UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q

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

                    FOR QUARTERLY PERIOD ENDED MARCH 31, 1999

                                       OR

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


               For the transition period from _______ to ________

                    Commission File Number __________________


                  PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            OHIO                                          34-1334199
-------------------------------                ---------------------------------
(State or Other Jurisdiction of                (IRS Employer Identification No.)
Incorporation or Organization)

2701 E. Camelback Road, Suite 210
Phoenix, Arizona                                             85016
----------------------------------------                   ---------
(Address of principal executive offices)                   (Zip Code)


        Registrant's telephone number including area code: (602) 912-0100
                                                           ---------------



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

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be  filed  by  Sections  12,  13 or 15d of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. YES [X]  NO [ ]


Number of shares  outstanding of each of the issuer's classes of common stock as
of May 21, 1999, is 2,206,083 shares.
<PAGE>
                  PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES


                                      INDEX



PART I  FINANCIAL INFORMATION (Unaudited)                                Page
                                                                         ----
Consolidated Balance Sheets -
         March 31, 1999 and December 31, 1998                              3

Consolidated Statements of Operations (Unaudited) -                        4
         Three Month Period Ended March 31, 1999 and 1998

Consolidated Statements of Cash Flows (Unaudited)
         Three Month Period Ended March 31, 1999 and 1998                  5

Management's Discussion and Analysis of Financial                          6
         Condition and Results of Operations


PART II OTHER INFORMATION                                                  7

Item 1.  Legal Proceedings

Item 2.  Changes in Securities

Item 3.  Defaults Upon Senior Securities

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

Item 5.  Other Information

Item 6.  Exhibits and Reports On Form 8-K

Signatures                                                                 8

                                       2
<PAGE>
                  PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)


ASSETS                                               31-MAR-99         31-DEC-98
                                                     ---------         ---------
Current assets:
  Cash and equivalents, unrestricted                  $  2,394         $  1,486
  Accounts and other receivables                           378              333
    less allowance for doubtful accounts
  Notes Receivable                                         325                0
  Current Portion of Receivables from sale
    of businesses, net of allowance                          0              125
  Factored receivables, net of allowance for
    doubtful accounts                                        0              150
  Inventories                                              218              289
  Prepaid expenses and other current assets                163              212
   Deferred income taxes                                    24               24
  Real estate held for sale                                785              785
                                                      --------         --------
      Total current assets                               4,287            3,404

  Deferred income taxes                                  1,278            1,278
  Property and equipment, net                            3,334            3,770
  Other assets                                             901              945
                                                      --------         --------

     TOTAL ASSETS                                     $  9,800         $  9,397
                                                      ========         ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt                      1,136            1,205
  Accounts payable                                         886              579
  Accrued employment costs                                 473              530
  Accrued expenses and other current liabilities           764              764
  Liabilities subject to compromise                        797              797
  Foreign Tax Liability                                    250              250
                                                      --------         --------
     Total current liabilities                           4,306            4,125

Long-term debt, less current portion                        41               58

Shareholders' equity:
  Preferred Stock, par value $1.00 per share:
    authorized 100,000 shares; none issued                   0                0
  Common stock, no par value; authorized 5,000,000
    shares; issued 3,157,332 shares; outstanding
    2,211,083 and 2,211,183, respectively               31,202           31,202
  Accumulated deficit                                  (21,989)         (22,228)
                                                      --------         --------
                                                         9,213            8,974

  Treasury stock at cost                                (3,760)          (3,760)
                                                      --------         --------
       Total shareholders' equity                        5,453            5,214

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $  9,800         $  9,397
                                                      ========         ========

                                       3
<PAGE>
                  PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
            FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1999 AND 1998
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)




                                                    THREE MONTHS ENDED MARCH 31,
                                                    ----------------------------
                                                        1999            1998
                                                    -----------     -----------

Revenues                                            $     5,560     $     4,900

Cost of revenues                                         (5,012)         (4,377)
Selling, general and administrative expenses               (328)           (396)
Interest expense                                             (2)             (8)
Other income (expenses), net                                 21             (29)

Income (loss) from continuing operations before
     income taxes                                           239              90


Provision for income taxes                                   (1)              0
                                                    -----------     -----------

Income (loss) from continuing operations                    238              90

Income (loss) from discontinued operations                    0              72
                                                    -----------     -----------

Net income (loss)                                   $       238     $       162
                                                    ===========     ===========

Net income (loss) per common share
  Continuing operations                             $      0.11     $      0.04
  Discontinued operations                           $      0.00     $      0.03
                                                    -----------     -----------

Net income (loss) per common share                  $      0.11     $      0.07
                                                    ===========     ===========

Average number of shares outstanding                  2,211,083       2,377,556
                                                    ===========     ===========

                                       4
<PAGE>
                  PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
            FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1999 AND 1998
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)


                                                    THREE MONTHS ENDED MARCH 31,
                                                    ----------------------------
                                                       1999              1998
                                                      -------           -------
Net cash provided by (used in) operating activities   $   770           $    84

Cash flows from investing activities:
  Decrease (increase) in receivables from sales
     of businesses, net                                   125                 0
  Purchase of property and equipment                     (187)              (75)
  Proceeds from sale of property and equipment            610                 0
  Issuance of Notes Receivable                           (325)             (350)
                                                      -------           -------
      Net cash provided by (used in) investing
        activities                                        223              (425)

Cash flows from financing activities:
  Proceeds from borrowings                                  0                 0
  Repayment of borrowings                                 (86)              (86)
  (Increase) decrease in treasury stock                    (0)               (1)
                                                      -------           -------
      Net cash provided by (used in) financing
        activities                                        (86)              (87)

Net increase (decrease) in cash and cash equivalents      908              (428)
Cash and cash equivalents at beginning of period        1,486             2,815
                                                      -------           -------
Cash and cash equivalents at end of period            $ 2,394           $ 2,387
                                                      =======           =======

                                       5
<PAGE>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS



RESULTS OF OPERATIONS

During  1997,  the  Company  sold two of its  operating  companies,  Funding and
Development.  As a result,  there  has been a  reclassification  of  income  and
expenses  related to these  businesses as set forth in the  Company's  Report on
Form 10-Q for the period  ending March 31,  1998.  Management's  Discussion  and
Analysis shall be limited to continuing operations.

In the  first  quarter  of 1999  the  company  sold  its Las  Vegas  and La Mesa
locations  and closed its LaJolla  location.  On April 13, 1999 the company sold
its San  Bernardino  location.  The company  currently  owns and  operates  four
restaurants in California and two in Arizona.

Revenue for the company  increased  from  $4,900,000 to $5,560,000 or by 13% for
the first  quarter of 1999 as compared to the same period last year.  Net income
from  restaurant  operations  increased  from  $90,000 to $238,000 for the first
quarter of 1999.

Net income which  reflected a gain of $72,000 from  discontinued  operations  in
1998  increased  from  $162,000  to  $238,000  for the first  quarter of 1999 as
compared to the same period last year.


LIQUIDITY AND CAPITAL RESOURCES

The company has  sufficient  cash  reserves  to meet  operational  needs for the
upcoming year. Management believes, but there can be no assurance,  that it will
be able to finance any future  expansion  through cash flow,  loans or leases of
equipment.

                                       6
<PAGE>
PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
        None

ITEM 2. CHANGES IN SECURITIES
        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
        None

                                       7
<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.


                                           PERFORMANCE INDUSTRIES, INC.
                                           and SUBSIDIARIES

Dated: May 21, 1999                        /s/ Joe Hrudka
                                           ---------------------------------
                                               Joe Hrudka
                                               Chairman of the Board
                                               (Principal Executive Officer)


                                           /s/   Ed Fochtman
                                           ---------------------------------
                                                 Ed Fochtman
                                                 Chief Financial Officer
                                                 (Principal Accounting Officer)


                                       8