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

                              FORM 10-Q/A

     (Mark One)

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

For the quarterly period ended August 30, 1998.

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

For the transition period from .............to ............

Commission File Number 1-7013

                       GRISTEDE'S SLOAN'S, INC.
        ------------------------------------------------------
        (Exact Name of Registrant as Specified in its Charter)

        Delaware                                13-1829183
  -------------------------------              ----------------
  (State or Other Jurisdiction of              (I.R.S. Employer
   Incorporation or Organization)             Identification No.)

            823 Eleventh Avenue, New York, New York 10019
               ----------------------------------------
               (Address of Principal Executive Offices)



                            (212) 956-5803
         ----------------------------------------------------
         (Registrant's Telephone Number, Including Area Code)

                                 N/A
       -------------------------------------------------------
          (Former Name, Former Address and Former Fiscal Year,
                    if Changed Since Last Report)

Indicate by check mark  whether the  registrant  (1) has filed all reports to be
filed  by  Section  13 or 15 (d) of  the  Securities  Exchange  Act  during  the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.

Yes  [X]   No  [ ]

At October 13, 1998, the registrant had issued and outstanding 19,636,574 shares
of common stock.


<PAGE>


                    GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES


                          PART I-FINANCIAL INFORMATION


Item 1. Financial Statements


            Consolidated Balance Sheets as of
                 August 30, 1998 and November 30, 1997                   Page 3

            Consolidated Statements of Operations for
                     the quarters and nine months ended
                     August 30, 1998 and August 31, 1997                 Page 4

            Consolidated Statements of Stockholders'
                     Equity for the nine months ended
                     August 30, 1998                                     Page 5


            Consolidated Statements of Cash Flows for
                     the nine months ended
                     August 30, 1998 and August 31, 1997                 Page 6

            Notes to Consolidated Financial Statements                   Page 7



Item 2.     Management's Discussion and Analysis of
                     Financial Condition and Results of
                     Operations                                          Page 9



                                      - 2 -


<PAGE>
<TABLE>
<CAPTION>

Item 1
Financial Statements
                            GRISTEDE'S SLOAN'S, INC.
                      UNAUDITED CONSOLIDATED BALANCE SHEETS

ASSETS                                                                                           August 30,          November 30,
                                                                                                   1998                 1997
                                                                                               ============         ============
<S>                                                                                            <C>                  <C>
CURRENT ASSETS:
          Cash .........................................................................       $    102,551         $     88,970
          Accounts receivable - net of allowance for doubtful accounts
            of $0 at August 30, 1998 and $300,000 at November 30, 1997 .................          6,082,536            5,110,026
          Inventory ....................................................................         17,874,128           16,221,465
          Prepaid expenses and other current assets ....................................          1,213,231              914,544
          Notes receivable- current portion ............................................            557,880              584,912
                                                                                               ------------         ------------

          Total current assets .........................................................         25,830,326           22,919,917
                                                                                               ------------         ------------

PROPERTY AND EQUIPMENT:
          Furniture, fixtures and equipment ............................................         15,433,155           13,393,803
          Capitalized equipment leases .................................................          6,970,706            5,574,369
          Leaseholds and leasehold improvements ........................................         33,928,505           30,296,510
                                                                                               ------------         ------------
                                                                                                 56,332,366           49,264,682

          Less accumulated depreciation and amortization ...............................         26,500,091           23,567,986
                                                                                               ------------         ------------


          Net property and equipment ...................................................         29,832,275           25,696,696


          Due from affiliate ...........................................................                  0              351,778
          Deposits and other assets ....................................................            719,429              717,429
          Deferred costs ...............................................................          1,923,719            1,515,004
          Notes receivable - noncurrent portion ........................................          1,145,733            1,504,731
                                                                                               ------------         ------------


                                                                                               $ 59,451,482         $ 52,705,555
                                                                                               ============         ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
          Accounts payable, trade ......................................................       $ 13,483,836         $ 15,671,962
          Accrued payroll, vacation and withholdings ...................................            564,770            1,276,535
          Accrued expenses and other current liabilities ...............................            936,378              947,395
          Capitalized lease obligation - current portion ...............................            535,404              389,809
          Current portion of long term debt ............................................          3,014,284            1,714,284
                                                                                               ------------         ------------

          Total current liabilities ....................................................         18,534,672           19,999,985

          Long-term debt ...............................................................         18,939,171           11,285,716
          Due to affiliate .............................................................          4,000,000            4,000,000
          Deferred advertising .........................................................            281,154              378,654
          Capitalized lease obligation - non current portion ...........................          2,224,181            1,377,194
          Deferred rent ................................................................          1,516,450              993,984
                                                                                               ------------         ------------

            Total liabilities ..........................................................         45,495,628           38,035,533
                                                                                               ------------         ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
          Preferred stock,  $50 par, - shares  authorized  500,000;  none issued
          Common stock, $.02 par, - shares authorized 25,000,000; outstanding
            19,636,574 shares issued at August 30, 1998 and November 30, 1997 ..........            392,732              392,732
          Additional paid-in capital ...................................................         14,167,595           14,136,674
          Retained earnings ............................................................           (604,473)             140,616
                                                                                               ------------         ------------

             Total stockholders' equity ................................................         13,955,854           14,670,022
                                                                                               ------------         ------------

                                                                                               $ 59,451,482         $ 52,705,555
                                                                                               ============         ============

See accompanying notes to unaudited consolidated financial statements.

</TABLE>
                                                                 -3-
<PAGE>

<TABLE>
<CAPTION>
                            GRISTEDE'S SLOAN'S, INC.
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
    FOR THE NINE MONTHS AND QUARTER ENDED AUGUST 30, 1998 AND AUGUST 31, 1997


                                                          39 weeks             13 weeks             39 weeks             13 weeks
                                                           ended                ended                ended                ended
                                                         August 30,           August 30,           August 31,           August 31,
                                                            1998                 1998                 1997                 1997
                                                       =============        =============        =============        =============
<S>                                                    <C>                  <C>                  <C>                  <C>
Sales ..........................................       $ 116,296,764        $  37,631,409        $  72,191,581        $  22,248,918
Cost of sales ..................................          70,211,045           23,006,331           44,379,937           13,732,202
                                                       -------------        -------------        -------------        -------------

Gross profit ...................................          46,085,719           14,625,078           27,811,644            8,516,716

Store operating, general and
  administrative expenses ......................          39,167,716           13,164,251           26,269,667            8,856,770

Depreciation and amortization ..................           2,973,525              862,422            1,612,803              571,739
                                                       -------------        -------------        -------------        -------------

Non-store operating expenses
  Administrative payroll and fringes                       2,307,783              842,747            2,354,267              812,901
  General office expense                                     871,630              344,019            2,109,469              942,720
  Professional fees                                          148,370               20,373              651,816              325,840
  Corporate expense                                          117,689               44,913                    0                    0
                                                       -------------        -------------        -------------        -------------

Total non-store operating expenses                         3,445,472            1,252,052            5,115,552            2,081,461
                                                       -------------        -------------        -------------        -------------


Operating profit/(loss) ........................             499,006             (653,647)          (5,186,378)          (2,993,254)
                                                       -------------        -------------        -------------        -------------

Other income (expense)
Interest income ................................             142,298               43,611              121,302               60,651
Interest expense ...............................          (1,386,393)            (533,453)            (700,787)            (328,744)
                                                       -------------        -------------        -------------        -------------

Total other income (expense)                              (1,244,095)            (489,842)            (579,485)            (268,093)
                                                       -------------        -------------        -------------        -------------

Loss before provision for income taxes .........            (745,089)          (1,143,489)          (5,765,863)          (3,261,347)

Provision for income taxes .....................                   0              (42,500)                   0                    0
                                                       -------------        -------------        -------------        -------------

Net  loss ......................................       $    (745,089)       $  (1,100,989)       $  (5,765,863)       $  (3,261,347)
                                                       =============        =============        =============        =============

Net loss per share .............................              ($0.04)              ($0.06)                 N/A                  N/A
                                                       =============        =============        =============        =============

Weighted average number of shares and
equivalents outstanding ........................          19,636,574           19,636,574                  N/A                  N/A
                                                       =============        =============        =============        =============


See accompanying notes to unaudited consolidated financial statements.

</TABLE>

                                                                 -4-


<PAGE>

<TABLE>
<CAPTION>

                            GRISTEDE'S SLOAN'S , INC.
            UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        NINE MONTHS ENDED AUGUST 30, 1998


                                                                                    Additional                           Total
                                                         Common stock                Paid-In          Retained        Stockholders'
                                                     Shares         Amount           Capital          Earnings           Equity
                                                  ===========    ===========       ===========      ===========       ===========

<S>                                                <C>           <C>               <C>              <C>               <C>
Balance at November 30 , 1997 ..............       19,636,574    $   392,732       $14,136,674      $   140,616       $14,670,022

To reflect acquisition of new store
    #53 on February 6, 1998 ................           30,921         30,921

Net loss for the nine months
   ended August 30, 1998 ...................         (745,089)      (745,089)
                                                  -----------    -----------       -----------      -----------       -----------

Balance at August 30, 1998 .................       19,636,574    $   392,732       $14,167,595      $  (604,473)      $13,955,854
                                                  ===========    ===========       ===========      ===========       ===========


See accompanying notes to unaudited consolidated financial statements.

</TABLE>

                                                                 -5-


<PAGE>

<TABLE>
<CAPTION>

                            GRISTEDE'S SLOAN'S, INC.
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE NINE MONTHS ENDED AUGUST 30, 1998 AND AUGUST 31, 1997

                                                                                                     39 weeks             39 weeks
                                                                                                      ended                ended
                                                                                                    August 30,           August 31,
                                                                                                      1998                 1997
                                                                                                   ===========          ===========
<S>                                                                                                <C>                  <C>
Net loss .................................................................................         $  (745,089)         $(5,765,863)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization ............................................................           2,973,252            1,612,803

Changes in operating assets and liabilities:

Accounts receivable - net ................................................................            (972,510)          (2,341,213)
          Inventory ......................................................................          (1,652,663)             694,404
Prepaid expenses and other current assets ................................................            (298,687)
   Notes receivable ......................................................................             386,030
Receivable from officer ..................................................................             351,778
       Other assets ......................................................................            (451,862)
Accounts payable, trade ..................................................................          (2,188,126)           3,055,444
Accrued payroll, vacation and withholdings ...............................................            (711,765)
Accrued expenses and other current liabilities ...........................................             (11,017)
Accrued rent leveling ....................................................................             522,466
Capitalized lease obligations ............................................................             992,582
      Other credits ......................................................................             (97,500)
                                                                                                   -----------          -----------

Net cash (used) / provided by operating activities .......................................          (1,903,111)          (2,744,425)
                                                                                                   -----------          -----------

Capital expenditures - net ...............................................................          (7,036,763)          (1,501,893)
                                                                                                   -----------          -----------

Net cash used in investing activities ....................................................          (7,036,763)          (1,501,893)
                                                                                                   -----------          -----------

Proceeds from bank loan ..................................................................          10,000,000
Repayments of bank loan ..................................................................          (1,546,545)
                                                                                                   -----------          -----------

Net cash provided / (used) in financing activities .......................................           8,953,455                    0
                                                                                                   -----------          -----------

NET INCREASE  IN CASH AND CASH EQUIVALENTS ...............................................              13,581                    0

CASH AND CASH EQUIVALENTS, beginning of period ...........................................              88,970                    0
                                                                                                   -----------          -----------

CASH AND CASH EQUIVALENTS, end of period .................................................         $   102,551          $         0
                                                                                                   ===========          ===========

INCREASE IN NET ASSETS PURCHASED .........................................................                              $    93,258*

*  The Unaudited  Consolidated Statement of Cash Flows for the Nine Months Ended
   August 31, 1997 reflects the difference between the Statement of Assets to be
   Purchased  and  Liabilities  to be Assumed at August 31,  1997 as compared to
   December 1, 1996. No cash was  transferred  as part of the  acquisition.  The
   increase in Net Assets Purchased was $ 93,258


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
-------------------------------------------------

Cash paid for interest ...................................................................         $ 1,277,535          $   590,518
Cash paid for taxes ......................................................................         $    22,056          $    20,951

NONCASH TRANSACTIONS
--------------------

Acquisition of new store .................................................................         $    30,921                 --


See accompanying notes to unaudited consolidated financial statements.

</TABLE>

                                                                 -6-


<PAGE>


                                      - 2 -

                    GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS - On November 4, 1997, Sloan's  Supermarkets,  Inc. ("Sloan's") changed
its name to Gristede's Sloan's,  Inc. ("GRI" or the "Company").  On November 10,
1997,  GRI  acquired  certain  assets,  net  of  liabilities,   of  29  selected
supermarkets and a wholesale distribution business ("The Food Group") controlled
by  Mr.  John  Catsimatidis,  Chairman  and  37%  stockholder  of  Sloan's.  The
transaction  was accounted for as the  acquisition  of Sloan's by The Food Group
pursuant  to  Emerging  Issues  Task  Force  90-13 as a result of The Food Group
obtaining  control of Sloan's after the transaction.  The assets and liabilities
of The Food Group were recorded at their  historical  cost.  Sloan's  assets and
liabilities   were  recorded  at  their  fair  value  to  the  extent  acquired.
Consideration  for the  transaction  was based on an aggregate of $36,000,000 in
market value of the Company's  common stock and the  assumption of $4,000,000 of
liabilities.  16,504,298  shares of common  stock were issued on the date of the
acquisition based on a market price of $2.18 per share.

The Company  presently  operates 41 supermarkets  and one health and beauty aids
store (the "Supermarkets").  36 Supermarkets are located in Manhattan, New York,
three   Supermarkets   are  located  in  Westchester   County,   New  York,  two
Supermarkets,  are located in Brooklyn,  New York and one Supermarket is located
in Long  Island,  New  York.  23 of the  Supermarkets  are  operated  under  the
"Sloan's"  name and 19 are operated  under the  "Gristede's"  name.  The Company
leases all of its Supermarket locations.

The Company also owns City Produce Operating Corp., a corporation which operates
a  warehouse  and  distribution  center  primarily  for fresh  produce on leased
premises in the Bronx, New York.

PRINCIPLES OF CONSOLIDATION - The consolidated  financial statements include the
accounts  of  the  Company  and  its  wholly-owned  subsidiaries.  All  material
intercompany accounts and transactions have been eliminated in consolidation.

QUARTER END - The Company  operates  using the  conventional  retail  52/53 week
fiscal year.  The fiscal  quarter  ends on the Sunday  closest to the end of the
quarter. The Company's fiscal year ends on the Sunday closest to November 30.

INVENTORY - Store  inventories  are valued  principally  at the lower of cost or
market with cost determined under the retail first in, first out (FIFO) method.

PROPERTY AND EQUIPMENT -  Depreciation  of furniture,  fixtures and equipment is
computed by the  straight-line  method over the  estimated  useful  lives of the
assets.

LEASES - The Company charges the cost of noncancelable  operating lease payments
and beneficial  leaseholds to operations on a straight-line basis over the lives
of the leases.


                                      -7-


<PAGE>

                    GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES  (Continued)

PROVISION FOR INCOME TAXES - Income taxes reflect Federal and State  alternative
minimum tax only, as all regular income taxes have been offset by utilization of
the Company's net operating loss carry forward.

INCOME PER SHARE - Per share data are based on the  weighted  average  number of
shares of common stock and equivalents  outstanding during each quarter.  Income
per share is computed by the treasury  stock  method;  primary and fully diluted
income per share are the same.

In the opinion of management, the information furnished reflects all adjustments
(consisting  of normal  recurring  adjustments)  which are  necessary for a fair
statement  of the  results of  operations  for the interim  period.  The interim
figures are not  necessarily  indicative  of the results to be expected  for the
fiscal year.

The Company's Annual Report on Form 10-K for the transition 9 month period ended
November  30, 1997  contains  information  which  should be read in  conjunction
herewith.


2. RELATED PARTY TRANSACTIONS

As of November  30,  1997,  the Company had  advanced an  aggregate  $351,778 in
principal  and  accrued  interest  to a  company  owned by the  Chairman  of the
Company.  These  advances  were fully repaid during the quarter ended August 30,
1998.

Advertising  services are provided to the Company by an affiliated company,  MCV
Advertising  Associates,  Inc.  For the quarter and nine months ended August 30,
1998 the costs  incurred  were  $232,279  and  $818,616,  respectively.  For the
quarter and nine months ended August 31, 1997 the costs  incurred  were $290,315
and $697,339, respectively.

Legal fees  incurred  by the  Company to a law firm,  of which a director of the
Company is a member,  were  $75,252 and $157,047 for the quarter and nine months
ended  August 30,  1998,  respectively.  For the quarter  and nine months  ended
August 31, 1997 these legal fees were $71,957 and $125,807, respectively.


                                      - 8 -


<PAGE>


                    GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES


                                     PART I

ITEM 2.      MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
             RESULTS OF OPERATIONS FOR THE QUARTERS AND NINE MONTHS ENDED AUGUST
             30, 1998 AND AUGUST 31, 1997

RESULTS OF OPERATIONS

As a result of the reverse  acquisition  which occurred on November 10, 1997 the
following discussion of the Results of Operations  encompasses the operations of
29 Supermarkets  plus the City Produce operation for the quarter and nine months
ended August 31, 1997 and the  operations of such 29  Supermarkets  and the City
Produce operation  combined with the operations of an additional 15 Supermarkets
for the quarter and nine months ended August 30, 1998.

The following table sets forth items from the Company's Consolidated  Statements
of Operations as a percentage of sales.


<TABLE>
<CAPTION>

                                                           39 weeks              13 weeks              39 weeks             13 weeks
                                                            ended                 ended                 ended                ended
                                                          August 30,            August 30,            August 31,          August 31,
                                                             1998                  1998                  1997                 1997
                                                        =============         =============         =============        ===========
<S>                                                          <C>                   <C>                   <C>                 <C>   
Sales ......................................                 100.0%                100.0%                100.0%              100.0%
Cost of sales ..............................                  60.4%                 61.1%                 61.5%               61.7%
                                                        -------------         -------------         -------------        -----------
Gross profit ...............................                  39.6%                 38.9%                 38.5%               38.3%
Store operating, ...........................                  33.7%                 35.0%                 36.4%               39.8%
general and
administrative
expense
Depreciation and ...........................                   2.5%                  2.3%                  2.2%                2.6%
amortization
Non-store ..................................                   3.0%                  3.3%                  7.1%                9.4%
operating expense
                                                        -------------         -------------         -------------        -----------
Operating ..................................                   0.4%                 (1.7%)                (7.2%)             (13.5%)
profit/(loss)
Other income ...............................                  (1.0%)                (1.3%)                (0.8%)              (1.2%)
(expense)
                                                        -------------         -------------         -------------        -----------
(Loss) from ................................                  (0.6%)                (3.0%)                (8.0%)             (14.7%)
operations before
income taxes
Provision for ..............................                --                      (0.1%)              --                  --
income taxes
                                                        -------------         -------------         -------------        -----------
Net (loss) .................................                  (0.6%)                (2.9%)                (8.0%)             (14.7%)
                                                        =============         =============         =============        ===========

</TABLE>


Sales for the quarter and nine months ended August 30, 1998 were $37,631,409 and
$116,296,764,  respectively.  Sales for the quarter and nine months ended August
31, 1997 were $22,248,918 and $72,191,581,  respectively. The sales increase was
mainly  attributable  to the 15 additional  stores included in the 1998 periods.
Sales for the same 29 stores were  $23,441,819  and  $75,072,497 for the quarter
and  nine  months  ended  August  30,  1998 as  compared  with  $21,864,336  and
$70,334,002  for the quarter and nine months ended August 31, 1997,  an increase
of 7.21% and 6.74%, respectively.  The increase in sales in the 1998 periods was
primarily the result of the Company's remodeling program, which is continuing.


                                       - 9 -


<PAGE>

Gross profit as a percentage  of sales was 38.86% and 39.63% for the quarter and
nine months  ended  August 30,  1998 as compared  with 38.28% and 38.52% for the
quarter and nine months  ended August 31,  1997.  The 1998  periods  include the
results of the additional 15 Sloan's stores which traditionally  achieved higher
gross margins.

Store operating,  general and  administrative  expenses as a percentage of sales
were 34.98% and 33.68% for the quarter and nine months  ended August 30, 1998 as
compared with 39.81% and 36.39% for the quarter and nine months ended August 31,
1997.  The  decrease in the 1998  period was mainly due to better cost  controls
resulting from the combining of the operations in the reverse acquisition.

Nonstore  operating  expenses as a percentage  of sales were 3.33% and 2.96% for
the  quarter and nine months  ended  August 30, 1998 as compared  with 9.36% and
7.09% for the quarter  and nine months  ended  August 31,  1997.  Administrative
payroll  and  fringes  were  2.24% and 1.98% of sales for the  quarter  and nine
months ended  August 30, 1998 as compared  with 3.65% and 3.26% of sales for the
quarter and nine months ended August 31, 1997.  The decrease was the result of a
reduction in administrative personnel. General office expense as a percentage of
sales  decreased to 0.76% and 0.75% for the quarter and nine months ended August
31, 1998 from 4.24% and 2.92% of sales for the  quarter  and nine  months  ended
August 31, 1997 as a result of the continuing efficiencies from the combining of
the operations.  Professional fees were 0.05% and 0.13% of sales for the quarter
and nine  months  ended  August 30, 1998 as compared to 1.46% and 0.90% of sales
for the quarter and nine months ended  August 31, 1997.  The decrease was due to
the reduced  need for outside  professional  services.  Corporate  expenses  are
attributable  to the  Company  being a public  company  and did not apply to the
prior year.

Interest  income was $43,611 and  $142,298 for the quarter and nine months ended
August 30, 1998 as compared  to $ 60,651 and  $121,302  for the quarter and nine
months  ended August 31,  1997.  The increase  during the 1998 nine month period
reflects interest on the notes received for the sale of various stores.

Interest  expense  for the quarter  and nine  months  ended  August 30, 1998 was
$533,453 and $1,386,393, respectively. Interest expense for the quarter and nine
months  ended  August 31, 1997 was  $328,744  and  $700,787,  respectively.  The
increase in the 1998 periods were primarily attributable to the borrowings under
the new bank credit facility which became effective November 10, 1997.

As a result of the items  reviewed  above the net loss for the  quarter and nine
months ended  August 30, 1998 were  $1,100,989  and  $745,089,  respectively  as
compared to a net loss of  $3,261,347  and  $5,765,863  for the quarter and nine
months ended August 31, 1997.


LIQUIDITY AND CAPITAL RESOURCES

On November 10, 1997,  the Company  entered into an aggregate  $25,000,000  five
year  credit  facility  with a group of banks.  The Company  believes  that this
facility,  together  with  commitments  it has obtained from third party leasing
companies,  is  sufficient  to finance the Company's  store  remodeling  program
through the next fiscal year. It is  anticipated  that the Company will generate
sufficient cash flow to finance its future working capital needs.

The Company has not  incurred  any material  financial  commitments  for capital
expenditures,  although it anticipates spending approximately $11,000,000 on its
store  remodeling  program in fiscal  1998.  Management  believes  that  amounts
available  under its  $25,000,000  credit  facility  together with financing the
Company believes it can obtain,  including loans from, and leasing  arrangements
with,  non-affiliated  companies,  will be  sufficient  to enable the Company to
complete its remodeling program.


YEAR 2000 ISSUE

The Company has assessed its information technology ("IT") systems for Year 2000
readiness  and has given the highest  priority to those IT systems it  considers
mission  critical.  The systems the Company  considers  mission critical are its
store  automation  systems  (including  point of sale  systems) and its computer
systems at its main office which support these store systems.


                                       - 10 -


<PAGE>

Management  expects all in-store IT systems as well as the host  support  system
located in the Company's  main office will be certified by the original  vendors
as Year 2000  compliant no later than March 30, 1999.  These systems were either
Year 2000 compliant as installed,  or are being upgraded by the original vendors
to a  Year  2000  compliant  status  under  existing  maintenance  programs.  No
additional expense has or will be incurred by the Company to bring these systems
into Year 2000  compliance  since any  necessary  changes  are  provided  by the
vendors under software maintenance programs.

The Company will then verify that these systems are in fact Year 2000  compliant
by performing its own tests independent of the vendors.  The Company will change
the  dates  on the  systems  to the end of 1999 and run  test  transactions  and
processes  using both 1999 and changed  Year 2000 dates.  The Company  will then
compare the results from the 1999 transactions and processes with those from the
changed Year 2000 dates to ensure that the systems perform as expected.

The Company has assessed its other IT systems,  including accounting and payroll
systems, deployed at its main office and its City Produce warehouse facility for
Year 2000  compliance and has  identified the steps  necessary to ensure systems
will be Year 2000 compliant.

The Company has developed and tested a methodology  that will allow its existing
software  programs to be Year 2000  compliant by making minor changes to some of
the existing  programs.  The existing  data files will not need to be altered to
use this methodology, thereby reducing the amount of time and effort required to
make these systems Year 2000 compliant. The Company will perform a review of the
software being  utilized to identify  processes that involve the input or output
of a date. Programs that are found to require the input or output of a date will
require a minor  modification  (utilizing the test procedure referred to above),
to become Year 2000 compliant. These systems will then be tested to confirm that
they function as expected.  Some of the Company's  hardware is not now Year 2000
compliant and the Company has budgeted for the  replacement or  modification  of
such hardware as necessary in the first half of 1999.

The Company  expects to spend  $70,000 for hardware and will spend an additional
$30,000 for  software  modifications  and related  expenses to ensure that these
systems are compliant.  The Company  expects that the necessary  funds for these
expenditures to come from cash flow generated from its  operations.  All testing
on these  systems is expected to be  completed by June 30, 1999 at which time it
is expected that these systems will be Year 2000 compliant.


                                       - 11 -


<PAGE>


The Company does not currently  intend to hire an outside firm to  independently
verify that its systems are Year 2000 compliant.

The  Company  has  assessed  the  majority  of its non-IT  systems for Year 2000
readiness  and has  identified  a small  number of  systems,  including  certain
equipment  at store  level,  which may not be Year 2000  ready.  The  Company is
working with the vendor of these  systems to identify the best  approach.  While
these systems have an internal clock and date, the date is not necessary for the
systems to be productive.  Such systems could therefore  continue to function as
needed and  management  does not  anticipate  that these  systems  will pose any
significant Year 2000 problem or expense.

The  Company  has begun to review  the Year  2000  readiness  plans of its major
vendors in an effort to ensure that  operations  remain  unaffected by Year 2000
related  failures.  The Company  will place  preset  orders with  certain  major
vendors  to help  ensure  product  deliveries  in the event  that the  vendor is
affected  by  failures  at some  level of its  operations  but is still  able to
deliver  merchandise.  In the event a major vendor is unable to provide products
the  Company  will  increase  its  purchases  from other  vendors  from which it
currently buys.

The Company  purchases  merchandise sold in its stores from multiple vendors and
is not reliant on any one vendor for the normal conduct of its  operations.  The
Company is not dependant on these supplier  relationships  since  merchandise is
readily available from numerous sources under different brand names,  subject to
conditions affecting food supplies generally.

The  Company  believes  that its efforts  will  result in Year 2000  compliance.
However,  the impact on business operations of failure by the Company to achieve
compliance or failure by external  entities  which the Company  cannot  control,
such as vendors,  to achieve  compliance,  could be  material  to the  Company's
consolidated results of operations.


                                     - 12 -


<PAGE>


                    GRISTEDE'S SLOAN=S, INC. AND SUBSIDIARIES


                           PART II - OTHER INFORMATION


Item 1.       Legal Proceedings

                  Reference  is  made  to Item  3.  "Legal  Proceedings"  in the
                  Company's Annual Report on Form 10-K for the transition period
                  ended November 30, 1997 and Item 1. "Legal Proceedings" in the
                  Company's  Quarterly Report on Form 10-Q for the quarter ended
                  August 30, 1998 for  information  concerning a lawsuit against
                  the  Company  and  John   Catsimatidis   instituted   by  RMED
                  International, Inc. on August 8, 1994.

Item 2.       Changes in Securities and Use of Proceeds

                      None.

Item 3.       Defaults Upon Senior Securities

                      None.

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

                      None.

Item 5.       Other Information

                      None.

Item 6.       Exhibits and Reports on Form 8-K

              (a) Exhibits

                      27. Financial Data Schedule

              (b) No Current  Reports on Form 8-K were filed for the quarter for
              which this report is being filed.


                                     - 13 -


<PAGE>


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                             Gristede's Sloan's, Inc.

                                        By:  /s/ John A. Catsimatidis

                                             John A. Catsimatidis
                                             Chairman of the Board and
                                             Chief Executive Officer


Dated: February 18, 1999



                                        By:  /s/ Stuart Spivak

                                             Stuart Spivak
                                             Executive Vice President and
                                             Chief Financial Officer


Dated: February 18, 1999


                                     - 14 -