<PAGE>   1
                                  United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549
                                    FORM 10-K
(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the Fiscal Year ended:   January 30, 1999
                                       OR
[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)

For the transition period from __________________ to ________________.

                           Commission File No. 0-21597
                               MAZEL STORES, INC.
                        --------------------------------
             (Exact name of Registrant as specified in its charter)

               Ohio                                      34-1830097
-------------------------------                      -------------------
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                       Identification No.)
                                31000 Aurora Road
                                Solon, Ohio 44139
                     --------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)
                                  440-248-5200
                                ----------------
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
Title of each class                   Name of each exchange on which registered
-------------------                   -----------------------------------------
        None                                      Not Applicable

           Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, No par Value
                           --------------------------
                                (Title of Class)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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.
            [X] Yes         [ ] No

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

         The aggregate market value of voting stock held by nonaffiliates of the
Registrant was approximately $53,987,000 at April 1, 1999. The number of common
shares outstanding at April 1, 1999 was 9,141,798.


<PAGE>   2



                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the registrant's definitive Proxy Statement to be mailed to
stockholders in connection with the registrant's 1999 Annual Meeting of
Stockholders are incorporated by reference into Part III, Items 10-13.

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                                TABLE OF CONTENTS


                                     PART I
<TABLE>
<CAPTION>

                                                                                          Page
                                                                                          ----
<S>            <C>                                                                      <C>
Item 1.           Business                                                                  4
Item 2.           Properties                                                               11
Item 3.           Legal Proceedings                                                        11
Item 4.           Submission of Matters to a Vote of Security Holders                      12

                                     PART II

Item 5.           Market for the Registrant's Common Stock and Related Stockholder
                    Matters                                                                14
Item 6.           Selected Financial Data                                                  14
Item 7.           Management's Discussion and Analysis of Financial Condition and
                    Results of Operations                                                  16
Item 8.           Financial Statements and Supplementary Data                              24
Item 9.           Changes and Disagreements with Accountants on Accounting and
                    Financial Disclosures                                                  24

                                    PART III

Item 10.          Directors and Executive Officers of the Company                          25
Item 11.          Executive Compensation                                                   25
Item 12.          Security Ownership of Certain Beneficial Owners and Management           25
Item 13.          Certain Relationships and Related Transactions                           25

                                     PART IV

Item 14.          Exhibits, Financial Statement Schedules, and Reports on Form 8-K         26

</TABLE>



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                                     PART I

ITEM 1. BUSINESS

GENERAL

         The Company consists of two complementary operations: (i) a major
regional closeout retail business; and (ii) the nation's largest closeout
wholesale business. The Company sells quality, value-oriented consumer products
at a broad range of price points offered at a substantial discount to the
original retail or wholesale price. The Company's merchandise primarily consists
of new, frequently brand-name products that are available to the Company for a
variety of reasons, including overstock positions of a manufacturer, wholesaler
or retailer; the discontinuance of merchandise due to a change in style, color,
shape or repackaging; a decrease in demand for a product through traditional
channels; or the termination of business by a manufacturer, wholesaler or
retailer. At January 30, 1999 (1998 fiscal year-end), the Company operated a
chain of 47 closeout retail stores, including 25 in New York (seven of which are
in Manhattan), 18 in New Jersey and two each in Pennsylvania and Connecticut.
The Company had fiscal 1998 sales of $237.1 million, including retail sales of
$156.2 million and wholesale sales, net of intercompany sales, of $80.9 million.

         The Company was founded in 1975 as a wholesaler of closeout
merchandise. Management's business strategy has expanded from a primary focus on
wholesale operations to an emphasis on growth of its Odd Job stores, the initial
12 of which were acquired in 1995. The Company's goal is to establish itself as
the leading closeout retailer in its Northeast and MidAtlantic markets.

         The Company believes that the combination of its wholesale operations
and the Odd Job retail operations have resulted in significant synergies that
have enabled the Company to expand its retail operations and increase sales and
net income of both the wholesale and retail operations.

INDUSTRY OVERVIEW

         Closeout retailing is one of the fastest-growing segments of the
retailing industry in the United States. Closeout retailers and wholesalers
provide a valuable service to manufacturers by purchasing excess products.
Closeout merchandisers also take advantage of generally lower prices in the
off-season by buying and warehousing seasonal merchandise for future sale. As a
result of acquiring merchandise at a deeper discount, closeout merchandisers can
offer merchandise at prices significantly lower than those offered by
traditional retailers and wholesalers.

         The closeout sector has benefited from several recent industry trends.
Consolidation in the retail industry and the expansion of just-in-time inventory
requirements have generally had the effect of shifting inventory risk from
retailers to manufacturers. In addition, a trend toward

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shorter product cycles, particularly in the consumer goods sector, has increased
the frequency of new product and new product packaging introductions. These
factors have increased the reliance of manufacturers on closeout retailers and
wholesalers like the Company, who frequently are able to purchase larger
quantities of excess inventory and successfully control the distribution of such
goods.

RETAIL OPERATIONS

         General. The Company's chain of 47 retail stores operating under the
names "Odd Job" and "Odd Job Trading" are located in New York (25, including
seven in Manhattan), New Jersey (18), Connecticut (2) and Pennsylvania (2). Odd
Job opened its first store in 1974. The retail stores generated sales in fiscal
1998 of $156.2 million.

         Expansion Plans. The Company plans to expand upon stores currently
operating by opening new stores in the Northeast and Mid-Atlantic markets, which
are serviceable from the Company's South Plainfield, New Jersey warehouse and
distribution facility and other storage facilities used on an as needed basis.
Stores may be opened in other geographic areas if favorable conditions exist.
The Company anticipates opening or acquiring 16 to 18 new stores through the end
of fiscal 1999. In addition, the Company may add stores through the acquisition
of other closeout businesses if favorable opportunities are presented.

         In choosing specific sites for expansion, the Company considers
numerous factors including demographics, traffic patterns, location of
competitors and overall retail activity. The Company's standards for evaluating
these factors are flexible and are based on the nature of the market. The
Company will seek to expand in both suburban and urban markets. Due to its
broader selection of closeout merchandise than other closeout retailers, the
Company seeks areas with a concentration of middle and upper middle-class
households for its suburban store locations.

         Merchandising and Marketing. The Company believes that its customers
are attracted to its stores principally because of the availability of a large
assortment of quality consumer items, which are frequently brand-name, at
attractive prices. The Company offers certain general categories of merchandise
on a continual basis, although specific lines, products and manufacturers change
frequently. Inventories depend primarily on the types of merchandise which the
Company is able to acquire at any given time. The Company believes that this
changing variety of merchandise from one day to the next results in customers
shopping at the stores more frequently than they might otherwise. The Company
refers to such frequent shoppers as "treasure hunters" due to their regular
visits to the Odd Job stores in an effort to seek out bargains. The Company's
stores offer substantial savings on housewares, stationery, books, party
supplies, health and beauty aids, food, toys, hardware, giftware, electronics
and garden supplies. Brands carried by the Company's stores may include, at any
given time, Black and Decker, Enesco, Hershey, Keebler, Mars, Mattel, Mikasa,
Newell/Rubbermaid and Sony. In addition, the Company has increased the breadth
and quality of its seasonal merchandise and has sought to promote these items
through in-store displays designed around specific holidays.



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         The Company believes its large selection of brand-name products often
attracts a customer seeking a particular brand or product, who will check the
Company's stores in search of the lowest price before resorting to a large
discount store where the customer assumes the product is in stock. In addition,
Odd Job stores carry, on a consistent basis, selected goods manufactured to the
Company's specifications. The Company is able to negotiate competitive prices
with manufacturers of these products, many of whom are located outside the
United States. Such products provide cost-effective merchandise on certain items
for which continuity is important to customers.

         Management believes the presentation of its merchandise is critical to
communicating value and quality to its customers. The Company uses a variety of
adaptable merchandising fixtures and displays, including mobile racks that allow
flexibility in the presentation of a merchandise mix which changes daily. Some
merchandise is displayed in its initial packaging, stacked floor-to-ceiling. A
message board appears in every store, indicating both new arrivals and coming
merchandise, in an effort to appeal to the "treasure hunters." The Company
relies on attractive exterior signage and in-store merchandising as its primary
form of advertising. The Company's advertising program uses mailers and in-paper
circulars, on a periodic basis, to promote up to 40 value-oriented, easily
recognizable items. Additionally, the Company utilizes targeted radio spots
several times per year to promote the Odd Job name and concept. As a result of
its merchandise mix, visual merchandising methods and high-traffic store
locations, the retail operation's average inventory turn rate is approximately
four times per year, which the Company believes is greater than the average for
other major closeout retailers.

         Purchasing. The Company believes that the primary factor contributing
to the success of its business is its ability to locate and take advantage of
opportunities to purchase large quantities of quality brand-name merchandise at
prices which allow the Company to resell the merchandise at prices that are
substantially below traditional retail prices. Its retail operations maintain a
buying staff in Columbus, Ohio and New York City. The retail purchasing staff
works closely with the wholesale operation to identify the most attractive
closeout purchasing opportunities available. Synergies created through the
combined buying power and expertise of the retail and wholesale purchasing
staffs enable the Company to identify and purchase large quantities of quality,
brand-name closeout merchandise and then sell the merchandise through its retail
stores, its wholesale distribution channels or both. The Company believes the
combined wholesale and retail operations enable the retail buying staff to
broaden the scope and the quantities of quality merchandise that it purchases
and offer better value to its customers. The Company's retail buyers purchase
merchandise from approximately 2,000 suppliers throughout the world.


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         Store Operations. Each store is staffed with section managers who have
primary responsibility for helping customers and monitoring sales floor
inventory in several merchandise categories. Section managers continually
replenish the shelves, communicate information as to fast-selling items to store
managers and identify slow-moving products for clearance. Each store has between
six and 14 check-out stations and provides sales personnel for customer
assistance. Sales are primarily for cash, although personal checks and bank
credit cards are accepted. The Company's Manhattan stores offer free daily
storage, which enables customers to pick up items purchased during the day on
their way home from work, and UPS shipment for larger purchases. The Odd Job
stores have seven day-a-week operations and have extended weekend hours. The
Company has created an infrastructure consisting of Regional Vice Presidents and
Regional Managers responsible for the operations of approximately 12 stores,
reporting directly to the Senior Vice President-Store Operations.

         Store Locations. The Company's 40 suburban stores are located in strip
shopping centers. The seven Manhattan stores are located in high-traffic urban
corridors (e.g. near Grand Central Station, Rockefeller Center, Port Authority,
Wall Street, Penn Station, Empire State Building and Union Square) which provide
access to large numbers of commuters. As a result, the Manhattan stores generate
higher sales volumes during the work week. The Company's suburban stores are
generally near a major highway or thoroughfare, making them easily accessible to
customers. The suburban stores generate higher sales volumes during the
weekends. The Company attempts to tailor its merchandising and marketing
strategies to respond to the differences in its urban and suburban stores. The
Company's stores range in size from 6,500 to 25,000 square feet. On average,
approximately 60% of the area of each store represents selling space. All of the
stores are located in leased facilities.

         In selecting its new store locations, the Company seeks suitable
existing structures which it can refurbish in a manner consistent with its
merchandising concept. This strategy, which typically requires minimal leasehold
improvements by the Company, enables the Company to open stores in new locations
generally within six to twelve weeks following occupancy of the space.

         Warehousing and Distribution. Merchandise is distributed to the retail
stores from the Company's 450,000 square foot South Plainfield, New Jersey
warehouse and distribution facility. The Company relocated to this facility in
the third quarter of 1998 from its former 253,000 square foot facility located
in Englewood, New Jersey. The Company believes the South Plainfield facility has
the capacity to support its longer-term retail expansion plans. The Company also
utilizes public warehouse space to store inventory on an as needed basis.

         Substantially all of the Company's retail inventory is shipped directly
from suppliers to the Company's South Plainfield, New Jersey warehouse and
distribution facility or the Company's Solon, Ohio warehouse and distribution
facility. Since the South Plainfield, New Jersey warehouse and distribution
facility maintains back-up inventory and provides delivery several times per
week to each store, in-store inventory requirements are reduced and the Company
is able to operate with smaller stores. Off-hours stocking and off-site storage
space are

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utilized to support the store's inventory turnover, particularly during the busy
fourth quarter. The majority of the Company's inventory is delivered to the
stores by a contract carrier, as well as by direct vendor shipments.

         Distribution to the stores is controlled by the Company's product
allocator, buyers and senior management. The Company's merchandise is
distributed based on variables such as store volume and certain demographic and
physical characteristics of each store. Each store has monthly budgeted
inventory levels based on its projected sales and available storage. Stores
receive shipments of merchandise several times per week based on budgeted
inventory requirements and direct communications between store managers, product
allocator and the Company's buyers and senior management.

WHOLESALE OPERATIONS

         General. The Company is the nation's largest wholesaler of closeout
merchandise, with fiscal 1998 sales of $80.9 million, excluding intercompany
sales to Odd Job. The Company's wholesale operations purchase and resell many of
the same lines of merchandise sold through the Company's retail operations. The
wholesale operations acquire closeout merchandise at prices substantially below
traditional wholesale prices and sell such merchandise through a variety of
channels. In general, the Company does not have long-term or exclusive
arrangements with any manufacturer or supplier for the wholesale distribution of
specified products. Rather, the Company's wholesale inventory, like its retail
inventory, consists primarily of merchandise obtained through specific purchase
opportunities.

         Purchasing. The Company's wholesale buyers purchase merchandise from
more than 1,000 suppliers throughout the world and continually seek
opportunities created by manufacturers and other closeout circumstances such as
packaging changes, the overstock inventory of wholesalers and retailers,
buybacks, receiverships, bankruptcies and financially distressed businesses, as
well as other sources. The Company's experience and expertise in buying
merchandise from such suppliers has enabled it to develop relationships with
many manufacturers and wholesalers who offer some or all of their closeout
merchandise to the Company prior to attempting to dispose of it through other
channels. By selling their inventories to the Company, suppliers can reduce
warehouse expenses and avoid the sale of products at concessionary prices
through their normal distribution channels. In addition to closeout merchandise
purchased from suppliers, approximately 35% of the Company's wholesale purchases
for fiscal years 1997 and 1998 consisted of selected items manufactured to the
Company's specifications by domestic and foreign suppliers.

         The Company's primary sources of merchandise are manufacturers, barter
agents, distributors and retailers. The Company accommodates the needs of its
vendors by (i) making rapid purchasing decisions; (ii) taking immediate delivery
of larger quantities of closeout merchandise than many of its competitors; (iii)
purchasing the entire product assortment offered by a particular vendor; (iv)
minimizing disruption to the supplier's ordinary distribution

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channels; and (v) making prompt and reliable payments. The Company believes that
its flexibility and expertise has established the Company as a preferred
customer of many key sources of closeout merchandise. In many cases, the Company
has developed valuable sources from which it obtains certain lines of
merchandise on a continuing basis.

         The Company's wholesale and retail buyers work closely together to
identify attractive purchasing opportunities and negotiate and complete the
purchase of significant quantities of closeout consumer items. The Company
believes the expertise and resources of the retail operations have enabled the
wholesale operations to broaden the categories and quantities of merchandise
offered to its customers.

         Sales and Marketing. The Company maintains a direct sales force of 11
people in its wholesale operations and also sells its merchandise through 9
independent representatives. In addition to a showroom at its Solon, Ohio
facility, the Company maintains showrooms in New York City, Columbus, Chicago,
Boston and Philadelphia. The Company sells to over 2,000 wholesale customers,
which include a wide range of major regional and national retailers as well as
smaller retailers and other wholesalers and distributors. Sales to the Company's
single largest wholesale customer accounted for approximately 7.4% of total
sales in fiscal 1998 and 14.9% of total sales in fiscal 1997. No other customer
accounted for more than 10% of total sales in either fiscal year.

         Warehousing and Distribution. The Company conducts its wholesale
operations primarily from a 740,000 square foot leased warehouse and
distribution facility in Solon, Ohio. In addition, the Company leases space at
public warehouses on an as needed basis. Generally, the Company does not have a
prospective customer prior to purchasing merchandise, although in some cases a
customer willing to purchase part or all of the goods will be found immediately
prior to, or soon after, a purchase. In the latter case, the Company attempts,
whenever possible, to drop ship the goods directly to the customer from the
point of purchase. In other cases, the Company ships the merchandise to its
warehouse and distribution facility via back haulers and common carriers. For
fiscal 1998, approximately 70.3% of the Company's wholesale sales were of
merchandise shipped through its warehouse and distribution facility, with the
remainder drop shipped directly to customers.

VALUE CITY JOINT VENTURE

         On August 3, 1997, the Company commenced operation of VCM, Ltd.
("VCM"), a 50 percent owned joint venture with Value City Department Stores. VCM
operates the toy, sporting goods, and health and beauty care departments in the
Value City department store chain. The Company coordinates merchandise
purchasing on behalf of VCM, some of which is sourced from the Company's
wholesale segment. The Company's initial investment in VCM was $9,637,000. In
addition to its 50 percent share of VCM's net profit or loss, the Company
receives a management fee equal to three percent of sales.


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MANAGEMENT INFORMATION SYSTEMS

         The Company's retail and wholesale operations are supported by an IBM
AS400-based computer system. The system utilizes proprietary software which
allows the Company to monitor and integrate its distribution, order entry,
showroom, product management, purchasing, inventory control, shipping, and
accounts receivable systems. The Company uses a vendor purchased general ledger
accounting system. The Company has successfully installed radio frequency
equipment in its wholesale warehouse and showrooms to expedite order processing.

         The Company has installed point-of-sale (POS) systems in all suburban
retail locations to fully capture store transactions and provide updated data to
its purchasing staff and other corporate personnel, and for transfer into the
Company's accounting, merchandising and distribution systems. The addition of
POS scanning in all of its retail stores is scheduled to be completed in fiscal
1999.

COMPETITION

         In its retail operations, the Company competes with other closeout
retailers, discount stores, deep discount drugstore chains, supermarkets and
other value-oriented specialty retailers. In its wholesale operations, the
Company competes with numerous national and regional wholesalers, retailers,
jobbers, dealers and others which sell many of the items sold by the Company.
Certain of these competitors have substantially greater financial resources and
wider distribution capabilities than those of the Company, and competition is
often intense. Competition is based primarily on product selection and
availability, price and customer service. The Company believes that by virtue of
its ability to make purchases of closeout, bulk and surplus items, its prices
compare favorably with those of its competitors.

         In addition to competition in the sale of merchandise at wholesale and
retail, the Company encounters significant competition in locating and obtaining
closeout, overproduction and similar merchandise for its operations. There is
increasing competition for the purchase of such merchandise. However, the
Company believes that it will have sufficient sources to enable it to continue
purchasing such merchandise in the future. Furthermore, the Company believes
that as the number and capacity of its stores grow, its ability to take
advantage of purchase opportunities of larger quantities of merchandise at
favorable prices will increase accordingly.

TRADEMARKS

         The Company has registered "Odd Job" as a trademark in the United
States. The Company has registered or has filed registration applications for
certain other trademarks and trade names.


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EMPLOYEES

         At January 30, 1999, the Company had 1,376 employees. Retail employees
included 1,118 in direct retail and warehouse operations, and 91 in support
operations. Wholesale employees included 152 in direct wholesale, support and
warehouse operations. Corporate employees included 15 in general management and
administrative positions. The Company considers its relationship with its
employees to be good. Approximately 73 of the Company's Solon, Ohio hourly
warehouse employees are subject to a five year collective bargaining agreement
expiring December 31, 1999. The warehouse employees in South Plainfield, New
Jersey, approximately 93 individuals, are subject to a 42 month collective
bargaining agreement expiring January 28, 2001. The Company is not a party to
any other labor agreements.


ITEM 2. PROPERTIES

         The Company leases its offices, warehouse and distribution facility in
Solon, Ohio from a corporation in which certain of the Company's executive
officers are minority owners. The Company currently occupies approximately
740,000 square feet at such facility, of which approximately 22,000 square feet
is used as office and showroom space and the remainder of which is used as
warehouse space for the Company's wholesale operations. The lease for the
facility, as amended, expires December 31, 2008. The Company leases a 475,000
square foot facility in South Plainfield, New Jersey from a limited liability
company which certain of the Company's executive officers are minority owners.
Housing the Company's retail operations, approximately 450,000 square feet of
the facility is utilized by the warehouse and distribution operation, with the
remainder used for office space. The lease for the facility expires November 30,
2010. In addition, the Company leases space at several public warehouses
depending on its needs at a particular point in time. The Company believes its
facilities will be generally adequate for its retail and wholesale operational
requirements for the foreseeable future.

         The Company leases its offices and showrooms in Columbus, Ohio, Chicago
and New York City. The Chicago lease expires on October 21, 2002 and the New
York City lease expires on December 31, 2001.

         The Company leases all of its stores. Store leases generally provide
for fixed monthly rental payments, plus the payment, in most cases, of real
estate taxes, utilities, liability insurance and common area maintenance. In
certain locations, the leases provide formulas requiring the payment of a
percentage of sales as additional rent. Such payments are generally only
required when sales reach a specified level. The typical store lease is for an
initial term of five or ten years, with certain leases having renewal options.




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ITEM 3. LEGAL PROCEEDINGS

         The U.S. Consumer Product Safety Commission has sent notice to the
Company that a certain product distributed by the Company known as "Teddy
Precious Indian Girl and Boy" (Teddy Bears") were banned hazardous substances
and were then under recall. Pursuant to the notice, the Company immediately
ceased distribution and notified all purchasers of Teddy Bears of the recall. A
Federal Grand Jury is investigating the circumstances surrounding the purchase,
sale and distribution of the Teddy Bears.

         On October 8, 1998, the Company filed a complaint in the U.S. District
Court for the Northern District of Ohio against DanDee International, Inc.
("DanDee") for breach of contract and fraud. Mazel Stores, Inc. v. DanDee
International, Inc., et al., 1:98 CV 2308, U.S. District Court-N.D. Ohio.
Pursuant to the purchase of the Teddy Bears referenced in the above paragraph,
DanDee has filed a counterclaim against Mazel claiming that the sale of the
Teddy Bears within the United States by Mazel breached Mazel's purchase
agreement with DanDee. 

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         The Company is subject to various other legal proceedings and claims
that arise in the ordinary course of business. The Company believes that the
amount of any ultimate liability with respect to all actions, including those
described above, will not have a material adverse effect on the Company's
liquidity or results of operations.


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

         None

ITEM 4A. DIRECTORS AND EXECUTIVE OFFICERS

         The executive officers and directors of the Company and their ages as
of April 1, 1999 are as follows:

       NAME                   AGE      POSITION
       ----                   ---      --------

Reuven D. Dessler             51       Chairman of the Board and Chief
                                         Executive Officer
Brady Churches                40       President, Director
Jacob Koval                   51       Executive Vice President-Wholesale,
                                         Director
Jerry Sommers                 48       Executive Vice President-Retail,
                                         Director
Susan Atkinson                48       Senior Vice President - Chief Financial
                                         Officer and Treasurer
Charles Bilezikian            62       Director
Phillip Cohen                 80       Director
Robert Horne                  40       Director
Ned L. Sherwood               49       Director
Marc H. Morgenstern           49       Secretary


         Reuven Dessler is Chairman of the Board and Chief Executive Officer of
the Company since November 1996. Mr. Dessler co-founded the Company in 1975 and
served as its President until November 1996.

         Brady Churches has served as the Company's President and a Director
since November 1996 and served as President - Retail from August 1995 until such
date. From 1978 until April 1995, Mr. Churches held various senior management
positions at Consolidated Stores, Inc., a large national retailer, including
President from August 1993 until April 1995.

         Jacob Koval is Executive Vice President - Wholesale and a Director of
the Company. Mr. Koval co-founded the Company in 1975.


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         Jerry Sommers has served as Executive Vice President - Retail of the
Company since November 1995, and as a Director since November 1996. From 1984
through April 1995, Mr. Sommers held various senior management positions with
Consolidated Stores, including Executive Vice President from August 1993 until
April 1995.

         Susan Atkinson has served as Senior Vice President-Chief Financial
Officer and Treasurer of the Company since January 1993. From August 1988
through December, 1992, she was employed by Harris Wholesale Company, a
pharmaceutical wholesaler, serving as Chief Financial Officer and Vice President
- Finance/Administration from January 1991 until
December 1992.

         Charles Bilezikian, has served as Director since January, 1997. Mr.
Bilezikian has been the President of Christmas Tree Shops, Inc., a specialty New
England retailer, since its formation in 1971.

         Phillip Cohen has served as a Director of the Company since November
1996. From 1947 to his retirement in 1989, Mr. Cohen was Chairman and CEO of
Wisconsin Toy and Novelty, Inc., a Midwest distributor of closeout toy and
novelty items.

         Robert Horne has served as a Director of the Company since November
1996. Mr. Horne has been a principal of ZS Fund L.P., a Company engaged in
making private investments, for over five years. Prior to joining ZS Fund L.P.,
Mr. Horne was employed by Salomon Brothers, Inc. as a Vice President in its
Mergers and Acquisitions Group.

         Ned L. Sherwood has served as a Director of the Company since November
1996. Mr. Sherwood has been a principal and President of ZS Fund L.P. for more
than five years. Mr. Sherwood is currently a member of the Boards of Directors
of Kaye Group, Inc. and Market Facts, Inc.

         Marc H. Morgenstern has served as Secretary of the Company since
November 1996. He has been a principal in the Cleveland, Ohio law firm of Kahn,
Kleinman, Yanowitz & Arnson Co., L.P.A. serving as President of the firm and
Chairman of its Executive Committee, for more than five years.


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                                     PART II

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

         The Company's Common Stock trades on The Nasdaq Stock Market(sm) under
the symbol "MAZL". The following table shows the quarterly high and low closing
sale prices of the Common Stock since the Company began trading publicly on
November 21, 1996, at an IPO price of $16.00 per share.

<TABLE>
<CAPTION>
                                         Fiscal Year 1998              Fiscal Year 1997
                                         ----------------              ----------------
          Fiscal Quarter                High           Low             High         Low
          --------------                ----           ---             ----         ---

         <S>                        <C>            <C>             <C>          <C>   
            First Quarter              20.250         13.875          28.250       12.625
            Second Quarter             17.500         15.750          20.250       11.750
            Third Quarter              15.625          8.875          25.250       19.000
            Fourth Quarter             16.000          8.375          19.250       12.500
</TABLE>

         As of April 2, 1999, the Company believes that there were 1,500
beneficial owners of the Company's Common Stock.

DIVIDEND POLICY

         The Company has never declared or paid any cash dividends on its Common
Stock. The Company currently intends to retain its future earnings, to finance
the expansion of its business and for general corporate purpose and currently
does not anticipate paying any cash dividends on its Common Stock in the
foreseeable future. Any payment of cash dividends in the future will be at the
discretion of the Board of Directors and will depend upon, among other things,
the Company's earnings, financial condition, capital requirements, level of
indebtedness, contractual restrictions with respect to the payment of dividends
and other factors that the Company's Board of Directors deems relevant. In
addition, the Company's credit facility prohibits declaring or paying any
dividends without the prior written consent of the Lender.

ITEM 6.  SELECTED FINANCIAL DATA

         The selected historical financial data of the Company presented under
the captions Statement of Operations Data and Balance Sheet Data as of January
31, 1995 and 1996 (fiscal years 1994 and 1995, respectively) have been derived
from the financial statements of Mazel Company L.P. ("Partnership"), which
during 1996 was restructured as the Company. The financial statements of the
Partnership include the operations of the Peddlers Mart retail store from
December 9, 1994 and the Odd Job operations from December 7, 1995. The selected
historical financial data presented under the captions Statement of Operations
Data and Balance Sheet Data for the fiscal years ended January 25, 1997, January
31, 1998 and January 30, 1999 (fiscal years 1996, 1997 and 1998, respectively)
were derived from the financial statements of the Company. The selected data
referred to above should be read in conjunction with the financial statements
and related notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this filing.


                                       15

<PAGE>   16


<TABLE>
<CAPTION>


                                                               Fiscal Year
                                ----------------------------------------------------------------------------
                                                                       Pro Forma,
                                                                      As Adjusted
                                  1994         1995       1996            1996(1)        1997         1998
                                  ----         ----       ----            -------        ----         ----

<S>                           <C>         <C>         <C>            <C>            <C>          <C>
STATEMENT OF OPERATIONS DATA (DOLLARS IN THOUSANDS):
Net sales                       $76,254      $98,106    $179,877        $179,877       $208,326     $237,134
Cost of sales                    55,183       70,208     121,382         121,382        136,446      152,792
                                -------      -------     -------         -------        -------      -------
Gross profit                     21,071       27,898      58,495          58,495         71,880       84,342
SG & A expense                   15,317       20,753      45,802          44,567         55,839       71,643
Special charges                     -          2,203       4,243             -              -          1,387
                                -------      -------     -------         -------        -------      -------
Operating profit                  5,754        4,942       8,450          13,928         16,041       11,312
Interest expense (income)           894        1,265       2,254            (206)           943        2,062
Other expense (income)              (26)         559         (34)           (34)            662          627
                                -------      -------     -------         -------        -------      -------
Income before
  income taxes                    4,886        3,118       6,230          14,168         14,436        8,623
Income tax expense
  (benefit)                          71           19      (1,987)          5,667          5,919        3,450
                                -------      -------     -------         -------        -------      -------
Net income                      $ 4,815      $ 3,099     $ 8,217         $ 8,501        $ 8,517      $ 5,173
                                =======      =======     =======         =======        =======      =======

Net income per share (basic)                                              $ 0.93         $ 0.93       $ 0.57
Net income per share (diluted)                                            $ 0.91         $ 0.92       $ 0.57
Shares outstanding (basic)                                             9,170,100      9,162,100    9,141,600
Shares outstanding (diluted)                                           9,386,000      9,265,400    9,146,800

BALANCE SHEET DATA (DOLLARS IN THOUSANDS):
Working capital                 $17,439      $26,193     $44,473         $44,473        $55,862      $53,960
Total assets                     31,129       56,634      86,361          86,644        113,884      130,995
Long term debt                   10,649       27,382          70              70         19,781       24,002
Total liabilities                19,567       43,764      21,599          21,599         41,045       52,965
Stockholders' equity and
  partners' capital              11,562       12,870      64,762          65,045         72,839       78,030

SELECTED RETAIL OPERATIONS DATA:
Number of stores                     12           13          23                             32          47
Total square footage            164,386      188,361     336,905                        466,716     689,750
Total store sales growth          12.8%         6.3%       40.2%                          34.4%       38.0%
Comparable store net sales         7.9%        -4.4%       15.8%                           1.8%        0.1%
Avg.  net sales per gross sq. ft.  $344         $319        $354                           $294        $258
                                                                                                       

</TABLE>


(1)      Pro forma as adjusted data gives effect to the Company's IPO as of the
         beginning of all period presented, and includes the combination of: (i)
         the Mazel wholesale operations and (ii) the Odd Job retail operations,
         as if the combination of entities had occurred at the beginning of all
         periods presented. Pro forma as adjusted data excludes certain
         non-recurring charges, and gives effect to the use of proceeds
         resulting from the Company's IPO, as well as certain adjustments to
         compensation expense.



                                       16

<PAGE>   17



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


     OVERVIEW

     The Company consists of two complementary operations: (i) a major regional
     closeout retail business; and (ii) the nation's largest closeout wholesale
     business. The Company sells quality, value-oriented consumer products at a
     broad range of price points offered at a substantial discount to the
     original retail or wholesale price. The Company's merchandise primarily
     consists of new, frequently brand-name, products that are available to the
     Company for a variety of reasons, including overstock positions of a
     manufacturer, wholesaler or retailer; the discontinuance of merchandise due
     to a change in style, color, shape or repackaging; a decrease in demand for
     a product through traditional channels; or the termination of business by a
     manufacturer, wholesaler or retailer.

     The Company was founded in 1975 as a wholesaler of closeout merchandise. In
     fiscal 1996, the Company purchased the established Odd Job retail business,
     consisting of 12 retail stores and a warehouse and distribution facility,
     from an affiliate of ZS Fund L.P., a shareholder of the Company. The
     Company's business strategy has expanded from a primary focus on wholesale
     operations to an emphasis on the growth of its Odd Job retail operations.
     At the end of fiscal 1998, the Company operated 47 closeout retail stores,
     including 25 in New York (seven of which are in Manhattan), 18 in New
     Jersey, and two each in Pennsylvania and Connecticut.

     The growth of the Company's retail operations, coupled with the fiscal 1997
     investment in VCM, Ltd., has transformed the Company into a "retailer",
     with quarterly sales and earnings patterns similar to other retail
     operations. The Company's Odd Job expansion plan is to open 16 to 18 stores
     in fiscal 1999 and 18 to 20 stores in fiscal 2000.





                                       17

<PAGE>   18



MANAGEMENT'S ANALYSIS OF RESULTS OF OPERATIONS

The results of operations set forth below describe the Company's retail and
wholesale segments and the Company's combined corporate structure.

<TABLE>
<CAPTION>

                                              (Dollars in thousands, except per share data)

                                               Fiscal 1998                  Fiscal 1997                   Fiscal 1996
                                          ---------------------        ----------------------          --------------------
                                                     Percent of                    Percent of                    Percent of
                                          Amount      Net Sales        Amount       Net Sales          Amount     Net Sales
                                          ------      ---------        ------       ---------          ------     ---------
<S>                                   <C>           <C>            <C>            <C>              <C>          <C>
Net sales
   Retail                               $156,242        65.89%        $113,205        54.34%          $84,202       46.81%
   Wholesale                              80,892        34.11%          95,121        45.66%           95,675       53.19%
                                         -------        -----           ------        -----           -------       ------
                                         237,134       100.00%         208,326       100.00%          179,877      100.00%
Gross profit
   Retail                                 61,153        39.14%          44,608        39.40%           32,903       39.08%
   Wholesale                              23,189        28.67%          27,272        28.67%           25,592       26.75%
                                          ------        -----           ------        -----            ------       ------
                                          84,342        35.57%          71,880        34.50%           58,495       32.52%
Segment operating profit
   Retail                                  3,618         2.31%           5,393         4.76%            3,817        4.53%
   Wholesale                               9,600        11.87%          12,821        13.48%           14,015       14.65%
   Corporate                                (519)       -0.22%          (2,173)       -1.04%           (5,139)      -2.86%
   Special charges                        (1,387)       -0.58%             -             -             (4,243)      -2.36%
                                          -------       ------          ------        ------           -------      ------
                                          11,312         4.77%          16,041         7.70%            8,450        4.70%

Interest expense, net                      2,062         0.87%             943         0.45%            2,254        1.25%
Other (income) expense                       627         0.26%             662         0.32%              (34)      -0.02%
Income tax expense (benefit)               3,450         1.46%           5,919         2.84%           (1,987)      -1.10%
                                           -----         ----            -----         -----           -------      ------
Net income
   As reported                           $ 5,173         2.18%         $ 8,517         4.09%          $ 8,217        4.57%
   Pro forma as adjusted                                                                              $ 8,501        4.73%
Net income per share
   As reported
      Basic                              $  0.57                       $  0.93
      Diluted                            $  0.57                       $  0.92
   Pro forma as adjusted
      Basic                                                                                           $  0.93
      Diluted                                                                                         $  0.91

</TABLE>




                                       18

<PAGE>   19



RETAIL SEGMENT

Fiscal 1998 Results versus Fiscal 1997

Net sales were $156.2 million for fiscal 1998 (52 weeks), compared to $113.2
million for fiscal 1997 (53 weeks), an increase of $43.0 million, or 38.0%.
Comparable store (23 stores for fiscal 1998) net sales increased approximately
0.1% on a 52 week basis. The increase in net sales was attributable to the full
year impact of the nine stores opened during fiscal 1997, as well as the partial
year sales from the 15 stores opened during fiscal 1998.

Gross profit was $61.2 million for fiscal 1998, compared to $44.6 million for
fiscal 1997, an increase of $16.6 million, or 37.1%. Gross margin decreased to
39.1% in fiscal 1998, from 39.4% in fiscal 1997, due to increased promotional
activity and a reduction in commission and allowances.

Selling, general and administrative expense was $57.5 million for fiscal 1998,
compared to $39.2 million for fiscal 1997, an increase of $18.3 million, or
46.8%. The increase resulted primarily from a $14.6 million increase in store
level and distribution costs, $3.6 million of which was attributable to the full
year operation of nine stores opened in fiscal 1997, plus expenses relating to
the 15 stores opened during fiscal 1998. Additionally, warehouse costs increased
$1.6 million, due to costs and inherent start-up inefficiencies resulting from
the third quarter 1998 relocation of the Company's retail distribution facility
to South Plainfield, New Jersey. Store level expenses include preopening costs,
which are expensed as incurred, and totaled $1.9 million in fiscal 1998,
compared to $1.0 million in fiscal 1997. Also included in store level costs is
advertising expense, which increased $1.4 million as the Company expanded its
advertising program during fiscal 1998, to include a targeted radio campaign.
Administrative support expenses increased $2.2 million reflecting the impact of
salary, fringe benefits and personnel costs for key individuals added to the
back office and field support infrastructure. Selling, general and
administrative expense, as a percentage of net sales, increased to 36.8% in
fiscal 1998, from 34.6% in fiscal 1997.

Operating profit decreased to $3.6 million for fiscal 1998, from $5.4 million
for fiscal 1997. As a percentage of net sales, operating profit decreased to
2.3% from 4.8%. This decrease was primarily due to the factors described above.

Fiscal 1997 Results versus Fiscal 1996

Net sales were $113.2 million for fiscal 1997, compared to $84.2 million for
fiscal 1996, an increase of $29.0 million, or 34.4%. Comparable store (13 stores
for fiscal 1997) net sales increased approximately 3.3%. Adjusting for the
additional week in fiscal 1997, comparable store net sales increased 1.8%. The
increase in net sales was attributable to the full year impact of the 10 stores
opened during fiscal 1996, as well as the partial year sales from the nine
stores opened during fiscal 1997.

                                       19

<PAGE>   20




Gross profit was $44.6 million for fiscal 1997, compared to $32.9 million for
fiscal 1996, an increase of $11.7 million, or 35.6%. Gross margin increased to
39.4% in fiscal 1997, from 39.1% in fiscal 1996. Better store controls resulting
in reduced inventory shrink results together with promotions and rebate income,
all reducing cost of sales, were largely responsible for the increase.

Selling, general and administrative expense was $39.2 million for fiscal 1997,
compared to $29.1 million for fiscal 1996, an increase of $10.1 million, or
34.8%. The increase resulted primarily from a $9.2 million increase in store
level and warehouse and distribution expenses, reflecting the addition of nine
stores during fiscal 1997 and the full year effect of the 10 stores opened in
fiscal 1996. Store preopening costs, which are expensed as incurred, totaled
$1.0 million in fiscal 1997, compared to $850,000 in fiscal 1996. The Company
also expanded its advertising program during fiscal 1997, resulting in $1.1
million of additional expenses. In addition, administrative support expenses
increased $650,000. Selling, general and administrative expense, as a percentage
of net sales, increased slightly to 34.6% in fiscal 1997, from 34.5% in fiscal
1996.

Operating profit increased to $5.4 million for fiscal 1997, from $3.8 million
for fiscal 1996. As a percentage of net sales, operating profit increased to
4.8% from 4.5%. This increase was primarily due to the factors described above.


WHOLESALE SEGMENT

Fiscal 1998 Results versus Fiscal 1997

Net sales, excluding intercompany sales, for fiscal 1998 were $80.9 million,
compared to $95.1 million for fiscal 1997, a decrease of $14.2 million, or
15.0%. The decline was primarily attributable to a decrease in sales to a large
wholesale customer which was acquired early in 1998. The Company expects further
declines in sales to this customer. 

Gross profit was $23.2 million for fiscal 1998, compared to $27.3 million for
fiscal 1997, a decrease of $4.1 million, or 15.0%. Gross margin was unchanged at
28.7%.

Selling, general and administrative expense was $13.6 million for fiscal 1998,
compared to $14.5 million for fiscal 1997, a decrease of $862,000, or 6.0%. The
decrease in selling, general and administrative expense was attributable to
lower levels of payroll and bonus payments, sales commissions, and product sales
program development costs, partially offset by higher warehouse rent expense
attributable to the 100,000 square foot addition

                                       20

<PAGE>   21



completed in third quarter 1997. As a percentage of net sales, selling, general
and administrative expense increased to 16.8% in fiscal 1998, from 15.2% in
fiscal 1997.

Wholesale operating profit was $9.6 million for fiscal 1998, compared to $12.8
million for fiscal 1997, a decrease of $3.2 million, or 25.1%. As a percentage
of net sales, operating profit decreased to 11.9% in fiscal 1998, from 13.5% in
fiscal 1997, due to the factors described above.

Fiscal 1997 Results versus Fiscal 1996

Net sales, excluding intercompany sales, for fiscal 1997 of $95.1 million were
virtually unchanged from fiscal 1996 despite a 15% decline in sales to the
Company's largest wholesale customer.

Gross profit was $27.3 million for fiscal 1997, compared to $25.6 million for
fiscal 1996, an increase of $1.7 million, or 6.6%. Gross margin increased to
28.7% in fiscal 1997, from 26.8% in fiscal 1996. The increase in gross margin
was attributable to a higher percentage of stock sales which typically present a
higher gross margin.

Selling, general and administrative expense was $14.5 million for fiscal 1997,
compared to $11.6 million for fiscal 1997, an increase of $2.9 million, or
24.8%. The increase in selling, general and administrative expense was
attributable to higher warehouse expenses, including rent and costs related to
the repackaging of products, additional sales commission expenses, and higher
administrative costs primarily related to the development of new product sales
programs. As a percentage of net sales, selling, general and administrative
expense increased to 15.2% in fiscal 1997, from 12.1% in fiscal 1996.

Wholesale operating profit was $12.8 million for fiscal 1997, compared to $14.0
million for fiscal 1996, a decrease of $1.2 million, or 8.5%. As a percentage of
net sales, operating profit decreased to 13.5% in fiscal 1997, from 14.6% in
fiscal 1996, due to the factors described above.


CORPORATE EXPENSES AND SPECIAL CHARGES

Fiscal 1998 Results versus Fiscal 1997

Corporate expenses consist of the cost of senior management and shared
administrative resources which are utilized by both segments of the business.
Corporate expense also includes management fee revenue received from VCM, Ltd.,
the 50% owned joint venture with Value City Department Stores, which commenced
operation on August 3, 1997. Corporate expense for fiscal 1998 was $0.5 million,
compared to $2.2 million for fiscal 1997. The decrease was due to 

                                       21

<PAGE>   22



higher VCM management fee revenue, which increased to $3.1 million for fiscal
1998, from $1.8 million in fiscal 1997, and lower expense levels, particularly
in bonus expense. As a result, net corporate expense decreased as a percentage
of total Company sales to 0.2% in fiscal 1998 from 1.0% in fiscal 1997.

Special charges for fiscal 1998 totaling $1.4 million resulted from the
relocation of the Company's retail warehouse and distribution facility to South
Plainfield, New Jersey. The charges reflect the estimated costs of exiting the
former retail warehouse located in Englewood, New Jersey, and related long-lived
asset write-offs and employee severance.

Interest expense was $2.1 million for fiscal 1998, compared to $943,000 for
fiscal 1997, primarily reflecting higher average borrowings in support of retail
store growth and management information system initiatives. Other expense was
$627,000 for fiscal 1998, compared to $662,000 for fiscal 1997. Other expense
includes the Company's 50% share in the net loss of VCM, Ltd., $477,000 for
fiscal 1998 and $758,000 for fiscal 1997, and for fiscal 1998, a $150,000 charge
relating to contingent obligations for retail operations disposed of in 1995.

Fiscal 1997 Results  versus Fiscal 1996

Corporate expense was $2.2 million for fiscal 1997, compared to $5.1 million for
fiscal 1996. The decrease was attributable to salary reductions effected at the
time of the initial public offering ("IPO"), offset by the addition of expenses
attributed to being a public company. In addition, fiscal 1997 corporate expense
is net of $1.8 million management fee revenue from VCM, Ltd. As a result, net
corporate expense decreased as a percentage of total Company sales to 1.0% in
fiscal 1997 from 2.9% in fiscal 1996.

Special charges for fiscal 1996 totaling $4.2 million resulted from compensation
and other charges arising at the time of the Company's IPO. There were no
special charges for fiscal 1997.

Interest expense decreased $1.3 million to $943,000 for fiscal 1997, compared to
$2.3 million for fiscal 1996, primarily reflecting lower post-IPO net
borrowings. Other expense includes a $758,000 net loss which reflects the
Company's 50% interest in VCM, Ltd. for fiscal 1997.


LIQUIDITY AND CAPITAL RESOURCES

The Company's primary requirements for capital consist of inventory purchases,
expenditures related to new store openings, existing store remodeling, MIS
initiatives, and other working capital needs. The Company takes advantage of
closeout and other special situation purchasing opportunities which frequently
result in large volume purchases, and as a consequence, its cash requirements
are not constant or predictable during the year and can be affected by the
timing and size of its purchases. The Company's high level of 

                                       22

<PAGE>   23



committed credit allows it to take immediate advantage of special
situation purchasing opportunities. Having such credit availability provides the
Company with a competitive advantage measured against many of its competitors.

The Company's growth has been financed through cash flow from operations,
borrowings under its revolving credit facility and the extension of trade
credit. In March 1998, the Company entered into a new $60.0 million credit
facility. This facility is comprised of a $50.0 million revolving line of credit
and a $10.0 million term loan. The facility expires on November 15, 2002. The
term loan requires 20 consecutive quarterly payments of $500,000 plus accrued
interest commencing May 1, 1998. Borrowings under the facility bear interest, at
the Company's option, at either the banks' prime rate less 50 basis points or
LIBOR plus a spread. Availability on the facility is the lesser of the total
credit commitment or a borrowing base calculation based upon the Company's
accounts receivable and inventories. The facility contains restrictive covenants
which require minimum net worth levels, maintenance of certain financial ratios
and limitations on capital expenditures and investments. At January 30, 1999,
the Company had availability of $23.2 million.

For fiscal year 1998, cash provided by consolidated operating activities was
$5.6 million, compared to cash used in fiscal 1997 of $9.1 million. A decrease
in accounts receivable and an increase in accounts payable, partially offset by
increases in inventory and other assets, comprised the majority of the cash
provided for fiscal 1998. Increases in trade receivables, inventories, and a
decrease in trade payables comprised the majority of cash used for fiscal 1997.
Cash used in investing activities decreased to $9.4 million in fiscal 1998, from
$17.4 million in fiscal 1997. Fiscal 1998 investing activities primarily
comprised capital expenditures of $8.1 million and the investment in lease
acquisitions of $1.3 million. Cash generated by financing activities of $4.2
million for fiscal 1998 was the result of additional borrowings from the
Company's credit facility. 

Total assets increased 15.0% to $131.0 million at fiscal year end 1998, from
$113.9 million at year end 1997. Working capital decreased to $54.0 million in
fiscal 1998, from $55.9 million at the prior year end, primarily as a result of
increases in accounts payable and current portion of long term debt, and a
decrease in accounts receivable, partially offset by an increase in inventory.
The current ratio was 2.9 to 1 at year end 1998, from 3.9 to 1 at year end 1997.
Net fixed assets were $17.3 million at the end of fiscal 1998, an increase of
$6.4 million over fiscal year end 1997, primarily related to capital
expenditures for fixtures, equipment, and leasehold improvements related to new
store openings, improvements to the new retail warehouse and distribution
facility, and investment in management information systems initiatives. 

The Company currently anticipates opening new stores in each of the next few
years. In addition to new store openings, the Company may increase the number of
stores it operates

                                       23

<PAGE>   24



through acquisitions. Management believes that from time to time, acquisition
opportunities will arise. Possible acquisitions will vary in size and the
Company will consider larger acquisitions that could be material to the Company.
In order to finance any such possible acquisitions, the Company may use cash
flow from operations, may borrow additional amounts under its revolving credit
facility, may seek to obtain additional debt or equity financing or may use its
equity securities as consideration. The availability and attractiveness of any
outside sources of financing will depend on a number of factors, some of which
will relate to the financial condition and performance of the Company, and some
of which will be beyond the Company's control, such as prevailing interest rates
and general economic conditions.


SEASONALITY

The Company, with the growth of its retail operations and the retail orientation
of the VCM, Ltd. joint venture, has shifted its business mix more toward retail.
This shift will also effect the net sales and earnings pattern of the Company,
with a greater weighting toward the second half of the fiscal year.


YEAR 2000 DISCLOSURE

The Company has completed a review of its internal management information
systems regarding Year 2000 issues. The Company's planned systems initiatives
will resolve the majority of the issues as current systems are converted to Year
2000 compliant systems. For other legacy systems, the Company has developed an
action plan and begun implementing remedial measures. All internal management
information systems are expected to be in Year 2000 compliance by mid-fiscal
1999. The Company estimates that costs associated with making internal
management information systems Year 2000 compliant will not be material, and
thus will not have a material impact on the Company's financial position,
results of operations, and cash flows. The Company also relies, directly and
indirectly, on external systems of business enterprises such as suppliers,
creditors, and financial organizations, both domestic and international. Many of
these external business partners have not, as of yet, advised the Company as to
the status of their Year 2000 program. The Company's operations could also be
effected if its external business partners do not successfully implement Year
2000 compliant systems.






                                       24

<PAGE>   25


NEW ACCOUNTING PRONOUNCEMENTS

In June 1997, the FASB issued SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information. SFAS No. 131 requires public business
enterprises to report certain information about operating segments, as well as
certain information about products and services, geographic areas in which an
enterprise operates, and any major customers. SFAS No. 131 is effective for
fiscal years beginning after December 15, 1997. The Company adopted SFAS No. 131
for the fiscal 1998 financial statements.

In February 1998, the FASB issued SFAS No. 132, Employers' Disclosure about
Pensions and Other Postretirement Benefits. SFAS No. 132 is effective for fiscal
years beginning after December 15, 1997. In June, 1998, the FASB issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
is effective for fiscal years beginning after June 15, 1999. SFAS No. 132 and
SFAS No. 133 are currently not applicable to the Company.

In April 1998, the AICPA Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5, Reporting on the Costs of Start-up Activities.
SOP 98-5 requires that the cost of start-up activities be expensed as incurred.
SOP 98-5 is effective for fiscal years beginning after December 15, 1998. The
Company has not fully analyzed the effect of SOP 98-5, but does not believe it
will have a significant impact on its consolidated financial statements.


FORWARD LOOKING STATEMENTS

Forward looking statements in this report are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such forward
looking statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from those projected. Such risks and
uncertainties include, but are not limited to: the successful implementation and
timing of the Company's retail expansion plans; the ability to purchase quality
closeout merchandise at prices that allow the Company to maintain or exceed
expected margins on sales; the effect of comparable store sales and the
disproportionate impact caused by individual buying transactions; any
unanticipated problems at the Company's distribution facilities or in
transportation of merchandise in general; and the operating and financial
results of the Value City joint venture. Please refer to the Company's
subsequent SEC filings under the Securities Exchange Act of 1934, as amended,
for further information.


                                       25

<PAGE>   26



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

       Reference is made to Part IV, Item 14 of this Form 10-K for the
information required by Item 8.

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

       None.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

       The information required by this Item (other than the information
regarding executive officers set forth at the end of Item 4(a) of Part I of this
Form 10-K) will be contained in the Company's definitive Proxy Statement for its
1999 Annual Meeting of Shareholders, and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

       The information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1999 Annual Meeting of Shareholders, and is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

       The information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1999 Annual Meeting of Shareholders, and is
incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       The information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1999 Annual Meeting of Shareholders, and is
incorporated herein by reference.


                                       26

<PAGE>   27



                                     PART IV

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

       (a) (1)    Financial Statements:

                  Independent Auditors' Report

                  Consolidated Balance Sheets as of January 30, 1999 and
                  January 31, 1998.

                  Consolidated Statements of Operations for the Years Ended
                  January 30, 1999, January 31, 1998 and January 25, 1997.

                  Consolidated Statements of Stockholders' Equity and Partners'
                  Capital for the Years Ended January 30, 1999, January 31,
                  1998 and January 25, 1997.

                  Consolidated Statements of Cash Flows for the Years Ended
                  January 30, 1999, January 31, 1998 and January 25, 1997.

                  Notes to Consolidated Financial Statements

       (a) (2)    Financial Statement Schedules:

                  All schedules are omitted because they are not applicable or
                  because required information is included in the financial
                  statements or notes thereto.

       (a) (3)    Exhibits
                  See the Index to Exhibits included on page 47.

       (b)        Reports on Form 8-K
                  None


                                       27

<PAGE>   28




                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
Mazel Stores, Inc.:

We have audited the consolidated financial statements of Mazel Stores, Inc. and
subsidiaries as listed in the accompanying index. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Mazel Stores, Inc.
and subsidiaries as of January 30, 1999 and January 31, 1998 and the results of
their operations and their cash flows for each of the years in the three-year
period ended January 30, 1999, in conformity with generally accepted accounting
principles.

                                             KPMG LLP



Cleveland, Ohio
March 16, 1999


                                       28

<PAGE>   29



                               MAZEL STORES, INC.
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                      January 30,               January 31,
                                                                         1999                      1998
                                                                      -----------               -----------
ASSETS

<S>                                                                 <C>                        <C> 
Current assets
     Cash and cash equivalents                                        $  1,668                     1,240
     Accounts receivable-trade, less allowance for doubtful
       accounts of $195 in both periods                                 12,819                    15,507
     Notes and other receivables                                           223                       334
     Inventories                                                        60,789                    53,676
     Prepaid expenses                                                    3,140                     1,194
     Deferred income taxes (note 8)                                      3,389                     2,837
                                                                       -------                   -------
            Total current assets                                        82,028                    74,788

Equipment, furniture, and leasehold improvements, net (note 4)          17,268                    10,889
Other assets                                                             4,205                     3,183
Investment in VCM, Ltd. (note 16)                                        8,401                     8,879
Notes and accounts receivable-related parties (notes 6 and 16)           6,953                     3,952
Goodwill, net                                                           10,388                    10,701
Deferred income taxes (note 8)                                           1,752                     1,492
                                                                       -------                   -------
                                                                      $130,995                   113,884
                                                                       =======                   =======

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
     Current portion of long-term debt (note 5)                       $  2,017                        17
     Accounts payable                                                   21,882                    14,362
     Accrued expenses                                                    3,432                     4,036
     Other current liabilities                                             737                       511
                                                                        ------                    ------
            Total current liabilities                                   28,068                    18,926
Revolving line of credit (note 5)                                       15,448                    19,716
Long-term debt, net of current portion (note 5)                          6,537                        48
Other liabilities                                                        2,912                     2,355
                                                                       -------                   -------
            Total liabilities                                           52,965                    41,045
Stockholders' equity
     Preferred stock, no par value; 2,000,000 shares authorized;
        no shares issued or outstanding                                    --                        --
     Common stock, no par value; 14,000,000 shares authorized;
        9,141,800 and 9,144,200 shares issued and
        outstanding, respectively                                       64,320                    64,302
     Retained earnings                                                  13,710                     8,537
                                                                       -------                   -------
            Total stockholders' equity                                  78,030                    72,839
Commitments and contingencies (note 9)                                 -------                   -------
                                                                      $130,995                   113,884
                                                                       =======                   =======
</TABLE>


           See accompanying notes to consolidated financial statements

                                       29

<PAGE>   30





                               MAZEL STORES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                              Fiscal Year Ended
                                                                 -----------------------------------------
                                                                 January 30,    January 31,    January 25,
                                                                    1999           1998            1997
                                                                 -----------    -----------    -----------
<S>                                                            <C>             <C>             <C>    
Net sales                                                         $237,134        208,326         179,877
Cost of sales                                                      152,792        136,446         121,382
                                                                   -------        -------         -------
      Gross profit                                                  84,342         71,880          58,495
Selling, general, and administrative expense                        71,643         55,839          45,802
Special charges (note 11)                                            1,387            -             4,243
                                                                   -------         ------          ------
      Operating profit                                              11,312         16,041           8,450
Other income (expense)
  Interest expense, net                                             (2,062)          (943)         (2,254)
  Other (notes 9 and 16)                                              (627)          (662)             34
                                                                   -------         ------          ------
      Income before income taxes                                     8,623         14,436           6,230
Income tax expense (benefit) (note 8)                                3,450          5,919          (1,987)
                                                                    ------         ------          -------
      Net income                                                   $ 5,173          8,517           8,217
                                                                    ======         ======          =======

Pro forma as adjusted data (unaudited) (note 13)
  Income before income taxes                                                                      $ 6,230
 Supplemental pro forma adjustments
   Management compensation adjustments                                                              1,235
   Special charges                                                                                  4,243
   Reduction in interest expense, net                                                               2,460
   Provision for income taxes                                                                      (5,667)
                                                                                                   ------
      Pro forma as adjusted net income                                                            $ 8,501
                                                                                                   ======

Net income per share (note 17)
   As reported - basic                                             $  0.57            0.93
   As reported - diluted                                           $  0.57            0.92
   Pro forma as adjusted (unaudited) - basic                                                      $  0.93
   Pro forma as adjusted (unaudited) - diluted                                                    $  0.91

Average shares outstanding - basic                               9,141,600       9,162,100      9,170,100
Average shares outstanding - diluted                             9,146,800       9,265,400      9,386,000

</TABLE>

           See accompanying notes to consolidated financial statements

                                       30

<PAGE>   31



                               MAZEL STORES, INC.
      Consolidated Statements of Stockholders' Equity and Partners' Capital
                             (Dollars in thousands)

<TABLE>
<CAPTION>


                                                                                                      Mazel
                                                                                     Retained        Company
                                                         Common        Common        Earnings       Partners'
                                                         Shares         Stock        (Deficit)       Capital          Total
                                                         ------         -----        ---------       -------          -----

<S>                                                  <C>            <C>             <C>             <C>            <C>    
Balance as of January 31, 1996                                         $    100        (204)          12,974         12,870

Capital contributed                                                         -            -             4,000          4,000
Net proceeds from issuance and sale of
 common shares in connection with the
 initial public offering, net of issuance
 costs of $1,038 (note 2)                               2,960,100        43,008          -               -           43,008
Stock issued pursuant to compensation
 arrangements                                             206,900         3,646          -               -            3,646
Conversion of debt                                        312,500         1,000          -               -            1,000
Partners' withdrawals                                        -              -            -            (7,979)        (7,979)
Net income                                                   -              -           224            7,993          8,217
Exchange of partnership equity for stock                5,690,600        16,988          -           (16,988)           -
                                                        ---------       -------      -------         --------        ------
Balance as of January 25, 1997                          9,170,100        64,742          20              -           64,762


Stock retirement                                          (25,900)         (440)         -               -             (440)
Net income                                                   -              -          8,517             -            8,517
                                                        ---------       -------      -------         --------        ------
Balance as of January 31, 1998                          9,144,200        64,302        8,537             -           72,839


Stock retirement                                           (3,800)           (4)         -               -               (4)
Sale of common shares                                       1,400            22          -               -               22
Net income                                                   -              -          5,173             -            5,173
                                                        ---------       -------      -------         --------        ------
Balance as of January 30, 1999                          9,141,800      $ 64,320       13,710             -           78,030
                                                        =========       =======      =======         ========        ======


</TABLE>




           See accompanying notes to consolidated financial statements

                                       31

<PAGE>   32




                               MAZEL STORES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                         Fiscal Year Ended
                                                                              -----------------------------------------
                                                                              January 30,    January 31,    January 25,
                                                                                 1999           1998           1997
                                                                              -----------    -----------    -----------
<S>                                                                         <C>              <C>            <C> 
Cash flows from operating activities:
  Net income                                                                   $ 5,173          8,517          8,217
  Adjustments to reconcile net income to net cash provided by
    (used in) operating activities
    Depreciation and amortization                                                2,514          1,519          1,075
    Deferred income taxes                                                         (812)           379         (2,304)
    Equity in net loss from VCM, Ltd.                                              478            758            -
    Noncash compensation expense                                                    -             -            2,928
    Noncash retirement of shareholder loans,
     stock options, and restricted stock                                            (4)          (440)           -
    Changes in operating assets and liabilities
     Accounts receivable - trade                                                 2,688         (4,942)        (2,077)
     Notes and other receivables                                                   111           (238)           256
     Inventories                                                                (7,113)       (13,277)       (10,735)
     Prepaid expenses                                                           (1,946)            (8)          (704)
     Other assets                                                               (3,178)        (1,633)           (31)
     Accounts payable                                                            7,520         (1,085)         3,627
     Accrued expenses and other liabilities                                        179          1,383            626
                                                                                 -----          -----          -----
             Net cash provided by (used in) operating activities                 5,610         (9,067)           878
                                                                                 -----          -----          -----
Cash flows from investing activities:
  Capital expenditures                                                          (8,155)        (5,832)        (3,923)
  Investment in VCM, Ltd.                                                           -          (9,637)           -
  Cash paid for lease acquisitions                                              (1,270)        (1,950)           -
  Cash paid for acquisitions, net of cash acquired                                  -             -             (266)
  Cash received at acquisition, net of cash expenses                                -             -               70
  Issuance of notes receivable - related parties                                    -             -           (2,936)
                                                                                 -----         ------          -----
             Net cash used in investing activities                              (9,425)       (17,419)        (7,055)
                                                                                 -----         ------          -----
Cash flows from financing activities:
  Repayment of debt                                                            (70,534)       (44,065)       (33,414)
  Net borrowings under credit facility                                          74,755         63,781          7,102
  Equity contributions                                                              -             -            4,000
  Partners' withdrawals                                                             -             -           (7,979)
  Net proceeds from sale of common shares                                           22            -           43,008
                                                                                 -----         ------         ------
             Net cash provided by financing activities                           4,243         19,716         12,717
                                                                                 -----         ------         ------
Net increase (decrease) in cash and cash equivalents                               428         (6,770)         6,540

Cash and cash equivalents at beginning of year                                   1,240          8,010          1,470
                                                                                 -----          -----         ------ 
Cash and cash equivalents at end of year                                       $ 1,668          1,240          8,010
                                                                               =======          =====         ======
Supplemental disclosures
  Cash paid for interest                                                       $ 2,085          1,883          2,503
  Cash paid for income taxes                                                   $ 4,892          5,441            278
                                                                                ======          =====         ======


</TABLE>

           See accompanying notes to consolidated financial statements

                                       32

<PAGE>   33



                               MAZEL STORES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      (A)  DESCRIPTION OF BUSINESS

           The Company consists of two complementary operations: (i) a major
           regional closeout retail business; and (ii) the nation's largest
           closeout wholesale business. The Company sells quality,
           value-oriented consumer products at a broad range of price points
           offered at a substantial discount to the original retail or wholesale
           price. The Company operates a chain of 47 closeout retail stores,
           including 25 in New York (seven of which are in Manhattan), 18 in New
           Jersey, and two each in Pennsylvania and Connecticut.

      (B)  ORGANIZATION

           The Company was incorporated as a wholly owned subsidiary of Mazel
           Company L.P. ("Partnership") in preparation for an initial public
           offering ("IPO") that occurred as of November 21, 1996 (see note 2).
           The Partnership was controlled by ZS Mazel L.P. ("ZS"), a limited
           partnership that was also the sole stockholder of Odd-Job Holdings,
           Inc. ("Holdings"), which owned all of the common stock of Odd-Job
           Acquisition Corp., which had been organized to acquire the retail
           business of a commonly owned group of corporations and partnerships
           (collectively, "Odd Job"). Immediately prior to the IPO, the
           Partnership then exercised its option to acquire the stock of
           Holdings from ZS for $1,400, which included the cancellation of a
           $1,350 note from ZS. Then the Partnership contributed all of its
           assets and liabilities to the Company in exchange for 5,690,600
           shares of common stock.

      (C)  BASIS OF PRESENTATION

           The consolidated financial statements of the Company give effect to
           the common control of the Partnership and Odd Job prior to the IPO
           and are comprised of the operations of the Partnership for all years
           presented including the Odd Job operations as of December 7, 1995.
           The transfer of assets and liabilities among these commonly
           controlled entities has been accounted for at historical cost in a
           manner similar to a pooling of interests.

                                       33

<PAGE>   34



      (D)  PRINCIPLES OF CONSOLIDATION

           The financial statements of the Company are presented on a
           consolidated basis to reflect the economic substance of activities
           arising from their common management and control. All significant
           intercompany balances and transactions have been eliminated in
           consolidation.

      (E)  CASH AND CASH EQUIVALENTS

           For financial reporting purposes, the Company considers all
           investments purchased with an original maturity of three months or
           less to be cash equivalents.

      (F)  INVENTORIES

           Wholesale inventories are valued at the lower of cost or market, with
           cost determined by the first-in, first-out (FIFO) method, and retail
           inventories are valued by use of the retail method.

      (G)  EQUIPMENT, FURNITURE, AND LEASEHOLD IMPROVEMENTS

           Depreciation and amortization are provided for the cost of
           depreciable properties at rates based on their estimated useful
           lives, which range from 3 to 10 years for furniture and equipment, or
           for leasehold improvements, extending to the life of the related
           lease. The rates so determined are applied on a straight-line basis.

      (H)  GOODWILL

              Goodwill represents the excess of cost over the fair value of net
              assets acquired and is amortized using the straight-line method
              over periods not exceeding 40 years. The Company assesses the
              recoverability of this intangible asset by determining whether the
              amortization of the goodwill balance over its remaining life can
              be recovered through undiscounted future operating cash flows of
              the acquired businesses.

              At January 30, 1999 and January 31, 1998, accumulated amortization
              amounted to $981 and $668, respectively.

       (I) INCOME TAXES

              The Company accounts for income taxes by the asset and liability
              method. Under this method, deferred tax assets and liabilities are
              recognized for the estimated future tax consequences attributable
              to differences between the financial statement carrying amounts of
              existing assets and liabilities and their respective tax bases and
              any operating loss, deduction, or tax credit carryforwards.
              Deferred tax assets and liabilities

                                       34

<PAGE>   35



              are measured using enacted tax rates expected to apply to taxable
              income in the years in which those temporary differences are
              expected to be recovered or settled. The effect on deferred tax
              assets and liabilities of a change in tax rates is recognized in
              the period that includes the enactment date.

              Income taxes attributable to the operations of the Partnership
              were obligations of individual partners and have not been
              reflected in the historical amounts shown in the accompanying
              consolidated financial statements. The consolidated financial
              statements as of January 25, 1997 reflect a one-time tax benefit
              of $1,489 arising from cumulative differences between the net book
              and tax basis of the Partnership's assets and liabilities upon
              their transfer to the Company.

       (J) ADVERTISING

              The Company expenses advertising costs as incurred. Advertising
              expense was $3,107, $1,724, and $598 for the fiscal years ended
              January 30, 1999, January 31, 1998, and January 25, 1997,
              respectively.

       (K) FISCAL YEAR

           The Company's fiscal year end is on the last Saturday in January
           nearest to January 31. Fiscal years 1998, 1997 and 1996 are defined
           as the fiscal years ended January 30, 1999, January 31, 1998 and
           January 25, 1997, respectively. Fiscal years 1998 and 1996 were 52
           week years, while fiscal 1997 was a 53 week year.

       (L) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

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

       (M)  RECLASSIFICATIONS

           Certain reclassifications were made to the Company's prior period
           financial statements to conform to the January 30, 1999 presentation.

(2)    INITIAL PUBLIC OFFERING

           On November 21, 1996, the Company completed its IPO of 2,574,000
       shares of common stock, no par value, at $16.00 per share, generating net
       proceeds of $37,398, after deducting

                                       35

<PAGE>   36



       underwriting fees and offering expenses. On December 13, 1996, the
       underwriters exercised their over-allotment option to purchase an
       additional 386,100 common shares, generating an additional $5,610 of cash
       proceeds to the Company. The net proceeds were used to repay $33,414 of
       indebtedness to a senior institutional lender and $4,000 of partners'
       notes and to fund $2,936 in tax loans and $900 in compensation buyouts to
       certain executives, with the remainder used for the Company's general
       corporate purposes.

(3)    ODD JOB ACQUISITION

           On December 7, 1995, the Odd Job retail operations were acquired by
       ZS Fund L.P. for $10,500 and an additional $1,013 in related expenses, in
       a transaction accounted for by the purchase accounting method. In
       connection with this acquisition, the Company recorded $8,801 of excess
       purchase price over the fair value of the net identifiable assets
       acquired.

(4)    EQUIPMENT, FURNITURE, AND LEASEHOLD IMPROVEMENTS

           The major classes of equipment, furniture, leasehold improvements,
       and construction in progress are summarized at cost, as follows:

<TABLE>
<CAPTION>

                                                                           January 30,          January 31,
                                                                              1999                  1998
                                                                           -----------          -----------

    <S>                                                                 <C>                     <C>  
       Furniture, fixtures, and equipment                                  $  11,003               7,295
       Leasehold improvements                                                  9,501               5,457
       Construction in progress                                                2,393               1,892
                                                                            --------              ------
                                                                              22,897              14,644
       Less accumulated depreciation and amortization                          5,629               3,755
                                                                            --------              ------
                                                                           $  17,268              10,889
                                                                            ========              ======
</TABLE>

(5)    LONG-TERM DEBT

       The Company's long-term debt as of January 30, 1999 and January 31, 1998
       consisted of the following:
<TABLE>
<CAPTION>
                                                                           January 30,          January 31,
                                                                              1999                 1998
                                                                           -----------          -----------
     <S>                                                                <C>                    <C>   
       Revolving credit facility                                           $ 15,448               19,716
       Other debt                                                             8,554                   65
       Less current portion                                                  (2,017)                 (17)
                                                                            -------               ------
                                                                           $ 21,985               19,764
                                                                            =======               ======

</TABLE>


                                       36

<PAGE>   37



       At January 31, 1998, the Company maintained a $40,000 revolving line of
       credit with its bank secured by substantially all of its assets and with
       a maturity date of April 30, 1999. On March 10, 1998, the Company entered
       into a $60,000 credit facility with a bank syndicate providing for a
       $50,000 revolving line of credit and a $10,000 term loan. The credit
       facility is secured by substantially all of the Company's assets and
       expires on November 15, 2002. The term loan requires 20 consecutive
       quarterly payments of $500 plus accrued interest, commencing May 1, 1998.
       Both loans call for interest at the banks' prime rate less 50 basis
       points or LIBOR plus a spread, and are subject to a commitment fee on the
       unused portion. Availability on the facilities is the lesser of the total
       credit commitment or a borrowing base calculation based primarily on the
       Company's accounts receivable and inventories. The facilities contain
       restrictive covenants which require minimum net worth levels, maintenance
       of certain financial ratios and limitations on capital expenditures and
       investments. At January 30, 1999 and January 31, 1998, the Company was in
       compliance with all restrictive covenants.

(6)    RELATED PARTY TRANSACTIONS

       As of January 30, 1999 and January 31, 1998, notes receivable consists
       primarily of $2,663 and $2,531, respectively, relating to tax loans
       provided to certain key executives related to stock issued in lieu of
       compensation reductions and to former shareholders of the Company in
       payment of indebtedness at the time of the Company's IPO. Such amounts
       include accrued interest of $257 and $99, respectively, at a rate of 6.6
       percent.

       During the year ended January 25, 1997, the Partnership paid its managing
       partner a management fee of $289, including a one-time management fee
       buyout of $200.

(7)    FINANCIAL INSTRUMENTS

       The carrying value of cash and cash equivalents, accounts receivable,
       notes and other receivables, accounts payable, and accrued expenses is
       considered to approximate their fair value due to their short maturity.
       The interest rates on debt instruments and notes receivable are
       considered to approximate market rates, and accordingly, their cost is
       reflective of fair value.




                                       37

<PAGE>   38



(8)    INCOME TAXES

       Income tax expense (benefit) attributable to income from operations is as
follows:

<TABLE>
<CAPTION>

                                                                        Fiscal Year Ended
                                                            ------------------------------------------
                                                            January 30,     January 31,    January 25,
                                                              1999             1998            1997
                                                            -----------     -----------    -----------
          <S>                                            <C>               <C>             <C>   
            Federal
              Current                                       $3,819            4,612            -
              Deferred                                        (772)             375          (1,975)
                                                            ------            -----          ------
                                                             3,047            4,987          (1,975)
            State and local
              Current                                          443              868             316
              Deferred                                         (40)              64            (328)
                                                            ------            -----          ------
                                                               403              932             (12)
                                                            ------            -----          ------
                                                            $3,450            5,919          (1,987)
                                                            ======            =====          ====== 
</TABLE>

       The income tax expense (benefit) differed from the "expected" amount
       computed by applying the U.S. federal tax rate of 35 percent to pretax
       income from operations as a result of the following:

<TABLE>
<CAPTION>

                                                                        Fiscal Year Ended
                                                            ------------------------------------------
                                                            January 30,     January 31,    January 25,
                                                              1999             1998            1997
                                                            -----------     -----------    -----------

         <S>                                             <C>               <C>             <C>  
           Computed "expected" tax expense                  $3,018            5,060           2,181
           Corporate state and local taxes,
              net of federal benefit                           262              606             159
           Non-recurring tax benefit                            -                -           (1,489)
           Partnership period earnings taxed
              to respective partners                            -                -           (2,797)
           Partnership local taxes                              -                -               72
           Other                                               170              253            (113)
                                                            ------            -----          -------
                                                            $3,450            5,919          (1,987)
                                                            ======            =====          =======


</TABLE>




                                       38

<PAGE>   39



       The tax effects of the temporary differences that give rise to
       significant portions of the deferred tax assets and liabilities are
       presented below:

<TABLE>
<CAPTION>

                                                                            January 30,   January 31,
                                                                               1999          1998
                                                                            -----------   -----------
           <S>                                                             <C>            <C>  
              Deferred tax assets
                  Current
                     Inventory capitalization and reserve                     $2,112         1,941
                     Accrued expenses                                            579           522
                     Net operating loss carryforward                              34            34
                     Other                                                       664           340
                                                                               -----         -----
                                                                               3,389         2,837
                  Noncurrent
                     Equipment, furniture, and leasehold
                         improvements basis differences                        1,472         1,356
                     Accrued lease obligations                                 1,165           966
                                                                               -----         -----
                                                                               2,637         2,322
                                                                               -----         -----
                          Total gross deferred tax assets                      6,026         5,159

              Noncurrent deferred tax liabilities - goodwill                    (885)          (830)
                                                                              ------          -----

                             Net deferred tax asset                           $5,141          4,329
                                                                              ======          =====


</TABLE>

             A net operating loss of $84 from fiscal year ended January 31, 1996
             is available to offset future taxable income. The loss carryforward
             expires in 11 years.

             A valuation allowance is established to reduce the deferred tax
             asset if it is more likely than not that the related tax benefit
             will not be realized. In management's opinion, it is more likely
             that the tax benefits will be realized; consequently, no valuation
             allowance has been established as of January 30, 1999 and January
             31, 1998.


(9)    COMMITMENTS AND CONTINGENCIES

       (A)   LEASES

             The Company is obligated for office, warehouse, and retail space
             under operating lease agreements which expire at various dates
             through fiscal 2017. Some of these leases are subject to certain
             escalation clauses based upon real estate taxes and other occupancy
             expense, and several leases provide for additional rent based on a
             percentage of sales. Three of the lessors are organizations that
             certain executives of the Company have a minority ownership
             interest.


                                       39

<PAGE>   40



           At January 30, 1999, minimum annual rental commitments under
           noncancelable leases for the Company as a whole are as follows, for
           the fiscal year ending:

                         2000                                   $  15,046
                         2001                                      14,531
                         2002                                      13,793
                         2003                                      11,892
                         2004                                       9,973
                         Thereafter                                40,933
                                                                   ------
                                                                 $106,168
                                                                 ========

           Rent expense under all operating leases for the fiscal years ended
           January 30, 1999, January 31, 1998, and January 25, 1997 was $13,006,
           $9,311, and $7,199, respectively. These amounts include rent paid to
           a related party lessor of $1,967, $1,533, and $1,471, respectively.

           In conjunction with the Odd Job acquisition, a portion of the
           purchase price was assigned to leases based on the excess of the
           contractual lease payments over the estimated current market rentals
           in the amount of $1,583. This amount is shown with other liabilities
           and will be reduced as lease payments are made.

       (B) LETTERS OF CREDIT

           The $50,000 revolving line of credit includes a letter of credit
           facility totaling $15,000 for use in the normal operations of the
           business. At January 30, 1999 and January 31, 1998, the Company had
           outstanding letters of credit issued to various parties aggregating
           $5,370 and $3,083, respectively.

       (C) CONTINGENT SUBORDINATED NOTES

           The Company has two subordinated notes due to a former owner of a
           retail store acquired as part of the Odd Job acquisition, both of
           which mature on December 31, 2002. Payments are to be made annually
           to a maximum of $675 and $275, based on the store's distribution
           profits, as defined. No amounts have been paid or are payable on
           these notes through January 30, 1999.

       (D) LITIGATION

           At January 30, 1999, the Company was a party to certain lawsuits
           incurred in the normal course of business, none of which individually
           or in the aggregate is considered material by management in relation
           to the Company's consolidated financial position or results of
           operations.


                                       40

<PAGE>   41



       (E) RETAIL LEASE OBLIGATIONS

           In connection with the sale of the Ohio retail stores in October
           1995, the Company remains contingently liable for the retail store
           lease obligations in the event that the buyer should default on its
           lease payments. The lease obligations for the remaining fiscal years
           are as follows: 2000 $191; 2001 $81; 2002 $47. In 1998, the buyer
           ceased operation, therefore, the Company has recorded a charge of
           $150,000 representing expected future obligations related to the
           operation, net of amounts due from the buyer.

(10)   RETIREMENT AND SAVINGS PLAN (DOLLARS AS STATED)

           The Company maintains separate contributory savings plans, under
       Section 401(k) of the Internal Revenue Code, for its non-union and union
       employees who meet certain age and service requirements. In early fiscal
       1998, the Company amended its Section 401(k) plan covering non-union
       employees. The Company's contribution for the non-union plan is equal to
       25 percent of employee contributions up to three percent of employee
       compensation, with the Company's contributions vesting ratably over five
       years. The Company contribution to the union plan is equal to 25 percent
       of the contributions to an annual maximum of $300 per employee, and vests
       immediately. Contributions to these plans by the Company have not been
       material.

(11)   SPECIAL CHARGES

       Special charges for the fiscal year ended January 30, 1999 resulted from
       the relocation of the Company's retail warehouse and distribution
       facility to South Plainfield, New Jersey. The charges totaling $1,387
       reflect the estimated costs of exiting the former retail warehouse
       located in Englewood, New Jersey, and related long-lived asset write-offs
       and employee severance.

       Special charges totaling $4,243 for the fiscal year ended January 25,
       1997 resulted from compensation and other charges arising at the time of
       the Company's IPO.

(12)   COMPENSATORY PLANS

       (A) STOCK OPTION PLAN

           The Mazel Stores, Inc. 1996 Stock Option Plan ("Stock Option Plan")
           was adopted by the Board of Directors and approved by the
           shareholders of the Company effective October 1, 1996. The Stock
           Option Plan, which was amended with a shareholder vote at the 1998
           Annual Meeting of Shareholders, increased the shares for issuance by
           600,000 to 1,500,000 stock options ("Options") to acquire common
           stock of the Company. Pursuant to the provisions of the Stock Option
           Plan, employees of the Company may be granted Options, including both
           incentive stock options and nonqualified stock options ("NQSO").
           Consultants may receive only NQSO under the Stock Option Plan.
           Non-employee directors automatically receive, upon the date they
           first become Directors, a grant of Options to purchase 15,000 shares
           of common stock

                                       41

<PAGE>   42



           of the Company. The purchase price of a share of common stock
           pursuant to an Option shall not be less than the fair market value at
           the grant date. The Options vest in five equal annual installments of
           20 percent of the grant, and have a term of 10 years.

           The Company applies the intrinsic value method to account for stock
           based compensation. Accordingly, no compensation expense has been
           recognized. The following table provides net income and net income
           per share reduced to the pro forma amounts calculating compensation
           expense consistent with the fair value method. The fair value of each
           option grant is estimated on the date of grant using the
           Black-Scholes option-pricing model with the following weighted
           average assumptions used for grants in the fiscal years ended January
           30, 1999, January 31, 1998 and January 25, 1997, respectively:
           expected volatility of 40 percent for all fiscal years, risk-free
           interest rates of 5.0, 6.0 and 6.5 percent, expected lives of 8.2,
           9.6 and 8.8 years, and a dividend yield of zero percent for all
           fiscal years.
<TABLE>
<CAPTION>

                                                                     Fiscal Year Ended
                                                      -----------------------------------------------
                                                                                           Pro forma
                                                                                          as adjusted
                                                                                          -----------
                                                      January 30,        January 31,      January 25,
                                                         1999               1998             1997
                                                      -----------        -----------      -----------
<S>                                                <C>                  <C>             <C> 
Net income
   As reported                                        $  5,173             8,517            8,501
   Pro forma                                             4,907             7,819            7,839
Basic net income per share
   As reported                                        $   0.57              0.93             0.93
   Pro forma                                              0.54              0.85             0.85
Diluted net income per share
   As reported                                        $   0.57              0.92             0.91
   Pro forma                                              0.54              0.84             0.84

</TABLE>

           The above results may not be representative of the effect of the fair
           value method on net income for future years.

           The following is a summary of option activity for the fiscal years
           ended January 30, 1999 and January 31, 1998 and related
           weighted-average exercise price:

<TABLE>
<CAPTION>

                                                          January 30, 1999                January 31, 1998
                                                       ------------------------       --------------------------
                                                                  Weighted Avg.                    Weighted Avg.
                                                       Shares    Exercise Price       Shares      Exercise Price
                                                       ------    --------------       ------      --------------

<S>                                                 <C>           <C>              <C>              <C>   
Outstanding at beginning of fiscal year                748,450       $16.30           718,350          $16.00
  Granted at market                                    223,975        15.14            55,000           20.07
  Exercised                                             (1,400)       16.00               -              -
  Expired or forfeited                                 (44,900)       20.30           (24,900)          16.00
                                                       -------       ------           -------          ------
Outstanding at end of fiscal year                      926,125       $15.85           748,450          $16.30
                                                       =======       ======           =======          ======
Options available for grant at end of year             573,875                        151,550
Weighted average fair value of options
  granted during the year                                $8.20                          $7.19

</TABLE>

                                       42

<PAGE>   43


<TABLE>
<CAPTION>



                                                          Options Outstanding                        Options Exercisable
                                           --------------------------------------------------    -------------------------------
                                                             Weighted Avg.
                                           No. of Options      Remaining       Weighted Avg.     No. of Options      Weighted Avg.
                                            Outstanding     Contractual Life  Exercise  Price      Exercisable      Exercise Price
                                            -----------     ----------------  --------  -----      -----------      --------------

<S>                                         <C>                <C>             <C>                 <C>               <C>  
Range of exercise prices:
   Fiscal year 1996 grants at $16.00           671,150            7.81            $16.00              279,710            $16.00
   Fiscal year 1997 grants at $13.87-25.75      31,000            8.67             20.07                6,200             16.83
   Fiscal year 1998 grants at $10.00-17.50     223,975            9.29             15.14               10,000             17.25
                                               -------            ----            ------              -------            ------
                                               926,125            8.20            $15.85              295,910            $16.06
                                               =======            ====            ======              =======            ======
</TABLE>

        (B)RESTRICTED STOCK PLAN (DOLLARS AS STATED)

           The Company's Restricted Stock Plan ("Restricted Stock Plan") was
           adopted by the Board of Directors and approved by the Company's
           shareholders effective October 1, 1996. The Restricted Stock Plan
           serves as the successor to the Partnership's Employee Equity Plan
           ("Equity Plan"). The Restricted Stock Plan relates to 72,351 unvested
           shares of common stock issued, initially as partnership units under
           the Equity Plan. Shares have the same vesting terms as provided in
           the Equity Plan.

           The Equity Plan provided for the purchase of partnership units by key
           executives of the Company, with exercisability subject to vesting
           restrictions, generally over a five-year period. Employees of the
           Company purchased a total of 1,730 units (representing 550,711 shares
           of common stock) under the Equity Plan. A total of 1,038 units were
           vested prior to, and as a result of, the effectiveness of the IPO. In
           conjunction with the IPO, all vested units (aggregating 330,426
           shares of common stock) were distributed to Equity Plan participants
           and all unvested units (aggregating 220,285 shares of common stock)
           were being held pursuant to the Restricted Stock Plan. As of January
           30, 1999, 72,351 shares are being held pursuant to the Restricted
           Stock Plan. The Company has recorded compensation expense in
           accordance with the vesting provisions of the Restricted Stock Plan
           at a value of $225 per unit, which represents the difference between
           the purchase price and the fair value of each unit at the grant date
           as established by an independent appraisal.

(13)   PRO FORMA INFORMATION (UNAUDITED)

       The unaudited pro forma as adjusted data, as shown on the accompanying
       consolidated statements of operations, gives effect to the IPO and the
       combination of the Partnership and Odd Job as if such transaction would
       have occurred at the beginning of the fiscal year ended January 25, 1997.
       Such data excludes certain one-time charges (principally compensation
       adjustments) incurred at the time of the IPO and organization of the
       Company, provides for income taxes at an effective rate of 40 percent,
       and excludes the one-time tax benefit of $1,489 attributable to the
       change in the Company's tax status.



                                       43

<PAGE>   44



(14)   BUSINESS SEGMENT INFORMATION

       In June 1997, the FASB issued SFAS No. 131, Disclosures About Segments of
       an Enterprise and Related Information. The Company adopted this standard,
       as required, for its January 30, 1999 consolidated financial statements.

       The Company's business segments are: retail, wholesale and corporate.
       Both retail and wholesale purchase quality, frequently brand name,
       value-oriented consumer products. Retail sells its product through its
       Odd Job store chain (47 at year-end) while wholesale sells to retailers,
       including Odd Job, wholesalers and distributors. Corporate includes
       shared administrative expenses and management fee revenue from VCM, Ltd.
       Summarized financial information by business segment as of the fiscal
       years ended January 30, 1999, January 31, 1998 and January 25, 1997, is
       as follows:

<TABLE>
<CAPTION>

                                                                                     Capital    Depreciation
                                                    Operating         Total           Expen-        and
                                  Net Sales           Profit          Assets          ditures   Amortization
                                  ---------           ------          ------          -------   ------------
<S>                            <C>                  <C>             <C>             <C>          <C>
January 30, 1999
 Retail                          $ 156,242             3,618          63,225           7,730        2,114
 Wholesale                          90,709             9,600          52,416             425          400
 Intersegment revenues              (9,817)
 Corporate                              -               (519)         15,354              -            -
 Special charges                        -             (1,387)             -               -            -
                                 ---------            ------         -------           -----        -----
                                 $ 237,134            11,312         130,995           8,155        2,514
                                 =========            ======         =======           =====        =====

January 31, 1998
  Retail                         $ 113,205             5,393          44,598           4,786        1,102
  Wholesale                        107,535            12,821          56,455           1,046          417
  Intersegment revenues            (12,414)
  Corporate                             -             (2,173)         12,831              -            -
                                 ---------            ------         -------           -----        -----
                                 $ 208,326            16,041         113,884           5,832        1,519
                                 =========            ======         =======           =====        =====

January 25, 1997
  Retail                         $  84,202             3,817          31,680           2,726          706
  Wholesale                        104,732            14,015          51,745           1,197          369
  Intersegment revenues             (9,057)
  Corporate                             -             (5,139)          2,936              -            -
  Special charges                       -             (4,243)             -               -            -
                                 ---------             -----          ------           -----        -----
                                 $ 179,877             8,450          86,361           3,923        1,075
                                 =========             =====          ======           =====        =====

</TABLE>

         Sales to the Company's largest customer accounted for 7.4 percent, 14.9
         percent and 20.0 percent of total sales for fiscal years 1998, 1997 and
         1996, respectively. Corporate operating profit is shown net of VCM Ltd.
         management fee revenue of $3,085 and $1,789 for fiscal years 1998 and
         1997, respectively.


                                       44

<PAGE>   45



(15)     UNAUDITED QUARTERLY FINANCIAL DATA

         The following is a summary of unaudited quarterly results of operations
         for the fiscal years ended January 30, 1999, January 31, 1998 an
         January 25, 1997:

<TABLE>
<CAPTION>

                                                                            Quarter
                                                      ---------------------------------------------------
                                                       First          Second         Third         Fourth
                                                       -----          ------         -----         ------
<S>                                                 <C>            <C>             <C>           <C>
Year ended January 30, 1999
   Net sales                                          $48,907         53,333         60,324        74,570
   Gross profit                                        17,321         19,071         20,856        27,094
   Net income                                             922            881             26         3,344
   Net income per share - basic                       $  0.10           0.10           0.00          0.37
   Net income per share - diluted                        0.10           0.10           0.00          0.37

Year ended January 31, 1998
   Net sales                                          $43,128         49,053         48,820        67,325
   Gross profit                                        14,844         16,160         17,342        23,534
   Net income                                           1,531          2,002          1,558         3,426
   Net income per share - basic                         $0.17           0.22           0.17          0.37
   Net income per share - diluted                        0.16           0.22           0.17          0.37

Year ended January 25, 1997
   Net sales                                          $42,454         42,711         44,387        50,325
   Gross profit                                        12,899         13,752         14,718        17,126
   Net income                                           2,338          2,194          2,416         1,269

</TABLE>

         Net income per share for the fiscal 1996 quarters is not meaningful due
         to the Company's IPO in November 1996.

(16)     INVESTMENT IN VCM, LTD.

         On August 3, 1997, the Company commenced operation of VCM, Ltd.
         ("VCM"), a 50 percent owned joint venture with Value City Department
         Stores, whereby VCM operates the toy, sporting goods, and expanded
         health and beauty care departments for the Value City department store
         chain. The Company coordinates merchandise purchasing on behalf of VCM,
         some of which is sourced from the Company's wholesale segment. The
         Company's initial investment in VCM, which is accounted for under the
         equity method, was $9,637. In addition to its 50 percent equity share
         of VCM's net profit or loss, the Company receives a management fee
         equal to three percent of net sales. Sales to VCM were $3,132 million
         for fiscal 1998 and $4,539 for fiscal 1997. The Company recorded an
         account receivable from VCM of $4,182 and $1,421 at January 30, 1999
         and January 31, 1998, respectively, representing sales, management fees
         and invoices paid on behalf of VCM.


                                       45

<PAGE>   46



(17)     EARNINGS PER SHARE

         The following data shows the amounts used in computing earnings per
         share and the effect on the weighted-average number of shares of
         dilutive potential common stock.

<TABLE>
<CAPTION>

                                                                       Fiscal Year Ended
                                                         ---------------------------------------------
                                                                                            Pro forma
                                                                                           as adjusted
                                                         January 30,     January 31,       January 25,
                                                           1999              1998             1997
                                                         -----------     -----------       ------------
<S>                                                    <C>               <C>             <C>
NUMERATOR:
Net income available to common
  shareholders used in basic and
  diluted net income per share                             $ 5,173             8,517            8,501
                                                           =======             =====            =====

DENOMINATOR:
Weighted-average number of
   common shares - basic                                 9,141,600         9,162,100        9,170,100
Net dilutive effect of stock options                         5,200           103,300          215,900
                                                         ---------         ---------        ---------
Weighted-average number of
   common shares - diluted                               9,146,800         9,265,400        9,386,000
                                                         =========         =========        =========

Net income per share - basic                                $ 0.57              0.93             0.93
Net income per share - diluted                              $ 0.57              0.92             0.91

</TABLE>

                                       46

<PAGE>   47



                                   SIGNATURES

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

                                    MAZEL STORES, INC.

                                        By: /s/ Reuven D. Dessler
                                            ------------------------------------
                                            Reuven D.  Dessler
                                            Chairman and Chief Executive Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on April 16, 1999.

<TABLE>
<CAPTION>

              SIGNATURES                                                     TITLE
              ----------                                                     -----

<S>                                                        <C>
        /s/ Reuven D.  Dessler                                Chairman and Chief Executive Officer
-------------------------------------------                   (Principal Executive Officer) and Director
            Reuven D.  Dessler                   

        /s/ Susan Atkinson                                    Chief Financial Officer (Principal Financial
-------------------------------------------                   and Accounting Officer)
            Susan Atkinson                                    

        /s/ Charles Bilezikian                                Director
-------------------------------------------
            Charles Bilezikian

        /s/ Brady Churches                                    Director
-------------------------------------------
            Brady Churches

        /s/ Phillip Cohen                                     Director
------------------------------------------- 
            Phillip Cohen

        /s/ Robert Horne                                      Director
-------------------------------------------
            Robert Horne

        /s/ Jacob Koval                                       Director
-------------------------------------------
            Jacob Koval

        /s/ Ned L. Sherwood                                   Director
-------------------------------------------
            Ned L. Sherwood

        /s/ Jerry Sommers                                     Director
-------------------------------------------
            Jerry Sommers

</TABLE>

                                       47

<PAGE>   48

<TABLE>
<CAPTION>


                                  EXHIBIT INDEX

EXHIBIT
NUMBER                    DESCRIPTION OF DOCUMENT
------                    -----------------------

<S>           <C>                                                 
 3.1            Amended and Restated Articles of Incorporation*
 3.2            Amended and Restated Code of Regulations*
 4.1            Asset Based Loan and Security Agreement dated  March 10, 1998 by and among
                the lending institutions and registrant and subsidiaries***
10.1            Amended and Restated Employment Agreement of Reuven Dessler dated
                September 30, 1996*
10.2            Amended and Restated Employment Agreement of Jacob Koval dated September
                30, 1996*
10.3            Employment Agreement of Brady Churches dated November 1, 1995*
10.4            Amendment to Brady Churches Employment Agreement dated
                September 30, 1996*
10.5            Employment Agreement of Jerry Sommers dated November 1, 1995*
10.6            Amendment to Jerry Sommers Employment Agreement dated September 30, 1996*
10.7            Amended and Restated Employment Agreement of Susan Atkinson dated
                September 30, 1996*
10.8            Amendment to Susan Atkinson Employment Agreement dated
                February 1, 1998***
10.10           1996 Stock Option Plan*
10.11           Restricted Stock Plan*
10.12           Solon, Ohio Facility Lease, dated as of January 1, 1989, including three
                amendments thereto*
10.13           South Plainfield, New Jersey Facility Lease
10.17           VCM, Ltd.  Agreement dated July 14, 1997**
21              List of Subsidiaries
23              Consent of Independent Auditors
24.1            Powers of Attorney
27              Financial Data Schedule

</TABLE>


*      Incorporated by reference to exhibit with same exhibit number included in
       the Registrant's Registration Statement on Form S-1 (File #333-11739) as
       amended.

**     Incorporated by reference to an exhibit included in the Quarterly
       Statement on Form 10-Q for the quarter ended October 26, 1996.

***    Incorporated by reference to an exhibit included in the Annual
       Statement on Form 10-K for the fiscal year ended January 31, 1998.




                                       48