during peak
periods.  None of the Company's employees are represented by a
labor union.  The Company believes that relationships with its
employees are good.

Service Marks

          The service marks TOPS and a Tops logo used in the
Company's print advertising, have been registered by the Company in
the U.S. Patent and Trademark Office.  The Company believes that
these marks have acquired substantial goodwill and reputation and
broad consumer recognition as marks of the Company within its
market area and that their continued use is important to the
development of its business.




Reorganization

          The Company was reorganized (the "Reorganization") in
August, 1992 as two New Jersey corporations in connection with the
Company's initial public offering.  Prior to that, the Company had
operated as a Delaware Limited Partnership ("Tops LP").  The
limited partners of Tops LP contributed their partnership interest
and shares, respectively, to a newly formed corporation in exchange
for that corporation's common stock.  This corporation changed its
name to Tops Appliance City, Inc. and became the sole shareholder
of the former corporate general partner, which owned all of the
Company's assets and traded as Tops Appliance City, Inc.  In March,
1993, these two corporations were merged, and the successor is Tops
Appliance City, Inc.  In 1995, the Company formed two subsidiaries
in connection with a mortgage loan on its Queens, New York
property.  All references in this report to Tops or the Company
refer to the prior limited partnership or the corporate entities on
a consolidated basis, where appropriate.

<PAGE>
ITEM 2.  Properties

          The Company operates eight stores in heavily populated
areas in New Jersey and New York, all except one of which are
leased by the Company.  The Company's Edison store and its office
and distribution center, also located in Edison, are leased from
the Company's former Chairman.  See "Item 13.  Certain
Relationships and Related Transactions."  The Company also leases
113,000 square feet of warehouse space adjacent to its Edison
distribution center from an unaffiliated third party.  The Company
purchased land and a building for its newest store in Queens, New
York, which the Company opened in August 1994.  The store leases,
including all options to renew, expire between 2010 and 2029.  The
following chart sets forth certain information regarding the store
leases and the Queens store.

<TABLE>
<CAPTION>
                        Date          Approximate    Approximate
Location                Opened      Sq. Footage(1) Selling Space(2)
<S>                     <C>              <C>            <C>
Edison, NJ............. June, 1979       45,059         33,940
Secaucus, NJ........... December, 1986  120,360         44,928
East Hanover, NJ....... April, 1989      65,600         38,407
Lakewood, NJ........... May, 1990        50,500         31,200
Westchester County, NY. October, 1992    63,935         48,935
Westbury, NY........... September, 1993  77,476         46,476
Union, NJ.............. November, 1993   54,920         44,320
Queens, NY............. August, 1994     77,000         43,826

                       
</TABLE>


(1)  Includes mezzanine area.

(2)  Selling space is total square footage less the Company's
estimate of              
     store space not used for selling merchandise.



ITEM 3.  Legal Proceedings

          The Company is not a party to any material legal
proceedings.


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

          The Company did not submit any matters to a vote of
security holders
in the fourth quarter of 1996. 


<PAGE>                      PART II

ITEM 5.  Market for Registrant's Common Stock and Related
Stockholder Matters 

          The Company's Common Stock is traded under the symbol
"TOPS" on the NASDAQ National Market System.

          The following table sets forth, for the fiscal quarters
indicated, the high and low sale prices for the Company's Common
Stock on the NASDAQ National Market System.  NASDAQ National Market
System quotations are based on actual transactions and not bid
prices.  

                                             Prices 
                                      High             Low

Year Ended December 26, 1995
    First Quarter.................    6 1/4          4
        
    Second Quarter................    5 1/2          3 7/8 
    Third Quarter.................    5 1/2          4 
    Fourth Quarter................    4 1/2          2 
        

Year Ended December 31, 1996
    First Quarter.................    3 1/4          2 1/4
    Second Quarter................    2 7/8          1 3/4
    Third Quarter.................    2 1/8            7/8
    Fourth Quarter................    2              1

          On April 14, 1997, the closing sale price of the Common
Stock as reported on the NASDAQ National Market System was 0.875
per share.  On December 31, 1996, there were approximately 579
holders of record of the Company's Common Stock.

          The Company has never paid any cash dividends on its
Common Stock and does not anticipate paying cash dividends in the
foreseeable future.  Any decision made by the Company to declare
dividends in the future will depend upon the Company's future
earnings, capital requirements, financial condition and other
factors deemed relevant by its Board of Directors.

ITEM 6.  Selected Financial Data

          Selected financial data is set forth below as of and for
the years ended December 31, 1992, December 28, 1993, December 27,
1994, December 26, 1995, and December 31, 1996.  The selected
financial data should be read in conjunction with the financial
statements, related notes and other information included herein and
"Management's Discussion and Analysis of Results of Operations and
Financial Condition."  Also set forth below is certain unaudited
pro forma statement of operations data for the year ended December
31, 1992 which has been adjusted to give effect to (i) the
Reorganization and (ii) adjustments to eliminate compensation in
excess of $400,000 annually earned by the Company's former Chairman
and a portion of interest expense resulting from reduced
borrowings.

<TABLE>
<CAPTION>
                      Year Ended  Year Ended  Year Ended  Year Ended  Year Ended
                        Dec. 31,   Dec. 28,    Dec. 27,     Dec. 26,   Dec. 31, 
                         1992       1993        1994         1995        1996
                                      (dollars in thousands except 
                                      per share and operating data)
<S>                       <C>         <C>        <C>          <C>       <C>
Statement of 
Operations Data:
Net sales and service
  revenues............... $  343,973 $  411,352  $  461,534  $ 421,264  $ 316,637
Cost of sales.............   261,490    312,392     350,881    324,079    250,117
Gross profit..............    82,483     98,960     110,653     97,185     66,520
Selling, general and
  administrative expenses.    69,034     90,328     107,317     96,859     82,461
Management Equity Award...     1,560        ---         ---        ---        ---
Partner Distributions.....     4,910        ---         ---        ---        ---
Income (loss) from 
  operations..............     6,979      8,632       3,336        326   (15,941)
Other Income, net.........       507        595         960        933       800
Interest Expense..........     2,637      1,451       3,934      4,478     6,240
Income (loss) before 
  income taxes............     4,849      7,776         362    (3,219)   (21,381)
Provision (benefit) for
  income taxes............     3,025      3,111         145    (1,288)    (2,000)
Net income (loss) (1).....$    1,824 $    4,665  $      217   $(1,931)   $ 19,381
Net income (loss) per 
  share...................    ---    $      .65  $      .03   $(  .27)   $ (2.66)
Weighted Average Shares
  Outstanding...................      7,200,042   7,269,417  7,252,990  7,277,229

</TABLE>
Pro Forma (unaudited):
Historical net income before       
  provision for income taxes....$    4,849
Pro forma adjustment to                  
 eliminate compensation in 
 excess of $400,000 annually
 earned by the Company's former
 Chief Executive Officer(2).....$    4,860
Pro forma adjustment to
 eliminate interest expense(3)..     1,850
Pro forma income before pro
 forma adjustment for income
 taxes..........................    11,559
Pro forma provision for income
 taxes(4)........................   (4,623)
Pro forma net income(5).........$    6,936
Pro forma net income per common
 share (for the period Aug. 12, 
 1992 through Dec. 31, 1992,
 historical net income per 
 common share was $.62).........$      .97
Pro forma common shares out-
 standing....................... 7,187,500 
<PAGE>
<TABLE>
<CAPTION>
                                Year       Year      Year      Year       Year
                                Ended      Ended     Ended     Ended      Ended
                                Dec. 31,  Dec. 28,  Dec. 27,   Dec. 26,  Dec. 31,
                                          1992      1993       1994 
     1995       1996
                                                   (dollars in
thousands)
<S>                               <C>        <C>         <C>      <C>        <C>
Operating Data (at period end)
 (unaudited):
Number of stores open............      5          7         8        8        8
Inventory turns..................   6.00x      5.50x     5.70x     5.4x     4.3x
Square feet of retail selling 
  space.......................... 197,410    288,206   332,032  332,032   332,032
Average retail sales per 
  store open entire year........$  67,560  $  64,615  $ 56,456 $ 47,010 $  34,777
Percentage increase (decrease)
  in  comparable store sales....     6.1%     (3.6%)   (14.1%)  (20.1%)   (26.4%)
Retail sales per weighted 
  average square foot of 
  selling space.................$   1,836  $   1,637  $  1,377 $  1,133 $     842

Balance Sheet Data:
Inventory...................... $  51,838  $  61,934  $ 61,289 $ 59,847 $  56,184
Working Capital................    16,647     35,909    25,132   32,112    14,785
Total Assets...................    77,382    127,422   121,076  113,552   101,020
Long-term debt, net of current 
  portion......................    10,146     41,611    40,689   49,201    48,944
Other long-term liabilities....     5,770      5,410     5,110   4,512      3,933
Shareholders' equity...........    16,674     21,517    21,952  20,099        750
</TABLE>
(1) Because the Company was organized as an S corporation and then
    as a limited partnership, net income does not reflect a
    provision for income taxes for periods prior to August 1992.

(2) Reflects compensation to Leslie S. Turchin in excess of
    $400,000 resulting from the Company's 1988 recapitalization.
    See Item 11 - Executive Compensation and Item 13 - Certain
    Relationships and Related Transactions.

(3) The pro forma interest adjustment reflects the reduction of
    outstanding borrowings at the beginning of the period resulting
    from the repayment of the Company's senior and subordinated
    debt.

(4) The following summarizes the pro forma effective tax rate of
    the pro forma adjustment for income taxes:
                                                              1992

    Federal statutory rate............................       34.00%
        State income taxes net of federal
        income tax benefit............................        6.00 
        Pro forma book income tax provision...........       40.00%

(5) The Company incurred certain charges in the second quarter of
    1992 related to the grant of equity interests to three
    executive officers and the settlement of certain compensation
    to Mr. Turchin as a result of the Company's 1988
    recapitalization.  See Item 1 - Business - Reorganization and
    Note 6 to Notes to Financial Statements.

ITEM 7.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations

Results of Operations

Year Ended December 31, 1996 Compared to the Year Ended December
26, 1995

    The Auditor's Report on the accompanying financial statements
states that such financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company
incurred a significant loss in 1996 which has significantly
decreased its working capital and stockholders' equity.  The
auditors have stated in their report that this condition raises
substantial doubt about the Company's ability to continue as a
going concern.  The financial statements do not include any
adjustments to reflect the possible future effects on the
recoverability and classification of the assets or the amounts and
classification of liabilities that may result from the outcome of
this uncertainty.  Management believes that cost reductions already
implemented and to be implemented during 1997 combined with the
leveling off of comparable store sales declines and a normal air
conditioning selling season will reduce losses in the future and
along with the continuation of its current credit
facility, will enable the Company to have sufficient cash flow to
continue its operations.

    Net sales and service revenues for 1996 decreased $104,627,000
or 24.8% to $316,637,000 from $421,264,000. This decrease is
attributable to the highly competitive and continuing slow retail
environment in the Northeast.  Room air conditioner sales declines,
due to unseasonably cooler weather during the summer season, also
contributed to the decrease. Room air conditioner sales in 1996
were approximately 54.2% less than in 1995. Total comparable store
sales were 26.4% lower than last year. Substantial price deflation
in Video and Home Office products also contributed to the decline.
Sales in the commercial division decreased $10,599,000 or 23.5%.

    Gross revenues from the sale of product protection plans for
1996 decreased 35.9% to $13,705,000 from $21,368,000. Incremental
costs related to these sales totaled $5,830,000 and $8,996,000
respectively, for the comparable periods. These product protection
plans are non-cancelable.

    Gross profit for 1996 decreased $30,665,000 or 31.6%. The
decrease is attributable to the decrease in merchandise sales and
higher margined product protection plans resulting in a decrease in
margins to 21.0% from 23.1% last year. This decrease was due in
part to lower sales of higher margined room air conditioners due to
the unseasonably cooler weather and gross margin pressure caused by
the generally weak retailing environment in a highly promotional
metro New York/New Jersey marketplace. Gross margins in the
commercial sales division increased to 9.1% from 8.6% for the
comparable periods. Gross margins in the commercial sales division
tend to be lower than gross margins on retail sales.

    Selling, general and administrative expenses for 1996 decreased
$14,398,000 or 14.9% to $82,461,000 from $96,859,000 for 1995. This
net decrease was achieved primarily by reducing payroll and related
expenses, net advertising, other cost-cutting measures, reduced
costs associated with the Company's private label credit card
program and reduced net variable selling expenses, partially offset
by higher net delivery costs and data processing expenses. Selling,
general and administrative expenses as a percentage of net sales
and service revenues increased to 26.0% from 23.0% for the
comparable periods.  This increase was due to the decreased sales
levels.

    Interest expense increased to $6,240,000 from $4,478,000 for
the comparable periods as a result of interest in 1996 on the
Queens mortgage, which was entered into in July 1995, higher
average borrowings and the write-off of $630,000 of capitalized
loan fees associated with the Company's revolving credit facility
which was replaced in October 1996 with a new revolving credit
facility with more favorable terms to the Company.

    The Company recorded a tax benefit at an effective rate of 9.4%
or $2,000,000 in 1996 compared to a tax benefit at an effective
rate of 40% or $1,288,000 in 1995.  [See Note 11 of Financial
Statements.]

    The Company's net loss for 1996 was $19,381,000 ($2.66 per
share) compared to a net loss of $1,931,000 ($.27 per share) for
1995.  

Year Ended December 26, 1995 Compared to the Year Ended December
27, 1994 

    Net sales and service revenue for 1995 decreased $40,270,000 or
8.7% to $421,264,000 from $461,534,000.  Net sales and service
revenues for 1995 include a full year of sales from the Queens, New
York megastore opened in August 1994.  Comparable store sales
decreased 20.1% for the year.  A portion of this decrease in
comparable store sales is attributable to a sluggish retail economy
and holiday sales that fell short of expectations and sales
transfer to the Company's new Queens, New York megastore.  The
Queens, New York megastore increased retail sales for the year
10.1%.  Sales in the commercial division increased by $1,612,000 or
3.7%.

    Gross revenues from the sale of product protection plans were
$21,368,000 and $25,322,000 for 1995 and 1994 respectively. 
Incremental costs related to these sales totaled $8,996,000 and
$10,706,000, respectively for the comparable years.  These
contracts are non-cancelable. 

    Gross profit for 1995 decreased $13,468,000 or 12.2%.  The
decrease is attributable to the decrease in sales and to a decrease
in gross profit margins from 24.0% to 23.1%.  This decrease in
gross profit margins was caused by competitive pricing pressure, a
shift in the sales mix to home office products, which have
relatively lower margins, and a decrease in commercial division
margins.  The commercial division, which accounted for 10.7% of net
sales and services revenue in 1995 compared to 9.4% in 1994,
reported a gross profit margin of 8.6% in 1995 compared to 9.8% in
1994.  Gross margins in the commercial sales division have
historically tended to be lower than gross margins on retail sales.

    Selling, general and administrative expenses decreased
$10,458,000 or 9.7%.  This decrease was achieved primarily by
reduced payroll and related expenses and reduced variable selling
expenses, offset partially by an increase in net advertising
expense and the full year effect of the policy of charging a
nominal fee for retail delivery and appliance removal.  Selling,
general and administrative expenses as a percentage of net sales
and service revenues decreased slightly to 23.0% from 23.3%.

    The Company's income from operations decreased from $3,336,000
in 1994 to $326,000 in 1995 primarily as a result of the decreased
sales levels.  Interest expense increased by $544,000 from 1994 to
1995 primarily due to the mortgage of the Queens, New York
megastore.  Income taxes (benefits) were provided for at an
effective federal and state income tax rate of 40% in both years.


Seasonality

          Sales levels are generally highest in the fourth quarter
as a result of increased demand for consumer electronics during the
Christmas season and either higher during the second or third
quarter, depending on weather conditions, as a result of demand for
room air conditioners during the summer months.  The unseasonably
cooler weather during the summer of 1996 severely impacted room air
conditioner sales.  Room air conditioner sales were approximately
54.2% less in 1996 compared to 1995.  Additionally, the first
quarter of 1996 was impacted by inclement weather.

          The Company experiences a build up of inventory and
accounts payable during the first quarter due to the purchase of
room air conditioners in anticipation of the May through August
selling season and the third and fourth quarters in anticipation of
the holiday season.

Liquidity and Capital Resources

          In the past, the Company has relied primarily upon net
cash from operations, a revolving credit facility with
institutional lenders and inventory floor plan financing to finance
its operations and growth.  During 1993, the Company issued
$40,000,000 convertible subordinated debentures due 2003 at an
annual interest rate of 6 1/2%.  Interest is payable semi-annually. 
The net proceeds were used to fund new store openings, repay
certain indebtedness and for general corporate purposes.  In July,
1995, the Company obtained a $9,200,000 ten year loan secured by a
mortgage on the Queens property.  This loan bears interest at a
fixed rate of 8.75%.

          At December 31, 1996, the Company had working capital of
$14.8 million, a decrease of $17.3 million from December 26, 1995. 
This decrease in working capital resulted primarily from the net
loss incurred by the Company for fiscal 1996.  The changes in
working capital components during the year were an increase of
$13.0 million in short-term borrowings, and decreases in cash of
$6.1 million, inventory of $3.7 million and accounts payable of
$3.6 million. 

          The Company increases its inventory levels during the
first quarter of each year in anticipation of room air conditioner
sales from May through August and during the third and fourth
quarters in anticipation of the Christmas season.  Short-term trade
credit represents a significant source of financing for inventory. 
Trade credit arises from the willingness of the Company's vendors
to grant extended payment terms for inventory purchases and is
financed either by the vendor or by third-party floor planning
sources.  The Company currently utilizes three floor planning
companies which in the aggregate at any one time provide financing
for approximately 20% of the Company's inventory purchases. 
Payment terms vary from 15 to 150 days, depending upon the
inventory product.  The Company typically grants the floor planning
companies a security interest in those products financed together
with the proceeds from the sales of such products.  Due to the
significant loss incurred by the Company during 1996, certain
vendors have reduced the credit terms previously extended to the
Company.  In most cases, the Company was able to negotiate
additional cash discounts relating to the reduced credit terms.

          The Company had a $35 million secured revolving credit
facility expiring March 22, 1999.  On October 31, 1996, the line
was fully repaid with the proceeds of a new $35 million secured
facility expiring October 28, 1999, which bears interest at the
bank's base rate plus 1% or, for a portion of the loan, LIBOR plus
3%.  All of the Company's unencumbered cash, equipment, inventory
and accounts receivable are pledged as collateral for the new
facility.   

          The Company also currently has $146,000 of secured notes
payable which are payable in monthly installments through October
28, 1997.  The interest rates vary between 8.5% and 8.75%.  The
loans are secured by certain fixed assets.

          As part of an agreement with the former Chairman of the
Board of the Company, payments due as compensation for services
which were provided in 1992 and 1993 were eliminated and were
replaced by a fixed amount of $4,910,000.  As of December 31, 1996
the remaining amount of $782,000 is being paid in monthly
installments of $65,000 plus interest through December 1, 1997.

          The Company continues to evaluate expansion plans in new
and existing markets within the Greater New York Metropolitan Area. 
During 1995, the Company obtained an option to purchase property
which will be the site of another store which is expected to open
in the fourth quarter of 1997.  The availability of financial
resources may limit the Company's expansion plans, and no
assurances can be given that the Company will expand.  

          The Company believes that its borrowings under available
credit facilities, short term trade credit from vendors and
inventory floor plan arrangements combined with the impact on
operating results of the cost reductions already implemented and to
be implemented in 1997, the leveling off of comparable store sales
decline and a normal room air conditioning selling season will be
sufficient to fund the Company's operations and its anticipated
capital expenditures, excluding new stores, of $1 million.  No
assurances can be given that such cost reductions will produce the
desired result.  

          This Annual Report on Form 10-K may contain
forward-looking information about the Company.  The following
factors, and others, may cause the Company's actual results to
differ from those set forth in any forward-looking statements made
by the Company.  Accordingly, there can be no assurances that any
future results will be achieved.

ITEM 8.  Financial Statements and Supplementary Data

          The financial statements and supplementary financial
information required in this item are attached.

ITEM 9.  Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 

          There have been no disagreements on any matter of
accounting principles or practices or financial statement
disclosure.
<PAGE>
                           PART III

ITEM 10.  Directors and Executive Officers of the Registrant

          The information required in response to this item is
incorporated by reference from the Registrant's proxy statement for
its 1997 annual meeting of shareholders to be filed with the
Securities and Exchange Commission on or before April 30, 1997.

ITEM 11.  Executive Compensation

          The information required in response to this item is
incorporated by reference from the Registrant's proxy statement for
its 1997 annual meeting of shareholders to be filed with the
Securities and Exchange Commission on or before April 30, 1997.

ITEM 12.  Security Ownership of Certain Beneficial Ownership and
Management

          The information required in response to this item is
incorporated by reference from the Registrant's proxy statement for
its 1997 annual meeting of shareholders to be filed with the
Securities and Exchange Commission on or before April 30, 1997.

ITEM 13.  Certain Relationships and  Related Transactions

          The information required in response to this item is
incorporated by reference from the Registrant's proxy statement for
its 1997 annual meeting of shareholders to be filed with the
Securities and Exchange Commission on or before April 30, 1997.

<PAGE>
                            PART IV

ITEM 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K

    (a)(1)  Financial Statements

          The following are incorporated by reference
          from the Company's Annual Report:

          Report of Independent Auditors.  . . . . . . . . . . .12

          Consolidated Balance Sheets as of December 31, 
          1996 and December 26, 1995 . . . . . . . . . . . . . . 4

          Consolidated Statements of Operations for years 
          ended December 31, 1996, December 26, 1995 and
          December 27, 1994. . . . . . . . . . . . . . . . . . . 5

          Consolidated Statements of Shareholders' Equity . . . .6

          Consolidated Statements of Cash Flows for Years
          ended December 31, 1996, December 26, 1995 and
          December 27, 1994. . . . . . . . . . . . . . . . . . . 7

          Notes to Consolidated Financial Statements. . . . . . .8

    (a)(2)  Financial Statement Schedule

          The following are included in Part II, Item 8:

          Report of Independent Auditors. . . . . . . . . . . .S-1

          Schedule II- Valuation and Qualifying
          Accounts and Reserves. . . . . . . . . . . . . . . . S-2

    (a)(3)  Exhibits

          Except where noted, all exhibits are incorporated by
reference from the Registrant's registration statement on Form S-1
as filed with the Securities and Exchange Commission on June 3,
1992, and amendments thereto, Registration No. 33-48326.

          Exhibit Number    Description of Document

                3.1         The Registrant's Certificate of
                              Incorporation
                3.2         The Registrant's By-Laws
                4           Specimen of stock certificate for
                              shares of common stock
                4.2         Indenture dated as of November 30, 1993
                              between Tops Appliance City, Inc. and
                              Donaldson, Lufkin & Jenrette
                              Securities Corporation (incorporated
                              by reference from Form S-3 filed
                              February 10, 1994)
                4.3         Registration Rights Agreement dated as
                              of November 30, 1993 between Tops
                              Appliance City, Inc. and Donaldson,
                              Lufkin & Jenrette Securities Corpor-
                              ation (incorporated by reference from
                              Form S-3 filed February 10, 1993)
               10.1         Security Agreement dated April 27, 1992
                              between Maytag Financial Service
                              Corp. and Tops Appliance City, L.P.
               10.2         Security Agreement dated January 19,
                              1989 between General Electric Capital
                              Corporation and Tops Appliance City,
                              L.P.
               10.3         Security Agreement dated January 15,
                              1990 between Tops Appliance City,
                              L.P. and WCI Acceptance Corporation
               10.4         Floor Plan Inventory Security Agreement
                              dated March 19, 1990 between Tops
                              Appliance City, L.P. and Carrier
                              Distribution Credit Corporation
               10.5         Lease dated March 3, 1984 between
                              Leslie S. Turchin and Tops Appliance
                              City, L.P., as amended (1745 Route
                              27, Edison, New Jersey) 
               10.6         Lease dated October 11, 1985 between
                              Leslie S. Turchin and Tops Appliance
                              City, L.P. (45 Brunswick Avenue,
                              Edison, New Jersey) 
               10.7         Lease Dated May 21, 1986 between Mack
                              Edison Co. and Tops Appliance City,
                              L.P., as amended
               10.8         Lease dated May 21, 1986 between Mack
                              Industries and Tops Appliance City,
                              Inc., as amended
               10.9         Lease dated April 27, 1988 between
                              Castle Ridge
                            Shopping Plaza Associates and Tops
                              Appliance City, L.P.
               10.10        Lease dated June 2, 1989 between Sudler
                              Town and
                            Country Limited Partnership and Tops
                              Appliance City, L.P.
               10.11        Management Agreement dated November 30,
                              1988 between Tops Appliance City,
                              L.P. and Leslie S. Turchin, as
                              amended
               10.12        Management Agreement dated January 1,
                              1989 between
                            Tops Appliance City, L.P. and Philip
                              M. Schmidt, as amended
               10.13        Form of Equipment Loan Agreement
                              between Tops
                            Appliance City, L.P. and Bell Atlantic
                              Mobile Systems, Inc.
               10.14        Form of Hardware/Software License
                              Agreement between Tops Appliance
                              City, L.P. and Bell Atlantic Mobile
                              Systems, Inc.
               10.15        Delivery Agreement dated January 30,
                              1992 between Tops Appliance City,
                              L.P. and Merchants Home Delivery
                              Service, Inc.
               10.16        Form of Amended and Restated Section
                              401(k) Plan dated July 29, 1988
               10.17        Summary Plan and Description Amended
                              and Restated 401(k) Plan dated
                              January 1, 1988
               10.18        Form of Executive and Deferred
                              Compensation Plan
               10.19        Form of Premium Conversion Plan
               10.20        Form of Stock Option Plan
               10.21        Extended Service Agreement dated
                              October 19, 1987 between Warrantech
                              Corporation and Tops Appliance
                              City, Inc.
               10.22        Extended Service Agreement dated April
                              29, 1988 between Warrentech
                              Corporation and Tops Appliance City,
                              Inc.
               10.23        Account Financing Agreement dated
                              December 30, 1986 between General
                              Electric Capital Corporation
                              and Tops Appliance City, L.P.
               10.24        Lease dated July 7, 1992 between New
                              York Medical College and Tops
                              Appliance City, L.P.
               10.25        Third Amendment to Management Agreement
                              between Tops Appliance City, Inc. and
                              Leslie S. Turchin dated December 16,
                              1992 (incorporated by reference 
                              from 8-K filed January 11, 1993).
               10.26        Lease dated February 11, 1993 between
                              Tops Appliance City, Inc. and Jerry
                              Spiegel and Jesco Co. (incorporated
                              by reference from 8-K filed April 6,
                              1993.)
               10.27        Lease dated May 1993 between Tops
                              Appliance City, Inc. and Lester
                              Robbins, Trustee (incorporated by 
                              reference from 8-K filed June 11,
                              1993).
               10.28        Management Agreement dated July 31,
                              1995 between Tops Appliance City,
                              Inc. and Rick Jones (incorporated
                              by reference from Annual Report
                              on Form 10-K for year ending December
                              26, 1995.
                10.29       Management Agreement dated May 31, 1995
                              between Tops Appliance City, Inc. and
                              Robert Gross (incorporated by
                              reference from Annual Report on Form
                              10-K for year ending December 26,
                              1995.)
                10.30       Management Agreement dated September 3,
                              1996 between Tops Appliance City,
                              Inc. and Thomas L. Zambelli - Page
                              25.
                10.31       Amendment to Management Agreement
                              between Tops Appliance City, Inc. and
                              Philip M. Schmidt dated December 1,
                              1996 - Page 39.
                22          List of Subsidiaries of the Registrant-
                              Page 41.
                24          Consent of Ernst & Young, L.L.P. - Page
                              42.

    (b)  Reports on Form 8-K

                None.
<PAGE>                        SIGNATURES

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

                                       TOPS APPLIANCE CITY, INC.


                                       BY:  /s/ Robert G. Gross 
                                          ROBERT G. GROSS
                                          Chief Executive Officer


                                       BY:  /s/ Thomas L. Zambelli
                                           THOMAS L. ZAMBELLI
                                           Chief Financial
Officer
Dated:  April 14, 1997
<PAGE>
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:

Signature                       Title                      Date


                               

/s/ Robert G. Gross        Chairman of the Board,    April 14, 1997
ROBERT G. GROSS            Chief Executive Officer



/s/ Philip M. Schmidt      President,                April 14, 1997
PHILIP M. SCHMIDT          Director


/s/ Thomas L. Zambelli     Senior Vice President,    April 14, 1997
THOMAS L. ZAMBELLI         Chief Financial
                           Officer


/s/ Leslie S. Turchin      Director                  April 14, 1997
LESLIE S. TURCHIN 


/s/ Anthony L. Formica     Director                  April 14, 1997
ANTHONY L. FORMICA


/s/ John H. Hollands       Director                  April 14, 1997
JOHN H. HOLLANDS

<PAGE>
               

                        REPORT OF INDEPENDENT AUDITORS


Shareholders and Board of Directors
TOPS Appliance City, Inc.

We have audited the accompanying consolidated balance sheets of
TOPS Appliance City, Inc. (the Company) as of December 31, 1996 and
December 26, 1995 and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1996.  Our audits also included 
the financial statement schedule listed in the Index at Item 14(a).  These
consolidated financial statements and schedule are the responsibility of 
the Company's management.  Our responsibility is to express an opinion
on these financial statements and schedule based on our audits.  

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

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of TOPS Appliance City, Inc. at December 31, 1996 and
December 26, 1995 and the consolidated results of its operations
and its cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting
principles.  Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information
set forth therein. 

The accompanying financial statements and schedule have been prepared 
assuming that TOPS Appliance City, Inc. will continue as a going concern. 
As more fully described in Note 1, the Company has incurred a
significant loss in 1996, which has significantly decreased its
working capital and shareholders' equity.  These conditions raise
substantial doubt about the Company's ability to continue as a
going concern.  The financial statements and schedule do not include any
adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of
this uncertainty.


                                     Ernst & Young LLP

MetroPark, New Jersey 
April 15, 1997

 
<PAGE>
<TABLE>
<CAPTION>
                       TOPS Appliance City, Inc.
                      CONSOLIDATED BALANCE SHEETS

                          (Dollars in thousands)

                                              December 31,  December 31,
                                                 1996          1995
------------------------------------------------------------------------
<S>                                             <C>          <C>
ASSETS
Current Assets:
   Cash and cash equivalents                     $  2,147    $  8,289
   Accounts receivable, net of allowance for 
      doubtful accounts of $268 and $373 in 
      1996 and 1995, respectively                    1,355      1,452
   Merchandise inventory                            56,184     59,847
   Prepaid expenses and other current assets         2,492      2,264
                                                 --------------------
Total current assets                              $ 62,178   $ 71,852
                                                 --------------------
Property, equipment and leasehold improvements,
   improvements, net                                31,858     35,616
Deferred taxes                                       2,758      2,462
Other assets                                         4,226      3,622
                                                 --------------------
                                                  $101,020   $113,552
                                                 --------------------
                                                 --------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                               $  9,626   $ 13,188
   Accrued liabilities and income taxes payable      7,061      8,061
   Sales tax payable                                 1,687      2,318
   Customer deposits                                 4,110      3,930
   Short-term borrowings                            21,904      8,900
   Current portion of long-term debt                   247        645
   Deferred taxes                                    2,758      2,698
                                                  -------------------
Total current liabilities                           47,393     39,740

Long-term debt, net of current portion              48,944     49,201
Deferred rent                                        3,179      2,792
Other liabilities                                      754      1,720

Commitments and contingencies

Shareholders' equity:
   Preferred stock, no par value, 20,000,000 shares
     authorized; none issued or outstanding
   Common stock, no par value, 30,000,000 shares
     authorized; 7,277,229 and 7,252,990 shares
     issued and outstanding in 1996 and 1995,
     respectively
   Paid-in capital                                  24,795     24,763
   Accumulated deficit                             (24,045)    (4,664)
                                                  --------------------
Total shareholders' equity                             750     20,099
                                                  --------------------
                                                  $101,020   $113,552
                                                  --------------------
                                                  --------------------

See accompanying notes.

</TABLE>

<PAGE>
                            TOPS Appliance City, Inc.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                              (Dollars in thousands)

<TABLE>
<CAPTION>
                                               Year ended
                                 --------------------------------------------
                                  December 31,    December 26,   December 27,
                                      1996            1995           1994
------------------------------------------------------------------------------
<S>                                 <C>             <C>           <C>
Net sales and service revenues      $  316,637      $  421,264    $  461,534
Cost of sales                          250,117         324,079    
   350,881
                                   ------------------------------------------
Gross profit                            66,520          97,185       110,653

Selling, general and adminis-
  trative expenses                      82,461          96,859       107,317
                                   ------------------------------------------
Income (loss) from operations          (15,941)            326         3,336

Other income                               800             933           960
Interest expense                         6,240           4,478         3,934
                                   ------------------------------------------
Income (loss) before provision
  (benefit) for income taxes           (21,381)         (3,219)          362

Provision (benefit) for income
  taxes                                 (2,000)         (1,288)          145
                                   ------------------------------------------
Net income (loss)                   $  (19,381)     $   (1,931)   $      217 
                                   ------------------------------------------
                                   ------------------------------------------

Net income (loss) per share         $    (2.66)     $     (.27)   $      .03
                                   ------------------------------------------
                                   ------------------------------------------
Weighted average shares
  outstanding                        7,277,229       7,252,990     7,269,417
                                   ------------------------------------------
                                   ------------------------------------------

See accompanying notes.

</TABLE>

<PAGE>
                              TOPS Appliance City, Inc.
                  CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                (Dollars in thousands)

<TABLE>
<CAPTION>
                                 Shares of
                                   Common     Paid-In   
Accumulated
                                   Stock      Capital      Deficit    Total
------------------------------------------------------------------------------
<S>                              <C>          <C>         <C>        <C>
Balance at December 28, 1993     7,197,263    $24,467     $ (2,950)  $21,517
  Net income                                                   217       217
  Shares issued under Employee
    Stock Purchase Plan             35,427        218                    218
                                ---------------------------------------------
Balance at December 27, 1994     7,232,690     24,685       (2,733)   21,952
  Net loss                                                  (1,931)   (1,931)
  Shares issued under Employee
    Stock Purchase Plan             20,300         78                     78
                                ---------------------------------------------
Balance at December 26, 1995     7,252,990     24,763       (4,664)   20,099
  Net loss                                                 (19,381)  (19,381)
  Shares issued under Employee
    Stock Purchase Plan             24,239         32                     32
                                ---------------------------------------------
Balance at December 31, 1996     7,277,229    $24,795     $(24,045)  $   750
                                ---------------------------------------------
                                ---------------------------------------------

See accompanying notes.

</TABLE>

<PAGE>
                                    TOPS Appliance City, Inc.
                             CONSOLIDATED STATEMENTS OF CASH FLOWS

                                      (Dollars in thousands)
<TABLE>
<CAPTION>
                                                      Year ended
                                     -------------------------------------------
                                     December 31,    December 26,   December 27,
                                        1996            1995            1994
--------------------------------------------------------------------------------
<S>                                      <C>             <C>            <C>
Cash flows from operating activities
Net income (loss)                        $(19,381)      $(1,931)        $    217
  Adjustments to reconcile net income 
    (loss) to net cash used in operating 
    activities:
      Depreciation and amortization         5,897         6,081            7,017
      Deferred rent                           387           494              503
      Amortization of deferred income         (73)         (216)            (330)
      Accounts receivable                      97           201             (470)
      Inventory                             3,663         1,442              645
      Prepaid expenses and other current 
        assets                               (228)         (314)          (2,186)
      Deferred taxes                         (236)       (1,006)             228
      Accounts payable                     (3,204)       (5,995)         (15,738)
      Accrued liabilities and income
        taxes payable                      (1,000)          510             (531)
      Sales tax payable                      (631)         (886)            (357)
      Customer deposits                       180        (1,716)              56
      Other assets                         (1,595)       (2,008)            (291)
      Other liabilities                      (111)          (94)             309
                                           -------------------------------------
Net cash used in operating activities     (16,235)       (5,438)         (10,928)

Cash flows from investing activities
Capital expenditures, net                  (1,148)       (2,111)         (14,816)
                                           -------------------------------------
Net cash used in investing activities      (1,148)       (2,111)         (14,816)

Cash flows from financing activities
Net proceeds from Employee Stock 
  Purchase Plan                                32            78              218
Cash overdrafts                              (358)       (3,773)           1,080
Short-term borrowings                      13,004          (700)           9,600
Proceeds from long-term borrowings                        9,200
Long-term debt repayments                    (655)         (894)            (808)
Related party repayments                     (782)         (782)            (782)
                                           --------------------------------------
Net cash provided by financing activities  11,241         3,129            9,308
                                           --------------------------------------

Decrease in cash and cash equivalents      (6,142)       (4,420)         (16,436)
Cash and cash equivalents, beginning 
  of year                                   8,289        12,709           29,145
                                           --------------------------------------
Cash and cash equivalents, end of year   $  2,147        $8,289         $ 12,709
                                         ----------------------------------------
                                         ----------------------------------------
Supplemental disclosures of cash flow 
  information
Interest paid                            $  5,939        $4,265         $  2,633
                                         ----------------------------------------
                                         ----------------------------------------
Income taxes paid                        $     30        $  196         $    724
                                         ----------------------------------------
                                         ----------------------------------------

See accompanying notes.

</TABLE>

<PAGE>
                    TOPS APPLIANCE CITY, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 1996, December 26, 1995 and December 27,
1994

1.  ORGANIZATION AND BASIS OF PRESENTATION

Tops Appliance City, Inc. is a publicly held retailer of major
household appliances, audio/video electronic goods and home office
products with eight megastores, five of which are located in New
Jersey and three in New York.  Sales may fluctuate due to weather
conditions, as a result of demand for room air conditioners during
the summer months and the ability to travel to stores during the
winter months.  During 1995, the Company formed two subsidiary
companies in connection with the issuance of a mortgage on the
Queens, New York property.

The accompanying consolidated financial statements have been
prepared on a going concern basis which contemplates the
realization of assets and the liquidation of liabilities in the
ordinary course of business. The Company has incurred a loss of
$19,381,000 in 1996 which decreased its working capital to
$14,785,000 and its shareholders' equity to $750,000 at December
31, 1996.  In view of this loss, continuation of the Company as a
going concern depends on its ability to restrain the losses in the
near future.  The accompanying consolidated financial statements do
not include any adjustments relating to the realization of assets
and liquidation of liabilities that might be necessary should the
Company be unable to continue as a
going concern. 

Management believes that cost reductions already implemented and to
be implemented during 1997, combined with the leveling off of
declines in comparable store sales and a normal room air
conditioner selling season will reduce losses and, along with the
continuation of its current credit facility, will enable the
Company to have sufficient cash flow to continue its operation.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH EQUIVALENTS

The Company considers all highly-liquid securities with an original
maturity less than three months to be cash equivalents.

CONCENTRATIONS OF CREDIT

Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of temporary
cash investments. The Company places its temporary cash investments
in high credit quality financial instruments in accordance with
debt agreements.  At times such investments may be in excess of the
FDIC insurance limit. 

USE OF ESTIMATES

Generally accepted accounting principles require the Company to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes.  Actual results
may differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of the Company's financial instruments,
excluding the subordinated debentures (see Note 4), approximates
fair value.

CONSOLIDATION

The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries.  All significant
intercompany accounts and transactions have been eliminated.

MERCHANDISE INVENTORY

Merchandise inventory is stated at the lower of cost or market.
Cost is determined under the first-in, first-out (FIFO) method.



PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements are stated at cost,
less accumulated depreciation and amortization. Depreciation and
amortization are computed on a straight-line basis over the
estimated useful lives of the respective assets which range from 3
to 30 years. 

DEFERRED FINANCING COSTS

Included in other assets is $1,463,000 and $1,894,000 at December
31, 1996 and December 26, 1995, respectively, of costs associated
with obtaining the debt discussed in Note 4. The deferred costs
associated with the convertible subordinated debentures, the
revolving credit note and the mortgage payable are being amortized
over periods ranging from three to ten years.

PREOPENING COSTS

Costs (primarily personnel and training costs) associated with the
opening of new stores are deferred and amortized on a straight-line
basis over the twelve month period following the store opening.

ACCOUNTS PAYABLE

Included in accounts payable is a cash overdraft balance of
$4,040,000 and $4,398,000 at December 31, 1996 and December 26,
1995, respectively.

REVENUE RECOGNITION

Revenue is recognized upon receipt of the merchandise by the
customer.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Included in selling, general and administrative expenses are
advertising costs which are charged to operations as incurred.
Advertising expense, net of reimbursements from vendors, was
$5,981,000, $7,294,000 and $2,761,000 for 1996, 1995 and 1994,
respectively.

Commencing in the fourth quarter of 1994, the Company began
charging a nominal fee for retail delivery and appliance removal,
which amounts have been classified as a reduction of selling,
general and administrative expenses.

PRODUCT PROTECTION PLANS

The Company purchases product protection plans on a non-recourse
basis from third parties who perform the obligations of the Company
under its protection plans through factory authorized service
centers. The third party is required to maintain insurance, with
the Company named as insured, guaranteeing performance of the third
partys obligation to the Company.  The difference between the
sales price of the Companys protection plan and the purchase price
of the third party protection plan is recognized as revenue at the
time of sale, since the Company has substantially completed what it
must do to be entitled to the benefits represented by the revenue
and it is remote that any future costs will be incurred with
respect to such contracts. The revenues and related costs
associated with the sale of product protection plans are as
follows:

<TABLE>
<CAPTION>
                                       Year ended
                       ------------------------------------------
                       December 31,   December 26,   December 27,
                           1996           1995           1994
----------------------------------------------------------------
<S>                    <C>            <C>            <C>
Revenues               $13,705,000    $21,368,000    $25,322,000
Cost of sales            5,830,000      8,996,000     10,706,000

</TABLE>

NET INCOME (LOSS) PER SHARE

Net income (loss) per share is based upon the weighted average
number of common shares and common equivalent shares (based on
stock options and convertible subordinated debentures when they are
not antidilutive) outstanding during the year.

STOCK BASED COMPENSATION

The Company grants stock options for a fixed number of shares to
employees with an exercise price equal to the fair value of the
shares at the date of grant.  As permitted by FASB Statement No.
123, "Accounting and Disclosure of Stock Based Compensation", the
Company has elected to account for stock option grants in
accordance with ABP Opinion No. 25, "Accounting for Stock Issued to
Employees" and, accordingly, recognizes no compensation expense for
the stock option grants.  The Company has adopted the pro forma
disclosure only option under Statement No. 123 and the effect of
applying the fair value method to the stock option grants results
in a net loss and net loss per share that are not materially
different from the amounts reported for the year ended December 31,
1996 and December 26, 1995.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, the FASB issued Statement No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of", which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying
amount.  Statement No. 121 also addresses the accounting for
long-lived assets that are expected to be disposed of.  The Company
adopted Statement No. 121 in the first quarter of 1996.  The
Company believes that no impairment of long-lived assets has
occurred at December 31, 1996.  However for certain stores the
estimate of future cash flows indicates that an impairment reserve
may be needed in the future if sales are significantly below
forecasted levels.

FISCAL YEAR

The Company's fiscal year ends on the last Tuesday of December. 
Fiscal 1996 contains 53 weeks, and fiscal 1995 and fiscal 1994
contain 52 weeks.

RECLASSIFICATION

Certain December 26, 1995 and December 27, 1994 balances have been
reclassified to conform to the December 31, 1996 presentation.

3.  PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements consist of the
following:

<TABLE>
<CAPTION>
                                       December 31,  December 26,
                                           1996          1995
-----------------------------------------------------------------
<S>                                    <C>           <C>
Land and buildings                     $13,970,000   $13,970,000
Computer equipment and 
  purchased software                    11,364,000    10,263,000
Transportation equipment                   869,000     1,178,000
Furniture, fixtures and 
  store equipment                        9,579,000     9,503,000
Warehouse equipment                      2,324,000     2,304,000
Leasehold improvements                  21,047,000    21,016,000
                                       -------------------------
                                        59,153,000    58,234,000
Less accumulated depreciation
  and amortization                      27,295,000    22,618,000
                                       -------------------------
                                       $31,858,000   $35,616,000
                                       -------------------------
                                       -------------------------
</TABLE>

Depreciation expense was $4,906,000, $5,015,000 and $4,533,000 for
1996,
1995 and 1994, respectively.

4.  DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                       December 31,  December 26,
                                           1996          1995
-----------------------------------------------------------------
<S>                                    <C>           <C>
Convertible Subordinated 
  Debentures (A)                       $40,000,000   $40,000,000
Equipment Financing Loans (B)              146,000       689,000
Mortgage Payable (C)                     9,045,000     9,157,000
                                       -------------------------
                                        49,191,000    49,846,000
Less current portion                       247,000       645,000
                                       -------------------------
Total long-term debt, non-current      $48,944,000   $49,201,000
                                       -------------------------
                                       -------------------------
</TABLE>

(A)  $40,000,000, 6-1/2% Convertible Subordinated Debentures due
2003.  Interest is paid semi-annually on February 28 and August 31. 
The debentures are convertible into common stock of the Company at
a conversion price of $22.25 per share, subject to adjustment in
certain circumstances.  The debentures are redeemable, in whole or
in part, for cash at any time on or after November 30, 1996 at the
option of the Company, at a redemption price beginning at 103.25%
and thereafter declining ratably to par plus accrued interest to
the date of redemption.  No quoted market price is available for
the debentures, however, the Company estimates the fair value is
approximately 25% of face value, based on the limited transactions
for these instruments.

(B)  Equipment financing loans are payable in monthly installments
of principal and interest through October 28, 1997. The interest
rates vary between 8.5% and 8.75%.  The loans are secured by
certain fixed assets.  The carrying value of the loans approximates
fair value due to their short-term maturities.

(C)  8.75% fixed rate mortgage loan on Queens property.  Interest
and principal are payable in equal monthly installments of $76,000
to July 2005 at which time the remaining principal is due.  The
carrying value of the mortgage approximates fair value.

On October 31, 1996, the Company fully repaid its $35,000,000
secured revolving credit facility with the proceeds of a new $35
million secured credit facility expiring October 28, 1999.  The new
revolver, which has more favorable terms to the Company, bears
interest at the bank's base rate plus 1% or, for a portion of the
loan, LIBOR plus 3%.  Borrowings are based on 65% of eligible
inventory, as defined, and amounts available under the agreement
may be reduced to reflect availability reserves, based on certain
conditions as determined by the lender.  In addition, a material
adverse change in the Company's consolidated financial condition
may be deemed an event of default under the agreement. All of the
Company's unencumbered cash, equipment, inventory and accounts
receivable are pledged as collateral for the new facility.  As of
December 31, 1996 and December 26, 1995, $21,904,000 was
outstanding under this credit facility and $8,900,000 was
outstanding under a previous credit facility. 

In connection with the mortgage loan, $1,200,000 of the proceeds
were used to purchase U.S. Treasury obligations, which are
restricted in accordance with the mortgage agreement and are
included in other assets at December 31, 1996 and December 26,
1995.  The carrying value of the U.S. Treasury obligations
approximates fair value.

Principal payments required under long-term debt obligations for
years subsequent to December 31, 1996 are as follows:

          1997                $   247,000
          1998                    131,000
          1999                    143,000
          2000                    156,000
          2001                    171,000
          Thereafter           48,343,000

5.  DUE TO RELATED PARTY

As part of an agreement with the former Chairman of the Board of
the Company, contingent payments due to such individual for
services which were provided in 1992 and 1993 were eliminated and
were replaced by a fixed amount of $4,910,000.  As of December 31,
1996, the remaining amount of $782,000 is included in accrued
liabilities and is being paid in monthly installments of $65,000
per month plus interest through December 1, 1997.

6.  COMMITMENTS AND CONTINGENCIES

Most of the Company's retail stores, distribution center and office
space are leased under operating leases.  The leases have initial
remaining terms of three to seventeen years with renewal options
from five to thirty years.  Most of the leases are net, requiring
additional payments for real estate taxes, maintenance and
insurance. 

During 1995, the Company obtained an option to purchase property
which will be the site of another store which is expected to open
in 1997.

One of the Company's stores and the distribution center/corporate
office are leased from a proprietorship affiliated with the former
Chairman of the Board.

Rental expense charged to operations under the leases described
above, all of which are classified as operating leases, are
summarized below:

<TABLE>
<CAPTION>
                                       Year ended
                       ------------------------------------------
                       December 31,   December 26,   December 27,
                           1996           1995           1994
-----------------------------------------------------------------
<S>                   <C>             <C>            <C>
Rentals under:
  Related 
    party leases      $1,848,000      $1,836,000     $2,206,000
  Other leases         5,660,000       5,323,000      5,471,000
                      -----------------------------------------
                      $7,508,000      $7,159,000     $7,677,000
                      -----------------------------------------
                      -----------------------------------------

</TABLE>

Minimum annual rental payments under operating leases in fiscal
years subsequent to December 31, 1996 are as follows:

          1997                $ 7,182,000
          1998                  7,188,000
          1999                  6,847,000
          2000                  6,686,000
          2001                  6,280,000
          Thereafter           26,751,000

The Company presently has employment contracts with four officers
which commit the Company to various salary and fringe benefit
obligations (as specified in the individual agreements).  The
aggregate salary obligation under these agreements is $935,000,
$431,000, $300,000 and $125,000 for the years ending 1997 through
2000, respectively.

In connection with the floor plan financing for certain inventory
purchases, such floor planners have a security interest in the
inventory purchased through such floor planning arrangements.

At December 31, 1996 and December 26, 1995, the Company had standby
letters of credit of $785,000 and $712,000, respectively.

7.  401(K) SALARY SAVINGS PLAN

The Company maintains a defined contribution 40l(k) plan which
allows eligible employees to defer a portion of their income
through contributions to the plan.  Under the terms of the plan,
the Company contributes an amount equal to 2-1/2% of the total
annual compensation paid to plan participants and may contribute
additional amounts on a discretionary basis. Effective January
1997, the Plan was modified to where the Company contributes 25% of
the participant's contribution up to 10% of that participant's
annual compensation.

The Company's contributions to the plan for the following years
were:

          1996                $  632,000
          1995                   856,000
          1994                 1,000,000

8.  LITIGATION

The Company is involved in litigation, both as plaintiff and
defendant, incidental to the conduct of its business.  It is the
opinion of management, after consultation with counsel, that the
outcome of such litigation will not have a material adverse effect
on the accompanying financial statements.

9.  STOCK OPTION PLAN

The Company offers two incentive and non-qualified stock option
plans.  In addition, non-qualified stock options have been issued
that are not covered by the plans.  A total of 1,585,000 shares of
common stock are reserved for issuance.  The exercise price of a
stock option granted under the plan may not be less than 100% (110%
in the case of incentive stock options granted to owners of more
than 10% of the total combined voting power of all classes of stock
of the Company) of the fair market value at the time of grant. 
Options are generally exercisable over a three year period.

Transactions under the stock option plans for the periods indicated
were as follows:

<TABLE>
<CAPTION>
                                       Number of Shares
                                1996         1995         1994
----------------------------------------------------------------
<S>                         <C>           <C>          <C>
Options outstanding at 
  beginning of year 
  ($4.13 to $16.23)           796,700      600,000      115,000
Granted 
  ($1.44 to $6.88)          1,041,300      385,000      600,000
Canceled 
  ($2.38 to $16.23)          (727,700)    (188,300)    (115,000)
                           -----------    ---------    ---------
Options outstanding 
  at end of year            1,110,300      796,700      600,000
                           -----------   ---------     ---------
                           -----------   ---------     ---------
</TABLE>

10.  STOCK PURCHASE PLAN

The Company has established an Employee Stock Purchase Plan (the
"Plan").  A total of 200,000 shares of common stock are reserved
for issuance under the Plan.  The Plan enables participating
employees to purchase Company common stock through payroll
deductions at a value equal to 85% of the market value of the
common stock on the first or last day of the offering period,
whichever is lower.  During 1996 and 1995, common stock totalling
24,200 and 20,300 shares, respectively, were issued under the Plan.

11.  INCOME TAXES

Deferred income taxes at December 31, 1996 and December 26, 1995
reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax assets and liabilities are
as follows:

<TABLE>
<CAPTION>
                                           1996           1995
----------------------------------------------------------------
<S>                                    <C>            <C>
Current deferred tax assets:
  Compensation not 
    currently deductible               $  313,000     $  313,000
  Inventory                               376,000        399,000
  Accrued liabilities                     152,000        147,000
  Federal and state 
    loss carryforwards                                   376,000
  Alternative minimum tax and
    jobs credit carryforwards                            326,000
  Other                                   324,000        637,000
  Valuation allowance                    (885,000)      (590,000)
                                       --------------------------
Total current deferred tax assets         280,000      1,608,000

Current deferred tax liabilities:
  Vendor allowances                     2,899,000      3,465,000
  Other                                   139,000        841,000
                                       --------------------------
Total current deferred 
  tax liabilities                       3,038,000      4,306,000
                                       --------------------------
Net current deferred
  tax liabilities                      $2,758,000     $2,698,000
                                       --------------------------
                                       --------------------------
</TABLE>

<TABLE>
<CAPTION>
                                           1996           1995
----------------------------------------------------------------
<S>                                   <C>             <C>
Long-term deferred tax assets:
  Federal and state 
    loss carryforwards                $ 7,150,000
  Alternative minimum tax and
    job credit carryforward               604,000
  Compensation not 
    currently deductible                   37,000     $  386,000
  Rent                                  1,266,000      1,053,000 
  Depreciation                          1,992,000      1,532,000
  Warranty                                343,000        403,000
  Other                                                    1,000
  Valuation allowance                  (8,629,000)      (905,000)
                                      --------------------------
Total long-term deferred tax assets     2,763,000      2,469,000

Long-term deferred tax liabilities:
  Other                                     5,000          7,000
                                      --------------------------
Net long-term deferred tax assets     $ 2,758,000     $2,462,000
                                      --------------------------
                                      --------------------------
</TABLE>

The valuation allowance increased by $8,019,000 during 1996 and
decreased by $430,000 during 1995.  At December 31, 1996, the
Company has a federal net operating loss carryforward of
approximately $16,417,000 of which the majority expires in 2010.

Components of the provision (benefit) for income taxes are as
follows:

<TABLE>
<CAPTION>
                             1996           1995           1994
-----------------------------------------------------------------
<S>                    <C>            <C>             <C>
Current:
  Federal              $(1,778,000)   $  (298,000)    $  (93,000)
  State                     14,000         16,000         10,000
                       -----------------------------------------
                        (1,764,000)      (282,000)       (83,000)
Deferred:
  Federal                 (236,000)      (752,000)       201,000
  State                                  (254,000)        27,000
                       -----------------------------------------
                          (236,000)    (1,006,000)       228,000
                       -----------------------------------------
Provision (benefit)
  for income taxes     $(2,000,000)   $(1,288,000)    $  145,000
                       -----------------------------------------
                       -----------------------------------------

</TABLE>

A reconciliation of the effective tax rate to the federal statutory
rate is
as follows:

<TABLE>
<CAPTION>
                                    1996        1995       1994
-----------------------------------------------------------------
<S>                                <C>         <C>        <C>
Federal statutory rate             (34.0)%     (34.0)%     34.0%
State income taxes, net of 
  federal income tax benefit                    (4.9)       6.8
Federal net operating 
  loss carryforward                 26.0
Targeted jobs tax credit                        (2.2)      (2.4)
Other                               (1.4)        1.1        1.6
                                   -----------------------------
Effective tax rate                  (9.4)%     (40.0)%     40.0%
                                   -----------------------------
                                   -----------------------------

</TABLE>
<PAGE>
                           TOPS Appliance City, Inc.

      Schedule II - Valuation and Qualifying Accounts and Reserves
 
Years ended December 27, 1994, December 26, 1995 and December 31,
1996
<TABLE>
<CAPTION>
                                                 Additions
                                    Balance at   Charged to             Balance
                                    Beginning    Costs and              at End
Description                         of Period    Expenses   Deductions  of Period
--------------------------------------------------------------------------------
<S>                                 <C>         <C>         <C>         <C>          
Year ended December 27, 1994:
  Allowance for doubtful accounts   $192,000    $210,000    $139,000    $263,000
                                    --------------------------------------------

Year ended December 26, 1995:
  Allowance for doubtful accounts   $263,000    $240,000    $130,000    $373,000
                                    --------------------------------------------
Year ended December 31, 1996:
  Allowance for doubtful acocunts   $373,000    $360,000    $465,000    $268,000

                                    --------------------------------------------
</TABLE>
<PAGE>
                          EXHIBIT 10.30
                      MANAGEMENT AGREEMENT

     AGREEMENT made and entered into as of the 3rd day of
September, 1996, by and between TOPS APPLIANCE CITY, INC., a New
Jersey corporation, with offices at 45 Brunswick Avenue, Edison,
Jersey 08818 (the "Company") and THOMAS ZAMBELLI, currently
residing at 58 Van Orden Road, Harrington Park, NJ 07640 (the
"Executive"),

     WHEREAS, the Company desires to employ the services of the
Executive to act as Senior Vice President and  Chief Financial
Officer of the Company, and the Executive desires to provide such
services to the Company, on the terms and conditions set forth in
this Agreement;

     NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:

     1.  Employment.  The Company hereby employs the Executive and
the Executive hereby accepts such employment (the "Employment")
upon the terms and conditions set forth in this Agreement.

     2.  Capacity and Duties.  The Executive is engaged as Senior
Vice President and Chief Financial Officer of the Company.  The
Executive shall perform such executive, managerial and
administrative duties as are from time to time assigned to him by
the Chief Executive Officer of the Company and which are normally
associated with such position.  Should the Executive serve as a
member of the Board of Directors and/or the Board of Directors of
any affiliate of the Company, the Executive will serve in such
capacities without any additional compensation.

            3.    Extent of Service.  The Executive shall devote
his attention and energies on a full-time basis to the business of
the Company and to the discharge of his duties as Senior Vice
President and Chief Financial Officer.  Subject to the provisions
in Section 11 hereof, nothing herein shall preclude the Executive
from pursuing other business, charitable and investment activities,
so long as such other activities do not materially affect the
Executive's performance of his duties under the preceding sentence.

            4.    Term of Agreement.  Unless sooner terminated in
accordance with the provisions of Section 9 hereof, the term of
this Agreement shall be for sixteen (16) months from September 3,
1996, unless extended by mutual agreement.

            5.    Base Compensation.  During the term of this
Agreement, the Company agrees to pay the executive a salary of
$160,000.00 per annum, less such deductions as are required by
applicable law ("Base Salary"), payable bi-weekly in equal
installments on the Company's designated payday.  The Base Salary
may be increased by such amounts and at such times as the Board of
Directors shall determine in its sole discretion.  The adjusted
salary shall then become the Base Salary for each respective year.

            6.    Additional Compensation.

                  (a)   Cash Bonus.  For the fiscal years
commencing January, 1997 and thereafter, the bonus will be
calculated by negotiation between the Executive and the Company
based upon operating income objectives.  Any such bonus will be
paid within one hundred twenty (120) days of the conclusion of the
fiscal year for which the bonus is earned and shall in no event
exceed 33% of the Base Salary and to be pro rated between the
minimum and maximum operating income objectives. In the event of a
termination without cause (as hereinafter defined), such bonus will
be pro rated.

                  (b)   Stock Options.  Pursuant to a separate
agreement to be executed and delivered simultaneously with this
Agreement, the Company will grant to the Executive options to
purchase 40,000 shares of Common Stock, which options will vest and
become exercisable in the following amounts on the following dates,
provided that the Executive is then employed by the Company:

                    Date                  No. of Shares

                 December 31, 1996            10,000
                 December 31, 1997            30,000
                 

Such options will be non-qualified and will have an exercise price
per share equal to the closing price of the Company's Common Stock
on the last trading day prior to the date of this Agreement.

            (c)   Change of Control.  If in a single transaction or
as a result of a series of transactions occurring in concert with
each other, the control of the Company shall change, and subsequent
to such change in control this Agreement is terminated or is not
renewed by the Company at the end of its term, all of the options
theretofore granted to Executive shall vest and Executive shall be
entitled to his Base Salary less earnings from any subsequent
employer during the term hereof.

      For purposes of this paragraph, a "change in control" shall
occur if more than fifty percent (50%) of the Company's outstanding
common stock is transferred in a single transaction or series of
transactions in concert with each other including a sale of
substantially all of the assets of the Company. Termination under
this agreement shall include any substantial diminution in the
duties, Base Salary, responsibilities or authority or a change in
title of the Executive.

            7.    Benefits.  During the term of this Agreement, the
Company shall provide to the Executive the benefits provided by the
Company to those employees of equivalent status, including without
limitation the following benefits:

                  (a)   Vacation.  The Executive shall receive two
(2) weeks of paid vacation during each calendar year. 

                  (b)   Expenses.  The Company shall reimburse the
Executive for all reasonable and necessary expenses, including,
without limitation, travel and entertainment expenses, incurred by
the Executive in connection with the business of the Company which
shall include the expenses of travel and other expenses relating to
membership in and attendance at trade and business associations and
conventions.  Such reimbursement shall be paid upon presentation of
expense statements or vouchers or such other supporting information
as the Company may require.

                  (c)   Medical.  The Executive shall be provided
with (i) reasonable health, medical, hospitalization, pension and
other insurance benefits; (ii) payment of reasonable expenses
attributable to the operation of an automobile used by the
Executive in the performance of his duties hereunder, including
without limitation, gasoline, insurance and maintenance and (iii) 
an automobile.  The expenses of leasing or purchasing such
automobile shall not exceed $6,000.00 yearly, which sum shall be
paid directly to the Executive if the Company does not provide the
automobile for him.  In addition, the Executive shall be permitted,
during the term hereof, if and to the extent eligible, to
participate in any group life, hospitalization or disability
insurance plan, health program, pension plan, similar benefit or
other "fringe benefits" of the Company, which may be available to
other executive officers of the Company.

                  8.    Insurance.  The Company may, in its
discretion, purchase or renew insurance on the life of the
Executive, with the Company or a lender to the Company as
beneficiary in the amount determined by the Company or such lender
from time to time.  The Executive agrees to submit to reasonable
medical examinations and otherwise reasonably to cooperate with the
Company and any such lender in connection with obtaining such
insurance.

                  9.    Termination.  This Agreement shall
terminate upon the first to occur of (a) the expiration of the term
of this Agreement as set forth in Section 4 hereof or (b) the
earlier occurrence of any of the following events or conditions:

                  (i)   the death of the Executive; or

                  (ii)  the Executive's voluntary departure from
employment by the Company; or 

                (iii) the delivery to the Executive of written
notice setting forth the election of a majority of the Board of
Directors (other than the Executive, if he is then a director) to
terminate his employment for "cause." For purposes of this Section
9, the term "cause" shall mean any of the following: (A) the
Executive's conviction of any crime or offense involving monies or
other property, or any felony offense for any crime of moral
turpitude, or his commission of a fraud or embezzlement; (B) the
Executive's breach of any of his fiduciary duties to the Company;
(C) the Executive's willful and continual neglect or failure to
discharge his duties; (D) the Executive's regularly failing or
refusing to follow policies or directives reasonably established by
the Board of Directors; or (E) the Executive's violation of Section
11 of this Agreement.  The determination of whether the Executive
has breached the provisions of (B), (C) or (D) above shall be made
by a majority of the Board of Directors, other than the Executive
if he is then a director.  No such determination shall be made
unless Executive has received ninety (90) days prior written notice
thereof and an opportunity to cure.

            10.   Disability.  In the event that the Executive is
unable to perform his duties hereunder by reason of illness or
incapacity for an aggregate of more than six (6) consecutive months
or more than nine (9) months in any twelve (12) month period, the
Company shall have the right to reduce the Executive's total
compensation to fifty percent (50%) of the base salary amount for
the balance of the contract term.  Such reduction shall be
determined by a majority of the members of the Board of Directors
(other than the Executive if he is then a director) after the
requisite period of disability, such reduction to be effective
thirty (30) days after written notice to the Executive of the
adoption of such resolution.  If the Executive shall resume his
duties within thirty (30) days after receipt of such notice of
reduction and continue to perform such duties for four (4)
consecutive weeks thereafter, this Agreement shall continue in full
force and effect without any reduction in salary and other
benefits, and the notice of reduction shall be considered null and
void and of no effect.

            11.   Non-Competition, Non-Interference and
NonDisclosure.  The Executive acknowledges that: (a) the business
of retail sales and service of consumer appliances, electronic
products and other household goods as currently conducted and as
conducted from time to time throughout the term of this Agreement
(collectively, the "Business") is conducted by and is proposed to
be conducted by the Company throughout New Jersey, the greater New
York metropolitan area, southern Connecticut, and eastern
Pennsylvania (the "Company's Market"); (b) the Business involves
the identification and development of new products and markets; (c)
the Company has developed trade secrets and confidential
information concerning the Business; and (d) this Agreement is
essential to protect the Business.  In order to induce the Company
to enter into this Management Agreement, the Executive covenants
and agrees that:

                  (a)   For a period commencing on the date of this
Agreement and ending on the date which is the earlier of (x) one
year following the date of termination this Agreement, including
any oral or written extensions hereof, or (y) the date, if any, in
which the Executive is terminated without cause ("Restricted
Period"), neither the Executive nor any entity of which 10% or more
of the beneficial ownership is held by the Executive or a related
family member ("Controlled Entity") will, anywhere in the Company's
Market, directly or indirectly own, manage, operate, control,
invest or acquire an interest in, or otherwise engage or
participate in, whether as a proprietor, partner, stockholder,
director, officer, "Key Employee" (defined herein to include any
person who is employed in a management, executive, supervisory,
marketing or sales capacity for another person), joint venturer,
investor or other participant, any business which competes with the
Business ("Competitive Business") without regard to (i) whether the
Competitive Business has its office, manufacturing or other
business facilities within or without the Company's Market, (ii)
whether any of the activities of the Executive referred to above
occur or are performed within or without the Company's Market, or
(iii) whether the Executive resides, or reports to an office,
within or without the Company's Market, except that it shall not be
a violation of this provision for the Executive to invest in the
stock of any company which is traded un a national stock exchange
or over-the-counter provided that the Executive does not acquire
more than two percent of the issued and outstanding stock of any
such company.

                  (b)   During the Restricted period, neither the
Executive nor any Controlled Entity will directly or indirectly
solicit, induce or influence any customer, supplier, lender, lessor
or any other person which has a business relationship with the
Company, or which had on the date of this Agreement, a business
relationship with the Company, to discontinue or reduce the extent
of such relationship with the Company.

                  (c)   During the Restricted Period, neither the
Executive nor any Controlled Party will (i) directly or indirectly
recruit, solicit or otherwise induce or influence any employee or
sales agent of the Company or any of its affiliates to discontinue
such employment or agency relationship with the Company, or (ii)
employ or seek to employ, or cause or permit any Competitive
Business to employ or seek to employ for any Competitive Business,
any person who is then (or was at any time within six months prior
to the date the Executive or the Competitive Business employs or
seeks to employ such person) employed by the Company.  Nothing
herein shall prevent the Executive from providing a letter of
recommendation to an Employee with respect to a future employment
opportunity.

                  (d)   During the Restricted Period and
thereafter, neither the Executive nor any Controlled Entity will
directly or indirectly disclose to anyone, or use or otherwise
exploit for the Executive's or any Controlled Entity's own benefit
or for the benefit of anyone other than the Company, any
confidential information, including, without limitation, any
confidential "knowhow," trade secrets, customer lists, details of
client or consultant contracts, pricing policies, operational
methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans and new personnel
acquisition plans of the Company related to the Business or any
portion or phase of any scientific or technical information,
design, process, procedure, formula or improvement of the Company
that is valuable and not generally known to the competitors of the
Company whether or not in written or tangible form (hereinafter
referred to as "Confidential Information") .  The term
"Confidential Information" does not include, and there shall be no
obligation hereunder with respect to, (a) information that becomes
generally available to the public other than as a result of a
disclosure by the Executive or a Controlled Entity or any agent or
the representative thereof and (b) general business methods
applicable to a sales business including, but not limited to,
pricing policies, operational methods and marketing concepts. 
Neither the Executive nor any Controlled Entity shall have any
obligation hereunder to keep confidential any Confidential
Information to the extent disclosure any thereof is required by
law, or determined in good faith by the Executive to be necessary
or appropriate to comply with any legal or regulatory order,
regulation or requirement; provided, however, that in the event
disclosure is required by law, the Executive or the Controlled
Entity concerned shall provide the Company with prompt notice of
such requirement so that the Company may seek an appropriate
protective order.

                  (e)   In the event of a termination of this
agreement pursuant to the provisions of either Sections 9(b) (ii)
or (iii) or a reduction of compensation pursuant to Section 10
hereof, the covenants and agreements contained in this Section 11
shall survive, shall continue thereafter, and shall not expire
unless and except as expressly set forth in such Sections.

                  (f)   The parties to this Agreement agree that
(a) if either the Executive or any Controlled Entity breaches any
provision of this Section 11, the damage to the Company will be
substantial, although difficult to ascertain, and money damages
will not afford the Company an adequate remedy, and (b) if either
the Executive or any Controlled Entity is in breach of this
Section 11, or threatens a breach of this Section 11, the Company
shall be entitled, in addition to all other rights and remedies
as may be available to the Company at law or in equity, to (i)
specific performance, (ii) injunctive and other equitable relief
to prevent or restrain a breach of this Section 11 and (iii)
require the breaching party to account for and pay over to the
Company all compensation, profits, monies, accruals or other
benefits derived received by such party as the result of any
transactions constituting a breach hereof.

            12.   Entire Agreement.  This Agreement constitutes
the full and complete understanding and agreement of the
Executive and the Company respecting the subject matter hereof,
and supersedes all prior understandings and agreements, oral or
written, express or implied.  This Agreement may not be modified
or amended orally, only by an agreement in writing, signed by the
party against whom enforcement of any waiver, change, modification,
extension or discharge is sought.

            13.   Headings.  The section headings of this Agreement
are for convenience of reference only and are not to be considered
in the interpretation of the terms and conditions of this
Agreement.

            14.   Notices.  Any notice required or permitted to
be given under this Agreement shall be in writing and shall be
deemed to have been given when sent by Certified Mail, postage
prepaid, addressed as follows:


      If to the Company:      Tops Appliance City, Inc.
                              45 Brunswick Avenue
                              Edison, New Jersey 08818
                              Attention: Robert Gross
                                  Chief Executive Officer


      with a copy to:         Allen Ravin, Esq.
                              Greenbaum, Rowe, Smith, Ravin,
                              Davis & Himmel
                              P.O.  Box 5600
                              Woodbridge, New Jersey 07095

      If to the Executive, at his personal residence.

            Any party may change the persons and address to which
notices such change to the other party in the manner provided
herein for giving notice.

            15.   Waiver of Breach.  No waiver by either party of
any conditions or of the breach by the other of any term or
covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed or
construed as a further or continuing waiver of any such condition
or breach or a waiver of any other condition, or of the breach of
any other term or covenant set forth in this Agreement.  Moreover,
the failure of either party to exercise any right hereunder shall
not bar the later exercise thereof.

            16.   Binding Nature; Assignment.  This Agreement
shall inure to the benefit of and be binding on the parties and
their respective successors in interest, and shall not be
assignable by either party without the written consent of the
other; provided, however, that nothing in this Section shall
preclude the Executive from designating a beneficiary to receive
any benefit payable hereunder upon his death.



            IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written.

                                    EXECUTIVE

                                    /s/ Thomas Zambelli
                                    ____________________________  
                                    THOMAS ZAMBELLI



                                    TOPS APPLIANCE CITY, INC.


                                    By:/s/Robert Gross
                                       _________________________
                                       Robert Gross
                                       Chief Executive Officer

<PAGE>

                               EXHIBIT 10.31

          SECOND ADDENDUM TO MANAGEMENT AGREEMENT ("AGREEMENT")
          DATED JANUARY 1, 1989 BETWEEN PHILIP MORRIS SCHMIDT
          ("EXECUTIVE") AND TOPS APPLIANCE CITY, L.P. ("COMPANY")


     WHEREAS, Tops Appliance City, L.P., predecessor to Tops
Appliance city, Inc. and Philip Morris Schmidt entered into the
referenced Agreement, as modified by an Addendum dated January 1,
1992 (executed on January 16, 1992), and

     WHEREAS, Company and Executive desire to amend such
Agreement,

     In consideration of One ($1.00) Dollar and other good and
valuable consideration, it is agreed as follows:

     1.   Executive's title shall be "President" of the Company.

     2.   The term of the Agreement is extended to December 31,
1997, subject to earlier termination pursuant to the provisions
of paragraph 10 hereof.

     3.   Executive's base compensation for the year 1997 shall
be Two Hundred Fifty Thousand and No/00 ($250,000.00) Dollars,
plus a bonus based upon the Company achieving a financial goal
for the year 1997 of earnings before interest and taxes, as may
be established by the Chief Executive Officer and/or Board of
Directors.

     4.   Executive's bonus shall be based upon the same
percentage of the executive management bonus pool as currently
enjoyed.

     5.   Executive shall receive an automobile allowance for the
leasing or purchasing of an automobile during 1997 in the amount
of Fifteen Thousand No/100 ($15,000.00) Dollars.

     6.   Paragraph 8.2 of the Agreement is deleted.

     7.   Executive shall be entitled to an aggregate of twenty
(20) paid non-working days inclusive of vacation, sick days,
personal days and days in compensation for working holidays.

     8.   Paragraph 10 of the Agreement is deleted in its
entirety, except that during the term of this Agreement,
Executive shall not directly or indirectly engage in or
participate in any business which competes with the Business of
the Company or is a supplier to the Company.

     9.   In the event of non-renewal of this Agreement,
Executive shall be entitled to six (6) month's base pay as and
for severance compensation.

    10.   In the event (a) there is a transfer of more than 50%
of the voting securities of the Company, whether in one or a
series of transactions, (b) a sale of substantially all of its
assets or (c) the Company admits a new Limited Partner, other
than as a result of a directive of or agreement with a regulatory
agency, where the transferee, purchaser or partner, as the case
may be, is not affiliated with the Company or any of its
partners, and such party elects to terminate the Executive's
employment hereunder, without cause, the Company shall pay to the
Executive an amount equal to one (1) year's Base Salary.

    11.   To the extent of any inconsistency between the
Agreement, the  First Addendum and this Addendum, the provisions
of this Addendum shall control.

    12.   This agreement is binding on the successors and assigns
of the parties hereto.

     IN WITNESS WHEREOF, the parties have set their hands and
seals this 1st day of December, 1996.

                                   TOPS APPLIANCE CITY, L.P.
                                   TOPS APPLIANCE CITY, INC.

/s/Philip Morris Schmidt            /s/Robert Gross
_________________________        By:_____________________________
Philip Morris Schmidt               Robert Gross


<PAGE>
                                         EXHIBIT 22

                               SUBSIDIARIES OF THE REGISTRANT



Tops Appliance Realty, Inc.
Tops Appliance City of New York, Inc.
<PAGE>                                   EXHIBIT 24

                               CONSENT OF INDEPENDENT AUDITORS


We consent to the incorporation by reference in the Registration
Statements:
(1) Form S-8 No. 33-54180, pertaining to the Section 401(k) Salary
Savings
Plan and Trust of TOPS Appliance City, Inc.; and (2) Form S-8 No.
33-68508,
pertaining to the TOPS Appliance City, Inc. Employee Stock Purchase
Plan, of
our report dated April 15, 1997 with respect to the consolidated
financial
statements and schedule of TOPS Appliance City, Inc. included in 
the Annual Report (Form 10-K),
for the year ended December 31, 1996.




Metro Park, New Jersey
April 15, 1997