MAZEL STORES INC, 424B1, 1996-11-21

MAZEL STORES INC
424B1, 1996-11-21
RETAIL STORES, NEC

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<PAGE> 1
Filed Pursuant to Rule 424(b)(1)
Registration Nos. 333-11739
333-16443

PROSPECTUS

2,574,000 SHARES

[LOGO]
MAZEL STORES

COMMON STOCK

All of the 2,574,000 shares of Common Stock offered hereby (the "Offering")
are being sold by Mazel Stores, Inc. (the "Company"). Following the Offering,
the Company's officers, directors and other affiliates will beneficially own
approximately 66.0% of the Common Stock. See "Risk Factors -- Control by
Principal Shareholders." Prior to the Offering, there has been no public market
for the Common Stock of the Company. See "Underwriting" for information relating
to the determination of the initial public offering price. The Common Stock has
been approved for quotation on the Nasdaq National Market under the symbol
"MAZL."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OF COMMON
STOCK OFFERED HEREBY.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- -----------------------------------------------------------------------------------------------
Per Share.......................... $16.00 $1.12 $14.88
Total(3)........................... $41,184,000 $2,882,880 $38,301,120
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<FN>
(1) The Company and certain of its existing shareholders have agreed to
indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."

(2) Before deducting estimated expenses of $900,000 payable by the Company.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 386,100 shares of Common Stock, solely to cover
over-allotments, if any. If all such shares are purchased, the total Price
to Public, Underwriting Discount, and Proceeds to Company will be
$47,361,600, $3,315,312 and $44,046,288, respectively. See "Underwriting."
</TABLE>

The shares of Common Stock are offered by the several Underwriters when, as
and if delivered to and accepted by them and subject to their right to reject
orders in whole or in part. It is expected that delivery of the certificates for
the Common Stock will be made on or about November 26, 1996.

WILLIAM BLAIR & COMPANY SALOMON BROTHERS INC

THE DATE OF THIS PROSPECTUS IS NOVEMBER 21, 1996

<PAGE> 2

[STORE LOCATIONS AND PHOTOS]

[PICTURES (INSIDE FRONT & BACK COVER AND GATEFOLD)
EXTERIOR OF NEW YORK CITY STORE
WITH NEW YORK SKYLINE IN BACKGROUND
AERIAL VIEW OF SOLON WAREHOUSE
STORE FRONT GRAND OPENING
EXTERIOR/INTERIOR OF STORES
COPIES OF MAIL ADVERTISEMENTS

LOGO

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET SYSTEM, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

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

The Company intends to furnish its shareholders with annual reports
containing audited financial statements and with quarterly reports containing
unaudited summary financial information for each of the first three quarters of
each fiscal year.

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<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus. Unless indicated otherwise, the information contained in this
Prospectus: (i) assumes that the Underwriters' over-allotment option is not
exercised; and (ii) has been adjusted to reflect the 1996 Restructuring
described in "Significant Corporate Transactions -- 1996 Restructuring." The
Company's fiscal year ended December 31 in 1991 and 1992 and January 31 in 1994,
1995 and 1996. References to fiscal years by date refer to the fiscal year
beginning in January or February of that calendar year: for example, "fiscal
year 1995" began on February 1, 1995 and ended on January 31, 1996. Commencing
with fiscal 1996, the Company converted to a 52- or 53-week fiscal year and the
Company's fiscal year ends on the Saturday closest to January 31 in the
following calendar year.

THE COMPANY

Mazel Stores, Inc. (the "Company") consists of two complementary
operations: (i) a major regional closeout retail business; and (ii) one of the
nation's largest closeout wholesale businesses. 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
acquired its retail operations in December 1995 as a platform for significant
future retail growth, with plans to expand upon the 21 stores currently
operating in the New York metropolitan area under the "Odd Job" name. In fiscal
1995, the pro forma net sales of the Company were approximately $133.9 million,
including $73.8 million for the wholesale operations.

In 1995, to strengthen and broaden the management team for future retail
expansion, the Company hired Brady Churches, President, and Jerry Sommers,
Executive Vice President -- Retail, who had served as President and Executive
Vice President, respectively, of Consolidated Stores Corporation
("Consolidated"), a leading national retailer and wholesaler of closeout
merchandise. During their tenure at Consolidated, the number of Consolidated
stores grew from one to over 800. The Company believes that the combination of
its wholesale operations and the Odd Job retail operations, together with its
new retail management team, will result in significant synergies, particularly
in purchasing, that will enable the Company to expand its retail operations and
increase sales and net income of both the wholesale and retail operations.

The Company was founded in 1975 as a wholesaler of closeout merchandise by
Reuven Dessler, Chairman of the Board and Chief Executive Officer, and Jacob
Koval, Executive Vice President -- Wholesale. In its wholesale operations, the
Company sells merchandise, including nationally recognized brand-name products,
at a substantial discount to their original retail or wholesale prices. The
Company's wholesale buyers purchase merchandise from more than 700 suppliers
throughout the world and continually seek opportunities created by
manufacturers' overproduction and other closeout circumstances such as packaging
changes, the overstock inventory of wholesalers and retailers, financially
distressed businesses and other sources.

The Company's Odd Job stores offer substantial savings on a large
assortment of quality consumer items, which are frequently brand-name.
Merchandise categories include housewares, stationery, books, party supplies,
health and beauty aids, food, toys, hardware, electronics and garden supplies.
Brands carried by the Company's stores may include, at any given time, Black and
Decker, Enesco, Farberware, Hershey, Keebler, Mars, Mattel, Mikasa, Rubbermaid
and Sony. The Company believes that the constantly changing variety, attractive
values and wide assortment of merchandise creates a significant amount of
customer loyalty. The Odd Job stores range in size from 6,500 to 25,000 square
feet and are located in high traffic urban and suburban areas. The Company's net
sales of approximately $320 per gross square foot is among the highest in the
closeout retail sector.

BUSINESS STRENGTHS

Experienced Management Team. The Company's senior retail and wholesale
management teams have substantial operating knowledge, vendor contacts and
closeout industry experience. The wholesale manage-

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<PAGE> 4

ment team has a long track record of building a growing and profitable
operation. Furthermore, with the recent addition of Brady Churches and Jerry
Sommers to the retail operations, the Company now has one of the most
experienced retail management teams in the closeout industry.

Integrated Wholesale and Retail Purchasing. The combination of the
wholesale and retail operations provides the Company with substantial purchasing
expertise, vendor contacts, purchasing capacity and cross-purchasing
opportunities. The Company believes these competitive advantages enable it to:
(i) have more direct access to sources of closeout merchandise, providing price
and opportunity advantages; (ii) purchase larger quantities and a wider variety
of closeout merchandise; and (iii) negotiate better terms due to higher
quantities of orders for merchandise manufactured to the Company's
specifications. The combination of these factors allows the Company to provide
its customers with an excellent mix of value-oriented merchandise at attractive
prices.

Responsive to Sources of Closeout Merchandise. The Company believes that
establishing and maintaining excellent relationships with vendors is essential
to the success of its retail and wholesale closeout operations. By remaining
flexible and responsive to the needs of its vendors, the Company believes it is
a preferred customer of many key vendors. Specifically, the Company accommodates
the needs of its vendors by: (i) making rapid purchasing decisions; (ii) taking
immediate delivery of large quantities of closeout merchandise; (iii) purchasing
the entire product assortment offered by a particular vendor; (iv) minimizing
disruption to the supplier's ordinary distribution channels; and (v) making
prompt and reliable payments.

GROWTH STRATEGIES

New Store Openings. The Company anticipates opening or acquiring
approximately 40 new stores through the end of fiscal 1999 and believes there is
a potential for the Company to operate approximately 100 stores in the Northeast
and Mid-Atlantic targeted market. The Company's current and planned stores would
be easily serviced from the Company's Englewood, New Jersey warehouse and
distribution facility. The Company plans to open nine stores in fiscal 1997, 12
stores in fiscal 1998 and 15 stores in fiscal 1999. The Company has opened or
acquired eight stores in fiscal 1996, and an additional store is scheduled to
open in December 1996. The Company may also open stores in other geographic
areas if favorable real estate opportunities and conditions exist. The Company's
strategy is to open stores in high-traffic urban areas or suburban strip
shopping centers. The Company sells its merchandise in a variety of store
configurations and locations, currently ranging from 6,500 to 25,000 square
feet. This flexibility in store configurations provides a competitive advantage
in selecting desirable store locations.

Enhancing Store Sales. The Company's management has expanded the
merchandise mix of the acquired Odd Job operations, including the addition of
more health and beauty aids, toys, greeting cards, hardware, food and seasonal
items. These additional items supplement Odd Job's existing extensive selection
of electronics, luggage, china, perfume and giftware. A targeted merchandise
approach has been instituted in

4
<PAGE> 5

recognition of the differences between the Company's urban and suburban
locations. Management has also instituted an advertising program consisting of
the periodic publication of multi-color mailing or newspaper circulars promoting
up to 35 value-oriented, easily recognizable items. Due to the program's initial
success, management plans to expand the use of advertising circulars in the
future.

Leveraging the Company's Investment in Infrastructure. To support the
Company's planned growth and expansion, which began in the second half of 1995,
the Company hired Brady Churches and Jerry Sommers, increased the number of its
experienced closeout buyers and committed to the expansion of its Solon, Ohio
and Englewood, New Jersey warehouse and distribution facilities. These
expenditures are expected to increase the Company's overall selling, general and
administrative expenses. The Company believes that such expenditures will enable
it to achieve its growth objectives and will result in significant operating
leverage as it expands.

Acquisitions. The closeout retail industry in the Northeast and
Mid-Atlantic targeted market is highly fragmented. The Company believes that by
focusing its retail operations in this geographic market, it will be able to
take advantage of acquisition opportunities which will further enable the
Company to implement its growth strategy. In addition, the Company may also
examine acquisition opportunities in other geographic areas. The Company seeks
to acquire closeout retail operations which will further enable it to leverage
its management, purchasing and distribution infrastructure and that can be
effectively integrated into the Company's retail operations. Furthermore, the
Company may pursue acquisition opportunities in the closeout wholesale industry.

The Company is incorporated under the laws of the State of Ohio. The
Company's principal executive offices are located at 31000 Aurora Road, Solon,
Ohio 44139 and its telephone number is (216) 248-5200. Unless the context
otherwise indicates: (i) the term the "Company" refers to Mazel Stores, Inc., a
holding company incorporated in Ohio in 1996, its subsidiary Odd Job Holdings,
Inc. and their predecessors; (ii) the term "ZS Fund" refers to ZS Fund L.P., its
affiliated partnerships and corporations that are shareholders of the Company,
as well as its predecessors and other investment entities in which the
principals of ZS Fund are or were principals; and (iii) "Odd Job" refers to Odd
Job Trading Corp., POW Trading Corp., HIA Trading Associates, Central Processing
Associates, their affiliates, subsidiaries and predecessors.

THE OFFERING

<TABLE>
<S> <C>
Shares offered by the Company............. 2,574,000
Shares to be outstanding after
the Offering............................ 8,784,000(1)
Use of Proceeds........................... To repay approximately $29.6 million of
outstanding indebtedness to the Company's senior
institutional lender, to pay a promissory note
aggregating $4.0 million representing
undistributed cumulative net income previously
allocated to the partners of the Company's
predecessor and to make certain payments to the
Company's officers and other entities aggregating
approximately $900,000 in compensation and $2.9
million in tax loans pursuant to contractual
provisions in their employment and other
agreements. See "Use of Proceeds."
Nasdaq National Market Symbol............. MAZL
<FN>
- ---------------

(1) Excludes 900,000 shares of Common Stock reserved for issuance under the
Company's Stock Option Plan, including 655,500 shares issuable pursuant to
options outstanding at an exercise price equal to the initial public
offering price per share. See "Management -- Compensatory Plans."
</TABLE>

5
<PAGE> 6

SUMMARY COMBINED FINANCIAL AND SELECTED OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)

The statement of combined operations data below consists of: (i) Mazel
Company L.P.'s wholesale operations, the Ohio Stores and Peddlers Mart (after
December 9, 1994) for the fiscal year ended January 31, 1995; (ii) Mazel Company
L.P.'s wholesale operations, the Ohio Stores (through October, 1995), Peddlers
Mart, and Odd Job's operations (after December 7, 1995) for the fiscal year
ended January 31, 1996; (iii) Mazel Company L.P.'s wholesale operations, the
Ohio Stores and Peddlers Mart for the six months ended July 31, 1995; and (iv)
Mazel Company L.P.'s wholesale operations, Peddlers Mart and Odd Job's
operations for the six months ended July 27, 1996.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JANUARY 31, ---------------------------------------
----------------------------------- PRO FORMA
PRO FORMA AS ADJUSTED
STATEMENT OF COMBINED AS ADJUSTED JULY 31, JULY 27, JULY 27,
OPERATIONS DATA: 1995 1996 1996(1) 1995 1996 1996(2)
-------- -------- ----------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net sales...................... $ 76,254 $ 98,106 $ 133,881 $ 41,696 $ 85,165 $ 85,165
Gross profit................... 21,071 27,898 42,858 12,445 26,651 26,651
Selling, general and
administrative ("SG&A")
expense...................... 15,317 20,753 32,093 9,163 20,822 19,999
Special charges................ -- 2,203(3) 632 -- -- --
Operating profit............... 5,754 4,942 10,133 3,282 5,829 6,652
Income before income taxes..... 4,886 3,118 10,449 2,769 4,567 6,722
Net income..................... 4,815 3,099 6,165 2,731 4,533 3,966
Pro forma earnings per share... $ 0.31(4) $ 0.70 $ 0.43(4) $ 0.45
Pro forma shares outstanding... 5,924(4) 8,784 6,210(4) 8,784
SELECTED STORE OPERATING DATA:
Number of stores............... 12 13 13 17
Total square footage........... 164,386 188,361 186,386 252,861
Total store sales growth....... 12.8% 6.3% 14.2% 24.2%
Comparable store sales
growth(5).................... 7.9% (4.4%) 2.1% 14.2%
Average annual net sales per
unit......................... $ 4,709 $ 4,620 $ 2,170 $ 2,336
Average net sales per gross sq.
ft........................... $ 344 $ 319 $ 157 $ 178
</TABLE>

<TABLE>
<CAPTION>
JULY 27, 1996
--------------------------
PRO FORMA
AS
BALANCE SHEET DATA: ACTUAL ADJUSTED(6)
------ -------------
<S> <C> <C>
Working capital........................................................ $37,976 $42,791
Total assets........................................................... 75,903 81,672
Total debt............................................................. 33,753 3,163
Total liabilities...................................................... 55,018 24,428
Shareholders' equity and partners' capital............................. 20,885 57,244
<FN>
- ---------------

(1) The pro forma as adjusted statement of combined operations data for the
fiscal year ended January 31, 1996 have been adjusted to: (i) reflect the
combination of Mazel Company L.P.'s wholesale operations and Odd Job's
operations as if it had occurred at the beginning of the period presented;
(ii) eliminate the discontinued Ohio Stores retail operations; and (iii)
give effect to the Offering. See "Pro Forma Financial Data."

(2) The pro forma as adjusted statement of combined operations data for the six
months ended July 27, 1996 gives effect to the Offering as if it had
occurred at the beginning of the period presented. See "Pro Forma Financial
Data."

(3) Consists of special charges of $632 in executive signing bonuses and a
$1,571 loss on the disposal of the Ohio Stores.

(4) See Note 15 of Notes to Combined Financial Statements for an explanation of
the method of calculation.

(5) Comparable store sales growth is defined as the annual percentage change in
aggregate net sales from stores that were open at the beginning of both
fiscal periods.

(6) The pro forma as adjusted balance sheet data: (i) give effect to the
Offering as if it had been completed on July 27, 1996, and the application
of the estimated net proceeds; and (ii) give effect to transactions between
the Company and its partners, employees, debt holders and other related
entities occurring in conjunction with the Offering.
</TABLE>

6
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RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered hereby.

LIMITED OPERATING HISTORY OF COMBINED OPERATIONS

The Company acquired the Odd Job chain of 12 stores in December 1995 and
has been operating as a combined entity with integrated operations since that
time. Accordingly, the Company's operating history with both wholesale and
retail operations is brief and may not be an accurate indication of the
Company's future performance. There can be no assurance that growth in the
Company's sales and net income will occur, or if it occurs, that it will be
sustained. See "Significant Corporate Transactions." As the Company's retail
operations grow, the Company's combined operating margin will decline and more
closely resemble the operating margins of other closeout retailers, which are
less than the operating margins experienced by the Company in its wholesale
operations.

CUSTOMER CONCENTRATION

Sales to the largest customer of the Company's wholesale operations
accounted for approximately 18.6% of pro forma total sales in fiscal 1995 and
24.3% in the first six months of fiscal 1996. The Company believes its
relationship with such customer is good. However, sales to such customer, or any
other significant customer, could be affected by events beyond the Company's
control, including a significant decline in the customer's sales or a
deterioration in the customer's financial condition. A substantial reduction in
sales to such customer could have a material adverse effect on the Company's
total sales and operating income. See "Business -- Wholesale Operations."

EXPANSION PLANS

The Company currently operates a total of 21 stores in the New York
metropolitan area under the name "Odd Job," including eight stores opened or
acquired to date in fiscal 1996. The Company anticipates opening an additional
store in fiscal 1996, nine stores in fiscal 1997, 12 stores in fiscal 1998 and
15 stores in fiscal 1999 in its Northeast and Mid-Atlantic targeted market,
which will be serviced from the Company's Englewood, New Jersey warehouse and
distribution facility. The success of the Company's expansion strategy is
dependent upon many factors, including identifying suitable markets and sites
for new stores, negotiating leases with acceptable terms, appropriately
upgrading its financial and management information systems and controls and
managing its operating expenses. In addition, the Company must be able to
continue to hire, train, motivate and retain competent managers and store
personnel. Many of these factors are influenced by variables beyond the
Company's control. As a result, there can be no assurance that the Company will
be able to achieve its expansion goals. Any failure of the Company to achieve
its expansion goals on a timely basis, obtain acceptance in markets in which it
currently has limited or no presence, attract and retain qualified management
and other personnel, appropriately upgrade its financial and management
information systems and controls or manage operating expenses could adversely
affect the Company's future operating results and its ability to execute its
expansion strategy.

The Company may add more stores (including stores outside its targeted
market) if a favorable acquisition opportunity is presented. In the event the
Company makes one or more acquisitions, this may affect the number and timing of
new store openings. There can be no assurance that the Company will be able to
locate suitable store locations or acquire operations that can be effectively
and profitably integrated into the Company's existing operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

In February 1996, the Company entered into an agreement with Consolidated
resolving certain issues which arose in connection with the hirings by the
Company of Messrs. Churches and Sommers and another officer (the "Consolidated
Settlement"). The agreement generally provides that until April 25, 1997, the
Company will not open new stores located within 10 miles of Consolidated stores
that were open or planned as

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of February 20, 1996. The Company believes that the terms of the Consolidated
Settlement will not affect its planned expansion strategy, although it could
restrict acquisition opportunities prior to April 25, 1997.

DEPENDENCE ON KEY INDIVIDUALS

The Company is dependent on its ability to retain the services of its
senior executives: Reuven Dessler, Brady Churches, Jacob Koval and Jerry
Sommers. The loss of one or more of these individuals could have a material
adverse effect on the Company. The Company maintains employment contracts and
non-competition agreements with each of these senior executives. See
"Management -- Executive Compensation." The Company is also dependent upon its
ability to retain the services of its buyers.

INVENTORY MANAGEMENT RISK

The Company's success depends in large part upon its ability to locate and
purchase quality closeout merchandise at attractive prices in order to maintain
its broad selection of merchandise, which includes many brand-name products.
There can be no assurance that such merchandise will continue to be available in
the future or will be available in quantities necessary to accommodate the
Company's expansion strategy. In general, the Company has no continuing
contracts for the purchase of merchandise and must continuously seek out buying
opportunities from both its existing suppliers and new sources, for which it
competes with numerous other wholesalers, retailers, jobbers, dealers and others
which sell many of the items sold by the Company. The Company's results of
operations could be adversely affected by a disruption in the availability of
closeout merchandise.

Following the acquisition of the Odd Job retail operations, the Company
recognized the need to replace Odd Job's existing management information systems
and integrate the new system with that of its wholesale operations. The Company
is in the early stages of installing an upgraded IBM AS400-based computer system
and related software packages that will be fully integrated with the AS400-based
system used by its wholesale operations. The Company intends to install a
point-of-sale (POS) system to fully capture store transactions and provide
updated data to its purchasing staffs, as well as additional retail software and
hardware, at an estimated cost of approximately $2.0 million. Installation of
the new systems is expected to occur by the end of fiscal 1997. The failure to
timely complete such installation and integration could affect the Company's
ability to properly manage its inventory which could, in turn, reduce sales and
operating income, or limit the Company's expansion plans. See
"Business -- Management Information Systems."

The Company takes advantage of large volume purchases, closeouts and other
special situations to obtain inventory at favorable prices. At July 27, 1996,
the net book value of the Company's inventory was approximately $40.9 million.
The Company periodically reviews the net realizable value of its inventory and
records adjustments to its carrying value when appropriate. The current carrying
value of the Company's inventory reflects management's belief that the Company
will realize the net values recorded on the Company's balance sheet. A sale by
the Company of any material portion of its inventory at an amount less than its
carrying value may have a material adverse effect on the Company's results of
operations or financial condition during the period in which such event or
events occur. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."

COMPETITION

Competition for the purchase of quality closeout merchandise is intense.
The Company's wholesale operations compete with numerous national and regional
wholesalers, retailers, jobbers and dealers for closeout buying opportunities.
The Company's retail operations compete for customers with other closeout
retailers as well as discount stores, deep discount drugstore chains,
supermarkets and other value-oriented specialty retailers. Certain of the
Company's competitors have financial and operating resources exceeding those of
the Company. See "Risk Factors -- Expansion Plans" and "Business --
Competition."

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SEASONALITY AND QUARTERLY FLUCTUATIONS

Historically, Odd Job's highest net sales and operating income have been
experienced during the fourth quarter, which includes the holiday selling
season. During fiscal 1994 and 1995, approximately 34% and 31%, respectively, of
Odd Job's net sales and approximately 79% and 65%, respectively, of its
operating income (excluding special charges) were generated during the fourth
quarter. Historically, net sales and operating income (excluding special
charges) from the Company's wholesale operations have been slightly higher
during the second half of the year. Accordingly, any adverse trend in net sales
for such period could have a material adverse effect upon the Company's overall
profitability and adversely affect the Company's results of operations for the
entire fiscal year. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Seasonality and Quarterly Fluctuation."

In addition to seasonality, the Company's results of operations may
fluctuate from quarter to quarter as a result of the amount and timing of sales
generated by new stores, the level of advertising and pre-opening expenses
associated with the opening of new stores, the integration of new stores into
the operations of the Company and the timing of large, opportunistic purchases
and sales in the Company's wholesale operations, as well as other factors.

DISRUPTIONS IN RECEIVING AND DISTRIBUTION

During the six months ended July 27, 1996, approximately 75% of the
Company's inventory was shipped or picked up directly from suppliers and
delivered to the Company's warehouse and distribution facilities. The Company's
success depends in large part on the orderly operation of this receiving and
distribution process, which depends, in turn, on adherence to shipping schedules
and effective management of the warehouse operations. Although management
believes that the Company's receiving and distribution procedures are efficient
and well positioned to support the Company's expansion plans, there can be no
assurance that the Company has anticipated, or will anticipate, all of the
changing demands its expanding operations will impose on its receiving and
distribution system or that events beyond the control of the Company will not
result in delays in the delivery of merchandise to the warehouses or from the
warehouses to the stores. In addition, a fire or other disaster at either of the
Company's warehouse and distribution facilities could materially and adversely
affect its business and results of operations. The Company maintains property
and business interruption insurance on its facilities and business. See
"Business -- Warehousing and Distribution."

CAPITAL REQUIREMENTS RELATING TO EXPANSION PLANS

The Company's strategy includes growth through the opening of new stores,
as well as potential acquisitions. This strategy will require significant
capital resources. The Company believes that while its cash generated from
operations and its existing and proposed credit facilities will be adequate to
support its planned capital requirements, certain large acquisitions, if any,
may require funds exceeding the capacity of its credit facility. There can be no
assurance that acceptable financing for certain future acquisitions or for the
integration, expansion and operation of the Company's existing business can be
obtained. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."

GEOGRAPHIC CONCENTRATION OF OPERATIONS

The Company's stores are located in the New York metropolitan area. The
Company's current retail expansion plans anticipate that its new stores will be
located in its Northeast and Mid-Atlantic targeted market. Consequently, the
Company's results of operations and financial condition are dependent upon
general trends in the economy of the Northeast and Mid-Atlantic market. In the
event of a recession in this market, retail spending may decline, resulting in a
decrease in the Company's retail sales.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding
8,784,000 shares of Common Stock, including 5,795,512 shares beneficially owned
by senior executives and ZS Fund. All of the shares of Common Stock held by ZS
Fund and the Company's senior executives are subject to lock-up agreements under
which the holders of such shares have agreed not to sell or otherwise dispose of
any of their shares for a

9
<PAGE> 10

period of 180 days after the date of this Prospectus without the prior written
consent of William Blair & Company, L.L.C. Sales of a substantial number of
shares of the Company's Common Stock in the public market following the Offering
could adversely affect the market price of the Common Stock. See "Principal
Shareholders," "Shares Eligible for Future Sale" and "Underwriting."

CONTROL BY PRINCIPAL SHAREHOLDERS

Upon completion of the Offering, ZS Fund and the four senior executives of
the Company will beneficially hold approximately 66.0% of the Common Stock
(approximately 63.2% if the Underwriters' over-allotment option is exercised in
full). Consequently, in the event these shareholders vote together, they may be
able to exercise effective control over the Company, including having the power
to elect or remove the Company's Board of Directors and approve certain actions
requiring shareholder approval. See "Principal Shareholders."

TRANSACTIONS WITH AFFILIATED PARTIES

The Company from time to time has entered into transactions with affiliated
persons, including Messrs. Dessler and Koval and entities owned by such
individuals or members of their families, and members of the families of the
former owners of Odd Job. Such transactions have included the lease of
facilities to the Company, capital obligations and debt incurred in connection
with the 1992 Recapitalization and the Odd Job Acquisition. See "Significant
Corporate Transactions" and "Certain Transactions."

PREFERRED STOCK; STATE ANTI-TAKEOVER LAWS

The Board of Directors of the Company is authorized to issue, from time to
time, without any further action on the part of the Company's shareholders, up
to 2,000,000 shares of preferred stock ("Preferred Stock") in one or more
series, with such relative rights, powers, preferences, and conversion rights as
determined by the Board of Directors at the time of issuance. The issuance of
Preferred Stock could adversely affect the holders of Common Stock. The Company
has no present plans to issue any Preferred Stock. In addition, certain
statutory provisions of Ohio law and the Company's charter documents could have
the effect of delaying, deferring or preventing a change in control of the
Company. See "Description of Capital Stock -- Preferred Stock" and "-- Certain
Provisions of Ohio Law."

DILUTION

Purchasers of shares of Common Stock offered hereby will experience an
immediate and substantial dilution in net tangible book value of approximately
$10.66 per share of their investment. See "Dilution."

ABSENCE OF PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Common Stock
of the Company. Although the shares of Common Stock have been approved for
quotation on the Nasdaq National Market, there can be no assurance that an
active trading market will develop or be sustained for the Common Stock or that
the market price of the Common Stock will not decline below the initial public
offering price. The initial public offering price of the Common Stock has been
determined by negotiations between the Company and the Representatives of the
Underwriters. The stock market has from time to time experienced extreme price
and volume fluctuations which in some circumstances have been unrelated to the
operating performance of particular companies. The market price for the Common
Stock may be highly volatile depending on various factors, including, but not
limited to, the state of the national economy, stock market conditions, industry
research reports, actions by governmental agencies, litigation involving the
Company, earnings and other announcements by the Company or its competitors and
general conditions in the closeout industry. See "Underwriting."

The Representatives have advised the Company that they intend to make a
market for the Common Stock, although they are under no obligation to do so.
Were such market making to be discontinued, investors would encounter difficulty
effecting purchase or sale transactions in the absence of alternative market
makers.

10
<PAGE> 11

FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE

This Prospectus contains various forward-looking statements and information
that are based on management's beliefs as well as assumptions made by and
information currently available to management. When used in this document, the
words "believe," "expect," "anticipate," "estimate," and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
certain risks, uncertainties and assumptions including those identified above.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or projected. In addition to the other risk factors
set forth above, among the key factors that may have a direct bearing on the
Company's results are competitive practices in the closeout merchandising
industry generally and particularly in the Company's targeted market, the
availability to the Company of store locations on competitive lease terms and
the ability of the Company to fund future expansion in the event of adverse
industry or economic conditions.

11
<PAGE> 12

SIGNIFICANT CORPORATE TRANSACTIONS
HISTORY

The Company was founded as a wholesaler of closeout merchandise in 1975 by
Messrs. Dessler and Koval and certain other individuals. The Company began its
operations as The Mazel Company, an Ohio corporation ("Old Mazel"). In 1981, the
Company initiated its Just Closeouts retail operations in Ohio. In 1992, Mazel
Company L.P. (the Company's predecessor) acquired substantially all of the
assets of Old Mazel, Just Closeouts and certain of their affiliates, in a
transaction which was treated as a recapitalization for accounting purposes (the
"1992 Recapitalization"). The consideration for the assets acquired by the
Company consisted of the payment to Old Mazel of approximately $20.4 million in
cash, the issuance to Old Mazel of contingent notes providing for additional
payments totaling $4.0 million upon the completion of the Offering (the "1992
Old Mazel Contingent Notes"), the issuance to Old Mazel of subordinated notes
providing for payments totaling $1.5 million (which have subsequently been
repaid), the assumption by the Company of substantially all of the liabilities
of Old Mazel and indemnities by the Company in favor of Old Mazel with respect
to certain liabilities of Old Mazel assumed by the Company.

Mazel Company L.P. was capitalized with $13.5 million of equity, consisting
of $9.0 million of equity contributed by ZS Fund (including $4.5 million of
preferred equity (the "ZS Preferred Return")) and $4.5 million contributed by
Messrs. Dessler and Koval. ZS Fund is a private investment fund with over $125
million under management. Messrs. Ned Sherwood and Robert Horne, two of the
Company's directors, are directors and officers of ZS Fund. To provide for the
balance of the cash payment for the 1992 Recapitalization, the Company borrowed
from its institutional lender $14.8 million, including $9.8 million under a
revolving credit facility.

In connection with the 1992 Recapitalization, the Company entered into
employment agreements with Messrs. Dessler and Koval. The Company also agreed to
pay ZS Fund an annual investment advisory fee of $100,000 (the "ZS Management
Fee"). Concurrent with the completion of the Offering, the Company will pay to
ZS Fund $200,000 to terminate the ZS Management Fee. See "Management --
Executive Compensation" and "Certain Transactions."

PEDDLERS MART ACQUISITION

In December 1994, ZS Fund acquired Peddlers Mart, Inc. ("Peddlers Mart"),
which operated one store in Nanuet, New York. The Company and ZS Fund identified
Peddlers Mart as a potential acquisition candidate at a time when the Company
was in negotiations with Odd Job regarding a possible acquisition. Although such
discussions with Odd Job were terminated prior to the Peddlers Mart acquisition,
ZS Fund completed the Peddlers Mart acquisition. Odd-Job Holdings, Inc.
(together with its affiliates, "Odd Job Holdings") acquired Peddlers Mart from
ZS Fund at the time of the Odd Job Acquisition. The name of the store has
subsequently been changed to "Odd Job," and the store has been integrated with
the Odd Job operations.

SALE OF OHIO RETAIL OPERATIONS

In October 1995, the Company sold its Just Closeouts retail operations
consisting of seven closeout stores and four "$1.00" stores operated in Ohio
(the "Ohio Stores") to an unaffiliated third party. The Ohio Stores had
aggregate losses of $2.2 million from February 1, 1993 through the date of sale.
The Company received approximately $1.8 million in cash, plus a contingent note
from the purchaser whereby it could be paid up to an additional $500,000 based
upon the operating performance of the Ohio Stores over the next several years.
The Company made the determination to sell its Ohio Stores, in part, to
facilitate the Consolidated Settlement. The Company realized a loss on this
disposal of approximately $1.6 million. The Company remains contingently liable
for the lease obligations of six of the Ohio Stores in the event the buyer
should default on its lease payments. See Note 13 to Combined Financial
Statements.

ODD JOB ACQUISITION

On December 7, 1995, a wholly-owned subsidiary of Odd Job Holdings acquired
all of the stock and equity interests of Odd Job and certain of its affiliates
(the "Odd Job Acquisition"). The stock of Odd Job was

12
<PAGE> 13

owned by Howard Snyder and Israel Horowitz (the co-founders of Odd Job) and Old
Mazel. Prior to the Odd Job Acquisition, Odd Job was a significant customer of
the Company. Odd Job Holdings was a wholly-owned subsidiary of a limited
partnership, the general partner of which is an affiliate of ZS Fund.

The consideration for the equity interests of Odd Job acquired by Odd Job
Holdings totaled approximately $10.5 million, consisting of approximately $9.0
million in cash, the issuance of a subordinated promissory note in the principal
amount of $1.0 million to Old Mazel (the "1995 Old Mazel Note"), and the
issuance of contingent subordinated promissory notes to Messrs. Snyder and
Horowitz and to Old Mazel in a maximum aggregate amount of $450,000 (the "Odd
Job Contingent Notes"). In addition, Odd Job Holdings assumed approximately $2.8
million of Odd Job's debt outstanding as of the closing. Odd Job Holdings was
capitalized with $1.4 million of equity contributed by ZS Fund ($1.35 million of
which was loaned to ZS Fund by Mazel Company L.P.) and a $2.1 million loan from
Mazel Company L.P. To provide for the balance of the cash payment for the
acquisition, Odd Job Holdings borrowed approximately $9.3 million pursuant to a
senior credit facility from an institutional lender. As additional consideration
for its agreement to provide loans in connection with the Odd Job Acquisition,
Mazel Company L.P. acquired an option to acquire 100% of Odd Job Holdings (the
"Mazel Option"), which option will be exercised immediately prior to the
Offering.

In connection with the Odd Job Acquisition, Odd Job Holdings entered into
employment agreements with Messrs. Snyder and Horowitz providing for the payment
of employment bonuses of $150,000 each at the time of the acquisition, as well
as a payment based on the earnings of the Odd Job operations in the amount of
approximately $360,000 each, payable in shares of Common Stock at the initial
public offering price. Messrs. Snyder and Horowitz's employment agreements
include non-competition provisions relating to the retail operations of Odd Job
effective through January 31, 2001, or for a period of two or three years
following the termination of employment, depending on the date of such
termination.

Odd Job Holdings also indemnified the principals of Odd Job with respect to
litigation filed by individuals claiming damages based upon an alleged oral
agreement entered into by Messrs. Snyder and Horowitz and Old Mazel with respect
to the sale of Odd Job to such individuals (the "Odd Job Litigation"). However,
the Odd Job Contingent Notes provide that the amount payable by the Company
pursuant thereto (an aggregate of $450,000) will be reduced by all costs and
expenses related to the Odd Job Litigation incurred following the Odd Job
Acquisition. The parties have reached a settlement of the case that will result
in no payments being made under the Odd Job Contingent Notes and which will not
have a material adverse effect on the results of operations or the financial
condition of the Company.

As part of the Odd Job Acquisition, Odd Job Holdings entered into a license
and purchase agreement with two stores which currently use the "Odd Job" name.
Odd Job purchases merchandise for such stores, each of which are operated by
relatives of Messrs. Snyder and Horowitz. The license and purchase agreement
provides that such stores will discontinue the use of the "Odd Job" name by
January 1998 and will continue to purchase at least seventy-five percent (75%)
of their merchandise from Odd Job for a period of five years.

In March 1996, Mazel Company L.P. received a $4.0 million capital
contribution from two of its partners. Such funds were loaned to Odd Job
Holdings to provide for working capital needs.

THE CLOSEOUT STORE ACQUISITION

Effective March 1, 1996, Odd Job Holdings acquired the operations of its
two Staten Island retail stores from Melen Trading Corp. (such stores were
formerly operated under the name "The CloseOut Store"). As consideration for the
assets acquired, Odd Job Holdings assumed certain liabilities of Melen Trading
Corp. owing to third parties and forgave liabilities owing from Melen Trading
Corp. to Odd Job Holdings totaling in the aggregate approximately $1.1 million.
Messrs. Snyder, Horowitz and the owners of Old Mazel owned, in the aggregate,
50% of Melen Trading Corp. (the remaining 50% is owned by a relative of Mr.
Snyder, who managed the operations of the two stores). In connection with the
acquisition, Odd Job Holdings entered into a consulting agreement with the 50%
owner of Melen Trading Corp. pursuant to which such individual will receive an
aggregate of $100,000, payable in monthly installments, through February 1998.
As a condition to completing the acquisition, Odd Job and Mr. Snyder agreed to
reduce his annual salary by $25,000 in both fiscal 1996 and fiscal 1997.

13
<PAGE> 14

1996 RESTRUCTURING

Immediately prior to the Offering being declared effective, Mazel Company
L.P. will exercise the Mazel Option and acquire 100% of Odd Job Holdings for a
cash payment of $1.4 million (plus interest since December 7, 1995) to ZS Fund,
which will then immediately repay the $1.35 million loan (together with accrued
interest) from Mazel Company L.P. advanced in connection with the Odd Job
Acquisition. In addition, Mazel Company L.P. will make a distribution of a
promissory note bearing interest at the applicable federal rate to the partners
representing the undistributed cumulative net income previously allocated to the
partners, an amount equal to $3,995,000 (the "Partners Note"). All of the assets
of Mazel Company L.P., including 100% of Odd Job Holdings, subject to all
liabilities, including the Partners Note, will be contributed to Mazel Stores,
Inc. in exchange for 5,693,979 shares of Common Stock. Mazel Company L.P. will
be liquidated and such shares of Common Stock will be distributed to its
partners. In addition, the 1992 Old Mazel Contingent Notes and the 1995 Old
Mazel Note will be converted into 250,000 and 62,500 shares of Common Stock,
respectively.

The following timeline graphically represents the Company's development:

July 1992 -- Mazel Company L.P.(1) purchases substantially all of the assets of
The Mazel Company(2)

Dec 1994 -- ZS Peddler's Mart, Inc.(3) purchases assets of Peddlers Mart

Oct 1995 -- Ohio stores sold by Mazel Company L.P.

Dec 1995 -- Odd Job Holdings(4) acquires stock of Odd Job Trading Corp.(5) and
related entities

Odd Job Holdings acquires stock of ZS Peddler's Mart, Inc.

March 1996 -- Odd Job Holdings acquires assets of Melen Trading Co.(6)

November 1996 -- 1996 Restructuring: Mazel Stores, Inc.(7) acquires assets of
Mazel Company L.P. and stock of Odd Job Holdings

1. Mazel Company L.P. is a limited partnership managed by ZS Fund, a private
investment company, and Mazel/D&K, Inc., a corporation owned by Messrs.
Dessler and Koval.

2. Messrs. Dessler and Koval and others own the stock of The Mazel Company.

3. ZS Peddler's Mart, Inc. was formed by ZS Fund to acquire the assets of
Peddler's Mart, Inc.

4. Odd Job Holdings, Inc. was formed by ZS Fund to acquire the stock of Odd Job
Trading Corp. and related entities.

5. Odd Job Trading Corp. and related entities were owned equally by H. Snyder,
I. Horowitz and The Mazel Company.

6. Melen Trading Co. was one-half owned by H. Snyder, I. Horowitz and The Mazel
Company, with the remaining half owned by a relative of H. Snyder.

7. Mazel Stores, Inc.'s stock ownership prior to the Offering is substantially
identical to ownership of Mazel Company L.P.

14
<PAGE> 15

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the
2,574,000 shares of Common Stock being offered are estimated to be approximately
$37.4 million after deducting the underwriting discount and estimated offering
expenses payable by the Company. The Company intends to use approximately $29.6
million of the net proceeds to repay indebtedness of the Company to its senior
institutional lender under its existing credit facilities (the Company's credit
facilities bear interest at a weighted average borrowing rate of 8.68% per
annum), as of July 27, 1996. The Company will use $4.0 million of the net
proceeds to pay the Partners Note. The Partners Note represents the
undistributed cumulative net income of Mazel Company L.P. previously allocated
to the partners. Prior to the 1996 Restructuring, the Company was taxed as a
partnership for income tax purposes. As a result, the Company paid no federal
and minimal state income tax as earnings of the Company were taxed directly at
the partner level. The Company intends to make cash payments totaling
approximately $700,000 to two of its senior executives pursuant to provisions of
their respective employment agreements and $200,000 to ZS Fund to terminate the
ZS Management Fee. The Company will loan, on a recourse basis, approximately
$2.9 million to certain of its executives and other entities to provide for the
payment of tax obligations resulting from the Common Stock issued to them by the
Company in connection with amendments to officers' and other employees'
employment agreements and payment of the 1992 Old Mazel Contingent Notes and
1995 Old Mazel Note. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources,"
"Management -- Executive Compensation" and "Certain Transactions."

DIVIDEND POLICY

Prior to the effectiveness of the Offering, the Company was a partnership
that made cash distributions from time to time to its partners primarily for the
payment of taxes and to satisfy the ZS Preferred Return. Except for such
distributions, the Company has not paid cash distributions on its capital stock
or equity interests and does not anticipate paying cash dividends on its capital
stock in the foreseeable future. The Company currently intends to retain all
earnings from its operations to finance the growth and development of its
operations. The Company anticipates that its new credit facility will contain
restrictions on its ability to pay dividends.

15
<PAGE> 16

CAPITALIZATION

The following table sets forth: (i) the short-term debt and combined
capitalization of the Company as of July 27, 1996; (ii) the pro forma combined
capitalization giving effect to the transactions between the Company and its
partners, employees, debt holders and other related entities resulting in the
issuance of 6,210,000 shares; and (iii) the pro forma combined capitalization,
as adjusted to give effect to the sale of 2,574,000 shares of Common Stock
offered hereby at the initial public offering price of $16.00 per share and the
application of the estimated net proceeds from the Offering. See "Use of
Proceeds" and "Pro Forma Condensed Balance Sheet" and notes thereto.

<TABLE>
<CAPTION>
JULY 27, 1996
--------------------------------------------
PRO PRO FORMA
ACTUAL FORMA AS ADJUSTED
------- -------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Short-term debt:
Current portion of long-term debt.............. $ 1,354 $ 1,354 $ 22
======= ======= =========
Long-term debt:
Borrowings under revolving credit facility..... $20,637 $20,637 $ 2,689
Other long-term debt, excluding current
portion..................................... 10,372 10,372 62
Notes payable to related parties............... 1,390 390 390
------- -------- -----------
Total long-term debt...................... 32,399 31,399 3,141
------- -------- -----------
Shareholders' equity and partners' capital:
Partners' capital.............................. 19,585 -- --
Preferred stock, 2,000,000 shares authorized;
no shares issued or outstanding -- -- --
Common stock, 14,000,000 shares authorized;
1,000 shares issued and outstanding, actual;
6,210,000 shares issued and outstanding, pro
forma; and 8,784,000 shares issued and
outstanding, pro forma as adjusted(1)....... 1 -- --
Additional paid in capital..................... 1,499 25,099 58,505
Retained earnings (deficit).................... (200) (1,261 ) (1,261)
------- -------- -----------
Total shareholders' equity and partners'
capital................................... 20,885 23,838 57,244
------- -------- -----------
Total capitalization...................... $53,284 $55,237 $60,385
======= ======= =========
<FN>
- ---------------

16
<PAGE> 17

DILUTION

As of July 27, 1996, the combined pro forma net tangible book value of the
Company (after giving effect to transactions between the Company and its
partners, employees, debt holders and other related entities occurring in
conjunction with the Offering) was approximately $13.5 million, or $2.17 per
share. "Combined pro forma net tangible book value per share" represents the
total tangible assets of the Company, including Odd Job, less all liabilities,
divided by the number of pro forma shares of Common Stock outstanding. After
giving effect to the sale by the Company of 2,574,000 shares of Common Stock
offered hereby at the initial public offering price of $16.00 per share and the
application of the estimated net proceeds as set forth under "Use of Proceeds,"
the pro forma net tangible book value of the Company as of July 27, 1996 would
be approximately $46.9 million or $5.34 per share. This represents an immediate
increase in net tangible book value per share of approximately $3.17 to current
shareholders and an immediate dilution of $10.66 per share to new investors. The
following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share........................... $16.00
Combined pro forma net tangible book value per share before
the Offering................................................ 2.17
Increase per share attributable to new investors............. 3.17
------
Combined pro forma net tangible book value per share after the
Offering........................................................ 5.34
------
Dilution per share to new investors............................... $10.66
======
</TABLE>

The following table summarizes, on a pro forma basis as of July 27, 1996,
the difference between existing shareholders and new shareholders with respect
to the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid by
existing shareholders and by the purchasers of the shares offered by the Company
(before deducting the underwriting discount and estimated offering expenses):

<TABLE>
<CAPTION>
AVERAGE
SHARES PURCHASED(1) TOTAL CONSIDERATION PRICE
--------------------- ----------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- ------
<S> <C> <C> <C> <C> <C>
Existing shareholders......... 6,210,000 70.7% $20,236,000(2) 33.0% $ 3.26
New shareholders.............. 2,574,000 29.3 41,184,000 67.0 16.00
--------- ------- ----------- -------
Total....................... 8,784,000 100.0% $61,420,000 100.0%
======== ======= ========== =======
<FN>
- ---------------

(1) Excludes 900,000 shares of Common Stock reserved for issuance under the
Company's Stock Option Plan including 655,500 shares issuable pursuant to
options outstanding at an exercise price equal to the initial public
offering price per share. See "Management -- Compensatory Plans."

(2) Consists of $19,585,000 of partners' capital, plus $3,646,000 of Common
Stock issued in lieu of compensation, plus the $1,000,000 1995 Old Mazel
Note converted to Common Stock, less the $3,995,000 payment of the Partners
Note from the estimated net proceeds of the Offering. See "Certain Corporate
Transactions -- 1996 Restructuring."
</TABLE>

17
<PAGE> 18

PRO FORMA FINANCIAL DATA

The following pro forma financial data of the Company present the Company's
unaudited pro forma condensed statement of combined operations for the year
ended January 27, 1996, the six months ended July 27, 1996 and the unaudited pro
forma condensed combined balance sheet data as of July 27, 1996. The pro forma
as adjusted statement of combined operations data for the fiscal year ended
January 31, 1996 has been adjusted to: (i) reflect the combination of Mazel
Company L.P.'s wholesale operations and Odd Job's operations as if it had
occurred at the beginning of the period presented; (ii) eliminate the
discontinued Ohio Stores retail operations; and (iii) give effect to the
Offering. The pro forma as adjusted statement of combined operations data for
the six months ended July 27, 1996 gives effect to the Offering.

The pro forma financial data appearing herein do not purport to represent
what the Company's results of operations would have been had such transactions
in fact occurred on the dates or at the beginning of the periods indicated or to
project the results of operations of the Company for the present year or for any
future period or the Company's financial condition on January 27, 1996, July 27,
1996 or on any other date. In the fourth quarter of fiscal 1996, the Company
will take a one-time, pre-tax charge of approximately $4.4 million representing
the compensation and other charges arising in connection with the Offering. See
"Certain Transactions -- Miscellaneous." The Company also expects to realize a
one-time $1.6 million tax benefit in fiscal 1996 arising from cumulative
differences between the net book and tax basis of Mazel Company L.P.'s assets
and liabilities. These items have not been reflected in the pro forma amounts.

PRO FORMA CONDENSED STATEMENT OF COMBINED OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED JANUARY 27, 1996 SIX MONTHS ENDED JULY 27, 1996
--------------------------------- ---------------------------------
PRO FORMA PRO FORMA
AS AS
COMBINED(1) ADJUSTMENTS ADJUSTED COMBINED(2) ADJUSTMENTS ADJUSTED
-------- --------- ---------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net sales................... $98,106 $35,775(4) $133,881 $85,165 $ -- $ 85,165
Cost of sales............... 70,208 20,815(5) 91,023 58,514 -- 58,514
-------- --------- ---------- -------- --------- ----------
Gross profit................ 27,898 14,960 42,858 26,651 -- 26,651
SG&A expense................ 20,753 11,340(6) 32,093 20,822 (823)(11) 19,999
Special charges............. 2,203 (3) (1,571)(7) 632 -- -- --
-------- --------- ---------- -------- --------- ----------
Operating profit............ 4,942 5,191 10,133 5,829 823 6,652
Interest expense............ 1,265 (1,540)(8) (275) 1,284 (1,332)(12) (48)
Other expense (income)...... 559 (600)(9) (41) (22) -- (22)
-------- --------- ---------- -------- --------- ----------
Income before income
taxes..................... 3,118 7,331 10,449 4,567 2,155 6,722
Income taxes................ 19 4,265(10) 4,284 34 2,722 2,756
-------- --------- ---------- -------- --------- ----------
Net income.................. $ 3,099 $ 3,066 $ 6,165 $ 4,533 $ (567) $ 3,966
======== ========= ========== ======== ========= ==========
Pro forma earnings per
share..................... $ 0.31(13) $ 0.70(14) $ 0.43(13) $ 0.45(14)
Pro forma shares
outstanding............... 5,924(13) 8,784(14) 6,210(13) 8,784(14)
<FN>
- ---------------

(1) Consists of Mazel Company L.P.'s wholesale operations, the Ohio Stores
through October 1995, Peddlers Mart, and Odd Job's operations after
December 7, 1995.

(2) Consists of Mazel Company L.P.'s wholesale operations and Odd Job's
operations, including Peddlers Mart.

(3) Consists of special charges of $632 in executive signing bonuses and a
$1,571 loss on the disposal of the Ohio Stores.

(4) Reflects Odd Job sales prior to its acquisition of $45,289; eliminates
pre-acquisition intercompany sales made from the Company's wholesale
operations to Odd Job of $1,835; and eliminates the sales of the Company's
discontinued Ohio Stores of $7,679.

(5) Includes cost of sales of $27,904 pertaining to Odd Job pre-acquisition
sales and eliminates pre-acquisition intercompany cost of sales of $1,835
and cost of sales pertaining to the discontinued Ohio Stores of $5,254.
</TABLE>

18
<PAGE> 19

(6) Includes Odd Job pre-acquisition expenses of $16,199 and an additional $225
of goodwill amortization, less a $1,404 adjustment to senior management
salaries, discontinued Ohio Stores expenses of $3,064 and certain
depreciation and lease expenses of $464 and $152, respectively.

(7) Eliminates the loss on the disposal of the Ohio Stores.

(8) Reflects the adjustment of additional interest expense of $796 to reflect a
full year of Odd Job operations reduced by $2,457 due to debt reduction of
$29,590 (at a weighted average borrowing rate of 8.25% per annum) from the
estimated net proceeds of the Offering and conversion into Common Stock of
the $1,000 1995 Old Mazel Note, offset by additional interest expense on
accrued leases of $121.

(9) Eliminates $600 of special charges related to the Consolidated litigation.

(10) Provides for income tax at a rate of 41%.

(11) Reflects the adjustment to senior management salaries.

(12) Reflects reduced interest expense due to debt reduction of $29,590 (at a
weighted average borrowing rate of 8.68% per annum) and the conversion into
Common Stock of the $1,000 1995 Old Mazel Note.

(13) See Note 15 of Notes to Combined Financial Statements for an explanation of
the method of calculation.

(14) Computed by dividing pro forma net income into 8,784 pro forma shares
outstanding after giving effect to the Offering assuming that such shares
were outstanding at the beginning of each period shown.

19
<PAGE> 20

PRO FORMA CONDENSED COMBINED BALANCE SHEET

(IN THOUSANDS)

<TABLE>
<CAPTION>
JULY 27, 1996
-------------------------------------
PRO FORMA
PRO AS
ACTUAL FORMA(1) ADJUSTED(1)
------- ----------- -------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents........................................ $ 2,312 $ 1,414(2) $ 2,312(2)
Accounts receivable -- trade, less allowance for doubtful
accounts of $195............................................... 13,496 13,496 13,496
Notes and other receivables...................................... 672 672 672
Inventories...................................................... 40,894 40,894 40,894
Prepaid expenses................................................. 880 880 880
Deferred income tax benefit...................................... 314 3,797(3) 3,797
------- ----------- -------------
Total current assets...................................... 58,568 61,153 62,051
Equipment, furniture and leasehold improvements, net............... 3,695 3,695 3,695
Other assets....................................................... 1,086 1,086 1,086
Notes receivable -- related parties................................ 1,350 --(4) 2,918(9)
Goodwill, net...................................................... 9,509 10,227(5) 10,227
Deferred income tax benefit........................................ 1,695 1,695 1,695
------- ----------- -------------
$75,903 $ 77,856 $81,672
======== ============ =============
LIABILITIES, SHAREHOLDERS' EQUITY AND PARTNERS' CAPITAL
Current liabilities
Long-term debt, current portion.................................. $ 1,354 $ 1,354 $ 22(9)
Accounts payable................................................. 15,174 15,174 15,174
Accrued expenses................................................. 3,704 3,704 3,704
Other current liabilities........................................ 360 360 360
------- ----------- -------------
Total current liabilities................................. 20,592 20,592 19,260
Revolving line of credit........................................... 20,637 20,637 2,689(9)
Long-term debt, net of current portion............................. 11,762 10,762(6) 452(9)
Other liabilities.................................................. 1,983 1,983 1,983
Deferred income taxes.............................................. 44 44 44
------- ----------- -------------
Total liabilities......................................... 55,018 54,018 24,428
Shareholders' equity and partners' capital......................... 21,085 25,099(7) 58,505(9)
Retained earnings (deficit)........................................ (200) (1,261)(8) (1,261)
------- ----------- -------------
Total shareholders' equity and partners' capital.......... 20,885 23,838 57,244
------- ----------- -------------
$75,903 $ 77,856 $81,672
======== ============ =============
<FN>
- ---------------

(1) The pro forma balance sheet data reflects transactions between the Company
and its partners, employees, debt holders and other related entities arising
in conjunction with the Offering as if it had been completed on July 27,
1996. The pro forma as adjusted balance sheet data additionally reflects the
Offering as if it had been completed on July 27, 1996 and the application of
the estimated net proceeds.

(2) Reflects $898 cash buyout of contractual compensation arrangements and the
related use of proceeds.

(3) Reflects: (i) $1,620 in deferred tax benefits arising from cumulative
differences between the net book and tax basis of Mazel Company L.P.'s
assets and liabilities; and (ii) $1,863 in tax benefits resulting from
compensation transactions in conjunction with the Offering.

(4) Reflects collection of the note from ZS Fund in conjunction with the
exercise of the Mazel Option.

(5) Reflects $718 in additional goodwill relating to the Odd Job Acquisition
arising in conjunction with the Offering.

(6) Reflects exchange of the $1,000 1995 Old Mazel Note for shares of Common
Stock.

(7) Reflects $3,646 of Common Stock issued in lieu of compensation, $1,000
relating to exchange of the 1995 Old Mazel Note for Common Stock, $718 of
Common Stock relating to additional consideration in connection with the Odd
Job Acquisition, less $1,350 payment to ZS Fund relating to the exercise of
the Mazel Option.

(8) Reflects $4,544 of compensation less related income taxes at 41% of $1,863
and $1,620 in deferred tax benefits.

(9) Reflects net proceeds of $37,401 less a $3,995 payment of the Partners Note,
$2,918 of tax loans, $898 of cash buyout of contractual compensation
arrangements, and $29,590 for repayment of indebtedness.
</TABLE>

20
<PAGE> 21

SELECTED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The selected historical financial data of Mazel Company L.P. for each of
the years ended December 31, 1992 and January 31, 1994, 1995 and 1996, of Odd
Job Holdings as of January 27, 1996 and its Predecessor and Successor periods
from February 1, 1995 to December 7, 1995 and December 7, 1995 to January 21,
1996, respectively, and for Mazel Company L.P. and Odd Job Holdings as combined
as of January 31, 1995 and 1996 and for each of the three years in the period
ended January 31, 1996, are derived from the financial statements of Mazel
Company L.P., Odd Job Holdings, and Mazel Company L.P. and Odd Job Holdings as
combined, respectively, which financial statements have been audited by KPMG
Peat Marwick LLP, independent certified public accountants. The financial
statements of Mazel Company L.P. as of January 31, 1996 and 1995, and for each
of the years in the three-year period ended January 31, 1996, and of Odd Job
Holdings and Mazel Company L.P. and Odd Job Holdings as combined as of and for
the periods noted above, and the reports thereon are included elsewhere in this
Prospectus. The financial statements of Odd Job Trading Corp. and its affiliates
for each of the years ended January 31, 1992, 1993, 1994 and 1995 are derived
from the financial statements of Odd Job Trading Corp. and its affiliates. The
January 31, 1995 and 1994 financial statements of Odd Job Trading Corp. and its
affiliates which are included herein have been audited by Deloitte & Touche LLP,
independent auditors. The selected data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and financial statements and related notes. The information
presented under the caption "Selected Operating Data" is unaudited.

The selected unaudited data presented for the six months ended July 31,
1995 and July 27, 1996 and as of such dates are derived from the unaudited
financial statements of Mazel Company L.P., Odd Job Holdings and the combined
entity included elsewhere in this Prospectus. In the opinion of management, the
unaudited financial statements have been prepared on the same basis as the
audited financial statements and include all adjustments, consisting only of the
normal recurring adjustments, necessary for the fair presentation thereof.
Operating results for the six months ended July 27, 1996 are not necessarily
indicative of the results that may be expected for the year ending January 25,
1997.

The statement of combined operations data consists of: (i) Mazel Company
L.P.'s wholesale operations and the Ohio Stores retail operations for the fiscal
years ended December 31, 1991, December 31, 1992 and January 31, 1994; (ii)
Mazel Company L.P.'s wholesale operations, the Ohio Stores retail operations and
Peddlers Mart operations (after December 9, 1994) for the fiscal year ended
January 31, 1995; (iii) Mazel Company L.P.'s wholesale operations, the Ohio
Stores retail operations (through October, 1995), Peddlers Mart and Odd Job
Holdings' operations (after December 7, 1995) for the fiscal year ended January
31, 1996; (iv) Mazel Company L.P.'s wholesale operations, the Peddlers Mart
operations and the Ohio Stores retail operations for the six months ended July
31, 1995; and (v) Mazel Company L.P.'s wholesale operations and Odd Job
Holdings' operations which includes Peddlers Mart for the six months ended July
27, 1996.

The pro forma data has been prepared on the basis of certain assumptions
and estimates and may not be indicative of the results that would have been
achieved if the 1996 Restructuring and the Offering had been effected on the
dates indicated or that may be achieved in the future.

21
<PAGE> 22

SELECTED FINANCIAL AND OPERATING DATA (CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED
-------------------------------------------------------------- SIX MONTHS ENDED
JANUARY 31, ------------------------------------
------------------------------------------ PRO FORMA
DECEMBER 31, PRO FORMA AS ADJUSTED
----------------- AS ADJUSTED JULY 31, JULY 27, JULY 27,
1991 1992 1994 1995 1996 1996(1) 1995 1996 1996(2)
------- ------- ------- ------- ------- ------------ --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF COMBINED
OPERATIONS DATA:
Net sales................ $70,051 $71,156 $74,954 $76,254 $98,106 $ 133,881 $41,696 $85,165 $ 85,165
Cost of sales............ 49,965 52,111 54,201 55,183 70,208 91,023 29,251 58,514 58,514
------- ------- ------- ------- ------- ------------ --------- --------- ------------
Gross profit............. 20,086 19,045 20,753 21,071 27,898 42,858 12,445 26,651 26,651
SG&A expense............. 14,589 13,703 15,094 15,317 20,753 32,093 9,163 20,822 19,999
Special charges.......... -- 8,100 1,285 -- 2,203(3) 632 -- -- --
------- ------- ------- ------- ------- ------------ --------- --------- ------------
Operating profit
(loss)................. 5,497 (2,758) 4,374 5,754 4,942 10,133 3,282 5,829 6,652
Interest expense......... 14 650 1,130 894 1,265 (275) 544 1,284 48
Other expense (income)... (828) (459) 43 (26) 559 (41) (31) (22) (22)
------- ------- ------- ------- ------- ------------ --------- --------- ------------
Income (loss) before
income taxes........... 6,311 (2,949) 3,201 4,886 3,118 10,449 2,769 4,567 6,722
Income taxes............. 93 63 21 71 19 4,284 38 34 2,756
Extraordinary loss....... -- -- (455) -- -- -- -- -- --
------- ------- ------- ------- ------- ------------ --------- --------- ------------
Net income (loss)........ $ 6,218 $(3,012) $ 2,725 $ 4,815 $ 3,099 $ 6,165 $ 2,731 $ 4,533 $ 3,966
======= ======= ======= ======= ======= ============ ======== ======== ============
Pro forma earnings per
share.................. $ 0.31(4) $ 0.70 $ 0.43(4) $ 0.45
Pro forma shares
outstanding............ 5,924(4) 8,784 6,210(4) 8,784
Supplemental pro forma
earnings per share..... $ 0.42(4) $ 0.43(4)
Supplemental pro forma
shares outstanding..... 7,773(4) 8,059(4)
</TABLE>

<TABLE>
<CAPTION>
JULY 27, 1996
DECEMBER 31, JANUARY 31, -------------------------
------------------ ----------------------------- PRO FORMA
1991 1992 1994 1995 1996 ACTUAL AS ADJUSTED(5)
------- ------- ------- ------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................... $21,119 $20,469 $18,373 $17,439 $26,193 $37,976 $ 42,791
Total assets.............................. 29,632 30,589 28,450 31,129 58,034 75,903 81,672
Long-term debt............................ -- 17,168 12,303 10,649 27,382 33,753 3,163
Total liabilities......................... 5,096 22,848 18,997 19,567 43,764 55,018 24,428
Shareholders' equity and partners'
capital................................. 24,537 7,741 9,453 11,562 14,270 20,885 57,244
<FN>
- ---------------

(1) The pro forma as adjusted statement of combined operations data for the
fiscal year ended January 31, 1996 have been adjusted to: (i) reflect the
combination of Mazel Company L.P.'s wholesale operations and Odd Job's
operations as if it had occurred at the beginning of the period presented;
(ii) eliminate the discontinued Ohio Stores; and (iii) give effect to the
Offering. See "Pro Forma Financial Data."

(3) Consists of special charges of $632 in executive signing bonuses and a
$1,571 loss on the disposal of the Ohio Stores.

(4) See Note 15 of Notes to Combined Financial Statements for an explanation of
the method of calculation.

(5) The pro forma as adjusted balance sheet data: (i) give effect to the
Offering, as if it had been completed on July 27, 1996, and the application
of the estimated net proceeds; and (ii) give effect to transactions between
the Company and its partners, employees, debt holders and other related
entities occurring in conjunction with the Offering.
</TABLE>

22
<PAGE> 23

SELECTED FINANCIAL AND OPERATING DATA (CONTINUED)

(IN THOUSANDS, EXCEPT SELECTED OPERATING DATA)

PREDECESSOR
------------------------------------------------------- SUCCESSOR
FEBRUARY 1, ----------- SIX MONTHS ENDED
YEARS ENDED JANUARY 31,(1) 1995 TO 1995 TO --------------------
STATEMENT OF OPERATIONS DATA ---------------------------------------- DECEMBER 7, JANUARY 27, JULY 31, JULY 27,
ODD JOB HOLDINGS (RETAIL): 1992 1993 1994 1995 1995 1996(2) 1995 1996
------- ------- ------- ------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales....................... $47,140 $47,538 $50,085 $56,511 $45,289 $14,775 $ 25,770 $ 35,039
Cost of sales................... 29,135 29,468 30,782 35,481 27,904 9,637 15,878 21,368
------- ------- ------- ------- ----------- ----------- -------- --------
Gross profit.................... 18,005 18,070 19,303 21,030 17,385 5,138 9,892 13,671
SG&A expense.................... 15,681 16,251 17,487 18,907 16,199 4,658 9,102 12,810
Special charges................. -- -- -- -- -- 300 -- --
------- ------- ------- ------- ----------- ----------- -------- --------
Operating profit................ 2,324 1,819 1,816 2,123 1,186 180 790 861
Interest expense................ 184 224 210 180 213 287 91 853
------- ------- ------- ------- ----------- ----------- -------- --------
Income (loss) before income
taxes......................... 2,140 1,595 1,606 1,943 973 (107) 699 8
Income taxes (benefit).......... 221 163 150 225 14 (7) 78 4
Cumulative effect of a change in
accounting principle.......... -- -- (39) -- -- -- -- --
------- ------- ------- ------- ----------- ----------- -------- --------
Net income (loss)............... $ 1,919 $ 1,432 $ 1,417 $ 1,718 $ 959 $ (100) $ 621 $ 4
======= ======= ======= ======= =========== ========== ======= =======
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JANUARY 31, ----------------------
----------------------------------------------------------------- JULY 31, JULY 27,
SELECTED OPERATING DATA: 1992 1993 1994 1995 1996 1995 1996
------- ------- ------- ------- --------------------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of stores................ 10 10 11 12 13 13 17
Total square footage............ 139,718 139,718 153,718 164,386 188,361 186,386 252,861
Total store sales growth........ 14.3% 0.8% 5.4% 12.8% 6.3% 14.2% 24.2%
Comparable store sales growth... 6.7% 0.8% (2.6)% 7.9% (4.4)% 2.1% 14.2%
Avg. annual net sales per
unit.......................... $ 4,714 $ 4,754 $ 4,553 $ 4,709 $ 4,620 $ 2,170 $ 2,336
Avg. net sales per gross sq.
ft............................ $ 337 $ 340 $ 326 $ 344 $ 319 $ 157 $ 178
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED
----------------------------------------------------------- SIX MONTHS ENDED
DECEMBER 31, JANUARY 31, ----------------------
STATEMENT OF OPERATIONS DATA -------------------- --------------------------------- JULY 31, JULY 27,
MAZEL COMPANY L.P. (WHOLESALE): 1991 1992 1994 1995 1996 1995 1996
------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales......................... $59,169 $57,434 $62,744 $62,748 $77,313 $ 33,648 $ 54,175
Cost of sales..................... 42,452 42,578 45,703 45,790 56,877 23,866 40,862
------- ------- ------- ------- ------- -------- --------
Gross profit...................... 16,717 14,856 17,041 16,958 20,436 9,782 13,313
SG&A expense...................... 11,505 9,540 10,546 10,478 13,031 6,063 8,012
Special charges................... -- 8,100 1,285 -- 332 -- --
------- ------- ------- ------- ------- -------- --------
Operating profit (loss)........... 5,212 (2,784) 5,210 6,480 7,073 3,719 5,301
Interest expense, net............. -- 673 1,130 883 978 499 431
Other expense (income)............ (716) (409) 72 (15) 571 (24) (22)
------- ------- ------- ------- ------- -------- --------
Income (loss) before income
taxes........................... 5,929 (3,048) 4,008 5,612 5,524 3,244 4,892
Income taxes...................... 83 61 21 73 26 37 32
Extraordinary loss................ -- -- (455) -- -- -- --
Discontinued operations........... 372 97 (807) (724) (2,202) (458) --
------- ------- ------- ------- ------- -------- --------
Net income (loss)................. $ 6,218 $(3,012) $ 2,725 $ 4,815 $ 3,296 $ 2,749 $ 4,860
======= ======= ======= ======= ======= ======= =======
<FN>
- ---------------

(1) Reflects a freight reclassification of $839, $737, $705 and $698 for the
years ended January 31, 1995, 1994, 1993 and 1992, respectively, from cost
of sales to selling, general and administrative expense.

(2) As a result of the purchase accounting method applied to the Odd Job
Acquisition, the financial information for the periods after the Odd Job
Acquisition is presented on a different cost basis than for the periods
before the Odd Job Acquisition; accordingly, post-acquisition and
pre-acquisition information is not comparable. The Company information
post-acquisition includes the results of Peddlers Mart for the 12 months
ended January 27, 1996 and Odd Job for the period from December 7, 1995 to
January 27, 1996.
</TABLE>

23
<PAGE> 24

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and
results of operations of the Company and its retail and wholesale operations
should be read in conjunction with the information set forth under "Selected
Financial and Operating Data" and the financial statements of Mazel Company
L.P., Odd Job Holdings and their combined operations and the accompanying notes
thereto included elsewhere in this Prospectus.

GENERAL

Mazel was founded as a wholesaler of closeout merchandise in 1975 by
Messrs. Dessler and Koval. In 1981, the Company initiated its Just Closeouts
retail operations in Ohio, which were subsequently sold in October 1995. In
1992, Mazel Company L.P. (the predecessor to the Company) acquired substantially
all of the assets of Mazel's wholesale business, as well as the Ohio Stores.

In December 1995, Odd Job Holdings, a wholly-owned subsidiary of ZS Fund,
acquired Odd Job, which operated a chain of 12 retail stores in the New York
metropolitan area, and acquired Peddlers Mart, which operated one store. Odd Job
Holdings completed the acquisition of two Staten Island retail stores in March
1996 and has opened six new stores this year. Immediately prior to the Offering,
Odd Job Holdings was acquired by the Company in the 1996 Restructuring. The
Company plans to open an additional store in fiscal 1996, nine stores in fiscal
1997, 12 stores in fiscal 1998 and 15 stores in fiscal 1999.

The 1996 Restructuring will involve the contribution by Mazel Company L.P.
of all of its assets to the Company, a newly created corporation, in exchange
for 5,693,979 shares of Common Stock. Among the transferred assets will be the
option to acquire the stock of Odd Job Holdings from ZS Fund, the managing
general partner of Mazel Company L.P. The Company will exercise this option
immediately prior to the Offering being declared effective. The option price
will consist of the cash payment of $50,000 to ZS Fund, plus the cancellation of
the $1.35 million indebtedness due by ZS Fund to the Company, as successor to
Mazel Company L.P. The $1.35 million was initially loaned to ZS Fund in
connection with the capitalization of Odd Job Holdings at the time of the Odd
Job Acquisition. The 1996 Restructuring will also include the conversion of the
1992 Old Mazel Contingent Notes ($4.0 million) and the 1995 Old Mazel Note ($1.0
million) into 250,000 and 62,500 shares of Common Stock, respectively, at a
conversion price equal to the initial offering price. See "Significant Corporate
Transactions."

The Combined Financial Statements of Mazel Company L.P. and Odd Job
Holdings, Inc. represent the historical assets, liabilities and results of
operations of the Company.

In the fourth quarter of fiscal 1996, the Company will take a one-time,
pre-tax charge of approximately $4.4 million representing the compensation and
other charges arising in connection with the Offering. Included as part of the
charge are the effects of the issuance, prior to completion of the Offering, of
a total of 203,521 shares of Common Stock to certain employees of the Company as
salary reduction and bonus compensation payments. See "Certain Transactions --
Miscellaneous."

The Company believes that it generally requires approximately $600,000 to
open a new store of 17,000 square feet, including the cost of leasehold
improvements, store equipment and fixtures and inventory (net of associated
accounts payable) and pre-opening costs. The Company anticipates that new stores
generally become profitable (excluding the store's share of interest carrying
charges or corporate overhead) within the first six to nine months of operation,
with stores opened in the third and fourth quarters achieving profitability more
quickly than stores opened in the first and second quarters.

On a continuous basis, the Company remodels and refurbishes stores at a
modest cost. Because the first full year of operations includes unusually strong
sales in the opening quarter associated with grand opening promotions, second
year net sales may be lower than first year net sales, but generally increase
thereafter. Store opening expenses are charged to operations as incurred. The
timing of store openings and the number of stores in the maturation process will
have an effect on quarter-to-quarter comparisons. Comparable store net sales
means a comparison of net sales from all stores open at the beginning of both
fiscal periods compared. The Company's comparable store sales increased
approximately 22.0% in the months of August and September in fiscal 1996.

24
<PAGE> 25

Wholesale net sales reflect both warehouse and drop shipment sales. Drop
shipment sales generally have lower gross margins than sales requiring
distribution from the Company's warehouses; however, they also have lower
associated selling, general and administrative costs. In addition, sales to the
Company's retail operations have lower margins than sales to third parties.

The Company's wholesale operations have grown from $59.2 million in fiscal
1991 to $77.3 million in fiscal 1995, a compound annual growth rate of 6.9%. The
Company anticipates that net sales of the retail operations should grow more
quickly than those of its wholesale operations because of an emphasis on opening
and acquiring new stores and anticipated increases in comparable store sales. As
the Company's retail operations grow, the wholesale operations will sell a
larger percentage of its products to the Company's retail stores. Because the
gross margin on sales from the wholesale to retail operations are below the
margin on sales to third parties, to the extent that sales to the retail
operations becomes a higher percentage of wholesale's net sales, wholesale's
margin will be negatively affected. The wholesale operations gross margin on
sales to the Company's retail operations of inventory remaining on the retail
operations books at the end of a reporting period is eliminated in the combined
statements. Consequently, the wholesale operations gross margins will be
slightly affected on a quarter-to-quarter basis based on the level of any
changes to retail inventory.

In the past year, the Company has made a substantial investment in
executive personnel and infrastructure to accommodate the Company's anticipated
growth, particularly with respect to its retail operations. The Company has
hired three senior executives and six buyers, and is in the process of expanding
its Solon, Ohio and Englewood, New Jersey warehouse and distribution facilities
by an aggregate of 208,000 square feet. The Company believes that this level of
investment in senior management and distribution facilities will be sufficient
to support its growth until the Company's retail operations expands to
approximately 60 stores.

RESULTS OF OPERATIONS

The results of operations set forth below describe: (i) the Company's
retail operations; and (ii) its wholesale operations. Retail operations include
the results of the Odd Job operations both prior and subsequent to its
acquisition by the Company on December 7, 1995. In addition, retail operations
results include the Peddlers Mart operations for the six months ended July 27,
1996 and for fiscal 1995 (but not the six months ended July 31, 1995). Wholesale
operations include the results of Mazel Company L.P. for each of the periods.
The Ohio Stores, which were sold on October 30, 1995, are treated as a
discontinued operation.

RETAIL

<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
------------------------------------------------------------------------------------
PREDECESSOR SUCCESSOR PREDECESSOR SUCCESSOR
---------------------------------- ----------------- ------------ ------------
YEARS ENDED SIX MONTHS ENDED
JANUARY 31, FEBRUARY 1, 1995 DECEMBER 7, 1995 ---------------------------
--------------- TO TO JULY 31, JULY 27,
1994 1995 DECEMBER 7, 1995 JANUARY 27, 1996 1995 1996
------ ------ ---------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales.............. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.......... 61.5 62.8 61.6 65.2 61.6 61.0
------ ----- ------ ------ ------ ------
Gross margin........... 38.5 37.2 38.4 34.8 38.4 39.0
SG&A expense........... 34.9 33.5 35.8 31.5 35.3 36.6
Special charges........ -- -- -- 2.0 -- --
------ ----- ------ ------ ------ ------
Operating margin....... 3.6 3.8 2.6 1.2 3.1 2.5
Interest expense....... 0.4 0.3 0.5 1.9 0.4 2.4
------ ----- ------ ------ ------ ------
Income (loss) before
income taxes......... 3.2 3.4 2.1 (0.7) 2.7 --
Income taxes........... 0.3 0.4 -- -- 0.3 --
------ ----- ------ ------ ------ ------
Net income (loss)...... 2.8% 3.0% 2.1% (0.7%) 2.4% --
====== ====== ====== ====== ====== ======
</TABLE>

25
<PAGE> 26

<TABLE>
<CAPTION>
PERCENTAGE INCREASE (DECREASE)
------------------------------------------------------------
SIX MONTHS
ENDED
----------
YEARS ENDED JULY 31,
--------------------------------------------- 1995
JANUARY 31, 1994 JANUARY 31, 1995 TO
TO TO JULY 27,
JANUARY 31, 1995 JANUARY 27, 1996(1) 1996
------------------- --------------------- ----------
<S> <C> <C> <C>
Net sales..................................... 12.8% 6.3% 36.0%
Cost of sales................................. 15.3 5.8 34.6
Gross margin.................................. 8.9 7.1 38.2
SG&A expense.................................. 8.1 10.3 40.7
Operating profit.............................. 16.9 (35.7) 9.0
Interest expense.............................. (14.3) nmf nmf
Income (loss) before income taxes............. 21.0 (55.4) (98.9)
Income taxes.................................. 50.0 (96.9) (94.9)
Net income (loss)............................. 21.2 (50.0) (99.4)
<FN>
- ---------------

(1) Combines Predecessor and Successor results
nmf = not meaningful
</TABLE>

Six Months Ended July 27, 1996, versus Six Months Ended July 31, 1995

Net sales increased $9.3 million, or 36.0%, to $35.0 million in the six
months ended July 27, 1996, from $25.8 million for the six months ended July 31,
1995. Comparable store net sales increased approximately 14.2%, contributing
$4.0 million of the increase in net sales. Comparable store net sales increased
primarily due to expanded weekend hours and seven-day-a-week operation following
the Odd Job Acquisition, as well as an expanded product mix and enhanced
merchandising techniques. The remaining $5.3 million increase is attributable to
the addition of Peddlers Mart, two stores acquired March 1, 1996 and two
additional stores opened in the second quarter of fiscal 1996. Net sales in the
first six months of fiscal 1995 were marginally negatively affected by the
relocation of one of the Company's Manhattan stores at the end of the period.

Gross profit increased $3.8 million, or 38.2%, to $13.7 million in the six
months ended July 27, 1996, from $9.9 million in the six months ended July 31,
1995. Gross margin increased to 39.0% in the six months ended July 27, 1996,
from 38.4% in the six months ended July 31, 1995. This increase was due to
increased purchasing opportunities resulting from the ability to buy for both
the retail and wholesale operations, as well as the efforts of the Company's
eight new senior buyers in acquiring higher margin products.

Selling, general and administrative expenses increased $3.7 million, or
40.7%, to $12.8 million in the six months ended July 27, 1996, from $9.1 million
in the six months ended July 31, 1995. Selling, general and administrative
expenses, as a percentage of net sales, increased to 36.6% in the fiscal 1996
period from 35.3% in the comparable 1995 period. This $3.7 million increase
primarily resulted from $2.0 million of increased store level expenses
(decreasing as a percentage of net sales to 25.7% for the six months ended July
27, 1996, from 27.4% for the six months ended July 31, 1995). Approximately $1.2
million of the increase resulted primarily from an increase in administrative
cost, principally attributable to costs associated with the new senior
management team, costs associated with store management trainees, and reduced
levels of outside commission income resulting from the March 1, 1996 acquisition
of two stores. In addition, warehouse and store delivery costs increased
$575,000 due to costs associated with increased inventory levels, new store
opening support costs, and costs associated with setup of the expanded warehouse
square footage.

Operating profit increased to $861,000 for the six months ended July 27,
1996, from $790,000 for the six months ended July 31, 1995. As a percentage of
net sales, operating margin decreased to 2.5% from 3.1%. This decrease was
primarily due to the factors described above.

Fiscal 1995 (Combined Predecessor and Successor results) versus Fiscal 1994

Net sales increased $3.6 million, or 6.3%, to $60.1 million in fiscal 1995,
from $56.5 million in fiscal 1994. Comparable store net sales decreased 4.4%, or
$2.2 million. Comparable store net sales decreased primarily due to the Company
carrying lower levels of inventory in anticipation of a difficult retail
environment in the

26
<PAGE> 27

last half of fiscal 1995 and additionally reflects the impact of the predecessor
management's focus on the Odd Job Acquisition. Fiscal 1995 net sales include
$5.2 million of sales attributable to Peddlers Mart.

Gross profit increased $1.5 million, or 7.1%, to $22.5 million in fiscal
1995, from $21.0 million in fiscal 1994. Gross margin remained relatively
constant, increasing modestly to 37.5% in fiscal 1995, from 37.2% in fiscal
1994.

Selling, general and administrative expenses increased $2.0 million, or
10.3%, to $20.9 million in fiscal 1995, from $18.9 million in fiscal 1994.
Selling, general and administrative expenses as a percentage of net sales
increased to 34.7% in fiscal 1995, from 33.5% in fiscal 1994. The increase in
selling, general and administrative expenses was due primarily to $1.7 million
of increased store operating expenses due to the inclusion of Peddlers Mart in
fiscal 1995, a $300,000 increase in Odd Job store payroll due in part to the
relocation of one Manhattan store, and a $200,000 expense incurred in connection
with on-going defense in the Odd Job Litigation. Additionally, fiscal 1995
selling, general and administrative expenses included an allocation of
approximately $100,000 of charges relating to the new senior management team.

Special charges were $300,000 in fiscal 1995, reflecting signing bonuses
paid to former owners of Odd Job payable upon completion of the Odd Job
Acquisition. There were no special charges in fiscal 1994.

Operating profit decreased $757,000, or 35.7% in fiscal 1995, to $1.4
million versus $2.1 million in fiscal 1994. As a percentage of net sales,
operating margin decreased to 2.3% in fiscal 1995, versus 3.8% in fiscal 1994.
This decrease was a result of all of the factors described above.

Fiscal 1994 versus Fiscal 1993

Net sales increased $6.4 million, or 12.8%, to $56.5 million in fiscal
1994, from $50.1 million in fiscal 1993. Comparable store net sales increased
7.9%, or $3.7 million. The comparable store net sales increase was due to higher
levels of inventory available for sales. The remaining increase in net sales of
$2.7 million was due to the full year effect of one location open in June 1993
and the opening of a second location in November 1994.

Gross profit increased $1.7 million, or 8.9%, to $21.0 million in fiscal
1994, from $19.3 million in fiscal 1993. Gross margin decreased to 37.2% in
fiscal 1994, from 38.5% in fiscal 1993. The Company believes this decrease in
gross margin was a result of higher levels of inventory shrink in the retail
stores in fiscal 1994.

Selling, general and administrative expenses increased $1.4 million, or
8.1%, to $18.9 million in fiscal 1994, from $17.5 million in fiscal 1993.
Selling, general and administrative expenses as a percentage of net sales,
decreased to 33.5% in fiscal 1994, from 34.9% in fiscal 1993. The increase in
selling, general and administrative expenses was due primarily to the full year
operation of one location opened in June 1993 and the store expenses relating to
another location opened in November 1994. The decrease in selling, general and
administrative expenses as a percentage of net sales was attributable to the
higher level of net sales in fiscal 1994 and reflects the "semi-fixed" nature of
store operating costs which decreased 1.1% of net sales in fiscal 1994.

Operating profit increased $307,000, or 16.9%, in fiscal 1994, to $2.1
million versus $1.8 million in fiscal 1993. As a percentage of net sales,
operating margin increased to 3.8% in fiscal 1994, versus 3.6% in fiscal 1993.
This increase was a result of all of the factors described above.

27
<PAGE> 28

WHOLESALE

<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
--------------------------------------------------------
SIX MONTHS ENDED
YEARS ENDED JANUARY 31, -----------------------
---------------------------- JULY 31, JULY 27,
1994 1995 1996 1995 1996
------ ------ ------ --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales.......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales...................................... 72.8 73.0 73.6 70.9 75.4
------ ------ ------ --------- ---------
Gross margin....................................... 27.2 27.0 26.4 29.1 24.6
SG&A expense....................................... 16.8 16.7 16.9 18.0 14.8
Special charges.................................... 2.0 -- 0.4 -- --
------ ------ ------ --------- ---------
Operating margin................................... 8.3 10.3 9.1 11.1 9.8
Interest expense, net.............................. 1.8 1.4 1.3 1.5 0.8
Other expense (income)............................. 0.1 -- 0.7 (0.1) --
------ ------ ------ --------- ---------
Income before income taxes......................... 6.4 8.9 7.1 9.6 9.0
Income taxes....................................... -- 0.1 -- 0.1 0.1
Extraordinary loss................................. (0.7) -- -- -- --
Discontinued operations............................ (1.3) (1.2) (2.8) (1.4) --
------ ------ ------ --------- ---------
Net income......................................... 4.3% 7.7% 4.3% 8.2% 9.0%
====== ====== ====== ======== ========
</TABLE>

<TABLE>
<CAPTION>
PERCENTAGE INCREASE (DECREASE)
----------------------------------------------------------------
YEARS ENDED SIX MONTHS ENDED
------------------------------------------- ----------------
JANUARY 31, 1994 JANUARY 31, 1995 JULY 31, 1995
TO TO TO
JANUARY 31, 1995 JANUARY 31, 1996 JULY 27, 1996
------------------- ------------------- ----------------
<S> <C> <C> <C>
Net sales.................................. -- 23.2% 61.0%
Cost of sales.............................. 0.2% 24.2 71.2
Gross margin............................... (0.5) 20.5 36.1
SG&A expense............................... (0.6) 24.4 32.1
Operating profit........................... 24.4 9.2 42.5
Interest expense, net...................... (21.9) 10.8 (13.6)
Other expense (income)..................... nmf nmf (8.3)
Income (loss) before income taxes.......... 40.0 (1.6) 50.8
Income taxes............................... nmf (64.4) (13.5)
Discontinued operations.................... (10.3) nmf nmf
Net income (loss).......................... 76.7 (31.5) 76.8
<FN>
- ---------------

nmf = not meaningful
</TABLE>

Six Months Ended July 27, 1996, versus Six Months Ended July 31, 1995

Net sales increased $20.5 million, or 61.0%, to $54.2 million in the first
six months of fiscal 1996, from $33.6 million in the first six months of fiscal
1995. Fiscal 1996 net sales were positively affected by a $2.7 million increase
in sales to the Odd Job retail operation and higher levels of sales to existing
customers, including one key customer whose secondary distribution center had
been damaged early in the second quarter of 1996. The Company also benefited
from the addition of new customers.

Gross profit increased $3.5 million, or 36.1%, to $13.3 million in the
first six months of fiscal 1996, from $9.8 million in the first six months of
fiscal 1995. Gross margin decreased to 24.6% in the first six months of fiscal
1996, from 29.1% in the first six months of fiscal 1995. The increase in gross
profit was driven by the large increase in sales volume, while the gross margin
decline resulted from the slightly higher percentage of drop shipment sales and,
due to a change in merchandise mix, reduced gross margins on stock sales in the
first half of fiscal 1996.

Selling, general and administrative expenses increased $1.9 million, or
32.1%, to $8.0 million in the first six months of fiscal 1996, from $6.1 million
in the comparable 1995 period. The increase in selling, general and
administrative expenses was principally due to increases in variable expense
(such as sales commission and

28
<PAGE> 29

travel) and approximately $1.2 million of charges attributable to the new senior
executives who joined the Company in the last six months of fiscal 1995. As a
percentage of net sales, selling, general and administrative expenses decreased
to 14.8% in the first six months of 1996, from 18.0% in the first six months of
1995, as the Company benefited from higher leverage of its fixed overhead.

Operating profit increased to $5.3 million in the first six months of 1996,
from $3.7 million in the first six months of 1995. As a percentage of net sales,
operating margin decreased to 9.8% in the 1996 period from 11.1% in the
comparable 1995 period, due to the factors described above.

Fiscal 1995 versus Fiscal 1994

Net sales increased $14.6 million, or 23.2% to $77.3 million in fiscal
1995, from $62.7 million in fiscal 1994. Fiscal 1995 net sales were positively
affected by a $4.5 million increase in levels of inventory available for sale, a
$1.2 million increase in sales to the Company's retail operations and higher
levels of sales to existing customers, as well as the addition of new customers.

Gross profit increased $3.5 million, or 20.5%, to $20.4 million in fiscal
1995, from $17.0 million in fiscal 1994. Gross margin decreased slightly to
26.4% in fiscal 1995, from 27.0% in fiscal 1994. Gross profit dollars increased
due to the higher level of net sales. Gross margin declined due to a lower gross
margin on drop shipment sales in fiscal 1995.

Selling, general and administrative expenses increased $2.6 million, or
24.4%, to $13.0 million in fiscal 1995, from $10.5 million in fiscal 1994.
Selling, general and administrative expenses as a percentage of net sales
remained relatively flat at 16.9% in fiscal 1995 and 16.7% in fiscal 1994. The
increase in selling, general and administrative expenses was due principally to
variable expenses such as warehouse expenses, sales commission and travel that
increase in relation to sales growth, a $300,000 increase in professional fees,
and approximately $1.0 million of charges, such as payroll and related office
and travel expenses for new senior executives who joined the Company in the last
half of fiscal 1995 and the setup of a Columbus, Ohio office and showroom.

Special charges of $332,000 in fiscal 1995 resulted from one-time
contractual obligations relating to the hiring of senior executives. There were
no special charges in 1994.

Operating profit increased $593,000, or 9.2%, in fiscal 1995, to $7.1
million, versus $6.5 million in fiscal 1994. Operating margin decreased to 9.1%
in fiscal 1995, versus 10.3% in fiscal 1994. This decrease was primarily a
result of the special charges. Excluding the special charges, operating margin
would have been 9.6% in fiscal 1995.

Fiscal 1994 versus Fiscal 1993

Net sales remained relatively unchanged at $62.7 million in both fiscal
1994 and fiscal 1993. The Company elected to reduce sales to certain customers
based on the Company's concerns regarding their creditworthiness.

Gross profit remained relatively unchanged at $17.0 million in both fiscal
1994 and fiscal 1993. Gross margin decreased to 27.0% in fiscal 1994, from 27.2%
in fiscal 1993.

Selling, general and administrative expenses remained relatively unchanged
at approximately $10.5 million in both fiscal 1994 and fiscal 1993. Selling,
general and administrative expenses as a percentage of net sales, decreased to
16.7% in fiscal 1994, from 16.8% in fiscal 1993.

While there were no special charges in fiscal 1994, the Company incurred
$1.3 million of special charges in fiscal 1993 due to the bankruptcy of Value
Merchants, a trade customer of the Company.

Operating profit increased $1.3 million, or 24.4%, in fiscal 1994, to $6.5
million versus $5.2 million in fiscal 1993. Operating margin increased to 10.3%
in fiscal 1994, versus 8.3% in fiscal 1993. This increase was primarily a result
of the absence of special charges in fiscal 1994. Excluding the special charges
in fiscal 1993, operating profit and operating margin would have been
approximately flat at $6.5 million and 10.4%, respectively.

29
<PAGE> 30

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary requirements for capital consist of purchases of
inventory, expenditures related to new store openings and the working capital
requirements for new and existing stores. 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 maintains a high level of
committed credit, so that it can 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.

For the six months ended July 27, 1996, on an actual basis, cash used by
combined operating activities increased to $6.8 million, from $842,000 in the
comparable period in 1995, primarily because of increased trade accounts
receivable due to wholesale business growth and increased inventory levels,
partially offset by increases in trade accounts payable. Cash used in investing
activities increased to $857,000 in the six months ended July 27, 1996, from
$200,000 in the comparable 1995 period, due to increased capital expenditures
relating to new stores and increased warehouse capacity. Cash provided by
financing activities increased to $8.5 million in the first six months of fiscal
1996 from $1.0 million in the comparable 1995 period, reflecting a $4.0 million
equity contribution and increased bank borrowings.

Capital expenditures for fiscal 1996 and 1997 are budgeted at approximately
$4.0 million, primarily for new stores, the management information systems
upgrade and the warehouse and distribution facilities' expansion.

Historically, the Company's growth has been financed through cash flow from
operations, borrowings under its bank credit facility and the extension of trade
credit. At July 27, 1996, the outstanding balance of the Company's $38.5 million
credit facility ("Credit Facility") was approximately $32.2 million. Most of the
net proceeds of the Offering will be used to repay outstanding indebtedness of
$29.6 million under the Credit Facility. Borrowings under the Credit Facility
bear interest at variable rates with a weighted average borrowing rate at July
27, 1996, of 8.68% per annum and are secured by a lien on substantially all of
the Company's assets. The Company expects to enter into a new $40.0 million
credit facility, conditioned on completion of the Offering. The Company expects
its effective borrowing rate to decline modestly and to achieve a modification
of current restrictive covenants; however, the new facility will include
covenants, still to be negotiated, on minimum net worth levels, maintenance of
certain financial ratios, limitations on capital expenditures and limitation on
dividends.

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 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. There can be no
assurance that such additional financing will be available or, if available,
will be on terms acceptable to the Company.

Management believes that the proceeds of the Offering, together with cash
flow from operations and additional borrowings under its proposed new loan
facility, will be adequate to fund the operations and internal expansion plans
of the Company for at least the next twelve months.

INFLATION

During the six months ended July 27, 1996 and the years ended January 31,
1996 and 1995 lease expense and salaries and wages have increased modestly. The
increases have not had a significant effect on the

30
<PAGE> 31

Company's results of operations because the impact of rising costs has been
offset by price increases. As a result, inflation has not had nor is it expected
to have a significant impact on the Company's operations.

NEW ACCOUNTING PRONOUNCEMENTS

During 1995, the Financial Accounting Standards Board issued two
pronouncements effective for financial statements for years beginning after
December 15, 1995, that would apply to the Company. The Company has considered
the requirements of Statement No. 121, Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of and has determined that
it will not require recognition of any impairment losses. The Company has also
determined to remain within the accounting prescribed by APB Opinion No. 25,
Accounting for Stock Issued to Employees, and accordingly the implementation of
Statement No. 123, Accounting for Stock-Based Compensation, will result in
additional disclosures without any impact on the statements of operations or
financial condition.

SEASONALITY AND QUARTERLY FLUCTUATION

Historically, the Company's retail stores have experienced their highest
net sales and operating income levels during the fourth quarter, which includes
the holiday selling season. The Company's wholesale operations have historically
experienced slightly higher sales and operating income levels in the second half
of the year.

The Company's quarterly results of operations may also fluctuate from
quarter to quarter as a result of the amount and timing of sales contributed by
new stores, the level of advertising and pre-opening expenses associated with
the opening of new stores, the integration of new stores into the operations of
the Company and the timing of large opportunistic purchases and sales in the
Company's wholesale operations as well as other factors.

QUARTERLY RESULTS

The following table represents certain selected unaudited financial
information of the Company's wholesale and retail operations for the quarters
indicated. For purposes of analysis, the wholesale operations consists of Mazel
Company L.P. and the retail operations consists of Odd Job and Peddlers Mart for
each quarter in the year ended January 27, 1996. Peddlers Mart operating results
following its acquisition in the fourth quarter of fiscal 1994 are not material
and have been excluded from the results of that quarter.

<TABLE>
<CAPTION>
4TH
RETAIL 1ST QUARTER 2ND QUARTER 3RD QUARTER QUARTER(1)
----------- ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Fiscal 1996
Net sales.................................. $16,882 $18,157
Gross profit............................... 6,501 7,170
Operating income........................... 500 360
Income (loss) before income taxes.......... 150 (142)
Net income (loss).......................... 87 (82)

Fiscal 1995
Net sales.................................. $13,975 $14,238 $13,249 $ 18,602
Gross profit............................... 5,324 5,423 4,970 6,806
Special charges............................ -- -- -- 300
Operating income (loss).................... 385 439 (239) 781
Income (loss) before income taxes.......... 326 363 (353) 529
Net income (loss).......................... 296 315 (326) 574

Fiscal 1994
Net sales.................................. $11,619 $13,087 $12,573 $ 19,232
Gross profit(2)............................ 4,324 4,870 4,679 7,157
Operating income (loss).................... (18) 292 175 1,674
Income (loss) before income taxes.......... (56) 239 118 1,642
Net income (loss).......................... (66) 192 85 1,507
</TABLE>

31
<PAGE> 32

<TABLE>
<CAPTION>
WHOLESALE 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Fiscal 1996
Net sales.................................. $27,185 $26,990
Gross profit............................... 6,553 6,760
Operating income........................... 2,655 2,646
Income before income taxes................. 2,422 2,470
Net income................................. 2,406 2,454

Fiscal 1995
Net sales.................................. $17,474 $16,174 $21,176 $ 22,489
Gross profit............................... 4,928 4,854 5,691 4,963
Special charges............................ -- -- -- 332
Operating income........................... 1,966 1,753 2,374 980
Discontinued operations.................... (233) (225) (1,744) --
Income (loss) before income taxes.......... 1,508 1,278 (155) 692
Net income (loss).......................... 1,485 1,264 (155) 702
Fiscal 1994

Net sales.................................. $14,267 $14,769 $16,228 $ 17,484
Gross profit............................... 4,056 3,921 4,539 4,442
Operating income........................... 1,474 1,438 1,797 1,771
Discontinued operations.................... (156) (101) (224) (243)
Income before income taxes................. 1,132 1,119 1,336 1,302
Net income................................. 1,115 1,102 1,316 1,282
<FN>
- ---------------

(1) As a result of the purchase accounting method applied to the Odd Job
Acquisition, certain financial information for the period subsequent to the
Odd Job Acquisition is not comparable to the period prior to the
acquisition. Such differences relate principally to fair market value
adjustments for goodwill, fixed assets and leases. The estimated impact of
such adjustments in the post-acquisition period was to reduce selling,
general and administrative expenses by approximately $80.

(2) Reflects a freight reclassification of $839 from cost of sales to selling,
general and administrative expense.
</TABLE>

32
<PAGE> 33

BUSINESS

GENERAL

The Company consists of two complementary operations: (i) a major regional
closeout retail business; and (ii) one of the nation's largest closeout
wholesale businesses. 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 operates a chain of 21 closeout retail
stores, including 12 in New York (five of which are in Manhattan) and nine in
New Jersey. The Company had, on a pro forma basis, fiscal 1995 retail sales of
$60.1 million and wholesale sales (excluding intercompany sales between Odd Job
and the Company's wholesale operation) of approximately $73.8 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 newly-acquired Odd Job stores. The
Company's goal is to establish itself as the leading closeout retailer in its
Northeast and Mid-Atlantic targeted market, which are easily serviced from the
Company's retail distribution and warehouse facility in Englewood, New Jersey.

In furtherance of its retail growth strategy, in 1995 the Company acquired
the Odd Job stores and hired Messrs. Churches and Sommers. Mr. Churches was
employed by Consolidated for approximately 19 years, the last two of which were
as President. Mr. Sommers worked closely with Mr. Churches at Consolidated for
approximately 12 years, the last two of which were as its Executive Vice
President -- Merchandising. Following the hiring of its retail management team,
the Company completed the Odd Job Acquisition and the related acquisitions of
three stores.

The Company believes that the combination of its existing wholesale
operations and the Odd Job retail operations will result in significant
synergies that will enable 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 benefitted 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 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.

BUSINESS STRENGTHS

Experienced Management Team. The Company's senior retail and wholesale
management teams have significant operating knowledge, vendor contacts and
closeout industry experience. Messrs. Churches and Sommers have significant
experience directing a rapid retail expansion and the associated purchasing,

33
<PAGE> 34

merchandising, advertising, distribution and real estate functions. During their
tenure at Consolidated, the number of Consolidated stores increased from one to
approximately 800. Similarly, Messrs. Dessler and Koval are widely considered to
be pioneers in the closeout wholesale industry and have a long track record of
building a growing and profitable operation.

Experienced Buying Team. The Company believes that it has assembled one of
the strongest and most experienced buying teams in the closeout industry. The
Company's 21 senior buyers in its retail and wholesale operations have an
average of over 15 years of closeout merchandise buying experience. The Company
maintains two distinct buying departments: (i) the wholesale buying staff
operating under the direction of Mr. Dessler in Solon, Ohio and New York City;
and (ii) the retail buying staff operating under the direction of Messrs.
Churches and Sommers in Columbus, Ohio and New York City. Each of these groups
maintains relationships with a wide range of sources of closeout and promotional
merchandise and maintains and coordinates regular contact between groups.

Integrated Wholesale and Retail Operations. The combination of the
wholesale and retail operations provides the Company with substantial purchasing
expertise, vendor contacts, purchasing capacity and cross-purchasing
opportunities. The Company believes these competitive advantages enable it to:
(i) have more direct access to sources of closeout merchandise, providing price
and opportunity advantages; (ii) purchase larger quantities and a wider variety
of closeout merchandise; and (iii) negotiate better terms due to higher
quantities of orders for merchandise manufactured to the Company's
specifications. The combination of these factors allows the Company to provide
its customers with an excellent mix of value-oriented merchandise at attractive
prices.

Responsive to Sources of Closeout Merchandise. The Company believes that
establishing and maintaining excellent relationships with vendors is essential
to the success of its retail and wholesale closeout operations. By remaining
flexible and responsive to the needs of its vendors, the Company believes it is
a preferred customer of many key vendors. Specifically, 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 channels; and (v) making prompt and reliable payments.

Broad Merchandise Mix. The Company seeks to provide its retail consumers
maximum value by offering a wide variety of quality merchandise at substantial
discounts. The Company's retail stores offer consumer items which are frequently
brand-name and emphasize housewares, stationery, books, party supplies, health
and beauty aids, food, toys, hardware, electronics and garden supplies. Although
the Company continuously offers these general categories of merchandise,
specific products and product lines carried change frequently, depending upon
the purchases the Company is able to negotiate. Brands carried by the Company's
stores may include, at any given time, Black and Decker, Enesco, Farberware,
Hershey, Keebler, Mars, Mattel, Mikasa, Rubbermaid and Sony. The Company
believes that its changing variety of value-oriented 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 Company's stores in an effort to
seek out bargains. The stores also carry, on a consistent basis, value-oriented
selected goods manufactured to the Company's specifications. These
manufactured-to-order goods provide cost-effective merchandise for the Company,
primarily in the areas of seasonal items, party goods and certain basic
houseware items. In addition, the Company offers products at a broad range of
price points from less than $1.00 to several hundred dollars. The Company's
stores feature message boards indicating newly arrived merchandise, adaptable
merchandising fixtures and displays and attractive signage, all designed to
emphasize the changing variety of merchandise and to communicate value and
quality to its customers.

34
<PAGE> 35

GROWTH STRATEGIES

New Store Openings. The Company anticipates opening or acquiring
approximately 40 new stores through the end of fiscal 1999 and believes there is
a potential for the Company to operate approximately 100 stores in the Northeast
and Mid-Atlantic targeted market. The Company's current and planned stores would
be easily serviced from the Company's Englewood, New Jersey warehouse and
distribution facility. The Company plans to open nine stores in fiscal 1997, 12
stores in fiscal 1998 and 15 stores in fiscal 1999. The Company has opened or
acquired eight stores this fiscal year and an additional store is scheduled to
open in December. The Company may also open stores in other geographic areas if
favorable real estate opportunities and conditions exist. The Company's strategy
is to open stores in high-traffic urban areas or suburban strip shopping
centers. The Company sells its full range of products and merchandise mix in a
variety of store configurations and locations, currently ranging from 6,500 to
25,000 square feet. This flexibility in store configurations provides a
competitive advantage in selecting desirable store locations.

Enhancing Store Sales. The Company's management has expanded the
merchandise mix of the acquired Odd Job operations, including the addition of
more health-and-beauty aids, toys, greeting cards, hardware, food and seasonal
items. These additional items supplement Odd Job's existing extensive selection
of electronics, luggage, china, perfume and giftware. A targeted merchandise
approach has been instituted in recognition of the differences between the
Company's urban and suburban locations. Management has also instituted an
advertising program consisting of the periodic publication of multi-color
mailing or newspaper circulars promoting up to 35 value-oriented, easily
recognizable items. Due to the program's initial success, management plans to
expand the use of advertising circulars in the future.

Leveraging the Company's Investment in Infrastructure. To support the
Company's planned growth and expansion, beginning in the second half of 1995,
the Company hired Brady Churches and Jerry Sommers, increased the number of its
experienced closeout buyers, committed to the expansion of its Solon, Ohio and
Englewood, New Jersey warehouse and distribution facilities and instituted an
advertising program to support increased store sales in its new and existing
stores. These expenditures have and are expected to increase the Company's
overall selling, general and administrative expenses. The Company believes that
such expenditures will enable it to achieve its growth objectives and will
result in significant operating leverage as it expands.

Acquisitions. The closeout retail industry in the Northeast and
Mid-Atlantic market is highly fragmented. The Company believes that by focusing
its retail operations in this geographic market, it will be able to take
advantage of acquisition opportunities which will further enable the Company to
implement its growth strategy. In addition, the Company may also examine
acquisition opportunities in other geographic areas. The Company seeks to
acquire closeout retail operations which will further enable the Company to
leverage its management, purchasing and distribution infrastructure and that can
be effectively integrated into the Company's retail operations. Furthermore, the
Company may also pursue acquisition opportunities in the closeout wholesale
industry.

RETAIL OPERATIONS

General. The Company's chain of 21 retail stores operating under the "Odd
Job" name are located in Manhattan (5), New Jersey (9), Westchester County, N.Y.
(3), Staten Island (3) and Rockland County, N.Y. (1). Odd Job opened its first
store in 1974.

Expansion Plans. The Company plans to expand upon the 21 stores currently
operating by opening new stores in the Northeast and Mid-Atlantic targeted
market, which are serviceable from the Company's Englewood, New Jersey warehouse
and distribution facility. Stores may be opened in other geographic areas if
favorable conditions exist. The Company anticipates opening or acquiring
approximately 40 new stores through the end of fiscal 1999. The Company has
opened two new stores to date in the fourth quarter of fiscal 1996 and plans to
open another store in December.

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

35
<PAGE> 36

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 upper middle-class households for
its suburban store locations, such as Westchester County, New York. See
"Business -- Retail Operations -- Store Locations."

In addition, the Company may add stores through the acquisition of other
closeout businesses if favorable opportunities are presented. The Company has
successfully integrated the Peddlers Mart store and the two "The CloseOut Store"
outlets acquired in March 1996 into the Odd Job organization and believes that
it can continue to do so with future acquisitions.

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 Company's stores in an effort to seek out bargains. Historically,
the Company's stores have offered substantial savings on merchandise categories,
including housewares, stationery, books, party supplies, health and beauty aids,
food, toys, hardware, electronics and garden supplies. Brands carried by the
Company's stores may include, at any given time, Black and Decker, Enesco,
Farberware, Hershey, Keebler, Mars, Mattel, Mikasa, Rubbermaid and Sony.

Following the Odd Job Acquisition, the Company has developed and
implemented a new merchandising approach. As a result of the purchasing
expertise and vendor contacts of Messrs. Dessler, Churches, Sommers and the
Company's senior purchasing executives, the Company has increased the number of
brand-name products which it offers, particularly toys, books, greeting cards,
health and beauty aids, party supplies and food. 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.

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 "treasure hunters." The Company relies on
attractive exterior signage and in-store merchandising as its primary form of
advertising. While Odd Job historically had not utilized other forms of
advertising, the Company has initiated an advertising program particularly for
the Company's suburban locations, using mailers and in-paper circulars, on a
periodic basis, to promote up to 35 value-oriented, easily recognizable items.
As a result of its merchandise mix, visual merchandising methods and
high-traffic store locations, the Company'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

36
<PAGE> 37

below traditional retail prices. Its retail operations maintain a buying staff
of ten individuals under the direction of Messrs. Churches and Sommers 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. The Company believes its acquisition of the retail
operations has created significant synergies in purchasing. 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
combination of wholesale and retail operations has enabled the Odd Job buying
staff to broaden the scope and the quantities of quality merchandise that it
purchases and offer better value to its customers. For example, the Odd Job
stores historically purchased seasonal items through importers or other
middlemen. Following the Odd Job Acquisition, such items are now purchased
primarily from manufacturers, at substantial savings. The Company's retail
buyers purchase merchandise from more than 1,300 suppliers throughout the world.

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
seven 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. Following the Odd Job Acquisition, the Odd Job stores
moved to expanded weekend hours and seven-day-a-week operation. As the number of
stores increases, the Company intends to create an infrastructure consisting of
regional managers responsible for the operations of approximately 20 stores,
reporting directly to the Vice President -- Retail Operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Store Locations. The Company's 16 suburban stores are each located in
strip shopping centers. The five Manhattan stores are each located in
high-traffic urban corridors (e.g., near Grand Central Station, Rockefeller
Center and Wall Street) which provide access to large numbers of commuters. As a
result, the Manhattan stores generate higher volumes during the work week. The
Company's suburban stores are generally in close proximity to shopping malls,
department stores and other retail operations and in most cases are 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 requires minimal leasehold improvements by the
Company, enables the Company to open stores in new locations generally within
six to ten weeks following execution of a lease.

37
<PAGE> 38

The locations of the Company's stores, and stores expected to open in
fiscal 1996, are as follows:

<TABLE>
<CAPTION>
LOCATION SQUARE FEET DATE OPENED
------------------------------------------------------- ----------- ----------------
<S> <C> <C>
New York City (W. 48th St.)............................ 15,000 November 1977
New York City (W. 32nd St.)............................ 15,000 August 1984
Port Chester, New York................................. 10,500 September 1987
Lakewood, New Jersey................................... 13,450 September 1987
Manalapan, New Jersey.................................. 12,300 November 1987
Edison, New Jersey..................................... 12,000 December 1987
Toms River, New Jersey................................. 12,000 March 1988
Scarsdale, New York.................................... 19,500 June 1988
New York City (Cortland St.)........................... 15,000 November 1990
New York City (Lexington Ave.)......................... 14,000 June 1993
Woodbridge, New Jersey................................. 10,700 November 1994
Nanuet, New York....................................... 22,000 December 1994*
New York City (5th Ave.)............................... 17,000 August 1995
Staten Island (Richmond Ave.).......................... 6,500 March 1996*
Staten Island (Hyland Blvd.)........................... 10,000 March 1996*
Succasunna, New Jersey................................. 23,000 May 1996
Staten Island (Richmond Ave.).......................... 25,000 July 1996
East Brunswick, New Jersey............................. 14,500 September 1996
Parsippany, New Jersey................................. 16,300 October 1996
Poughkeepsie, New York................................. 15,000 November 1996
Linden, New Jersey..................................... 16,100 November 1996
Garden City, New York.................................. 15,000 December 1996**
<FN>
*Date of acquisition.
**Scheduled to open.
</TABLE>

Warehousing and Distribution. Merchandise is distributed to the retail
stores from the Company's Englewood, New Jersey warehouse and distribution
facility. The Englewood facility has recently been expanded from 140,000 square
feet to approximately 253,000 square feet. The Company believes the expanded
Englewood facility has the capacity to support the warehousing and distribution
needs of approximately 60 stores.

Substantially all of the Company's retail inventory is shipped directly
from suppliers to the Company's Englewood, New Jersey warehouse and distribution
facility or the Company's Solon, Ohio warehouse and distribution facility. Since
the Englewood, 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 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 buyers and senior
management. The Company's merchandise is distributed based on variables such as
store volume and certain demographic and physical characteristics of the stores.
Each store has monthly budgeted inventory levels based on its projected sales
for the year and its existing inventory levels. Stores receive shipments of
merchandise several times per week from distribution centers based on their
anticipated inventory requirements and communications between store managers and
the distribution group.

WHOLESALE OPERATIONS

General. The Company is one of the nation's largest wholesalers of
closeout merchandise, with 1995 wholesale sales of approximately $77.3 million,
including approximately $3.5 million of sales to Odd Job. The

38
<PAGE> 39

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 700 suppliers throughout the world and continually seek opportunities
created by manufacturers' overproduction and other closeout circumstances (e.g.,
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 25.6% and 22.0% of the Company's
wholesale purchases for fiscal 1995 and the first six months of 1996,
respectively, 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 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 16
persons in its wholesale operations and also sells its merchandise through 22
independent representatives. In addition to a showroom at its Solon, Ohio
facility, the Company or its representatives maintain showrooms in New York
City, Columbus, Boston and Philadelphia. The Company sells to over 1,000
wholesale customers, which include a wide range of major regional and national
retailers as well as smaller retailers, manufacturers and other wholesalers and
distributors. Sales to the Company's single largest wholesale customer accounted
for approximately 18.6% of total sales on a pro forma basis in fiscal 1995 and
24.3% of total sales in the first six months of 1996. No other customer
accounted for more than 10% of total sales in either period. See "Risk
Factors -- Customer Concentration."

Warehousing and Distribution. The Company conducts its wholesale
operations primarily from a leased, single-story office and warehouse and
distribution facility in Solon, Ohio, at which the Company currently occupies
approximately 645,000 square feet. The Solon facility is currently being
expanded to approximately 740,000 square feet, which expansion is scheduled to
be completed by the end of fiscal 1996. From time to time, the Company leases
space at public warehouses. 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 1995,
approximately 58.6% of the Company's wholesale sales

39
<PAGE> 40

were of merchandise shipped through its warehouse and distribution facility, and
approximately 41.4% of such sales were of merchandise drop shipped directly to
customers.

MANAGEMENT INFORMATION SYSTEMS

The Company's wholesale operations is currently supported by an IBM
AS400-based computer system, which system is being upgraded to support the
Company's combined operations. 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
accounting systems. The Company is exploring the use of radio frequency
equipment in its warehouse and showrooms.

The Company is in the early stages of installing an upgraded IBM
AS400-based system and related software packages for use in its retail
operations. The Company intends to install a point-of-sale (POS) system to fully
capture store transactions and provide updated data to its purchasing staffs and
other corporate personnel, and for transfer into the Company's accounting,
merchandising and distribution systems. The Company intends to fully integrate
such retail system with its wholesale computer system. The Company estimates
that it will spend approximately $2.0 million in implementing and integrating
its retail management information systems and that installation will be
completed by the end of fiscal 1997. Cash from operations and borrowings under
the Company's credit facility will be utilized to fund the cost of the
management information systems upgrade and the project is not dependent on
proceeds from the Offering.

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 reason 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.

EMPLOYEES

At July 27, 1996, the Company had 794 employees, including 614 in direct
retail operations, 102 in direct wholesale operations and 78 in general
management and administrative positions. The Company considers its relationship
with its employees to be good. Approximately 60 of the Company's Solon, Ohio
hourly warehouse employees are subject to a five year collective bargaining
agreement expiring December 31, 1999. The Company is not a party to any other
labor agreements.

PRINCIPAL PROPERTIES

The Company leases its offices and a warehouse and distribution facility in
Solon, Ohio from a partnership in which certain of its shareholders are
partners. The Company currently occupies approximately 645,000 square feet at
such facility, of which approximately 22,000 square feet are used as office and
showroom space and the remainder of which are used as warehouse space for the
Company's wholesale operations. The Solon facility is currently being expanded
to approximately 740,000 square feet, which expansion is scheduled to be
completed by the end of fiscal year 1996. The lease for the facility, as
amended,

40
<PAGE> 41

expires December 31, 2008. The Company leases its warehouse and distribution
facility in Englewood, New Jersey. This facility has recently been expanded to
253,000 square feet from 140,000 square feet. A revised 10-year lease for the
expanded facility is currently being drafted. In addition, the Company leases
space at several public warehouses depending on its needs at a particular point
in time. The Company believes that the office and warehouse facilities described
above are generally adequate for the present and reasonably foreseeable
requirements of its present retail stores and wholesale business. As the number
of stores expands, additional warehouse and distribution facilities will be
required for the Company's retail operations. See "Certain
Transactions -- Leases."

The Company leases its offices and showrooms in Columbus, Ohio and New York
City and the current leases expire (assuming exercise of outstanding options) on
March 31, 1997 and 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. In addition, the
Company remains contingently liable with respect to six store leases relating to
its Ohio Stores. See "Significant Corporate Transactions -- Sale of Ohio Retail
Operations."

LITIGATION

The Company and various related parties were named as defendants in the Odd
Job Litigation, filed on February 27, 1995 under the caption DeFusco v. Horowitz
et al. (95 Civ. 1366, U.S. District Court, S.D. New York). The lawsuit alleged
that the owners of Odd Job Trading Corp. had an oral agreement to sell Odd Job
to the plaintiff, and that this alleged agreement was breached when Odd Job
entered into a letter of intent in October 1994 to be acquired by an entity
formed by ZS Fund. The Company was also named a defendant in the complaint
alleging tortious interference with plaintiff's contract right. The Company
agreed to indemnify all parties with respect to expenses, liabilities and
damages of the litigation, provided that the Company may offset the initial
$450,000 of expenses incurred after the Odd Job Acquisition against the Odd Job
Contingent Notes. The parties have reached a settlement of the case, which will
not have a material adverse effect on the results of operations or the financial
condition of the Company. As a result of the settlement, no payments under the
Odd Job Contingent Notes will be made.

In February 1996, the Company, ZS Fund and Messrs. Churches, Sommers and
Mark Hanners entered into the Consolidated Settlement resolving certain issues
arising in connection with the hirings by the Company of Messrs. Churches,
Sommers and Hanners. The Consolidated Settlement provides that until April 25,
1997, the Company will not open new stores located within ten miles of
Consolidated stores that were open or planned as of February 20, 1996 or hire
certain employees of Consolidated.

The Company is also subject to various 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 these actions will not have a material
adverse effect on the Company's liquidity or results of operations.

TRADEMARKS

The Company has filed an application to register "Odd Job" as a trademark
in the United States. The Company has registered certain other trademarks and
trade names.

41
<PAGE> 42

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The persons listed below are the executive and certain other officers and
directors of the Company.

<TABLE>
<CAPTION>
NAME AGE OFFICE
- ---------------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Reuven Dessler.................... 49 Chairman of the Board and Chief Executive Officer
Brady Churches.................... 38 President, Director
Jacob Koval....................... 49 Executive Vice President -- Wholesale, Director
Jerry Sommers..................... 46 Executive Vice President -- Retail, Director
Susan Atkinson.................... 45 Senior Vice President -- Chief Financial Officer and
Treasurer
Ned L. Sherwood................... 47 Director
Robert Horne...................... 37 Director
Marc H. Morgenstern............... 46 Secretary
</TABLE>

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

Brady Churches has served as the Company's President and a Director since
the 1996 Restructuring and has served as President -- Retail since August 14,
1995. Mr. Churches was employed by Consolidated for 19 years until he resigned
in April 1995. He held various senior management positions in the merchandising
area at Consolidated, and was President from August 1993 until his resignation.
During such period the acquisition, merchandising, distribution and advertising
areas reported to him. During his tenure, the number of stores operated by
Consolidated grew from one to approximately 800. Mr. Churches is currently a
member of the Board of Directors of Sun Television & Appliance, Inc.

Jacob Koval is Executive Vice President -- Wholesale and a Director of the
Company. Mr. Koval co-founded the Company in 1975 and served as its Vice
President until the 1996 Restructuring.

Jerry Sommers has served as Executive Vice President -- Retail of the
Company since November 1995, and as a Director since the 1996 Restructuring,
with direct responsibility for all purchasing of merchandise for the Company's
retail operations. He was employed by Consolidated from 1984 until he resigned
in April 1995. At the time of his resignation from Consolidated, he was
responsible for the acquisition, merchandising and advertising of all
merchandise for Consolidated's approximately 800 stores.

Susan Atkinson has served as Senior Vice President -- Chief Financial
Officer and Treasurer of the Company since January 1993. From August 1988 until
joining the Company, she was employed by Harris Wholesale Company, a
pharmaceutical wholesaler, serving as Chief Financial Officer and Vice
President -- Finance/Administration since January 1991. Prior to joining Harris
Wholesale, Ms. Atkinson served as Assistant Treasurer of Riser Foods (formerly
known as Fisher Foods), a publicly traded company.

Ned L. Sherwood has served as a Director of the Company since the 1996
Restructuring. Mr. Sherwood has been a principal and President of ZS Fund, a
company engaged in making private investments, for more than the past five
years. Mr. Sherwood previously served as a principal of AEA Investors, Inc.,
which was an investor in and led the initial public offering of Consolidated
(AEA later liquidated its interest in Consolidated). Mr. Sherwood is currently a
member of the Boards of Directors of Sun Television & Appliance, Inc. and Kaye
Group, Inc.

Robert Horne has served as a Director of the Company since the 1996
Restructuring. Mr. Horne has been a principal of ZS Fund since March 1992. Prior
to joining ZS Fund, Mr. Horne was employed by Salomon Brothers Inc as a Vice
President in its Mergers and Acquisitions Group.

Marc H. Morgenstern has served as Secretary of the Company since the 1996
Restructuring. He has been a principal in the Cleveland, Ohio law firm of Kahn,
Kleinman, Yanowitz & Arnson Co., L.P.A. for more than five years, and has been
President of the law firm and Chairman of its Executive Committee since June
1992.

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<PAGE> 43

BOARD OF DIRECTORS

The business of the Company is managed under the direction of the Company's
Board of Directors. The number of Directors is currently fixed at nine. The
Company intends to name three additional directors within 60 days of the
completion of the Offering to serve with Messrs. Dessler, Churches, Koval,
Sommers, Sherwood and Horne. The Company's Amended and Restated Code of
Regulations ("Code of Regulations") divides the Board of Directors into three
classes. The Directors serve staggered terms of three years, with the members of
one class being elected in any year, as follows: (i) Jacob Koval and Jerry
Sommers have been designated as Class I Directors and will serve until the 1997
annual meeting; (ii) Brady Churches and Robert Horne have been designated as
Class II Directors and will serve until the 1998 annual meeting; and (iii)
Reuven Dessler and Ned L. Sherwood have been designated as Class III Directors
and will serve until the 1999 annual meeting; and in each case until their
respective successors are elected and qualified.

The Board of Directors will have two standing committees: a Compensation
Committee and an Audit Committee. At least a majority of the membership of both
the Audit and Compensation Committees will include independent directors. The
Audit Committee will have general responsibility for supervision of financial
controls as well as accounting and audit activities of the Company. The Audit
Committee will annually review the qualifications of the Company's independent
certified public accountants, make recommendations to the Board of Directors
concerning the selection of the accountants and review the planning, fees and
results of the accountants' audit.

The Compensation Committee will have the authority to: (i) administer the
Company's stock option plan and restricted stock plan; and (ii) review and
monitor key employee compensation and benefits policies and administer the
Company's management compensation plans.

INSIDER PARTICIPATION IN COMPENSATION COMMITTEE

Prior to the 1996 Restructuring, Mazel Company L.P. had no compensation
committee. Decisions concerning compensation of executive officers for fiscal
1996 and prior years were made by ZS Mazel L.P., the partnership's managing
general partner, and Reuven Dessler on behalf of the other general partner.

COMPENSATION OF DIRECTORS

Following completion of the Offering, the Company intends to pay each
outside director a fee of $15,000 for attendance at four meetings per year,
together with reimbursement of out-of-pocket expenses incurred in connection
with the directors' attendance at such meetings. In addition, each outside
director will receive $1,500 per meeting for each meeting attended in excess of
four per year. No additional compensation is to be paid for committee meetings
held on the same day as a Board of Directors' meeting. Officers of the Company
who are also directors will receive no additional compensation for serving as
directors.

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<PAGE> 44

EXECUTIVE COMPENSATION

The following table sets forth certain information with respect to the
compensation earned during the fiscal year ended January 31, 1996 by the Chief
Executive Officer and certain other named executive officers of the Company:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ----------------
NAME AND ---------------------- RESTRICTED STOCK ALL OTHER
PRINCIPAL POSITION SALARY BONUS AWARDS(1) COMPENSATION(2)
- ---------------------------------------- ---------- ------- ---------------- ---------------
<S> <C> <C> <C> <C>
Reuven Dessler.......................... $1,406,836 -- $ 33,750 --
Chief Executive Officer
Brady Churches.......................... $ 196,885(3) $80,000 $110,250 $ 122,500
President
Jacob Koval............................. $ 432,356 -- $ 11,250 --
Executive Vice President --
Wholesale
Jerry Sommers........................... $ 25,957(3) $80,000 $110,250 --
Executive Vice President -- Retail
Susan Atkinson.......................... $ 121,564 $25,000 $ 6,750 --
Senior Vice President--
Chief Financial Officer and Treasurer
<FN>
- ---------------

(1) The foregoing named executive officers each purchased partnership units in
Mazel Company L.P. as part of the Company's Employee Equity Plan. Messrs.
Churches and Sommers each purchased 490 units on November 1, 1995, and
Messrs. Dessler and Koval and Ms. Atkinson purchased 150, 50 and 30 units,
respectively, on January 1, 1996. The purchase price for such units was
$25.00 per unit. The issuances have been included here as the difference
between their fair market value of $250.00 on the date of purchase and the
purchase price. The Company's Restricted Stock Plan serves as the successor
to the Employee Equity Plan. See "Management -- Compensatory Plans."

(2) Mr. Churches received a consulting fee in the amount of $122,500.

(3) Represents partial year payments made to Mr. Churches effective April 1995
and to Mr. Sommers effective November 1995.
</TABLE>

Mr. Dessler has entered into an amended and restated employment agreement
terminating October 31, 2000. Under the terms of the agreement, Mr. Dessler's
annual salary is $425,000 (subject to annual cost-of-living adjustments). On the
effective date of the Offering, Mr. Dessler will receive non-qualified options
to purchase 75,000 shares of the Common Stock of the Company at the initial
public offering price, with 20% of such options vesting each year and
terminating ten years after the grant date. Mr. Dessler is entitled to receive
an annual bonus of up to 88.2% of his base salary subject to the Company
achieving pre-determined annual performance targets, provided that the maximum
bonus for fiscal 1996 and fiscal 1997 is $125,000 per year. Under the agreement,
Mr. Dessler is also entitled to receive, at the time of closing of the Offering,
shares of Common Stock having a value of approximately $668,000 (calculated at
the initial public offering price) and to receive approximately $606,000 in
cash. The Company may terminate the agreement without cause provided it makes a
severance payment to Mr. Dessler equal to one-year's salary and bonus, except
that, if the termination occurs after or in contemplation of a "change in
control" (as defined in the agreement) that Mr. Dessler voted against, the
severance payment is two-years' salary and bonus. Pursuant to the terms of his
agreement, Mr. Dessler has agreed not to compete with the Company's operations
for a period expiring on the later of (i) two years following his termination of
employment or (ii) October 31, 2000, provided that in the event of a termination
by the Company for reasons other than for "cause" (as defined in the agreement),
the noncompetition period is one year.

Mr. Koval has entered into an amended and restated four-year employment
contract terminating on October 31, 2000. Under the terms of the agreement, Mr.
Koval's annual salary is $225,000 (subject to annual

44
<PAGE> 45

cost-of-living adjustments). On the effective date of the Offering, Mr. Koval
will receive non-qualified options to purchase 30,000 shares of Common Stock of
the Company at the initial public offering price, with 20% of such options
vesting each year and terminating ten years after the grant date. Mr. Koval is
entitled to receive an annual bonus of up to 66.7% of his base salary subject to
the Company achieving pre-determined annual performance targets, provided that
the maximum bonus for fiscal 1996 is $80,000 and the maximum bonus for fiscal
1997 is $125,000. Under the agreement, Mr. Koval will be issued, at the closing
of the Offering, shares of Common Stock having a value of approximately $369,000
(calculated at the initial public offering price) and approximately $92,000 in
cash. The Company may terminate the agreement without cause provided it makes a
severance payment to Mr. Koval equal to one-year's salary and bonus, except
that, if the termination occurs after or in contemplation of a change in control
that Mr. Koval voted against, the severance payment is two-years' salary and
bonus. Pursuant to the terms of his agreement, Mr. Koval has agreed not to
compete with the Company's wholesale operations for a period expiring on the
later of (i) two years following a termination of employment or (ii) October 31,
2000, provided that in the event of termination by the Company for reasons other
than "cause", the noncompetition period is one year.

Brady Churches has entered into an amended employment agreement terminating
October 31, 2000, and providing him an annual base salary of $360,000 (subject
to annual cost-of-living adjustments). Mr. Churches is entitled to receive an
annual bonus up to 58.3% of his annual base salary, subject to the Company
achieving pre-determined annual performance targets provided that the maximum
annual bonus in both fiscal 1996 and fiscal 1997 is $125,000. In fiscal 1995,
Mr. Churches received a $450,000 signing bonus (payable quarterly over a
two-year period) and the right to participate in the Company's Employee Equity
Plan. The signing bonus vests on the earlier of the second anniversary of the
date of Mr. Churches employment with the Company or the effective date of its
initial public offering. Mr. Churches executed a promissory note to evidence his
obligation to repay half of the signing bonus in the event of his departure
prior to vesting. As a result of the Offering, the signing bonus vests and the
promissory note will be canceled. In addition, Mr. Churches purchased interests
in Mazel Company L.P. from certain of its partners for $405,000. On the
effective date of the Offering, Mr. Churches will receive non-qualified options
to purchase 100,000 shares of Common Stock of the Company at the initial public
offering price, with 20% of such options vesting each year and terminating ten
years after the grant date. Mr. Churches will also be issued, at the closing of
the Offering, shares of Common Stock having a value of approximately $544,000
(calculated at the initial public offering price). Under his agreement, Mr.
Churches is entitled to two-years' salary and bonus in the event of his
termination of employment without cause or in the event he elects to terminate
employment following a change in control. The agreement also contains a one-year
covenant not to compete with the Company following termination of Mr. Churches
employment with the Company.

Jerry D. Sommers has entered into an amended employment agreement
terminating on October 31, 2000 and providing him an annual base salary of
$265,000 (subject to annual cost-of-living adjustments). Mr. Sommers is entitled
to receive an annual bonus of up to 59.4% of his annual base salary, subject to
the Company achieving pre-determined annual performance targets provided that
the maximum annual bonus in both fiscal 1996 and fiscal 1997 is $125,000. In
fiscal 1995, Mr. Sommers also received a signing bonus of $215,000 (payable
quarterly over a two-year period) and the right to participate in the Company's
Employee Equity Plan. The signing bonus vests on the earlier of the second
anniversary of the date of Mr. Sommers employment with the Company or the
effective date of its initial public offering. Mr. Sommers executed a promissory
note to evidence his obligation to repay half of the signing bonus in the event
of his departure prior to vesting. As a result of the Offering, the signing
bonus vests and the promissory note will be canceled. In addition, Mr. Sommers
purchased interests in Mazel Company L.P. from certain of its partners for
$405,000. On the effective date of the Offering, Mr. Sommers will receive
non-qualified options to purchase 100,000 shares of Common Stock of the Company
at the initial public offering price, with 20% of such options vesting each year
and terminating ten years after the grant date. Mr. Sommers will also be issued
shares of Common Stock having a value of approximately $327,500 (calculated at
the initial public offering price) upon the completion of the Offering. Mr.
Sommers is entitled to receive two-years' salary and bonus in the event of his
termination of employment without cause or in the event he elects to terminate
employment following a change in control. Mr. Sommers is bound by a one-year
non-competition provision following a termination of employment, under certain
conditions.

45
<PAGE> 46

Susan Atkinson has an employment agreement terminating January 31, 1999 and
providing her an annual base salary of $117,600. Ms. Atkinson is entitled to
receive an annual bonus of up to 48.4% of her annual base salary, subject to the
Company achieving pre-determined annual performance targets. On the effective
date of the Offering, Ms. Atkinson will receive non-qualified options to
purchase 30,000 shares of Common Stock of the Company at the initial public
offering price, with 20% of such options vesting per year and terminating ten
years after the grant date. Ms. Atkinson will also be issued shares of Common
Stock having a value of approximately $123,000 (calculated at the initial public
offering price) upon the completion of the Offering. Under her agreement, Ms.
Atkinson is entitled to receive one-year's salary in the event of her
termination of employment other than for cause.

Each of Messrs. Dessler, Koval, Churches and Sommers and Ms. Atkinson will
be receiving the shares of Common Stock referred to in each of their respective
employment agreements pursuant to Rule 701 promulgated under the Securities Act
of 1933, as amended (the "Securities Act"), in transactions that are exempt from
the registration requirements of the Securities Act. Although shares acquired
under Rule 701 are generally available for resale beginning 90 days after the
initial public offering, subject to certain provisions of Rule 144, each of
these individuals has agreed in their employment agreements not to offer, sell
or otherwise dispose of any shares of Common Stock beneficially owned by them
for a period of 180 days after the date of this Prospectus. See "Shares Eligible
For Future Sale."

COMPENSATORY PLANS

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. Pursuant to the provisions of the Stock
Option Plan, employees of the Company may be offered the opportunity to acquire
Common Stock by the grant of stock options ("Options"), including both incentive
stock options ("ISOs") and nonqualified stock options ("NQSOs"). Consultants may
receive only NQSOs under the Stock Option Plan. A total of 900,000 shares of
Common Stock have been reserved for Options under the Stock Option Plan. The
purchase price of a share of Common Stock pursuant to an ISO shall not be less
than the fair market value of a share of Common Stock at the grant date. As of
the date of this Prospectus, non-qualified options have been granted to certain
employees of the Company, including Options for 75,000 shares to Mr. Dessler,
100,000 shares to Mr. Churches, 100,000 shares to Mr. Sommers, 30,000 shares to
Mr. Koval and 30,000 shares to Ms. Atkinson. The Options have an exercise price
equal to the initial public offering price, vest in five equal annual
installments of 20% of the grant, and have a term of ten years. Pursuant to the
provisions of the Stock Option Plan, non-employee directors of the Company
automatically receive, upon the later of the effective date of the Offering or
the date they first become directors, a grant of Options to purchase 15,000
shares of Common Stock of the Company. The directors' Options vest at the rate
of 20% per year beginning on the first anniversary of the date of grant. The
exercise price per share of Common Stock is the closing price at which the
Company's Common Stock trades on the Nasdaq National Market on the date of
grant. Options expire ten years after the date of grant. The Options granted to
Messrs. Sherwood and Horne and those that will be granted to the new directors
will have an exercise price equal to the initial public offering price.

The Mazel Stores, Inc. Restricted Stock Plan ("Restricted Stock Plan" and,
collectively, with the Stock Option Plan, the "Compensatory Plans") 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 Mazel
Company L.P. Employee Equity Plan. The Restricted Stock Plan relates to 220,252
unvested shares of Common Stock issued, initially as partnership units under the
Employee Equity Plan. Shares have the same vesting terms as provided in the
Employee Equity Plan. The Employee Equity Plan provided for the purchase of
partnership units (at a share equivalent price of $0.08 per share) 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
1,660 units (representing 528,492 shares of Common Stock) under the Employee
Equity Plan during the year ended January 31, 1996, resulting in a total of
1,730 units outstanding. A total of 588 units were vested at such date, and an
additional 450 units will vest upon the effectiveness of the Offering. As part
of the 1996 Restructuring, all vested units (aggregating 330,537 shares of
Common Stock) were

46
<PAGE> 47

distributed to plan participants and all unvested units (aggregating 220,252
shares of Common Stock) will be held pursuant to the Restricted Stock Plan.

LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL 1995

The table below sets forth awards made in fiscal 1995 under the Mazel
Company L.P. Employee Equity Plan, the predecessor to the Restricted Stock Plan.

<TABLE>
<CAPTION>
PERFORMANCE OR
OTHER PERIOD UNTIL
NAME NUMBER OF SHARES MATURATION OR PAYOUT
- --------------------------------------------- ---------------- ----------------------------
<S> <C> <C>
Reuven Dessler............................... 47,784 Fully vested
Brady Churches............................... 156,094 Vest through August 1999
Jacob Koval.................................. 15,928 Fully vested
Jerry Sommers................................ 156,094 Vest through August 1999
Susan Atkinson............................... 9,557 Vest through January 1999
All other employees (16 persons)............. 143,035 Vest through January 2001
----------------
Total.............................. 528,492
================
</TABLE>

47
<PAGE> 48

CERTAIN TRANSACTIONS

LEASES

Messrs. Dessler, Koval and certain other shareholders of the Company are
partners in Aurora Road Realty Development Company, a partnership which leases
the office and warehouse facility located in Solon, Ohio, to the Company.
Messrs. Dessler and Koval own 40.0% and 6.0% interests, respectively, in such
partnership. The Company made payments totaling approximately $1.5 million, $1.6
million and $1.2 million pursuant to the lease for fiscal 1995, 1994 and 1993,
respectively. Messrs. Dessler and Koval are minority shareholders in entities
that operate public warehouses in which the Company periodically leases space.
The Company made payments totaling approximately $1.7 million, $1.7 million,
$1.5 million and $975,000 to such entities in fiscal 1995, 1994 and 1993, and
the first six months of 1996, respectively. The Company believes the payments
under these leases are not in excess of those which could be obtained from
unaffiliated sources. The recent addition of warehouse space at both the
Company's New Jersey and Ohio facilities is expected to reduce, but not
eliminate, the occasional need for public warehouse space. See
"Business -- Principal Properties."

ZS MANAGEMENT FEE

In connection with the 1992 Recapitalization, the Company entered into a
Financial Advisory Agreement with ZS Fund L.P., of which Ned Sherwood and Robert
Horne are principals, which provides for an annual financial advisory fee of
$100,000 payable in equal quarterly installments of $25,000 through the earlier
of June, 1997 or the date the Company notifies ZS Fund of its election to
terminate the agreement. The Company made payments of $100,000 to ZS Fund
pursuant to the Financial Advisory Agreement during each of fiscal 1995, 1994
and 1993, respectively. The Company intends to terminate the Financial Advisory
Agreement by making a payment of $200,000 to ZS Fund at the completion of this
Offering. See "Use of Proceeds."

CONVERSION OF 1992 RECAPITALIZATION, ODD JOB ACQUISITION AND 1996 RESTRUCTURING
DEBT; PAYMENT OF ODD JOB CONTINGENT NOTES

In connection with the 1992 Recapitalization, the Company issued to Old
Mazel the 1992 Old Mazel Contingent Notes providing for additional payments
totaling $4.0 million upon the completion of the Offering. In connection with
the Odd Job Acquisition, Odd Job Holdings issued to Old Mazel the 1995 Old Mazel
Note in the principal amount of $1.0 million. Each of the above obligations will
be converted into shares of Common Stock of the Company (at a conversion price
equal to the initial offering price). In addition, Odd Job Holdings issued the
Odd Job Contingent Notes providing for the payment to Messrs. Snyder and
Horowitz and to Old Mazel of an aggregate amount equal to $450,000 less all
costs and expenses related to the Odd Job Litigation incurred following the Odd
Job Acquisition, such payment to be due 60 days following the final disposition
of the Odd Job Litigation. As a result of the settlement of the litigation, no
payment will be made to Messrs. Snyder and Horowitz and Old Mazel.

PURCHASES AND SALES OF MERCHANDISE BETWEEN MAZEL AND ODD JOB

Prior to the Odd Job Acquisition, Mazel Company L.P. both purchased from
and sold merchandise to Odd Job. Such sales and purchases totaled approximately
$3.5 million and $900,000, respectively, in fiscal 1995. Messrs. Dessler and
Koval owned 10.5% and 8.3%, respectively, of Odd Job.

LICENSE AND PURCHASE AGREEMENT WITH RELATED STORES

In connection with the Odd Job Acquisition, the Company, as licensor,
entered into licensing and purchasing agreements (the "License Agreements") with
corporations (the "Licensees") owned by relatives of Messrs. Snyder and
Horowitz, the prior owners of Odd Job Trading Corp. Under the License
Agreements, the Licensees are permitted to continue to use the "Odd Job" trade
name on their two New York stores

48
<PAGE> 49

through January, 1998. Thereafter, the Licensees must cease to use the "Odd Job"
name, and they may not utilize the trade name on any other stores, without the
Company's consent. Additionally, the Licensees must purchase at least 75% of
their store merchandise from the Company for a period not to exceed the earlier
of five years or the date Messrs. Snyder or Horowitz cease to be employed by the
Company. The Company is in discussions with the Licensees concerning the
possible purchase of one of the Licensees' stores.

PEDDLERS MART CONSULTING FEE

The Company provided consulting services to ZS Peddler's Mart, Inc.
beginning in December 1994 and ending at the time of Odd Job Holding's
acquisition of Peddlers Mart in December 1995. Fees paid pursuant to such
agreement, together with interest, totaled approximately $96,000 in fiscal 1995.

NOTES FROM RELATED PARTIES

Messrs. Churches and Sommers have executed promissory notes to the Company
in exchange for $225,000 and $107,500, respectively, advanced by the Company to
such individuals as bonus payments pursuant to their respective employment
agreements. Pursuant to the terms of such individual's employment agreement, the
Company is forgiving such indebtedness upon the completion of the Offering.

THE CLOSEOUT STORE ACQUISITION

Effective March 1, 1996, Odd Job Holdings acquired the operations of its
two Staten Island retail stores from Melen Trading Corp. (such stores were
formerly operated under the name "The CloseOut Store"). As consideration for the
assets acquired, Odd Job Holdings assumed liabilities of Melen Trading Corp.
owing to third parties and forgave liabilities owing from Melen Trading Corp. to
Odd Job Holdings totaling in the aggregate approximately $1.1 million. Messrs.
Snyder, Horowitz and Old Mazel owned, in the aggregate, 50% of Melen Trading
Corp. (the remaining 50% was owned by a relative of Mr. Snyder, who managed the
operations of the two stores). In connection with the acquisition, Odd Job
Holdings entered into a consulting agreement with the 50% owner of Melen Trading
Corp. pursuant to which such individual will receive monthly payments totaling
$100,000 through February 28, 1998. As a condition to completing the
acquisition, Odd Job and Mr. Snyder agreed to reduce his annual salary by
$25,000 in both fiscal 1996 and fiscal 1997.

MISCELLANEOUS

Pursuant to the terms of their respective employment agreements, Messrs.
Dessler and Koval will receive payments of $606,108 and $92,179, respectively,
concurrent with the Offering. The foregoing represents the present value of the
difference between the current salaries of Messrs. Dessler and Koval and their
salaries, pursuant to their respective employment agreements. Messrs. Dessler,
Churches, Koval, Sommers, Snyder and Horowitz and Ms. Atkinson will be issued
shares of Common Stock having values of approximately $668,000, $544,000,
$369,000, $327,500, $564,000, $468,500 and $123,000 (calculated at the initial
public offering price), respectively, as salary reduction and bonus compensation
pursuant to their respective employment agreements. The Company has also loaned
approximately $2.9 million to executives and other individuals to provide for
payment of tax obligations arising from the issuance of such stock, including
approximately $307,500, $250,000, $170,000, $150,500, $94,500, $50,500 and
$56,500 to Messrs. Dessler, Churches, Koval, Sommers, Snyder and Horowitz and
Ms. Atkinson, respectively. Such loans are to be repaid on the earlier of five
years from the effective date of the loan or the date of the individual's first
sale of shares of Common Stock of the Company, but only to the extent of net
sale proceeds. The loans will bear interest at the applicable federal rate.
Under the Company's Employee Equity Plan, 21 employees of the Company, including
Ms. Atkinson and Messrs. Dessler, Koval, Churches and Sommers have purchased
limited partnership units in Mazel Company L.P. which, as part of the 1996
Restructuring, were distributed as 550,789 shares of Common Stock, of which
220,252 shares will be held pursuant to the Restricted Stock Plan. See
"Management -- Compensatory Plans."

The Company has adopted a policy that future transactions with affiliates,
if any, will be on terms no less favorable than could be obtained from unrelated
parties, and that such transactions shall be subject to the approval of a
majority of the disinterested members of the Company's Board of Directors.

49
<PAGE> 50

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock on the date of this Prospectus. Unless
otherwise indicated below, the persons named below have the sole voting and
investment power with respect to the number of shares set forth opposite their
names. All information with respect to beneficial ownership has been furnished
by the respective director, officer or 5% or more shareholder, as the case may
be.

SHARES BENEFICIALLY OWNED

<TABLE>
<CAPTION>
PRIOR TO OFFERING
--------------------------------- AFTER THE OFFERING
NUMBER OF SHARES ---------------------
NAMES OF BENEFICIAL OWNERS BENEFICIALLY OWNED PERCENTAGE PERCENTAGE(1)
- ------------------------------------------------------ ------------------ ---------- ---------------------
<S> <C> <C> <C>
ZS Fund(2)............................................ 2,751,907 44.3% 31.3%
54 Morris Lane
Scarsdale, NY 10583

Reuven Dessler(4)..................................... 1,561,475 25.1 17.8
31000 Aurora Road
Solon, Ohio 44139

Jacob Koval(5)........................................ 803,520 12.9 9.1
31000 Aurora Road
Solon, Ohio 44139

Mazel/D&K, Inc.(3).................................... 2,059,354 33.2 23.4
31000 Aurora Road
Solon, Ohio 44406

Brady Churches........................................ 326,290 5.3 3.7
540 Officenter Place, Suite 260
Gahanna, OH 43230

Jerry Sommers......................................... 312,759 5.0 3.6
540 Officenter Place, Suite 260
Gahanna, OH 43230

Susan Atkinson........................................ 39,552 0.6 0.5
31000 Aurora Road
Solon, Ohio 44139

Ned Sherwood(6)....................................... 2,751,907 44.3 31.3
54 Morris Lane
Scarsdale, NY 10583

Robert Horne(6)....................................... 2,751,907 44.3 31.3
54 Morris Lane
Scarsdale, NY 10583

All Current Directors and 5,795,512 93.3 66.0
Executive Officers of the Company (10 Persons)......
<FN>
- ---------------

(1) The table set forth above assumes that the over-allotment option is not
exercised by the Underwriters. The Company has granted the Underwriters a
30-day option to purchase up to 386,100 additional shares, solely for the
purpose of covering over-allotments.

(2) The shares beneficially owned by ZS Fund include 1,993,072 shares held by ZS
Mazel L.P., 453,996 shares held by ZS Mazel II L.P., and 304,839 shares held
by ZS Mazel, Inc. Messrs. Horne and Sherwood are directors and officers of
ZS Fund.

(3) Mazel/D&K, Inc. is a corporation owned by Messrs. Dessler and Koval and
members of their families. Messrs. Dessler and Koval are the directors and
officers of Mazel/D&K, Inc.

(4) Includes 1,372,971 shares owned by Mazel/D&K, Inc. for the benefit of Mr.
Dessler and family members.

(5) Includes 686,383 shares owned by Mazel/D&K, Inc. for the benefit of Mr.
Koval and family members.

(6) Includes the shares beneficially owned by ZS Fund (See Note 2 above). As
officers and/or equity owners of the entities holding such shares, Messrs.
Sherwood and Horne have voting power with respect to such shares. Except to
the extent of their equity interests in the entities holding such shares,
Messrs. Sherwood and Horne disclaim beneficial ownership in such shares.

(7) Messrs. Churches and Sommers and Ms. Atkinson own 52,642, 52,642, and 9,584
shares of Common Stock, respectively, that are unvested and held under the
Company's Restricted Stock Plan. These shares are included in the
individuals respective totals.
</TABLE>

50
<PAGE> 51

DESCRIPTION OF CAPITAL STOCK

The Company's Amended and Restated Articles of Incorporation (the "Articles
of Incorporation") provide that the authorized capital stock of the Company
consists of 2,000,000 shares of Preferred Stock, without par value, issuable in
series, and 14,000,000 shares of Common Stock, without par value.

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of shareholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of shares of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared by the Board of Directors out
of funds legally available therefor, subject to any preferential dividend rights
of outstanding shares of Preferred Stock. Upon the liquidation, dissolution or
winding up of the Company, the holders of shares of Common Stock are entitled to
receive ratably the net assets of the Company available after the payment of all
debts and other liabilities and subject to the prior rights of holders of any
outstanding shares of Preferred Stock. Holders of shares of Common Stock have no
preemptive, subscription, redemption or conversion rights. The outstanding
shares of Common Stock are, and the shares offered by the Company in the
Offering will be, when issued and paid for, fully paid and nonassessable.

PREFERRED STOCK

The Articles of Incorporation provide that the Board of Directors is
authorized, subject to certain limitations prescribed by law, without further
shareholder approval, to issue from time to time up to an aggregate of 2,000,000
shares of Preferred Stock in one or more series and to fix or alter the
designations, preferences, rights and any qualifications, limitations or
restrictions of shares of each such series thereof, including the dividend
rights, dividend rates, conversion rights, voting rights, terms of redemption
(including sinking fund provisions), redemption price or prices, liquidation
preferences and the number of shares constituting any series or designations of
such series. The issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change of control of the Company. The rights,
preferences and privileges of holders of shares of Common Stock are subject to,
and may be adversely affected by, the rights of the holders of shares of any
series of Preferred Stock which the Company may designate and issue in the
future. The Company has no present plans to issue any Preferred Stock.

LIMITATION OF DIRECTOR LIABILITY

Under Ohio law, a director's liability to the Company or its shareholders
for damages is limited to those situations where it is proved by clear and
convincing evidence that the director's action or failure to act involved an act
or omission undertaken with deliberate intent to cause injury to the Company or
undertaken with reckless disregard for the best interests of the Company, and
those situations involving unlawful loans, asset distributions, dividend
payments or share repurchases. As a result, shareholders may be unable to
recover monetary damages against directors for actions which constitute gross
negligence or which are in violation of their fiduciary duties, although it may
be possible to obtain injunctive or other equitable relief with respect to such
actions.

The Company's Code of Regulations contains provisions indemnifying
Directors and officers of the Company to the fullest extent permitted by law and
providing for the advancement of expenses incurred in connection with an action
upon the receipt of an appropriate undertaking to repay said amount if it is
determined that the individual in question is not entitled to indemnification.

CERTAIN PROVISIONS OF OHIO LAW

As an Ohio corporation, the Company is subject to certain provisions of
Ohio law which may discourage or render more difficult an unsolicited takeover
of the Company. Among these are provisions that: (i) prohibit certain mergers,
sales of assets, issuances or purchases of securities, liquidation or
dissolution, or reclassification of the then outstanding shares of an Ohio
corporation involving certain holders of stock representing 10%

51
<PAGE> 52

or more of the voting power, unless such transactions are either approved by the
Directors in office prior to the 10% shareholder becoming such or involve a 10%
shareholder which has been such for at least three years and certain
requirements related to the price and form of consideration to be received by
shareholders are met; and (ii) provide Ohio corporations with the right to
recover profits realized under certain circumstances by persons engaged in
"greenmailing" or who otherwise sell securities of a corporation within 18
months of proposing to acquire such corporation.

In addition, pursuant to Section 1701.831 of the Ohio Revised Code, the
purchase of certain levels of voting power of the Company (one-fifth or more,
one-third or more, or a majority) can be made only with the prior authorization
of the holders of at least a majority of the total voting power of the Company
and the separate prior authorization of the holders of at least a majority of
the voting power held by shareholders other than the proposed purchaser,
officers of the Company and Directors of the Company who are also employees. In
light of the fact that, upon completion of the Offering, the officers and
directors of the Company will beneficially own more than 66.0% of the Company's
outstanding shares of Common Stock, acquisition of the foregoing levels of
voting power by third parties may not be possible unless the current
shareholders vote in favor thereof.

The Code of Regulations establishes an advance notice procedure with regard
to the nomination, other than by or at the direction of the Board of Directors,
of candidates for election as directors of the Company. In general, notice must
be received by the Company not less than 90 days prior to the first anniversary
of the prior year's annual meeting and must contain certain specified
information concerning the person to be nominated and the shareholder submitting
the nomination.

It is possible that these provisions, as well as the classification of the
Board of Directors, the ability of the Board to issue additional shares of
Common Stock or Preferred Stock and the percentage of ownership held by the
executive officers, will discourage other persons from making a tender offer
for, or acquisitions of, substantial amounts of the Company's Common Stock, or
may delay changes in control or management of the Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock will be American
Stock Transfer & Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, there will be 8,784,000 shares of Common
Stock of the Company outstanding (assuming the over-allotment option is not
exercised). Of these shares, the 2,574,000 shares sold in the Offering will be
freely tradeable without restriction or further registration under the
Securities Act, except that any shares purchased by "affiliates" of the Company,
as that term is defined in Rule 144 ("Rule 144") promulgated under the
Securities Act, may generally only be sold in compliance with the limitations of
Rule 144 described below.

The remaining 6,210,000 shares of Common Stock are deemed "Restricted
Shares" as defined under Rule 144. Restricted Shares may be sold in the public
market only if registered, or if they qualify for an exemption from
registration, under Rules 144, 144(k) or 701 promulgated under the Securities
Act, which rules are summarized below. Subject to the lock-up agreements
described below and the provisions of Rules 144, 144(k) and 701, additional
shares will be available for sale in the public market (subject in the case of
shares held by affiliates to compliance with certain volume restrictions) as
follows: (i) no shares will be available for immediate sale in the public market
on the date of the Prospectus; (ii) 203,521 shares will be eligible for resale
upon expiration of lock-up agreements 180 days after the date of this
Prospectus; and thereafter, (iii) 6,006,479 shares will be eligible for sale
upon expiration of their respective two-year holding periods.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least two years (and, with respect to non-affiliates of the

52
<PAGE> 53

Company, a person who has beneficially owned Restricted Shares for at least two
years and less than three years), will be entitled to sell in any three-month
period a number of shares that does not exceed the greater of: (i) 1% of the
then outstanding shares of the Company's Common Stock (approximately 87,840
shares immediately after the Offering); or (ii) the average weekly trading
volume of the Company's Common Stock on the Nasdaq National Market during the
four calendar weeks immediately preceding the date on which notice of the sale
is filed with the Securities and Exchange Commission (the "Commission"). Such
sales pursuant to Rule 144 are subject to certain requirements relating to
manner of sale, notice and availability of current public information about the
Company. A person (or persons whose shares are aggregated) who is not deemed to
have been an affiliate of the Company at any time during the 90 days immediately
preceding the sale and who has beneficially owned Restricted Shares for at least
three years is entitled to sell such shares pursuant to Rule 144(k) without
regard to the limitations described above. The Commission has recently proposed
to reduce the two- and three-year holding periods under Rule 144 to one and two
years, respectively. If enacted, such modification will have a material effect
on the timing of when certain shares of Common Stock become eligible for resale.

Rule 701 promulgated under the Securities Act provides that shares of
Common Stock acquired pursuant to written agreements such as the employment
agreements of the Company's senior executives may be resold by persons other
than affiliates, beginning 90 days after the date of this Prospectus, subject
only to the manner of sale provisions of Rule 144, and by affiliates, beginning
90 days after the date of this Prospectus, subject to all provisions of Rule 144
except its two-year minimum holding period.

The Company has agreed, subject to certain exceptions, not to offer, sell
or otherwise dispose of any shares of Common Stock for a period of 180 days
after the date of this Prospectus, except that the Company may issue, and grant
options to purchase, shares of Common Stock under its Stock Option Plan and
Restricted Stock Plan. In addition, the Company may issue shares of Common Stock
in connection with any acquisition of another company if the terms of such
issuance provide that such Common Stock shall not be resold prior to the
expiration of the 180 day period referenced in the preceding sentence.

The Company's executive officers, directors, ZS Fund, and its other
shareholders have agreed pursuant to written agreements (the "Lock-up
Agreements"), subject to certain exceptions, not to offer, sell or otherwise
dispose of any shares of Common Stock beneficially owned by them for a period of
180 days after the date of this Prospectus.

The Company intends to file registration statements on Form S-8 under the
Securities Act to register all shares of Common Stock issuable under the Stock
Option Plan and Restricted Stock Plan. The registration statements are expected
to be filed shortly after the effective date of the Registration Statement of
which this Prospectus is a part and will be effective upon filing. Shares issued
upon the exercise of stock options after the effective date of the Form S-8
registration statements will be eligible for resale in the public market without
restriction, subject to Rule 144 limitations applicable to affiliates and the
Lock-up Agreements.

Prior to the Offering, there has been no public market for the Common Stock
of the Company, and no prediction can be made as to the effect, if any, that
market sales of shares of Common Stock or the availability of shares for sale
will have on the market price of the Common Stock prevailing from time to time.
Nevertheless, sales of significant numbers of shares of Common Stock in the
public market could adversely affect the market price of the Common Stock and
could impair the Company's future ability to raise capital through an offering
of its equity securities.

REGISTRATION RIGHTS

The Company plans to grant certain shareholders the right to require the
Company to register their stock under the Securities Act. The Company intends to
enter into a Registration Rights Agreement prior to the completion of the
Offering, providing each of ZS Fund and Mazel/D&K two demand registration
rights; provided, however, that the Company shall have the right to delay a
demand registration under certain circumstances for a period not to exceed 90
days. In addition, ZS Fund, Mazel/D&K, Messrs. Snyder and Horowitz and certain
former owners of Old Mazel shall have a right to include shares of Common Stock
which they own in any registration statement under the Securities Act filed in
connection with the proposed

53
<PAGE> 54

offering for cash of any of the Company's capital stock by it or any of its
shareholders (other than on Form S-4 or Form S-8 promulgated under the
Securities Act); provided, however, that if the managing underwriter, in the
case of an underwritten public offering, determines and advises in writing that
the inclusion in the registration statement of all of the capital stock of the
Company proposed to be included in the Offering would interfere with the
successful marketing of the securities proposed to be registered by the Company,
then the number of shares of capital stock to be included in the registration
statement shall be reduced pro rata among all such holders of capital stock
included in the Offering. The Company will bear all filing and related expenses
in connection with the registration statement other than commissions and selling
expenses that will be borne by each selling shareholder.

54
<PAGE> 55

UNDERWRITING

The several underwriters named below (the "Underwriters") for whom William
Blair & Company, L.L.C. and Salomon Brothers Inc are acting as representatives
(the "Representatives"), have severally agreed, subject to the terms and
conditions set forth in the Underwriting Agreement by and among the Company and
the Underwriters, to purchase from the Company, and the Company has agreed to
sell to each of the Underwriters, the aggregate number of shares of Common Stock
set forth opposite each Underwriter's name:

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- ------------------------------------------------------------------------------ ----------------
<S> <C>
William Blair & Company, L.L.C................................................ 702,000
Salomon Brothers Inc.......................................................... 702,000
Bear, Stearns & Co. Inc....................................................... 60,000
Alex. Brown & Sons Incorporated............................................... 60,000
Dillon, Read & Co. Inc........................................................ 60,000
Donaldson, Lufkin & Jenrette Securities Corporation........................... 60,000
Goldman, Sachs & Co........................................................... 60,000
Lazard Freres & Co. LLC....................................................... 60,000
Montgomery Securities......................................................... 60,000
PaineWebber Incorporated...................................................... 60,000
Prudential Securities Incorporated............................................ 60,000
Smith Barney Inc.............................................................. 60,000
Allen & Company Incorporated.................................................. 30,000
J.C. Bradford & Co............................................................ 30,000
JW Charles Securities, Inc.................................................... 30,000
Equitable Securities Corporation.............................................. 30,000
EVEREN Securities, Inc........................................................ 30,000
Fahnestock & Co. Inc.......................................................... 30,000
First of Michigan Corporation................................................. 30,000
Furman Selz................................................................... 30,000
Gerard Klauer Mattison & Co., Inc............................................. 30,000
Janney Montgomery Scott Inc................................................... 30,000
Johnson Rice & Company L.L.C.................................................. 30,000
C.L. King & Associates, Inc................................................... 30,000
Morgan Keegan & Company, Inc.................................................. 30,000
Needham & Company, Inc........................................................ 30,000
Neuberger & Berman, LLC....................................................... 30,000
The Ohio Company.............................................................. 30,000
Ragen MacKenzie Incorporated.................................................. 30,000
The Robinson-Humphrey Company, Inc............................................ 30,000
Wedbush Morgan Securities..................................................... 30,000
----------------
Total......................................................................... 2,574,000
================
</TABLE>

The nature of the Underwriters' obligations under the Underwriting
Agreement is such that all shares of Common Stock offered hereby (excluding
shares covered by the over-allotment options granted therein) must be purchased
if any are purchased. In the event of a default by any Underwriter, the
Underwriting Agreement provides that, in certain circumstances, purchase
commitments of the non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.

The Representatives have advised the Company that the several Underwriters
propose to offer the shares of Common Stock to the public initially at the
public offering price set forth on the cover page of this Prospectus and to
selected dealers at such price less a concession of not more than $0.62 per
share. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $0.10 per share to certain

55
<PAGE> 56

other dealers. After the initial public offering, the public offering price and
other selling terms may be changed by the Representatives.

The Company has granted to the Underwriters an option, exercisable within
30 days after the date of this Prospectus, to purchase up to an additional
386,100 shares of Common Stock at the same price per share to be paid by the
Underwriters for the other shares offered hereby. If the Underwriters purchase
any of such additional shares pursuant to this option, each Underwriter will be
committed to purchase such additional shares in approximately the same
proportion as set forth in the table above. The Underwriters may exercise the
option only for the purpose of covering over-allotments, if any, made in
connection with the distribution of shares of Common Stock offered hereby.

The Company, its executive officers and directors and its shareholders have
agreed not to offer, sell, contract to sell or otherwise dispose of any shares
of Common Stock of the Company for a period of 180 days after the date of this
Prospectus without the written consent of William Blair & Company, L.L.C. See
"Shares Eligible for Future Sale."

There has been no public market for the Common Stock prior to the Offering.
The initial public offering price of the Common Stock has been determined by
negotiation among the Company and the Representatives. Among the factors
considered in determining the initial public offering price were prevailing
market and economic conditions, revenues and earnings of the Company, estimates
of the business potential and prospects of the Company, the present state of the
Company's business operations, an assessment of the Company's management and the
consideration of the above factors in relation to market valuations of certain
publicly traded companies and related businesses.

The Company and certain existing shareholders have agreed to indemnify the
Underwriters and their controlling persons against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments the
Underwriters may be required to make in respect hereof.

The Representatives have informed the Company that the Underwriters do not
intend to confirm, without customer authorization, sales to any accounts over
which they exercise discretionary authority.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Kahn, Kleinman, Yanowitz & Arnson Co., L.P.A., Cleveland, Ohio. Marc
H. Morgenstern, a principal of the firm, is the Secretary of the Company.
Certain attorneys in the firm indirectly own shares of Common Stock. Certain
legal matters will be passed upon for the Underwriters by Sonnenschein Nath &
Rosenthal, Chicago, Illinois.

EXPERTS

The audited combined financial statements of Mazel Company L.P. and Odd Job
Holdings, Inc. and of Mazel Company L.P. as of January 31, 1996 and 1995 and for
each of the years in the three-year period ended January 31, 1996, and the
audited consolidated financial statements of Odd Job Holdings, Inc. as of
January 27, 1996, and its Predecessor and Successor periods from February 1,
1995 to December 7, 1995 and December 7, 1995 to January 27, 1996, respectively,
included herein and elsewhere in the Registration Statement have been included
herein and in the Registration Statement in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.

The audited combined financial statements of Odd Job Trading Corp. and its
affiliates as of January 31, 1995 and 1994, and for each of the years ended
January 31, 1995 and 1994, respectively, included herein and elsewhere in the
Registration Statement have been included herein and in the Registration
Statement in reliance upon the report of Deloitte & Touche LLP, independent
auditors, appearing elsewhere herein, given upon the authority of said firm as
experts in accounting and auditing.

56
<PAGE> 57

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (of which this Prospectus is a part) under the Securities Act with respect
to the securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in the Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Company and the Common Stock offered hereby, reference is hereby
made to the Registration Statement and such exhibits and schedules which may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the following regional offices of the Commission: 500 West Madison Street, Suite
1400, Chicago, Illinois 60601; and Seven World Trade Center, New York, New York
10048. The Commission maintains a Web site, located at http://www.sec.gov,
containing reports, proxy or information statements and other information
regarding registrants, including the Company's Registration Statement, that file
electronically with the Commission.

57
<PAGE> 58

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Mazel Company L.P. and Odd Job Holdings, Inc. Combined Financial Statements:
Independent Auditors' Report.................................................. F-2
Combined Balance Sheets as of January 31, 1995 and 1996 and July 27, 1996
(unaudited)................................................................ F-3
Combined Statements of Operations for the years ended January 31, 1994, 1995
and 1996 and the six months ended July 31, 1995 and July 27, 1996
(unaudited)................................................................ F-4
Combined Statements of Stockholders Equity and Partners' Capital for the years
ended January 31, 1994, 1995 and 1996 and the six months ended July 27,
1996 (unaudited)........................................................... F-5
Combined Statements of Cash Flows for the years ended January 31, 1995 and
1996 and the six months ended July 31, 1994, 1995 and July 27, 1996
(unaudited)................................................................ F-6
Notes to Combined Financial Statements........................................ F-7
Mazel Company L.P. Consolidated Financial Statements:
Independent Auditors' Report.................................................. F-16
Consolidated Balance Sheets as of January 31, 1995 and 1996 and July 27, 1996
(unaudited)................................................................ F-17
Consolidated Statements of Operations for the years ended January 31, 1994,
1995 and 1996 and the six months ended July 31, 1995 and July 27, 1996
(unaudited)................................................................ F-18
Consolidated Statements of Partners' Equity for the years ended January 31,
1994, 1995 and 1996 and the six months ended July 27, 1996 (unaudited)..... F-19
Consolidated Statements of Cash Flows for the years ended January 31, 1994,
1995 and 1996 and the six months ended July 31, 1995 and July 27, 1996
(unaudited)................................................................ F-20
Notes to Consolidated Financial Statements.................................... F-21
Odd Job Holdings, Inc. and Subsidiary Consolidated Financial Statements:
Independent Auditors' Report.................................................. F-26
Consolidated Balance Sheets as of January 27, 1996 and July 27, 1996
(unaudited)................................................................ F-27
Combined Statement of Operations February 1, 1995 to December 7, 1995,
(predecessor period) and Consolidated Statements of Operations December 8,
1995 to January 31, 1996, (successor period) and the six months ended July
31, 1995 and July 27, 1996 (unaudited)..................................... F-28
Consolidated Statements of Stockholders Equity December 7, 1995 to January 27,
1996 and the six months ended July 27, 1996 (unaudited).................... F-29
Combined Statement of Cash Flows February 1, 1995 to December 7, 1995,
(predecessor period) and Consolidated Statements of Cash Flows December 8,
1995 to January 31, 1996 (successor period) and the six months ended July
31, 1995 and July 27, 1996 (unaudited)..................................... F-30
Notes to Consolidated Financial Statements.................................... F-32
Odd Job Trading Corp., POW Trading Corp., HIA Trading Associates and Central
Processing Associates Combined Financial Statements for the Years ended
January 31, 1995 and 1994..................................................... F-39
</TABLE>

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

Note: No separate financial statements for Mazel Stores, Inc. have been
presented because the Company has nominal assets, liabilities and equity.

F-1
<PAGE> 59

INDEPENDENT AUDITORS' REPORT

The Partners and Stockholder of
Mazel Company L.P. and Odd-Job Holdings, Inc.:

We have audited the accompanying combined balance sheets of Mazel Company
L.P. and Odd-Job Holdings, Inc. (the "Company"), both of which are under common
control and management, as of January 31, 1995 and 1996, and the related
combined statements of operations, stockholder's equity and partners' capital,
and cash flows for each of the years in the three year period ended January 31,
1996. These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
combined 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
January 31, 1995 and 1996, and the results of its operations and its cash flows
for each of the years in the three year period ended January 31, 1996, in
conformity with generally accepted accounting principles.

/s/ KPMG Peat Marwick LLP

Cleveland, Ohio
May 22, 1996

F-2
<PAGE> 60

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

COMBINED BALANCE SHEETS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 31, JULY 27,
----------------- JULY 27, 1996
1995 1996 1996 PRO FORMA
------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents....................... $ 143 $ 1,470 $ 2,312 $ 1,414
Accounts receivable -- trade, less allowance for
doubtful accounts of $195 in 1995 and 1996... 7,268 10,067 13,496 13,496
Notes and other receivables..................... 136 352 672 672
Inventories..................................... 20,245 29,212 40,894 40,894
Prepaid expenses................................ 428 440 880 880
Deferred income tax benefit..................... -- 314 314 3,797
------- ------- ----------- -----------
Total current assets.................... 28,220 41,855 58,568 61,153
Equipment, furniture, and leasehold improvements,
net............................................. 1,954 3,097 3,695 3,695
Other assets...................................... 675 1,037 1,086 1,086
Notes receivable -- related parties............... -- 1,350 1,350 --
Goodwill, net..................................... 280 9,000 9,509 10,227
Deferred income tax benefit....................... -- 1,695 1,695 1,695
------- ------- ----------- -----------
$31,129 58,034 75,903 77,856
======= ======= =========== ===========
LIABILITIES, STOCKHOLDER'S EQUITY
AND PARTNERS' CAPITAL
Current liabilities
Long-term debt, current portion................. $ 1,868 1,361 1,354 1,354
Accounts payable................................ 7,449 11,732 15,174 15,174
Accrued expenses................................ 1,464 2,376 3,704 3,704
Other current liabilities....................... -- 193 360 360
------- ------- ----------- -----------
Total current liabilities............... 10,781 15,662 20,592 20,592
Revolving line of credit.......................... 7,244 13,496 20,637 20,637
Long-term debt, net of current portion............ 1,537 12,525 11,762 10,762
Other liabilities................................. -- 2,037 1,983 1,983
Deferred income taxes............................. 5 44 44 44
------- ------- ----------- -----------
Total liabilities....................... 19,567 43,764 55,018 54,018
Stockholder's equity and partners' capital
Mazel Company L.P.
Partners' capital............................ 11,456 12,974 19,585 --
Odd-Job Holdings, Inc.
Common stock ($1 par value; 1,000 shares
issued and outstanding).................... 1 1 1 --
Additional paid-in capital................... 99 1,499 1,499 --
Retained earnings (deficit).................. 6 (204) (200) --
Mazel Stores, Inc.
Common stock (no par value), 14,000,000
shares authorized; 6,210,000 shares issued
and outstanding............................ -- -- -- --
Additional paid in capital................... -- -- -- 25,099
Accumulated deficit.......................... -- -- -- (1,261)
------- ------- ----------- -----------
Total stockholder's equity and partners'
capital............................... 11,562 14,270 20,885 23,838
------- ------- ----------- -----------
Commitments and contingencies.....................
$31,129 $58,034 $75,903 $77,856
======= ======= =========== ===========
</TABLE>

See accompanying notes to combined financial statements.

F-3
<PAGE> 61

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

COMBINED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED -------------------
JANUARY 31, JULY JULY
------------------------------- 31, 27,
1994 1995 1996 1995 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales............................... $74,954 $76,254 $98,106 $41,696 $85,165
Cost of sales........................... 54,201 55,183 70,208 29,251 58,514
------- ------- ------- ------- -------
Gross profit.................. 20,753 21,071 27,898 12,445 26,651
Selling, general & administrative
expense............................... 15,094 15,317 20,753 9,163 20,822
Special charges......................... 1,285 -- 2,203 -- --
------- ------- ------- ------- -------
Operating profit.............. 4,374 5,754 4,942 3,282 5,829
Other income (expense)
Interest expense, net................. (1,130) (894) (1,265) (544) (1,284)
Other................................. (43) 26 (559) 31 22
------- ------- ------- ------- -------
Income before income taxes.... 3,201 4,886 3,118 2,769 4,567
Income taxes............................ 21 71 19 38 34
Extraordinary loss...................... 455 -- -- -- --
------- ------- ------- ------- -------
Net income.................... $ 2,725 $ 4,815 $ 3,099 $ 2,731 $ 4,533
======= ======= ======= ======= =======
Unaudited pro forma data (note 15)
Income before provision for income
taxes................................. 3,118 4,567
Provision for income taxes.............. 1,278 1,872
------- -------
Net income.............................. 1,840 2,695
======= =======
Net income per share.................... $ 0.31 $ 0.43
======= =======
Shares outstanding...................... 5,924 6,210
======= =======
</TABLE>

See accompanying notes to combined financial statements.

F-4
<PAGE> 62

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

COMBINED STATEMENTS OF STOCKHOLDER'S EQUITY AND PARTNERS' CAPITAL
YEARS ENDED JANUARY 31, 1994, 1995 AND 1996,
AND SIX MONTHS ENDED JULY 27, 1996
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
MAZEL
COMPANY ODD-JOB HOLDINGS, INC. TOTAL
L.P. ------------------------------------------ STOCKHOLDER'S
------- ADDITIONAL RETAINED EQUITY AND
PARTNERS' COMMON PAID-IN EARNINGS PARTNERS'
CAPITAL STOCK CAPITAL (DEFICIT) TOTAL CAPITAL
------- ------ ---------- -------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of January 31,
1993.................... $ 7,678 $ -- $ -- $ -- $ -- $ 7,678
Partners' withdrawals..... (950) -- -- -- -- (950)
Net income................ 2,725 -- -- -- -- 2,725
------- ------ ---------- -------- ------ -------------
Balance as of January 31,
1994.................... 9,453 -- -- -- -- 9,453
Capital contributed....... -- 1 99 -- 100 100
Partners' withdrawals..... (2,806) -- -- -- -- (2,806)
Net income................ 4,809 -- -- 6 6 4,815
------- ------ ---------- -------- ------ -------------
Balance as of January 31,
1995.................... 11,456 1 99 6 106 11,562
Capital contributed....... 92 -- 1,400 -- 1,400 1,492
Partners' withdrawals..... (1,773) -- -- -- -- (1,773)
Dividends paid............ -- -- -- (110) (110) (110)
Net income (loss)......... 3,199 -- -- (100) (100) 3,099
------- ------ ---------- -------- ------ -------------
Balance as of January 31,
1996.................... 12,974 1 1,499 (204) 1,296 14,270
Capital contributed
(unaudited)............. 4,000 -- -- -- -- 4,000
Partners' withdrawals
(unaudited)............. (1,918) -- -- -- -- (1,918)
Net income (unaudited).... 4,529 -- -- 4 4 4,533
------- ------ ---------- -------- ------ -------------
Balance as of July 27,
1996 (unaudited)........ $19,585 $ 1 $1,499 $ (200) $1,300 $20,855
======= ======== ========= ======== ====== ============
</TABLE>

See accompanying notes to combined financial statements.

F-5
<PAGE> 63

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

COMBINED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED --------------------
JANUARY 31, JULY JULY
---------------------------------- 31, 27,
1994 1995 1996 1995 1996
------- -------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income............................... $ 2,725 $ 4,815 $ 3,099 $2,731 $4,533
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities
Depreciation and amortization....... 641 475 646 303 465
Deferred income taxes............... -- 5 (12) -- --
Allowance for doubtful accounts..... 105 (55) -- -- --
Extraordinary loss.................. 455 -- -- -- --
Loss on sale of retail operations... -- -- 1,571 -- --
Noncash charges on sale of retail
operations........................ -- -- (3,038) -- --
Changes in operating assets and
liabilities
Accounts receivable -- trade...... 825 (1,077) (672) (558) (4,419)
Notes and other receivables....... 252 31 (196) 84 (320)
Inventories....................... 1,814 (57) (1,686) (3,825) (11,402)
Prepaid expenses.................. 128 (135) 266 (8) (398)
Other assets...................... (80) (82) 63 55 (9)
Accounts payable.................. 433 1,668 (2,107) 201 3,355
Accrued expenses and other
liabilities..................... 341 81 (178) 175 1,441
Income taxes payable.............. -- 5 -- -- --
------- -------- ------- ------- -------
Total adjustments............ 4,914 859 (5,343) (3,573) (11,287)
------- -------- ------- ------- -------
Net cash provided by (used
in) operating activities... 7,639 5,674 (2,244) (842) (6,754)
------- -------- ------- ------- -------
Cash flows from investing activities
Capital expenditures, net................ (217) (497) (450) (200) (927)
Cash paid for acquisition, net of cash
acquired............................... -- 23 (8,395) -- --
Cash received at acquisition, net of cash
expenses incurred...................... -- -- -- -- 70
Issuance of notes receivable -- related
parties................................ -- -- (1,350) -- --
Security deposits........................ -- (16) -- -- --
Proceeds from sale of retail
operations............................. -- -- 1,818 -- --
------- -------- ------- ------- -------
Net cash used in investing
activities................. (217) (490) (8,377) (200) (857)
------- -------- ------- ------- -------
Cash flows from financing activities
Proceeds from term loan.................. -- 4,000 10,925 -- --
Repayment of debt........................ (5,790) (12,636) (4,151) (1,187) (800)
Net borrowings under credit facility..... -- 6,858 6,220 3,627 7,171
Repayment of subordinated notes
payable................................ (500) (500) (500) -- --
Equity contributions..................... -- 100 1,492 -- 4,000
Partners' withdrawals.................... -- (2,806) (1,773) (1,424) (1,918)
Dividends paid........................... (950) -- (110) -- --
Loan fees................................ (280) (75) (155) -- --
------- -------- ------- ------- -------
Net cash provided by (used
in) financing activities... (7,520) (5,059) 11,948 1,016 8,453
------- -------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents.............................. (98) 125 1,327 (26) 842
Cash and cash equivalents at beginning of
period................................... 116 18 43 143 1,470
------- -------- ------- ------- -------
Cash and cash equivalents at end of
period................................... $ 18 $ 143 $ 1,470 $ 117 $2,312
======== ========== ======== ======== ========
Supplemental disclosure
Interest paid............................ $ 1,129 $ 887 $ 1,225 $ 499 $1,251
======== ========== ======== ======== ========
</TABLE>

See accompanying notes to combined financial statements.

F-6
<PAGE> 64

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JANUARY 31, 1994, 1995 AND 1996

(1) ORGANIZATION

Mazel Company L.P. (Mazel) is a partnership engaged in the wholesale of
closeout merchandise to closeout retailers. Odd-Job Holdings, Inc. (Holdings) is
a corporation engaged in the retail sale of high-quality closeout merchandise
through 13 retail stores operating in the New York metropolitan area. Mazel is
controlled by ZS Mazel L.P. (ZS), a limited partnership that is also the sole
stockholder of Holdings. Holdings owns all of the outstanding common stock of
Odd Job Acquisition Corp. (OJAC), which was organized to acquire all of the
outstanding capital stock of Odd Job Trading Corp. (OJT) and POW Trading Corp.
(POW), and all of the partnership units of HIA Trading Associates (HIA) and
Central Processing Associates (CPA), a group of corporations and partnerships
related by common control (collectively, Odd Job). Holdings and OJAC were both
formed in November 1994 in contemplation of the Odd Job acquisition and had no
activity prior to the acquisition. On December 9, 1994, ZS acquired Peddler's
Mart, Inc. (Peddlers), which was merged with Odd Job upon its acquisition on
December 7, 1995 (Acquisition). Accordingly, combined financial statements have
been presented on an as-if pooling basis to reflect the common control of Mazel
and Holdings by ZS. The combined financial statements reflect the annual
operations of Mazel, the operations of Peddlers from December 9, 1994, and the
operations of Odd Job from December 7, 1995 (collectively the "Company").

In April 1996, in preparation for an initial public offering, Mazel Stores,
Inc. (Mazel Stores) was incorporated as a wholly owned subsidiary of Mazel.
Immediately prior to the public offering, Mazel will contribute all of its
assets and liabilities to Mazel Stores in exchange for Common Stock. Mazel
Stores will then exercise its option to acquire the stock of Holdings from ZS
for $1,400,000, which included the cancellation of a $1,350,000 note due Mazel.
It is anticipated that Mazel will then liquidate and distribute the Mazel
Stores' stock to its partners.

(2) ODD JOB ACQUISITION

Odd Job was acquired by ZS on December 7, 1995 for $10,500,000 and an
additional $1,013,000 in related expenses, in a transaction accounted for by the
purchase accounting method. In connection with the Acquisition, the purchase
price allocation and liabilities assumed were as follows (in thousands):

<TABLE>
<S> <C>
Current assets........................................................... $12,197
Equipment furniture and leasehold improvements........................... 1,568
Goodwill................................................................. 8,801
Other non current assets................................................. 1,866
Expenses incurred in connection with the Acquisition..................... (1,013)
Cash paid for stock and partnership units................................ (9,050)
-------
Liabilities assumed............................................ $14,369
=======
</TABLE>

The following unaudited pro forma combined results of operations assume
that the combination had occurred at the beginning of the year ended January 31,
1995 (in thousands):

<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Net sales.................................................... $120,860 $133,881
Net income................................................... 6,324 4,054
</TABLE>

The unaudited pro forma information is not necessarily indicative either of
results of operations that would have occurred had the combination been made at
the beginning of the year ended January 31, 1995 or of future results of
operations of the combined Company.

F-7
<PAGE> 65

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) PRINCIPLES OF COMBINATION

The financial statements of the Company are presented on a combined 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 the combined financial statements.

(b) 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.

Mazel 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.

(d) 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. Maintenance and repairs are charged to expense as incurred.

(e) 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
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.

(f) GOODWILL

Goodwill consists of the excess of purchase price over the estimated fair
value of net assets acquired and is amortized on a straight-line basis over
40 years in connection with the Acquisition and over 8 years for Peddlers. At
January 31, 1996, goodwill for the Acquisition and Peddlers amounted to
approximately $8,756,000 and $244,000, respectively, net of approximately
$45,000 and $42,000, respectively, of accumulated amortization. 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 operations.

(g) INCOME TAXES

Income taxes for the corporations in the Holdings consolidated group are
accounted for under the asset and liability method. Deferred tax assets and
liabilities are recognized for the 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 and tax
credit carryforwards. Deferred tax assets and liabilities 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
income in the period that includes the enactment date.

For Mazel, the allocated share of the taxable income or loss for the period
is includable in the income tax returns of the partners; accordingly, federal
and state income taxes are not reflected in Mazel's financial statements. City
income taxes are the responsibility of Mazel.

F-8
<PAGE> 66

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

(h) ADVERTISING

The Company expenses advertising costs as incurred. Advertising expense was
approximately $712,000, $464,000 and $470,000 in the years ended January 31,
1994, 1995 and 1996, respectively.

(i) INTERIM INFORMATION (UNAUDITED)

The interim information presented in the combined financial statements has
been prepared by management without audit and, in the opinion of management,
includes all adjustments of a normal recurring nature that are necessary for the
fair presentation of financial position, results of operations, and cash flows
for the periods shown, in accordance with generally accepted accounting
principles.

(4) PARTNERS' CAPITAL

In 1992, Mazel was funded by a $13,500,000 initial capital contribution by
two of its three partners, who funded $4,500,000 and $9,000,000, respectively.
Of the $9,000,000 contribution, $4,500,000 represents preferred capital. Terms
of the Mazel partnership agreement prioritize cash distributions as follows:

First--In 1993, a mandatory distribution of $225,000, which was made.

Second--Beginning in 1993, mandatory distributions equal to 10 percent
of the preferred capital, which have been made.

Third--A mandatory distribution to all partners in proportion to their
respective profit percentages to cover their income tax liabilities
resulting from Mazel's income which have been made.

Fourth--Distributions providing for a return of the preferred capital.

Fifth--After complete distribution of preferred capital, distributions
to partners on a pro rata basis in proportion to their respective capital
percentages until the partners shall have received an amount equal to their
aggregate capital contributions.

Sixth--The balance to all partners on a pro rata basis in proportion
to their respective positive capital account balances.

The Mazel partnership agreement calls for redemption of the preferred
capital in July 2002. If Mazel shall not have funds legally available to redeem
all the preferred capital, then Mazel shall redeem the remaining preferred
capital on later dates when the funds are legally available.

The cash distributions and preferred capital redemption provisions made
above are subject to restrictions between Mazel and its lender (note 6).

(5) EQUIPMENT, FURNITURE, AND LEASEHOLD IMPROVEMENTS

At January 31, 1995 and 1996, the major classes of equipment, furniture,
and leasehold improvements are summarized at cost, as follows (in thousands):

<TABLE>
<CAPTION>
1995 1996
------ ------
<S> <C> <C>
Furniture, fixtures, and equipment............................... $2,887 $2,687
Leasehold improvements........................................... 1,067 2,203
------ ------
3,954 4,890
Less accumulated depreciation and amortization................... 2,000 1,793
------ ------
$1,954 3,097
====== ======
</TABLE>

F-9
<PAGE> 67

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

(6) LONG-TERM DEBT

(a) MAZEL

Term Loan and Revolving Line of Credit

Mazel has a term loan and revolving line of credit with The Provident Bank
(Provident) secured by all the assets of Mazel.

The $5,500,000 term loan has a maturity date of December 1, 2000, with a
portion bearing interest at 2.95 percentage points above the Treasury rate as
defined and a portion bearing interest at one-half percent above the prime rate
as published by Provident. At January 31, 1996, the interest rate charged to
Mazel was 6.49 percent on $1,446,889 and 9.0 percent on the remainder. Principal
payments are due in the amount of $111,000 per month through February 1, 1997
and $85,402 per month thereafter through maturity.

The revolving credit facility has a maturity date of January 31, 1998,
bears interest at the prime rate as published by Provident or a "LIBOR Rate" as
defined, and is subject to a commitment fee on the unused portion. At January
31, 1996, the interest rate charged to Mazel was 8.2 percent on $5,000,000 of
borrowings and 8.5 percent on the remainder. Availability on the revolving
credit facility is the lesser of $20,000,000 or a borrowing base computation
based on accounts receivable and inventories.

As of January 31, 1995 and 1996, amounts outstanding under the term loan
totaled $2,779,000 and $5,342,000, respectively, and outstanding borrowings on
the revolving line of credit totaled $7,244,000 and $12,084,000, respectively.

In addition to the regularly scheduled term loan payments, Mazel is
required, on an annual basis, to make certain prepayments in accordance with a
defined formula beginning June 1, 1995.

Subordinated Notes Payable

Notes payable originally aggregating $1,500,000 were payable to individuals
who own or who owned interests in Mazel. The final installments totaling
$500,000 were made in July 1995, and the notes were retired.

(b) HOLDINGS

Senior Debt

In conjunction with the Acquisition, Holdings entered into a term loan and
revolving line of credit agreement with Provident whereby Holdings' debt
pursuant to the agreement is secured by all assets of Holdings.

The $7,000,000 term loan has a maturity date of December 31, 2002 and bears
interest, which is due quarterly, at 1.25 percent above the prime rate as
published by Provident, or the Treasury rate. At January 31, 1996, the
applicable interest rate was 9.75 percent. Principal payments on the term loan
are due in quarterly amounts commencing on January 1, 1998 and continuing
through December 31, 2001 as follows: 1998, $300,000 per quarter; 1999, $350,000
per quarter; 2000, $400,000 per quarter; 2001, $450,000 per quarter. A final
principal payment of $1,000,000 is due on December 31, 2002.

The revolving credit facility has a maturity date of April 30, 1998 and
bears interest at 1 percent above the prime rate as published by Provident or a
"LIBOR Rate" as defined. Interest payments are due monthly; the applicable
interest rate was 9.5 percent at January 31, 1996. Availability on the revolving
credit facility is the lesser of $6,000,000 or a borrowing base computation
based on eligible inventory and accounts receivable, as defined. In addition,
the maximum available is reduced by letters of credit issued under the letter of
credit

F-10
<PAGE> 68

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

facility (see note 11(b)). The loan is subject to certain prepayment penalties.
As of January 31, 1996, outstanding borrowings on the revolving line of credit
totaled approximately $1,412,000.

In addition to the regularly scheduled term loan payments, Holdings is
required to pay, on an annual basis, 25 percent of a prepayment surplus, as
defined, beginning June 1, 1998 for 1997.

The senior debt is subject to certain restrictive covenants, with whose
terms Holdings is in compliance as of January 31, 1996.

Senior Subordinated Debt

As part of the consideration for the Acquisition, OJAC issued a $1,000,000
senior subordinated note to a former owner, secured by all assets of Holdings
and OJAC, with a claim on assets subordinated to the senior debt. The note has a
maturity date on the earlier of December 5, 1998, an initial public offering, or
a change in control as defined. The note bears interest, which is payable
annually, at 1 percent above the prime rate as published by Provident; the
applicable interest rate was 9.5 percent at January 31, 1996. The principal is
due in total at maturity.

Contingent Subordinated Debt

As part of the Acquisition consideration, OJAC issued three $150,000
contingent subordinated notes to the former Odd Job owners for a total of
$450,000, secured by all assets of OJAC and subordinated to the senior
subordinated debt and senior debt. The notes have a contingent maturity date 60
days subsequent to the settlement of a lawsuit against the owners and bear
interest at the prime rate as published by Provident; the applicable interest
rate was 8.5 percent at January 31, 1996. The principal and interest are due in
total at maturity, if at all, depending upon the outcome of the lawsuit.

Peddlers Notes Payable

- Contingent Subordinated "A" Note -- Payments to Peddlers' former owner
under this note, which matures on December 31, 2002, are to be made
annually, to a maximum of $675,000, based on Peddlers' distribution
profits, as defined. No amounts have been paid or are payable on this
note through January 31, 1996.

- Contingent Subordinated "B" Note -- Payments to Peddlers' former owner
under this note, which matures on December 31, 2002, are to be made
annually, to a maximum of $275,000, based on Peddlers' distribution
profits, as defined. No amounts have been paid or are payable on this
note through January 31, 1996.

- Subordinated "C" Note -- As part of the acquisition consideration,
Peddlers issued a $136,000 subordinated note to its former owner,
payable in quarterly installments of $4,250 commencing on December 31,
1994 with a final payment due on September 30, 2002. The amounts payable
under this note are to be reduced by payments made under the Contingent
Subordinated "A" Note, as defined. As of January 31, 1996, $114,750 was
outstanding on this note. The present value of the outstanding amount,
discounted at a rate of 10 percent, is $83,439, consisting of a current
portion of $17,000 and long-term portion of $66,439.

- Subordinated "D" Note -- As part of the acquisition consideration,
Peddlers also issued a $34,800 subordinated note to its former owner,
payable in quarterly installments of $4,350 commencing on December 31,
1994 with a final payment due on September 30, 1996. As of January 31,
1996, $11,540 was outstanding, all of which is current.

F-11
<PAGE> 69

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

(7) RELATED PARTY TRANSACTIONS

(a) HOLDINGS

Holdings procured certain merchandise for related parties that were passed
through at cost. Such transactions aggregated approximately $711,000 and are not
reflected in net sales or cost of goods sold in the accompanying combined
statement of operations. Holdings charged these related parties fees aggregating
approximately $38,000 for warehousing and administration and $57,000 for
commissions. Included in accounts receivable at January 31, 1996 was
approximately $1,500,000 due from these related parties.

(b) MAZEL

Prior to the acquisition of OJAC by Holdings, Mazel conducted transactions
with Odd Job as both vendor and customer. During the years ended January 31,
1994, 1995 and 1996, sales by Mazel to Odd Job amounted to approximately
$2,506,000, $2,051,000 and $1,835,000, respectively, and purchases from Odd Job
approximated $2,992,000, $2,653,000 and $909,000, respectively, for such
pre-Acquisition periods. At January 31, 1994 and 1995, approximately $296,000
and $285,000 were due from Odd Job and included in accounts receivable -- trade,
and approximately $128,000 was due to Odd Job and included in accounts payable
at January 31, 1995.

Also included in Mazel's notes and other receivables are amounts due from
executives for approximately $166,000 at January 31, 1996.

During each of the years ended January 31, 1994, 1995 and 1996, Mazel paid
a management fee of $100,000 to its managing partner.

Mazel has a note from a related party bearing interest at 7.34 percent.
Interest is paid annually. During the year ended January 31, 1996, Mazel
recorded $15,203 of interest income as an offset to interest expense on these
notes. As of January 31, 1996, interest of $15,203 related to these notes was
due and included in accounts receivable -- trade.

(8) EMPLOYEE EQUITY PLAN

Mazel maintains an Employee Equity Plan (Plan) eligible to key executives
of Mazel. Terms of the Plan call for the awarding of units, entitling key
executives to purchase Mazel units for a stated purchase price, with
exercisability subject to certain vesting restrictions, generally over a
five-year period. Pursuant to exercise of the purchase option, such key
executives become limited partners of Mazel. No more than 2,000 units can be
issued under the Plan; on a fully diluted basis the Plan would represent a 15.3
percent profits interest in Mazel. During the year ended January 31, 1996, Mazel
issued 1,660 units to key executives, leaving a total of 1,730 units outstanding
at January 31, 1996, of which 588 units were vested. Such units were issued for
a purchase price of $25.00 per unit, at a discount of $225.00 per unit from fair
market value established by an independent appraisal. The resulting compensation
expense for the years ended January 31, 1994, 1995 and 1996, was not material.

(9) 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 the short maturity of these instruments.
Debt instruments and notes receivable are carried at cost which approximates
market.

(10) INCOME TAXES

As a result of the Company's pretax income being attributable principally
to the Mazel partnership, income tax expense is not significant and principally
reflects local taxes for which Mazel is liable.

F-12
<PAGE> 70

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities as of January
31, 1996 are presented below (in thousands):

<TABLE>
<S> <C>
Deferred tax assets
Equipment, furniture, and leasehold basis differences................... $1,035
Accrued lease obligations............................................... 660
Inventory capitalization................................................ 235
Net loss carryforward................................................... 72
Allowance for doubtful accounts......................................... 7
------
Total gross deferred tax assets................................. 2,009
Deferred tax liabilities
Other................................................................... 44
------
Net deferred tax asset.......................................... $1,965
======
</TABLE>

A valuation allowance for the net deferred tax asset is not considered to
be necessary.

A net operating loss carryforward of approximately $205,000 is available to
offset future taxable income. This loss carryforward expires in 15 years.

(11) COMMITMENTS AND CONTINGENCIES

(a) LEASES

Mazel is obligated under operating leases with rental arrangements for
various periods of time providing for fixed rents. A majority of this commitment
(which expires on December 31, 2002) is for Mazel's office and warehouse
facilities where the lessor is a company in which certain partners of Mazel have
a minority ownership interest.

Holdings is obligated for office, warehouse, and retail space under
operating lease agreements which expire at various dates through fiscal 2009.
These leases are subject to certain escalation clauses based upon real estate
taxes and other occupancy expense. Also, several leases provide for additional
rent based on a percentage of sales.

At January 31, 1996, minimum annual rental commitments under noncancelable
leases for the Company as a whole are as follows (in thousands), for the fiscal
year ending:

<TABLE>
<S> <C>
1997..................................................................... $ 6,021
1998..................................................................... 5,710
1999..................................................................... 4,617
2000..................................................................... 4,655
2001..................................................................... 4,557
Thereafter............................................................... 15,360
-------
Total minimum lease payments............................................. $40,920
=======
</TABLE>

Rent expense for the aforementioned operating leases (excluding disposed of
retail operations (note 13)) was approximately $1,087,000, $1,345,000 and
$2,469,000 for the years ended January 31, 1994, 1995 and 1996, respectively.
Rent paid to the related party lessor by Mazel was approximately $1,229,000,
$1,241,000 and $1,330,000 for 1994, 1995 and 1996, respectively.

F-13
<PAGE> 71

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

In conjunction with the 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 approximately $1,891,000.
This amount is shown with other liabilities and will be reduced as lease
payments are made.

(b) LETTERS OF CREDIT

The Company has letters of credit facilities totaling $6,000,000 to be used
in the normal operations of the business. At January 31, 1996, the Company had
outstanding letters of credit issued to various parties aggregating
approximately $914,000.

In the event of a sale or qualified public offering occurring during the
five-year period ending on July 14, 1997, in which the aggregate price paid by
the public is in excess of $10,000,000, contingent notes amounting to $4,000,000
become payable to owners of the predecessor entity to Mazel.

(d) INDEMNIFICATION AGREEMENT

Mazel has agreed to indemnify certain defendants against damages in the
amount of $5,000,000 with respect to an attempted acquisition by the plaintiff.
A claim for $20,000,000 against Mazel alleging tortious interference with
respect to the attempted acquisition has been dismissed but remains subject to
an amended filing. Discovery with respect to this lawsuit has not commenced. The
defendants believe the action to be without merit and intend to contest the
matter vigorously. Based upon the facts of the matter and discussions with legal
counsel, Mazel does not believe that the ultimate resolution of this matter will
have a material adverse impact on the results of operations or the financial
condition of Mazel.

(e) CONTINGENT BONUSES

Holdings has agreed to pay an incentive employment bonus to two key
executives of Holdings on the earlier of January 31, 1999, a qualified initial
public offering (as defined), or the sale of Holdings. These bonuses are to be
calculated based on earnings of Holdings, as defined.

(f) CONTINGENT STOCK OPTION

In the event of an initial public offering, Holdings is committed to grant
two key executives stock options for a number of shares of stock at a price
equal to $150,000 divided by the initial public offering price per share.

(12) RETIREMENT AND SAVINGS PLAN

Mazel maintains a contributory savings plan under Section 401(k) of the
Internal Revenue Code for the benefit of all collectively bargained employees
meeting certain minimum age and service requirements. Mazel's contribution under
the savings plan, which amounts to 25 percent of the employees' contributions up
to a maximum of $250 per employee, was $4,589, $4,786 and $5,619 for the years
ended January 31, 1994, 1995 and 1996, respectively.

(13) DISPOSAL OF MAZEL RETAIL BUSINESS

In October 1995, Mazel sold its retail business, which consisted of 11
closeout stores (Just Closeouts, Inc. and It's A Dollar, Inc.), for
approximately $1,818,000. Under terms of the agreement, Mazel sold all the
assets of the retail business (primarily inventory and fixed assets) to the
buyer, and the buyer assumed the

F-14
<PAGE> 72

MAZEL COMPANY L.P.
ODD-JOB HOLDINGS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

operating liabilities, including the store leases, maintenance contracts, and
accrued expenses. Mazel realized a loss on this disposal of approximately
$1,571,000. No assets of the disposed of retail business segment are included in
the combined balance sheet as of January 31, 1996. Mazel 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 fiscal years ending
January 31, are as follows: 1997 -- $609,000; 1998 -- $575,000; 1999 --
$418,000; 2000 -- $212,000; 2001 -- $157,000; and $214,000 thereafter.

(14) SUBSEQUENT EVENTS

In March of 1996, Mazel received a $4,000,000 capital contribution from two
of its partners. Also in March 1996, Holdings acquired certain assets and
liabilities of two stores from a related party in exchange for the related
party's accounts receivable balance for $969,000.

(15) PRO FORMA INFORMATION (UNAUDITED)

Below is the pro forma shareholders' equity section for capital changes at
January 27, 1996 and July 27, 1996.

<TABLE>
<CAPTION>
JANUARY 27, 1996 JULY 27, 1996
---------------- -------------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C>
Common stock 14,000,000
shares authorized,
6,210,000 shares issued
and outstanding.......... -- --
Additional Paid in
Capital.................. 25,099 25,099
Retained Earnings
(deficit)................ (1,265) (1,261)
</TABLE>

Below is the pro forma and supplemental earnings per share information (in
thousands except share data)

<TABLE>
<CAPTION>
YEAR ENDED JANUARY 27, 1996 SIX MONTHS ENDED JULY 27, 1996
----------------------------------- -----------------------------------
EARNINGS EARNINGS
SHARES EARNINGS PER SHARE SHARES EARNINGS PER SHARE
-------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares issued with respect
to existing capital and
debt holders pretax
income.................... 5,923,779 3,118 6,210,000 4,567
Pro forma income taxes...... 1,278(A) 1,872(A)
-------- -------- -------- -------- ---
Pro forma earnings per share
information after taxes... 5,923,779 1,840 .31 6,210,000 2,695 .43
======= =======
Adjustment for debt
repayment from proceeds... 1,849,375(B) 1,440(C) 1,849,375(B) 758(C)
-------- -------- -------- --------
Supplemental earnings per
share information......... 7,773,154 3,280 .42 8,059,375 3,453 .43
======== ====== ======= ======== ====== =======
<FN>
- ---------------

(A) Provides for income tax rate at 41%.

(B) Represents shares issued from the Offering used to repay debt ($29,590 of
debt / $16/share).

(C) Represents the net tax effect elimination of interest expense using the
weighted average borrowing rate of 8.25% for the year and 8.68% for the
six-month period on a principal balance of $29,590.
</TABLE>

(16) PRO FORMA BALANCE SHEET DATA

The unaudited pro forma balance sheet data reflects transactions between
the Company and its partners, employees, debt holders and other related entities
arising in conjunction with the Offering as if it had been completed on July 27,
1996.

F-15
<PAGE> 73

INDEPENDENT AUDITORS' REPORT

The Partners
Mazel Company L.P.:

We have audited the accompanying consolidated balance sheets of Mazel
Company L.P. as of January 31, 1995 and 1996, and the related consolidated
statements of operations, partners' equity, and cash flows for each of the years
in the three-year period ended January 31, 1996. These consolidated financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Mazel
Company L.P. as of January 31, 1995 and 1996, and the results of its operations
and its cash flows for each of the years in the three-year period ended January
31, 1996, in conformity with generally accepted accounting principles.

/s/ KPMG Peat Marwick LLP

Cleveland, Ohio
May 22, 1996

F-16
<PAGE> 74

MAZEL COMPANY L.P.

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 31,
------------------- JULY 27,
1995 1996 1996
------- ------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 19 $ 2 $ 2
Accounts receivable -- trade, less allowance for doubtful
accounts of $175 in 1995 and 1996 (note 5)............. 7,267 10,190 13,701
Notes and other receivables (note 5)...................... 136 448 806
Inventories............................................... 19,744 24,290 26,867
Prepaid expenses.......................................... 313 70 368
------- ------- ------------
Total current assets.............................. 27,479 35,000 41,744
Equipment, furniture, and leasehold improvements, net (note
3)........................................................ 1,746 1,369 1,464
Other assets................................................ 604 720 692
Notes receivable -- related parties (note 5)................ 560 4,420 8,390
------- ------- ------------
$30,389 $41,509 $ 52,290
======= ======= =========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities
Long-term debt, current portion (note 4).................. $ 1,833 $ 1,332 $ 1,332
Accounts payable (note 5)................................. 7,115 9,508 9,970
Accrued expenses.......................................... 1,289 1,280 2,089
Other current liabilities................................. -- -- --
------- ------- ------------
Total current liabilities......................... 10,237 12,120 13,391
Revolving line of credit (note 4)........................... 7,244 12,084 15,475
Long-term debt, net of current portion (note 4)............. 1,446 4,010 3,280
Other liabilities........................................... -- 166 73
------- ------- ------------
Total liabilities................................. 18,927 28,380 32,219
Partners' equity (notes 2 and 6)............................ 11,462 13,129 20,071
Commitments and contingencies (notes 7 and 10)..............
------- ------- ------------
$30,389 $41,509 $ 52,290
======= ======= =========
</TABLE>

See accompanying notes to consolidated financial statements.

F-17
<PAGE> 75

MAZEL COMPANY L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JANUARY 31, ---------------------
------------------------------- JULY 31, JULY 27,
1994 1995 1996 1995 1996
------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales................................ $62,744 $62,748 $77,313 $ 33,648 $ 54,175
Cost of sales............................ 45,703 45,790 56,877 23,866 40,862
------- ------- ------- -------- --------
Gross profit................... 17,041 16,958 20,436 9,782 13,313
Selling, general & administrative
expense................................ 10,546 10,478 13,031 6,063 8,012
Special charges.......................... 1,285 -- 332 -- --
------- ------- ------- -------- --------
Operating profit............... 5,210 6,480 7,073 3,719 5,301
Other income (expense)
Interest expense, net.................. (1,130) (883) (978) (499) (431)
Other.................................. (72) 15 (571) 24 22
------- ------- ------- -------- --------
Income from continuing
operations before income
taxes and extraordinary
loss......................... 4,008 5,612 5,524 3,244 4,892
Income taxes............................. 21 73 26 37 32
------- ------- ------- -------- --------
Income from continuing
operations before
extraordinary loss........... 3,987 5,539 5,498 3,207 4,860
Extraordinary loss (note 4).............. (455) -- -- -- --
------- ------- ------- -------- --------
Income from continuing
operations................... 3,532 5,539 5,498 3,207 4,860
Discontinued operations (note 10)
Loss from operations of discontinued
retail business segment............. (807) (724) (631) (458) --
Loss on disposal of retail business
segment............................. -- -- (1,571) -- --
------- ------- ------- -------- --------
Net income..................... $ 2,725 $ 4,815 $ 3,296 $ 2,749 $ 4,860
======= ======= ======= ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-18
<PAGE> 76

MAZEL COMPANY L.P.

CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY

YEARS ENDED JANUARY 31, 1994, 1995, AND 1996,
AND SIX MONTHS ENDED JULY 27, 1996

(DOLLARS IN THOUSANDS)

<TABLE>
<S> <C>
Balance as of January 31, 1993..................................... $ 7,678
Distributions...................................................... (950)
Net income......................................................... 2,725
-------
Balance as of January 31, 1994..................................... 9,453
Distributions...................................................... (2,806)
Net income......................................................... 4,815
-------
Balance as of January 31, 1995..................................... 11,462
Equity contributions............................................... 92
Distributions...................................................... (1,721)
Net income......................................................... 3,296
-------
Balance as of January 31, 1996..................................... 13,129
Equity contributions (unaudited)................................... 4,000
Distributions (unaudited).......................................... (1,918)
Net income (unaudited)............................................. 4,860
-------
Balance as of July 27, 1996 (unaudited)............................ $20,071
=======
</TABLE>

See accompanying notes to consolidated financial statements.

F-19
<PAGE> 77

MAZEL COMPANY L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JANUARY 31, ---------------------
------------------------------- JULY 31, JULY 27,
1994 1995 1996 1995 1996
------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income............................. $ 2,725 $ 4,815 $ 3,296 $ 2,749 $ 4,860
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities
Depreciation and amortization....... 641 466 497 256 179
Extraordinary loss.................. 455 -- -- -- --
Allowance for doubtful accounts..... 105 (55) -- -- --
Loss on sale of discontinued
operations........................ -- -- 1,571 -- --
Changes in operating assets and
liabilities
Accounts receivable -- trade..... 817 (1,093) (2,916) (566) (3,511)
Notes and other receivables....... 148 (56) (349) 19 (358)
Inventories....................... 1,541 (331) (7,236) (3,241) (2,577)
Prepaid expenses.................. 119 (86) 181 (65) (298)
Other assets...................... (80) (82) (134) 55 28
Accounts payable.................. 782 2,190 2,828 250 462
Accrued expenses and other
liabilities 279 139 359 234 716
Discontinued operations -- noncash
charges and working capital
changes........................... 107 312 (893) (308) --
------- ------- ------- -------- --------
Total adjustments.............. 4,914 1,404 (6,092) (3,366) (5,359)
------- ------- ------- -------- --------
Net cash provided by (used in)
operating activities......... 7,639 6,219 (2,796) (617) (499)
------- ------- ------- -------- --------
Cash flows from investing activities
Capital expenditures, net.............. (217) (497) (436) (169) (274)
Issuance of notes receivable --
related parties..................... -- (560) (3,860) (250) (3,970)
Proceeds from sale of discontinued
operations.......................... -- -- 1,818 -- --
------- ------- ------- -------- --------
Net cash used in investing
activities................... (217) (1,057) (2,478) (419) (4,244)
------- ------- ------- -------- --------
Cash flows from financing activities
Proceeds from term loan................ -- 4,000 3,925 -- --
Repayment of debt...................... (5,790) (12,636) (1,362) (667) (730)
Net borrowings under revolving credit
facility............................ -- 6,856 4,840 3,627 3,391
Repayment of subordinated notes
payable............................. (500) (500) (500) (500) --
Equity contributions................... -- -- 92 -- 4,000
Distributions.......................... (950) (2,806) (1,721) (1,424) (1,918)
Loan fees.............................. (280) (75) (17) -- --
------- ------- ------- -------- --------
Net cash provided by (used in)
financing activities......... (7,520) (5,161) 5,257 1,036 4,743
------- ------- ------- -------- --------
Net increase (decrease) in cash and cash
equivalents............................ (98) 1 (17) -- --
Cash and cash equivalents at beginning of
period................................. 116 18 19 19 2
------- ------- ------- -------- --------
Cash and cash equivalents at end of
period................................. $ 18 $ 19 $ 2 $ 19 $ 2
======= ======= ======= ======= =======
Supplemental disclosure
Interest paid.......................... $ 1,129 $ 882 $ 1,127 $ 499 $ 799
======= ======= ======= ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-20
<PAGE> 78

MAZEL COMPANY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 1994, 1995, AND 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) NATURE OF OPERATIONS

Mazel Company L.P. (Partnership) is a wholesaler of closeout merchandise.
The Partnership's principal market is closeout retailers.

(b) ORGANIZATION AND BASIS OF PRESENTATION

The accompanying consolidated financial statements of the Partnership
include the accounts of Blue Grass Premium Corp.; Oxford Imports Co.; Oxford
Products Co.; and The Mazel Company of New York, Inc. All significant
interdivisional transactions have been eliminated.

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

(d) INVENTORIES

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

(e) EQUIPMENT, FURNITURE, AND LEASEHOLD IMPROVEMENTS

Depreciation and amortization are provided for the cost of depreciable
properties at rates based on their estimated useful lives. The rates so
determined are applied on a straight-line basis. Maintenance and repairs are
charged to expense as incurred.

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

(g) INCOME TAXES

As a partnership, the allocated share of the taxable income or loss for the
period is includable in the income tax returns of the partners; accordingly,
federal and state income taxes are not reflected in the Partnership's financial
statements. City income taxes are the responsibility of the Partnership.

(h) INTERIM INFORMATION (UNAUDITED)

The interim information presented in the consolidated financial statements
has been prepared by management without audit and, in the opinion of management,
includes all adjustments of a normal recurring nature that are necessary for the
fair presentation of financial position, results of operations, and cash flows
for the periods shown, in accordance with generally accepted accounting
principles.

F-21
<PAGE> 79

MAZEL COMPANY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(2) PARTNERS' CAPITAL

In 1992, the Partnership was funded by a $13,500,000 initial capital
contribution by two of the three partners of the Partnership, who funded
$4,500,000 and $9,000,000, respectively. Of the $9,000,000 contribution,
$4,500,000 represents preferred capital. Terms of the Partnership agreement
prioritize cash distributions as follows:

First--in 1993, a mandatory distribution of $225,000, which was made.

Second--Beginning in 1993, mandatory distributions equal to 10 percent
of the preferred capital, which have been made.

Third--A mandatory distribution to all partners in proportion to their
respective profit percentages to cover their income tax liabilities
resulting from Partnership income.

Fourth--Distributions providing for a return of the preferred capital.

Sixth--The balance to all partners on a pro rata basis in proportion
to their respective positive capital account balances.

The Partnership agreement calls for redemption of the preferred capital in
July 2002. If the Partnership shall not have funds legally available to redeem
all the preferred capital, then the Partnership shall redeem the remaining
preferred capital on later dates when the funds are legally available.

The cash distributions and preferred capital redemption provisions made
above are subject to restrictions between the Partnership and its lender (note
4).

(3) EQUIPMENT, FURNITURE, AND LEASEHOLD IMPROVEMENTS

At January 31, 1995 and 1996, the major classes of equipment, furniture,
and leasehold improvements are summarized at cost, as follows:

<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Equipment........................................................ $1,214 $1,334
Furniture........................................................ 1,673 972
Leasehold improvements........................................... 854 780
------ ------
3,741 3,086
Less accumulated depreciation and amortization................... 1,995 1,717
------ ------
$1,746 $1,369
====== ======
</TABLE>

(4) LONG-TERM DEBT

(a) TERM LOAN AND REVOLVING LINE OF CREDIT

The Partnership has a term loan and revolving line of credit with The
Provident Bank (Provident) secured by all the assets of the Partnership.

F-22
<PAGE> 80

MAZEL COMPANY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

6.49 percent on $1,446,889 and 9.0 percent on the remainder. Principal payments
are due in the amount of $111,000 per month through February 1, 1997 and $85,402
per month thereafter through maturity.

The revolving credit facility has a maturity date of January 31, 1998,
bears interest at the prime rate as published by Provident or a "LIBOR Rate" as
defined, and is subject to a commitment fee on the unused portion. At January
31, 1996, the interest rate charged to the Partnership was 8.2 percent on
$5,000,000 of borrowings and 8.5 percent on the remainder. Availability on the
revolving credit facility is the lesser of $20,000,000 or a borrowing base
computation based on accounts receivable and inventories.

In addition to the regularly scheduled term loan payments, the Partnership
is required, on an annual basis, to make certain prepayments in accordance with
a defined formula beginning June 1, 1995.

In 1994 the Partnership refinanced its term loan and revolving line of
credit. Pursuant to such refinancing, unamortized financing fees relating to the
old debt of $455,000 were written off and have been reported as an extraordinary
loss for financial reporting purposes.

(b) SUBORDINATED NOTES PAYABLE

Notes payable originally aggregating $1,500,000 were payable to individuals
who own or who owned interests in the Partnership. The final installments
totaling $500,000 were made in July 1995, and the notes were retired.

(5) RELATED PARTY TRANSACTIONS

Certain partners have ownership interests in parties which are both vendors
and customers of the Partnership. During the years ended January 31, 1994, 1995,
and 1996, sales to these parties amounted to approximately $2,506,000,
$2,216,000, and $3,462,000, respectively, and purchases from these parties
approximated $2,992,000, $2,653,000, and $909,000, respectively. At January 31,
1995 and 1996, approximately $285,000 and $1,180,000, respectively, was due from
these parties and included in accounts receivable -- trade. In addition, at
January 31, 1995, approximately $128,000 was due to these parties and included
in accounts payable.

Beginning in December 1995, the Partnership provided consulting services to
a related party. Total fees earned for the year ended January 31, 1996 were
approximately $96,000 and are included in notes and other receivables. The
revenue is reflected as a reduction of operating, selling, and administrative
expense.

Also included in notes and other receivables are amounts due from
executives for approximately $166,000 at January 31, 1996.

During each of the years ended January 31, 1994, 1995 and 1996, the
Partnership paid a management fee of $100,000 to its managing partner.

Notes from related parties bear interest at 7.34 percent to 14.5 percent;
the interest is paid annually or monthly. During the year ended January 31,
1996, the Partnership recorded $141,933 of interest income as an offset to
interest expense on these notes. As of January 31, 1996, interest of $34,278
related to these notes was due and included in accounts receivable -- trade. The
Partnership has agreed to provide $530,000 of additional funds to one of the
related parties.

In April 1996, the Partnership loaned an additional $4,000,000 to a related
party. In order to provide this loan to the related party, the Partnership
received the funds as a capital contribution from two of its partners.

F-23
<PAGE> 81

MAZEL COMPANY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(6) EMPLOYEE EQUITY PLAN

The Partnership maintains an Employee Equity Plan (Plan) eligible to key
executives of the Partnership. Terms of the Plan call for the awarding of units,
entitling key executives to purchase Partnership units for a stated purchase
price, with exercisability subject to certain vesting restrictions, generally
over a five-year period. Pursuant to exercise of the purchase option, such key
executives become limited partners of the Partnership. No more than 2,000 units
can be issued under the Plan; on a fully diluted basis the Plan would represent
a 15.3 percent profits interest in the Partnership. During the year ended
January 31, 1996, the Partnership issued 1,660 units to key executives, leaving
a total of 1,730 units outstanding at January 31, 1996, of which 588 units were
vested. Such units were issued for a purchase price of $25.00 per unit, at a
discount of $225.00 per unit from fair market value established by an
independent appraisal. The resulting compensation expense for the years ended
January 31, 1995 and 1996, was not material.

(7) COMMITMENTS AND CONTINGENCIES

(a) LEASES

The Partnership is obligated under operating leases with rental
arrangements for various periods of time providing for fixed rents. A portion of
this commitment (which expires on December 31, 2002) is for the Partnership's
office and warehouse facilities where the lessor is a company in which certain
partners of the Partnership have a minority ownership interest.

At January 31, 1996, future minimum rental payments applicable to the
aforementioned operating leases were as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1997................................................................. $1,317
1998................................................................. 1,263
1999................................................................. 1,252
2000................................................................. 1,246
2001................................................................. 1,163
Thereafter........................................................... 2,228
-------
Total minimum lease payments......................................... $8,469
=======
</TABLE>

Rent expense for the aforementioned operating leases (excluding retail
operations [note 10]) was approximately $1,229,000, $1,260,000, and $1,344,000
for the years ended January 31, 1994, 1995, and 1996, respectively. Rent paid to
the related party lessor was approximately $1,087,000, $1,241,000, and
$1,330,000 for 1994, 1995, and 1996, respectively.

(b) LETTERS OF CREDIT

The Partnership has a letter of credit facility of $3,000,000 to be used
for the purchase of inventory overseas. At January 31, 1996, there was a letter
of credit issued for the purchase of inventory for approximately $134,000.

F-24
<PAGE> 82

MAZEL COMPANY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(d) INDEMNIFICATION AGREEMENT

The Partnership has agreed to indemnify certain defendants against damages
in the amount of $5,000,000 with respect to an attempted acquisition by the
plaintiff. A claim for $20,000,000 against the Partnership alleging tortious
interference with respect to the attempted acquisition has been dismissed but
remains subject to an amended filing. Discovery with respect to this lawsuit has
not commenced. The defendants believe the action to be without merit and intend
to contest the matter vigorously. Based upon the facts of the matter and
discussions with legal counsel, the Partnership does not believe that the
ultimate resolution of this matter will have a material adverse impact on the
results of operations or the financial condition of the Partnership.

(8) RETIREMENT AND SAVINGS PLAN

The Partnership maintains a contributory savings plan under Section 401(k)
of the Internal Revenue Code for the benefit of all collectively bargained
employees meeting certain minimum age and service requirements. The
Partnership's contribution under the savings plan, which amounts to 25 percent
of the employees' contributions up to a maximum of $250 per employee, was
$4,589, $4,786, and $5,619 for the years ended January 31, 1994, 1995, and 1996,
respectively.

(9) FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, accounts receivable,
accounts payable, and accrued expenses is considered to approximate their fair
value due to the short maturity of these instruments. Debt instruments and
related party notes receivable are carried at cost which approximates market.

(10) DISPOSAL OF RETAIL BUSINESS SEGMENT

In October 1995, the Partnership sold its retail business, which consisted
of 11 closeout stores (Just Closeouts, Inc. and It's A Dollar, Inc.), for
approximately $1,818,000. Under terms of the agreement, the Partnership sold all
the assets of the retail business (primarily inventory and fixed assets) to the
buyer, and the buyer assumed the operating liabilities, including the store
leases, maintenance contracts, and accrued expenses. The Partnership realized a
loss on this disposal of approximately $1,571,000. No assets of the retail
business segment are included in the consolidated balance sheet as of January
31, 1996. The Partnership 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 fiscal years ending January 31, are as follows:
1997 -- $609,000; 1998 -- $575,000; 1999 -- $418,000; 2000 -- $212,000;
2001 -- $157,000; and $214,000 thereafter.

The Partnership is anticipating a public offering within the next fiscal
year. Immediately prior to the public offering, the Partnership will merge with
other entities, some of which operate retail business. Upon consummation of the
public offering, the above discontinued retail operations will be retroactively
reclassified to continuing operations.

F-25
<PAGE> 83

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholder
Odd-Job Holdings, Inc.:

We have audited the accompanying consolidated balance sheet of Odd-Job
Holdings, Inc. and subsidiary (Successor) as of January 27, 1996, and the
related consolidated statements of operations, stockholder's equity, and cash
flows from December 7, 1995 to January 27, 1996 (Successor period) and the
combined statements of operations and cash flows of Odd Job (Predecessor) for
the period from February 1, 1995 to December 7, 1995 (Predecessor period). These
consolidated and combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated and combined financial statements based on our audit.

We conducted our audit 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.

In our opinion, the aforementioned Successor consolidated financial
statements present fairly, in all material respects, the financial position of
Odd-Job Holdings, Inc. and subsidiary as of January 27, 1996, and the results of
their operations and cash flows for the Successor period in conformity with
generally accepted accounting principles. Further, in our opinion, the
aforementioned Predecessor combined financial statements present fairly, in all
material respects, the results of operations and cash flows of Odd Job for the
Predecessor period in conformity with generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, on
December 7, 1995, Odd-Job Holdings, Inc. acquired, in a business combination
accounted for as a purchase, stock and partnership units in several entities. As
a result of the acquisition, the financial information for the periods after the
acquisition is presented on a different cost basis than for the periods before
the acquisition and, therefore, is not comparable.

/s/ KPMG Peat Marwick LLP

Cleveland, Ohio
March 29, 1996, except for Note 4(c),
which is as of April 8, 1996

F-26
<PAGE> 84

ODD-JOB HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 27, JULY 27,
1996 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents (including restricted cash of $100)...... $ 1,468 $ 2,310
Accounts receivable, less allowance for doubtful accounts of $20
(note 5)........................................................ 1,486 1,332
Inventories........................................................ 5,020 14,457
Prepaid expenses, income taxes, and other current assets........... 370 512
Deferred income taxes (note 6)..................................... 314 314
----------- -----------
Total current assets....................................... 8,658 18,925
Equipment, furniture, and leasehold improvements, net (note 3)....... 1,728 2,231
Other assets
Goodwill, net...................................................... 9,000 9,509
Deferred income taxes (note 6)..................................... 1,695 1,695
Security deposits.................................................. 234 273
Other.............................................................. 134 171
----------- -----------
Total other assets......................................... 11,063 11,648
----------- -----------
$21,449 $32,804
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable (note 5).......................................... $ 3,834 $ 6,683
Accrued expenses (note 5).......................................... 1,191 1,807
Current maturities of long-term debt (note 4)...................... 28 22
Other current liabilities (note 8[a]).............................. 193 360
----------- -----------
Total current liabilities.................................. 5,246 8,872
Long-term debt (note 4).............................................. 12,998 20,684
Other noncurrent liabilities (note 8[a])............................. 1,871 1,910
Deferred income taxes (note 6)....................................... 44 44
----------- -----------
Total liabilities.......................................... 20,159 31,510
Stockholder's equity
Common stock (authorized 10,000 shares, issued 1,000).............. 1 1
Additional paid-in capital......................................... 1,389 1,389
Accumulated deficit................................................ (100) (96)
----------- -----------
Total stockholder's equity................................. 1,290 1,294
Commitments and contingencies (note 8)...............................
----------- -----------
$21,449 $32,804
======== ========
</TABLE>

See accompanying notes to consolidated and combined financial statements.

F-27
<PAGE> 85

ODD-JOB HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS (SUCCESSOR) AND
COMBINED STATEMENTS OF OPERATIONS (PREDECESSOR)

(DOLLARS IN THOUSANDS)

See accompanying notes to consolidated and combined financial statements.

F-28
<PAGE> 86

ODD-JOB HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (SUCCESSOR)

DECEMBER 7, 1995 TO JANUARY 27, 1996
AND SIX MONTHS ENDED JULY 27, 1996

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------- PAID-IN ACCUMULATED
NUMBER PAR VALUE CAPITAL DEFICIT TOTAL
------ --------- ---------- ----------- ------
<S> <C> <C> <C> <C> <C>
Balance at December 7, 1995................ 1,000 $ 1 $ 1,389 $ -- $1,390
Net loss................................... -- -- -- (100) (100)
--
------ ---------- ----------- ------
Balance at January 27, 1996................ 1,000 1 1,389 (100) 1,290
Net income (unaudited)..................... -- -- -- 4 4
--
------ ---------- ----------- ------
Balance at July 27, 1996 (unaudited)....... 1,000 $ 1 $ 1,389 $ (96) $1,294
====== ======= ========== =========== ======
</TABLE>

See accompanying notes to consolidated and combined financial statements.

F-29
<PAGE> 87

ODD-JOB HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (SUCCESSOR) AND
COMBINED STATEMENTS OF CASH FLOWS (PREDECESSOR)

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SUCCESSOR
PREDECESSOR PREDECESSOR ---------
----------- ----------- SIX
FEBRUARY 1, SIX MONTHS MONTHS
1995 TO SUCCESSOR ENDED ENDED
DECEMBER 7, --------- JULY 31, JULY 27,
1995 NOTE 1 1995 1996
----------- --------- ----------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income (loss)............................... $ 959 $ (100) $ 621 $ 4
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities
Depreciation and amortization.............. 677 149 430 286
Loss on disposal of property and
equipment............................... 11 -- -- --
Deferred income taxes...................... (2) (12) -- --
Changes in operating assets and liabilities
Accounts receivable..................... (949) 661 (603) (836)
Inventories............................. (1,767) 2,762 (1,814) (9,157)
Other current assets.................... 113 170 (182) (100)
Cash surrender value of officers' life
insurance............................. 333 -- (16) --
Accounts payable and accrued expenses... 2,062 (2,890) 295 3,378
Other current liabilities............... 109 (239) 8 167
Other liabilities....................... -- -- 46 39
----------- --------- ----------- ---------
Total adjustments.................. 587 601 (1,836) (6,223)
----------- --------- ----------- ---------
Net cash provided by (used in)
operating activities............. 1,546 501 (1,215) (6,219)
----------- --------- ----------- ---------
Cash flows from investing activities
Cash paid for acquisition, net of cash
acquired..................................... -- (8,395) -- --
Cash received at acquisition, net of cash
expenses incurred............................ -- -- -- 70
Additions to property and equipment, net........ (1,025) (15) (683) (653)
Additions to other assets....................... (163) -- (27) (36)
----------- --------- ----------- ---------
Net cash used in investing
activities....................... (1,188) (8,410) (710) (619)
----------- --------- ----------- ---------
Cash flows from financing activities
Principal payments on debt...................... (600) (2,789) (400) (70)
Proceeds from term loan......................... -- 7,000 1,900 --
Net proceeds from revolving lines of credit..... 1,988 1,790 -- 3,750
Debt issuance costs............................. -- (138) -- --
Proceeds from subordinated debt................. -- 2,100 -- 4,000
Proceeds from capital stock..................... -- 1,400 -- --
Withdrawals from partners' capital.............. (772) -- (125) --
Dividends paid to stockholders.................. (216) (110) -- --
----------- --------- ----------- ---------
Net cash provided by financing
activities....................... 400 9,253 1,375 7,680
----------- --------- ----------- ---------
Net increase (decrease) in cash and cash
equivalents..................................... 758 1,344 (550) 842
Cash and cash equivalents at beginning of
period.......................................... 909 124 909 1,468
----------- --------- ----------- ---------
Cash and cash equivalents at end of period........ $ 1,667 $ 1,468 $ 359 $ 2,310
========= ======= ======== =======
Supplemental disclosure of cash flow information
Income taxes paid............................... $ 77 $ 7 $ 107 $ --
Interest paid................................... 213 98 83 452
========= ======= ======== =======
</TABLE>

See accompanying notes to consolidated and combined financial statements.

F-30
<PAGE> 88

NON-CASH INVESTING ACTIVITIES

In March 1996 Odd Job Holdings acquired certain assets and liabilities of
two stores from a related party in exchange for the forgiveness of the related
party's accounts receivable balance.

The transaction is summarized as follows:

<TABLE>
<S> <C>
Fair value of assets acquired..................................... 1,077
Accounts receivable exchanged..................................... (990)
------
Liabilities assumed............................................. 87
======
</TABLE>

F-31
<PAGE> 89

ODD-JOB HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) AND
COMBINED FINANCIAL STATEMENTS (PREDECESSOR)

JANUARY 27, 1996

(1) ORGANIZATION AND NATURE OF OPERATIONS

Odd-Job Holdings, Inc. (Company or Successor) is a holding company that was
formed in November 1994 and is wholly owned by ZS Mazel L.P. (ZS), a limited
partnership. The Company owns all of the outstanding common stock of Odd Job
Acquisition Corp. (OJAC), which was also organized in November 1994 in
contemplation of acquiring all of the outstanding capital stock of Odd Job
Trading Corp. (OJT) and POW Trading Corp. (POW), and all of the partnership
units of HIA Trading Associates (HIA) and Central Processing Associates (CPA), a
group of corporations and partnerships related by common control (collectively,
Odd Job or Predecessor). The acquisition of Odd Job for $10,500,000 and
$1,013,000 of related expenses occurred on December 7, 1995 (Acquisition) and
has been accounted for by the purchase method of accounting. Neither the Company
nor OJAC had any activities prior to the acquisition. Concurrently with the
Acquisition, ZS merged OJAC with Peddler's Mart, Inc. (Peddlers), a wholly owned
subsidiary, in a transaction that has been reflected as an as-if-pooling by
virtue of the common control of Peddlers and Odd Job. Peddlers was acquired by
ZS on December 9, 1994. In connection with the Acquisition, the purchase price
allocation and liabilities assumed were as follows (in thousands):

<TABLE>
<S> <C>
Current assets........................................................... $12,197
Equipment, furniture and leasehold improvements.......................... 1,568
Goodwill................................................................. 8,801
Other non-current assets................................................. 1,866
Expenses incurred in connection with the Acquisition..................... (1,013)
Cash paid for stock and partnership units................................ (9,050)
-------
Liabilities assumed............................................ $14,369
=======
</TABLE>

The following unaudited pro forma combined results of operations assume
that the combination had occurred at the beginning of the year ended January 31,
1995 (in thousands):

Odd Job and Peddlers are engaged in the retail sale of high-quality
closeout merchandise through 13 retail stores operating in the New York
metropolitan area.

As a result of the purchase accounting method applied to the Acquisition,
the financial information for the periods after the Acquisition is presented on
a different cost basis than for the periods before the Acquisition; accordingly,
such Successor and Predecessor financial information is not comparable.

F-32
<PAGE> 90

ODD-JOB HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) AND
COMBINED FINANCIAL STATEMENTS (PREDECESSOR) -- CONTINUED

The Successor company information includes the results of Peddlers for the
12 months ending January 27, 1996 and Odd Job for the period from December 7,
1995 to January 27, 1996, as follows (in thousands):

<TABLE>
<CAPTION>
ODD JOB PEDDLERS
----------- -----------
DECEMBER 7, FEBRUARY 1,
1995 TO 1995 TO
JANUARY 27, JANUARY 27,
1996 1996 TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
Net sales........................................ $ 9,621 $ 5,154 $14,775
Gross profit..................................... 3,485 1,653 5,138
Special charges.................................. 300 -- 300
Operating profit (loss).......................... 198 (18) 180
Net income (loss)................................ 8 (108) (100)
</TABLE>

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) PRINCIPLES OF CONSOLIDATION

Prior to the Acquisition, the financial statements of Odd Job were
presented on a combined basis to reflect the economic substance of their
activities arising from their common management and control. Subsequent to the
Acquisition, the financial statements of OJAC, Peddlers, and Odd Job have been
consolidated with the financial statements of the Company reflecting a full year
of Peddlers' operations in the Successor period. All significant intercompany
balances and transactions have been eliminated in the consolidated and combined
financial statements.

(b) 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.

Inventories are stated at the lower of cost or market, with cost for the
Predecessor determined on the specific identification or first-in, first-out
method and cost for the Successor valued by use of the retail method.

(d) EQUIPMENT, FURNITURE, AND LEASEHOLD IMPROVEMENTS

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

(f) GOODWILL

F-33
<PAGE> 91

ODD-JOB HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) AND
COMBINED FINANCIAL STATEMENTS (PREDECESSOR) -- CONTINUED

lated amortization. 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 operations.

(g) INCOME TAXES

Income taxes for the corporations in the consolidated group are accounted
for under the asset and liability method, except that during the Predecessor
period no federal or state income taxes were provided for HIA or CPA as the
taxable income for these partnerships was passed through to their respective
partners. Deferred tax assets and liabilities are recognized for the 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 and tax credit carryforwards. Deferred tax assets
and liabilities 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 income in the period that includes the
enactment date.

(h) ADVERTISING

The Company expenses advertising costs as incurred. Advertising expense was
approximately $145,000 and $77,000 in the Predecessor and Successor periods,
respectively.

(i) CHANGE IN FISCAL YEAR

Prior to the Acquisition, the Predecessor's fiscal year ended on January 31
of each year. The Successor has adopted a 52-53 week fiscal year ending on the
Saturday nearest to the last day of January.

(j) INTERIM INFORMATION (UNAUDITED)

The interim information presented in the consolidated and combined
financial statements has been prepared by management without audit and, in the
opinion of management, includes all adjustments of a normal recurring nature
that are necessary for the fair presentation of financial position, results of
operations, and cash flows for the periods shown, in accordance with generally
accepted accounting principles.

(3) EQUIPMENT, FURNITURE, AND LEASEHOLD IMPROVEMENTS

At January 27, 1996, the major classes of equipment, furniture, and
leasehold improvements are summarized at cost, as follows (in thousands):

<TABLE>
<S> <C>
Leasehold improvements.................................................... $1,423
Furniture, fixtures, and equipment........................................ 381
------
1,804
Less accumulated depreciation and amortization............................ 76
------
$1,728
======
</TABLE>

(4) LONG-TERM DEBT

(a) SENIOR DEBT

In conjunction with the Acquisition, the Company entered into a term loan
and revolving line of credit agreement with The Provident Bank (Provident)
whereby the Company's debt pursuant to the agreement is secured by all assets of
the Company.

F-34
<PAGE> 92

ODD-JOB HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) AND
COMBINED FINANCIAL STATEMENTS (PREDECESSOR) -- CONTINUED

1996, the applicable interest rate was 9.75 percent. Principal payments on the
term loan are due in quarterly amounts commencing on January 1, 1998 and
continuing through December 31, 2001 as follows: 1998, $300,000 per quarter;
1999, $350,000 per quarter; 2000, $400,000 per quarter; 2001, $450,000 per
quarter. A final principal payment of $1,000,000 is due on December 31, 2002.

The revolving credit facility has a maturity date of April 30, 1998 and
bears interest at 1 percent above the prime rate as published by Provident or a
"LIBOR Rate" as defined. Interest payments are due monthly; the applicable
interest rate was 9.5 percent at January 27, 1996. Availability on the revolving
credit facility is the lesser of $6,000,000 or a borrowing base computation
based on eligible inventory and accounts receivable, as defined. In addition,
the maximum available is reduced by letters of credit issued under the letter of
credit facility (see note 8[b]). The loan is subject to certain prepayment
penalties. As of January 27, 1996, outstanding borrowings on the revolving line
of credit totaled approximately $1,412,000.

In addition to the regularly scheduled term loan payments, the Company is
required to pay, on an annual basis, 25 percent of a prepayment surplus, as
defined, beginning June 1, 1998 for 1997.

The senior debt is subject to certain restrictive covenants, with whose
terms the Company is in compliance as of January 27, 1996.

(b) SENIOR SUBORDINATED DEBT

As part of the consideration for the Acquisition, OJAC issued a $1,000,000
senior subordinated note to a former owner, secured by all assets of the Company
and OJAC, with a claim on assets subordinated to the senior debt. The note has a
maturity date on the earlier of December 5, 1998, an initial public offering, or
a change in control as defined. The note bears interest, which is payable
annually, at 1 percent above the prime rate as published by Provident; the
applicable interest rate was 9.5 percent at January 27, 1996. The principal is
due in total at maturity.

The Company issued a $2,100,000 subordinated note to Mazel Company L.P.
(Mazel), a related party. The note is secured by all assets of the Company and
subordinated to all other long-term debt. The note has a maturity date of
February 28, 2003, and bears interest at 6 percent above the prime rate as
published by Provident; the applicable interest rate was 14.5 percent at January
27, 1996. The principal is due in total at maturity. In 1996, the Company
borrowed an additional $4,000,000 from Mazel which was contributed to OJAC as
additional paid-in capital. Mazel also holds an option to acquire OJAC from ZS,
who serves as the managing partner of Mazel.

(d) CONTINGENT SUBORDINATED DEBT

As part of the Acquisition consideration, OJAC issued three $150,000
contingent subordinated notes to the former Odd Job owners for a total of
$450,000, secured by all assets of OJAC and subordinated to the senior
subordinated debt and senior debt. The notes have a contingent maturity date 60
days subsequent to the settlement of a lawsuit against the owners and bear
interest at the prime rate as published by Provident; the applicable interest
rate was 8.5 percent at January 27, 1996. The principal and interest are due in
total at maturity, if at all, depending upon the outcome of the lawsuit.

(e) PEDDLERS NOTES PAYABLE

- Senior Subordinated Revolving Credit Note -- Peddlers has a $1,500,000
senior subordinated revolving credit note with a related party expiring
at the sale of Peddlers to a third party or a qualified public offering,
as defined, bearing interest at a rate of 10 percent, payable monthly.
As of January 27, 1996, the amount outstanding was $970,000.

F-35
<PAGE> 93

ODD-JOB HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) AND
COMBINED FINANCIAL STATEMENTS (PREDECESSOR) -- CONTINUED

- Subordinated "C" Note -- As part of the acquisition consideration,
Peddlers issued a $136,000 subordinated note to its former owner,
payable in quarterly installments of $4,250 commencing on December 31,
1994 with a final payment due on September 30, 2002. The amounts payable
under this note are to be reduced by payments made under the Contingent
Subordinated "A" Note, as defined. As of January 27, 1996, $114,750 was
outstanding on this note. The present value of the outstanding amount,
discounted at a rate of 10 percent, is $83,439, consisting of a current
portion of $17,000 and long-term portion of $66,439.

- Subordinated "D" Note -- As part of the acquisition consideration,
Peddlers also issued a $34,800 subordinated note to its former owner,
payable in quarterly installments of $4,350 commencing on December 31,
1994 with a final payment due on September 30, 1996. As of January 27,
1996, $11,540 was outstanding, all of which is current.

(5) RELATED PARTY TRANSACTIONS

During the Predecessor period, Odd Job purchased merchandise from a company
with whom it shared certain common ownership. Such purchases aggregated
approximately $1,835,000. During the Successor period, the Company continued to
be related to this supplier. Purchases during the Successor period were
approximately $1,813,000. At January 27, 1996, amounts payable to this supplier
amounted to approximately $747,000 and are included in accounts payable.

Also during the Predecessor period, Odd Job procured certain merchandise
for the above-mentioned supplier and for other related parties. Such
transactions aggregated approximately $5,733,000 and are not reflected in net
sales or cost of goods sold in the accompanying Predecessor combined statement
of operations.

Odd Job charged these related parties a fee to cover warehousing and
administrative costs aggregating approximately $249,000 for the Predecessor
period, in addition to purchase commissions aggregating approximately $459,000
for the period. These revenues are shown as a reduction of selling, general, and
administrative expenses in the accompanying Predecessor combined statement of
operations.

During the Successor period, purchases for these related parties aggregated
approximately $711,000, and the Company charged these related parties fees
aggregating approximately $38,000 for warehousing and administration and $57,000
for commissions. Included in accounts receivable at January 27, 1996 was
approximately $1,500,000 due from these related parties.

During the Successor period, the Company incurred interest expense to
related parties totaling approximately $61,000 on various debt arrangements. Of
this amount, approximately $49,000 is payable at January 27, 1996 and is
included with accrued expenses.

During the Successor period, the Company was allocated payroll costs of
approximately $91,000 from a related party for services provided. The full
amount is payable at January 27, 1996 and is included with accrued expenses.

F-36
<PAGE> 94

ODD-JOB HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) AND
COMBINED FINANCIAL STATEMENTS (PREDECESSOR) -- CONTINUED

(6) INCOME TAXES

The components of income tax (benefit) expense for the two months ended
January 27, 1996 are as follows (in thousands):

<TABLE>
<S> <C>
Deferred federal income tax benefit -- current.............................. $(29)
Deferred federal income tax expense -- noncurrent........................... 17
State and local income tax expense.......................................... 5
----
$ (7)
====
</TABLE>

During the Predecessor period, Odd Job's income was attributable to the HIA
and CPA partnerships; accordingly, the related federal and state income tax
liabilities were passed through to their respective partners. During the
Successor period, the difference in the effective tax rate benefit of 19 percent
from the statutory rate benefit of 35 percent is due primarily to state and
local income tax expense.

The components of the deferred income tax benefit are as follows (in
thousands):

<TABLE>
<S> <C>
Net loss carryforward....................................................... $(72)
Inventory capitalization.................................................... 44
Equipment, furniture, and leasehold improvements............................ 9
Goodwill.................................................................... 7
----
$(12)
====
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities as of January
27, 1996 are presented below (in thousands):

A net operating carryforward of approximately $205,000 is available to
offset future taxable income. This loss carryforward expires in 15 years.

(7) FINANCIAL INSTRUMENTS

(8) 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 2009.
These leases are subject to certain escalation clauses based upon

F-37
<PAGE> 95

ODD-JOB HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (SUCCESSOR) AND
COMBINED FINANCIAL STATEMENTS (PREDECESSOR) -- CONTINUED

real estate taxes and other occupancy expense. Also, several leases provide for
additional rent based on a percentage of sales.

At January 27, 1996, minimum annual rental commitments under noncancelable
leases are as follows (in thousands), for the fiscal year ending:

<TABLE>
<S> <C>
1997..................................................................... $ 4,704
1998..................................................................... 4,447
1999..................................................................... 3,365
2000..................................................................... 3,409
2001..................................................................... 3,394
Thereafter............................................................... 13,132
-------
Total minimum lease payments............................................. $32,451
=======
</TABLE>

Rent expense relating to these leases for the Predecessor and Successor
periods amounted to approximately $4,290,000 and $715,000, respectively.

(b) LETTERS OF CREDIT

The Company has a letter of credit facility of $3,000,000 to be used in the
normal operations of the business. At January 27, 1996, the Company had
outstanding letters of credit issued to various parties aggregating
approximately $780,000.

The Company has agreed to pay an incentive employment bonus to two key
executives of the Company on the earlier of January 31, 1999, a qualified
initial public offering (as defined), or the sale of the Company. These bonuses
are to be calculated based on earnings of the Company, as defined.

(d) CONTINGENT STOCK OPTION

In the event of an initial public offering, the Company is committed to
grant two key executives stock options for a number of shares of stock at a
price equal to $150,000 divided by the initial public offering price per share.

(9) SUBSEQUENT EVENT

In March 1996, the Company acquired certain assets and liabilities of two
stores from a related party in exchange for the related party's accounts
receivable balance for $969,000.

F-38
<PAGE> 96

ODD JOB TRADING CORP.,
POW TRADING CORP.,
HIA TRADING ASSOCIATES AND
CENTRAL PROCESSING ASSOCIATES

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
INDEPENDENT AUDITORS' REPORT........................................................ F-40
FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 1995 AND 1994:
Combined Balance Sheets........................................................... F-41
Combined Statements of Operations................................................. F-42
Combined Statements of Stockholders' Equity and Partners' Capital................. F-43
Combined Statements of Cash Flows................................................. F-44
Notes to Combined Financial Statements............................................ F-45
</TABLE>

F-39
<PAGE> 97

INDEPENDENT AUDITORS' REPORT

To the Stockholders and Partners of
Odd Job Trading Corp.,
POW Trading Corp.,
HIA Trading Associates and
Central Processing Associates:

We have audited the accompanying combined balance sheets of Odd Job Trading
Corp., POW Trading Corp., HIA Trading Associates and Central Processing
Associates (the "Company"), all of which companies are under common ownership
and common management, as of January 31, 1995 and 1994, and the related combined
statements of operations, stockholders' equity and partners' capital and of cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these combined financial statements based on our audits.

In our opinion, such combined financial statements present fairly, in all
material respects, the financial position of the Company at January 31, 1995 and
1994, and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.

As discussed in Note 2 to the financial statements, in the year ended
January 31, 1994, the Company changed its method of accounting for income taxes
to conform with Statement of Financial Accounting Standards No. 109.

/s/ DELOITTE TOUCHE LLP

New York, New York
August 11, 1995

F-40
<PAGE> 98

ODD JOB TRADING CORP.,
POW TRADING CORP.,
HIA TRADING ASSOCIATES AND
CENTRAL PROCESSING ASSOCIATES

COMBINED BALANCE SHEETS

JANUARY 31, 1995 AND 1994

<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash........................................................... $ 909,175 $ 807,583
Accounts receivable (Less allowance for doubtful accounts of
$20,000 and $130,000, respectively) (Note 7)................ 1,642,309 1,665,982
Inventories (Note 2)........................................... 5,933,623 5,160,322
Prepaid expenses and other current assets (Note 2)............. 553,368 687,323
Prepaid income taxes (Note 2).................................. 902 118,653
Deferred income tax benefits................................... 37,831 34,921
----------- -----------
Total current assets................................... 9,077,208 8,474,784
----------- -----------
PROPERTY AND EQUIPMENT -- Net (Notes 2 and 3).................... 3,400,696 3,775,678
----------- -----------
OTHER ASSETS:
Security deposits.............................................. 165,397 216,085
Cash surrender value of officers' life insurance............... 332,996 300,236
Deferred income tax benefits................................... 19,261 26,337
Other (Note 2)................................................. 87,698 117,060
----------- -----------
Total other assets..................................... 605,352 659,718
----------- -----------
TOTAL ASSETS................................................... $13,083,256 $12,910,180
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable and accrued expenses (Note 7)................. $ 5,521,072 $ 5,058,832
Current maturities of long-term debt (Note 5).................. 600,000 800,000
Income taxes payable........................................... 31,590 2,734
Other current liabilities...................................... 266,823 219,217
----------- -----------
Total current liabilities.............................. 6,419,485 6,080,783
----------- -----------
LONG-TERM DEBT -- Less current maturities (Note 5)............... 800,000 1,400,000
----------- -----------
ACCRUED RENT (Note 8)............................................ 172,502 131,266
----------- -----------
DEFERRED INCOME TAXES............................................ 15,904 17,242
----------- -----------
STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL:
Common stock:
Odd Job Trading Corp., no par value -- authorized, 200 shares;
outstanding, 200 shares..................................... 6,800 6,800
POW Trading Corp., no par value -- authorized, 200 shares:
outstanding, 200 shares..................................... 20,000 20,000
Additional paid-in capital..................................... 58,800 58,800
Retained earnings.............................................. 1,904,261 1,688,738
HIA Trading Associates partners' capital (Note 6).............. 3,685,504 3,506,551
----------- -----------
Total stockholders' equity and partners' capital....... 5,675,365 5,280,889
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY AND PARTNERS'
CAPITAL........................................................ $13,083,256 $12,910,180
========== ==========
</TABLE>

See notes to combined financial statements.

F-41
<PAGE> 99

ODD JOB TRADING CORP.,
POW TRADING CORP.,
HIA TRADING ASSOCIATES AND
CENTRAL PROCESSING ASSOCIATES

COMBINED STATEMENTS OF OPERATIONS

YEARS ENDED JANUARY 31, 1995 AND 1994

<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
NET SALES........................................................ $56,510,863 $50,085,255
COST OF GOODS SOLD (Note 7)...................................... 36,319,500 31,519,011
----------- -----------
Gross profit........................................... 20,191,363 18,566,244
----------- -----------
OPERATING EXPENSES (Note 7):
Occupancy...................................................... 6,077,394 5,656,830
Selling, general and administrative expense.................... 11,174,761 10,402,492
Depreciation and amortization.................................. 815,495 691,440
----------- -----------
Total.................................................. 18,067,650 16,750,762
----------- -----------
INCOME FROM OPERATIONS........................................... 2,123,713 1,815,482
INTEREST EXPENSE -- Net (Note 5)................................. 179,995 209,620
----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES AND CUMULATIVE EFFECT OF
A CHANGE IN ACCOUNTING PRINCIPLE............................... 1,943,718 1,605,862
PROVISION FOR INCOME TAXES (Note 4).............................. 225,396 150,298
----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE...................................................... 1,718,322 1,455,564
CUMULATIVE EFFECT OF CHANGE IN METHOD OF ACCOUNTING FOR INCOME
TAXES.......................................................... -- 38,584
----------- -----------
NET INCOME....................................................... $ 1,718,322 $ 1,416,980
========== ==========
</TABLE>

See notes to combined financial statements.

F-42
<PAGE> 100

ODD JOB TRADING CORP.,
POW TRADING CORP.,
HIA TRADING ASSOCIATES AND
CENTRAL PROCESSING ASSOCIATES

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL

YEARS ENDED JANUARY 31, 1995 AND 1994

<TABLE>
<CAPTION>
NET INCOME NET INCOME
YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, PARTNERS' PARTNERS' JANUARY 31, JANUARY 31, PARTNERS' JANUARY 31,
1993 1994 CONTRIBUTIONS WITHDRAWALS 1994 1995 WITHDRAWALS 1995
----------- ----------- ------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HIA TRADING
ASSOCIATES:
Partners'
capital..... $2,904,256 $1,257,806 $ 200,000 $(855,511) $3,506,551 $1,502,799 $(1,323,846) $3,685,504
----------- ----------- ------------- ----------- ----------- ----------- ----------- -----------
ODD JOB TRADING
CORP.:
Common
stock....... 6,800 -- -- -- 6,800 -- -- 6,800
Paid-in
capital..... 58,800 -- -- -- 58,800 -- -- 58,800
Retained
earnings.... 765,356 23,202 -- -- 788,558 49,587 -- 838,145
----------- ----------- ------------- ----------- ----------- ----------- ----------- -----------
Total....... 830,956 23,202 -- -- 854,158 49,587 -- 903,745
----------- ----------- ------------- ----------- ----------- ----------- ----------- -----------
POW TRADING
CORP.:
Common
stock....... 20,000 -- -- -- 20,000 -- -- 20,000
Retained
earnings.... 764,208 135,972 -- -- 900,180 165,936 -- 1,066,116
----------- ----------- ------------- ----------- ----------- ----------- ----------- -----------
Total....... 784,208 135,972 -- -- 920,180 165,936 -- 1,086,116
----------- ----------- ------------- ----------- ----------- ----------- ----------- -----------
CENTRAL
PROCESSING
ASSOCIATES..... -- -- -- -- -- -- -- --
----------- ----------- ------------- ----------- ----------- ----------- ----------- -----------
TOTAL
STOCKHOLDERS'
EQUITY AND
PARTNERS'
CAPITAL.... $4,519,420 $1,416,980 $ 200,000 $(855,511) $5,280,889 $1,718,322 $(1,323,846) $5,675,365
========== ========== ============ =========== ========== ========== =========== ==========
</TABLE>

See notes to combined financial statements.

F-43
<PAGE> 101

ODD JOB TRADING CORP.,
POW TRADING CORP.,
HIA TRADING ASSOCIATES AND
CENTRAL PROCESSING ASSOCIATES

COMBINED STATEMENTS OF CASH FLOWS

YEARS ENDED JANUARY 31, 1995 AND 1994

<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before cumulative effect of a change in accounting
principle................................................... $ 1,718,322 $ 1,455,564
Adjustments to reconcile income before cumulative effect of a
change in accounting principle to net cash provided by
operating activities:
Reduction in allowance for doubtful accounts................ (110,000) --
Provision for losses on accounts receivable................. -- 100,000
Depreciation and amortization............................... 815,495 691,440
Loss on disposal of property and equipment.................. 801 --
Deferred income taxes....................................... 2,828 (21,603)
Change in operating assets and liabilities:
Accounts receivable....................................... 133,673 (126,706)
Inventories............................................... (773,301) (1,407,933)
Prepaid expenses and other current assets................. 133,956 (18,245)
Prepaid income taxes...................................... 117,751 (106,589)
Security deposits......................................... 50,688 --
Cash surrender value of officers' life insurance.......... (32,760) (33,224)
Accounts payable and accrued expenses..................... 462,240 1,547,967
Income taxes payable...................................... 28,856 2,734
Other current liabilities................................. 47,606 26,371
Accrued rent.............................................. 41,236 17,302
----------- -----------
Net cash provided by operating activities........................ 2,637,391 2,127,078
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment............................ (341,866) (1,179,780)
Additions to other assets...................................... (73,587) (32,175)
Proceeds received for sale of property or equipment............ 3,500 --
----------- -----------
Net cash used in investing activities.................. (411,953) (1,211,955)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt................................... -- 700,000
Principal payments on long-term debt........................... (800,000) (800,000)
Withdrawals from partners' capital............................. (1,323,846) (998,111)
----------- -----------
Net cash used in financing activities.................. (2,123,846) (1,098,111)
----------- -----------
NET INCREASE (DECREASE) IN CASH.................................. 101,592 (182,988)
CASH, BEGINNING OF YEAR.......................................... 807,583 990,571
----------- -----------
CASH, END OF YEAR................................................ $ 909,175 $ 807,583
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest.................................................... $ 179,995 $ 209,669
========== ==========
Income taxes................................................ $ 105,362 $ 240,205
========== ==========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Conversion of subordinated debt to partners' capital........... $ -- $ 200,000
========== ==========
Partners' withdrawals payable.................................... $ -- $ (142,600)
========== ==========
</TABLE>

See notes to combined financial statements.

F-44
<PAGE> 102

ODD JOB TRADING CORP.,
POW TRADING CORP.,
HIA TRADING ASSOCIATES AND
CENTRAL PROCESSING ASSOCIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

YEARS ENDED JANUARY 31, 1995 AND 1994

(1) ORGANIZATION

Odd Job Trading Corp. and POW Trading Corp. are New York corporations
organized in August 1974 and August 1984, respectively. HIA Trading Associates
and Central Processing Associates are New York partnerships formed in December
1986 and July 1987, respectively. The companies are engaged in the retail sale
of high quality closeout merchandise and currently operate twelve retail stores
and maintain warehouse and office space in the New York metropolitan area.

Odd Job Trading Corp., POW Trading Corp. and HIA Trading Associates operate
the retail stores and Central Processing Associates acts as a conduit for
administrative and warehouse expenses, which are ultimately charged to the other
companies within the group.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Combination -- The combined financial statements include the
accounts of Odd Job Trading Corp., POW Trading Corp., HIA Trading Associates and
Central Processing Associates (collectively the "Company"). As these companies
are under the common control of the principal stockholders and partners, it is
the opinion of management that presenting the financial statements of the
companies on a combined basis more accurately reflects the economic substance of
their activities.

All material intercompany transactions have been eliminated in the combined
financial statements.

Inventory Valuation -- Inventories are stated at the lower of cost or
market, with cost determined on the specific identification or first-in,
first-out method.

Property and Equipment -- Property and equipment are stated at cost.
Depreciation and amortization are computed on the straight-line method over
estimated useful lives as follows:

<TABLE>
<S> <C>
Leasehold improvements.................... life of the related lease, which is not in
excess of the estimated useful life
Furniture, fixtures and office equipment.. 3 to 10 years

</TABLE>

Other Assets -- Other assets - Other consists of pre-opening costs related
to the various stores. Such costs are capitalized and amortized over the lives
of the related store leases. At January 31, 1995 and 1994, other assets are
shown net of accumulated amortization of $279,340 and $320,328, respectively.
Amortization expense for the years ended January 31, 1995 and 1994 aggregated
$97,952 and $66,283, respectively.

The current portion of pre-opening costs, representing one year's
amortization, is included in prepaid expenses and other current assets in the
accompanying combined balance sheets and is $89,740 and $84,744 at January 31,
1995 and 1994, respectively.

Income Taxes -- HIA Trading Associates and Central Processing Associates,
the partnerships, do not incur any Federal or state income tax liability as any
taxable income is passed through to the partners. Accordingly, no Federal or
state income provision has been recorded in the accompanying combined financial
statements. HIA Trading Associates and Central Processing Associates are liable,
however, for certain local unincorporated business taxes. Federal, state and
local taxes are provided on the income of Odd Job Trading Corp. and POW Trading
Corp.

F-45
<PAGE> 103

ODD JOB TRADING CORP.,
POW TRADING CORP.,
HIA TRADING ASSOCIATES AND
CENTRAL PROCESSING ASSOCIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

YEARS ENDED JANUARY 31, 1995 AND 1994

In the year ended January 31, 1994, the Company adopted the method of
accounting for income taxes pursuant to Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." As detailed in Note 4, the
Company provides for deferred income taxes under the asset and liability method,
whereby deferred income taxes result from temporary differences between the tax
bases of assets and liabilities and their reported amounts in the financial
statements.

Fair Value of Financial Instruments -- SFAS No. 107, "Disclosures About
Fair Value of Financial Instruments," requires disclosure about the fair value
of financial instruments. The carrying amounts reported in the balance sheet for
accounts receivable, accounts payable and long-term debt approximate fair value
because of the short-term maturity of these financial instruments.

(3) PROPERTY AND EQUIPMENT

Property and equipment at January 31, 1995 and 1994 consist of the
following:

<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Leasehold improvements....................................... $4,150,188 $4,071,299
Furniture, fixtures and equipment............................ 2,677,603 2,430,086
---------- ----------
6,827,791 6,501,385
Less accumulated depreciation and amortization............... 3,427,095 2,725,707
---------- ----------
Property and equipment -- net................................ $3,400,696 $3,775,678
========= =========
</TABLE>

(4) INCOME TAXES

As discussed in Note 2, Federal, state and local income taxes are provided
on the income before provision for income taxes of Odd Job Trading Corp. and POW
Trading Corp. Local unincorporated business taxes are provided on the income
before provision for income taxes of HIA Trading Associates and Central
Processing Associates.

The components of such income tax provision for the years ended January 31,
1995 and 1994 are as follows:

<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Current:
Federal....................................................... $121,114 $ 65,240
State and local............................................... 101,453 106,661
Deferred:
Federal....................................................... 4,109 (8,739)
State and local............................................... (1,280) (12,864)
-------- --------
$225,396 $150,298
======== ========
</TABLE>

F-46
<PAGE> 104

ODD JOB TRADING CORP.,
POW TRADING CORP.,
HIA TRADING ASSOCIATES AND
CENTRAL PROCESSING ASSOCIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

YEARS ENDED JANUARY 31, 1995 AND 1994

The components of the deferred tax accounts as of January 31, 1995 and 1994
are as follows:

<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Current deferred tax asset:
Inventory capitalization...................................... $ 29,032 $ 23,837
Allowance for doubtful accounts............................... 65 11,084
Accrual for medical claims.................................... 8,734 --
-------- --------
37,831 34,921
-------- --------
Noncurrent deferred tax asset:
Excess of financial reporting depreciation
over depreciation for tax return purposes.................. 18,703 11,328
Accrued rent.................................................. 558 15,009
-------- --------
19,261 26,337
-------- --------
Noncurrent deferred tax liability:
Excess of depreciation for tax return purposes
over financial reporting depreciation...................... (15,904) (17,242)
-------- --------
$ 41,188 $ 44,016
======== ========
</TABLE>

As discussed in Note 2, the Company changed its method of accounting for
income taxes by adopting the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," in the year ended January 31,
1994 and recorded a cumulative effect of $38,584. The adoption of this statement
had no material effect on the provision for income taxes for the year ended
January 31, 1994.

(5) LONG-TERM DEBT

Long-term debt at January 31, 1995 and 1994 consists of the following:

<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Term loan payable to a bank, with interest at 1 percent above
the prime rate (prime rate being 8.5 percent at January 31,
1995); due in quarterly installments of $100,000 through
June 1995.................................................. $ 200,000 $ 600,000
Term loan payable to a bank, with interest at 1 percent above
the prime rate (prime rate being 8.5 percent at January 31,
1995); due in quarterly installments of $100,000 beginning
March 1, 1993 through December 1996, and $400,000 due March
1, 1997.................................................... 1,200,000 1,600,000
---------- ----------
Total.............................................. 1,400,000 2,200,000
Less current maturities...................................... 600,000 800,000
---------- ----------
Long-term debt less current maturities....................... $ 800,000 $1,400,000
========= =========
</TABLE>

The loans are collateralized by all personal property and fixtures of the
Company and are guaranteed by the stockholders and partners of the Company. The
Company is required to meet certain financial ratios and covenants as described
in the agreements. At January 31, 1995, the Company was not in compliance with

F-47
<PAGE> 105

ODD JOB TRADING CORP.,
POW TRADING CORP.,
HIA TRADING ASSOCIATES AND
CENTRAL PROCESSING ASSOCIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

YEARS ENDED JANUARY 31, 1995 AND 1994

certain loan covenants primarily relating to report deadlines and tangible net
worth ratios. On July 13, 1995, the bank issued waivers for the violations of
these loan covenants. Additionally, on July 31, 1994, the term loan agreements
were amended, eliminating, as of July 31, 1994, a requirement to maintain
minimum cash balances, and reducing the requirements under the tangible net
worth ratios provisions.

Long-term debt matures in each of the years subsequent to January 31, 1995
as follows:

<TABLE>
<CAPTION>
YEAR ENDING JANUARY 31, AMOUNT
------------------------------------------------------------------------ ----------
<S> <C>
1996.................................................................... $ 600,000
1997.................................................................... 800,000
----------
Total................................................................... $1,400,000
=========
</TABLE>

(6) SUBORDINATED DEBT

During 1992, capital in the amount of $200,000 was converted to
subordinated debt. Such debt was noninterest-bearing and was due January 1995.
In January 1994, the subordinated debt outstanding amounting to $200,000 was
contributed to capital by the partners.

(7) RELATED PARTY TRANSACTIONS

During the years ended January 31, 1995 and 1994, the Company purchased
merchandise from a company that has certain common ownership with the various
entities which comprise the Company. Such purchases aggregated approximately
$1,918,019 and $2,231,000, respectively. At January 31, 1995 and 1994, amounts
payable to this company amounted to approximately $183,965 and $296,000,
respectively, and are included in accounts payable and accrued expenses in the
accompanying combined balance sheets.

Also during the years ended January 31, 1995 and 1994, the Company procured
certain merchandise for the above-mentioned company and other companies whose
stockholders are related to certain stockholders and partners of the Company.
Such transactions aggregated approximately $7,448,009 and $6,584,322,
respectively, and are not reflected in net sales or cost of goods sold in the
accompanying combined statements of operations. Accounts receivable at January
31, 1995 and 1994 related to such transactions amounted to approximately
$1,605,994 and $1,680,524, respectively.

The Company has charged these companies a fee to cover warehousing and
administrative costs aggregating approximately $294,862 and $320,000 for the
years ended January 31, 1995 and 1994, respectively, and commencing December 1,
1994, commissions as a percentage of these purchases aggregating approximately
$123,006. These revenues are included as a reduction of operating expenses in
the accompanying combined statements of operations.

(8) ACCRUED RENT

Accrued rent is composed of (i) unincurred liability relating to a real
estate lease for which the Company is recording rent on a straight-line basis,
while the lease terms are for an initial free rent period and increasing rent
payments thereafter and, (ii) imputed liability relating to a capitalized
equipment lease where the leased equipment becomes the Company's property at the
end of the lease.

F-48
<PAGE> 106

ODD JOB TRADING CORP.,
POW TRADING CORP.,
HIA TRADING ASSOCIATES AND
CENTRAL PROCESSING ASSOCIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

YEARS ENDED JANUARY 31, 1995 AND 1994

(9) COMMITMENTS AND CONTINGENCIES

The Company is obligated under lease agreements for office, warehouse and
retail store space, which expire at various dates through September 2006. These
leases are subject to certain escalation clauses based upon real estate taxes
and other occupancy expenses. In addition, several leases provide for additional
rent based on a percentage of sales.

At January 31, 1995, minimum annual rental commitments under noncancellable
leases are as follows:

<TABLE>
<CAPTION>
MINIMUM
YEAR ENDING JANUARY 31, RENTALS
----------------------------------------------------------------------- -----------
<S> <C>
1996................................................................... $ 3,810,099
1997................................................................... 3,868,056
1998................................................................... 3,437,746
1999................................................................... 2,356,787
2000................................................................... 2,390,826
Thereafter............................................................. 9,965,846
-----------
Total.................................................................. $25,829,360
==========
</TABLE>

Rent expense relating to these leases for the years ended January 31, 1995
and 1994 amounted to $4,807,410 and $4,479,280, respectively.

The Company currently provides medical insurance benefits to eligible
employees and their dependents. The Company is liable for medical claims
submitted (after the deductible and any copayment by the employee) up to a
specific amount per person insured. Any claims in excess of the specified amount
are covered by an insurance policy. During the years ended January 31, 1995 and
1994, the Company incurred expenses aggregating approximately $341,154 and
$320,910, respectively, related to such medical claims. Additionally, the
Company has reserved approximately $91,511 included in accrued expenses for
claims incurred not reported at January 31, 1995.

At January 31, 1995, the Company had a credit agreement with a bank
providing for a line of credit in the amount of $1,500,000. Borrowings under the
credit agreement are secured by the accounts receivable, inventory, personal
property and fixtures of the Company and bear interest at prime plus .75%. At
January 31, 1995 and 1994, the Company was contingently liable for open letters
of credit, in lieu of lease security, in the amount of $679,525.

(10) SUBSEQUENT EVENT

On August 2, 1995, the Company entered into a new term loan agreement with
a bank effective June 30, 1995 for a principal amount of $1,800,000 replacing
the then existing term loans described in Note 5. The note provides for fifteen
consecutive quarterly principal payments commencing on October 1, 1995 in the
amount of $112,500 and a sixteenth payment of the remaining outstanding
principal balance. The note bears interest at one percent above the prime rate.
The Company is required to meet certain financial ratios and covenants as
described in the new agreement. Additionally, on August 2, 1995, the Company's
credit agreement with a bank was renewed with an increase of the Company's line
of credit to a maximum of $2,500,000. The credit agreement is effective until
July 31, 1996.

F-49
<PAGE> 107

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

NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF
THIS PROSPECTUS.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
The Company........................... 3
The Offering.......................... 5
Summary Combined Financial and
Selected Operating Data............. 6
Risk Factors.......................... 7
Significant Corporate Transactions.... 12
Use of Proceeds....................... 15
Dividend Policy....................... 15
Capitalization........................ 16
Dilution.............................. 17
Pro Forma Financial Data.............. 18
Selected Financial and Operating
Data................................ 21
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 24
Business.............................. 33
Management............................ 42
Certain Transactions.................. 48
Principal Shareholders................ 50
Description of Capital Stock.......... 51
Shares Eligible for Future Sale....... 52
Underwriting.......................... 55
Legal Matters......................... 56
Experts............................... 56
Available Information................. 57
Index to Financial Statements......... F-1
</TABLE>

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

Until December 16, 1996 (25 days after the date of this Prospectus), all
dealers effecting transactions in the Common Stock, whether or not participating
in this distribution, may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

2,574,000 SHARES

[LOGO]
MAZEL STORES, INC.
COMMON STOCK
--------------------------
PROSPECTUS
NOVEMBER 21, 1996
--------------------------

WILLIAM BLAIR & COMPANY
SALOMON BROTHERS INC
- ------------------------------------------------------
- ------------------------------------------------------