SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

                                  FORM 10-Q
(Mark One)
    [X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) 
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the Quarterly Period Ended June 30, 1998

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

                      Commission File No.  1-13710

                         AID AUTO STORES, INC.
           --------------------------------------------------
         (Exact Name of Registrant as Specified in its Charter)
       
              Delaware                              11-2254654
        --------------------             -------------------------------- 
      (State of Incorporation)         (IRS Employer Identification Number)

      275 Grand Boulevard, Westbury, New York  11590
   ------------------------------------------------------
   (Address of Principal Executive Offices)     (Zip Code)

Registrant's Telephone Number,Including Area Code:  (516) 338-7889

Indicate by check mark if 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 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         
                         --------           ---------
                                             
Indicate the number of shares outstanding of the issuer's classes of common
stock, as of the latest practical date.

Common Stock (par value $.001 per share) 3,957,596 shares outstanding as of
August 1, 1998.

<PAGE>

                              AID AUTO STORES, INC.


                                  CONTENTS
                                  --------
  
PART I      FINANCIAL INFORMATION                                   PAGE
                                                                    ----
Item  1     Consolidated Condensed Financial Statements:
-------
            Balance Sheets as of June 30, 1998 and 
            December 31, 1997................................       3 - 4

            Statement of Operations for the Six Months
            Ended June 30, 1998 and 1997 ....................       5
            
            Statements of Operations for the Three Months
            Ended June 30, 1998 and 1997 ....................       6 

            Statements of Cash Flows for the Six Months
            Ended June 30, 1998 and 1997 ....................       7 - 8


            Notes to Financial Statements ...................       9 


Item 2      Management's Discussion and Analysis of Financial
------      Condition and Results of Operations .............       10 - 15




PART II     OTHER INFORMATION

                                            
Item 6      Exhibits and Reports on Form 8-K ................       16






SIGNATURES ..................................................       17



                                    2

<PAGE>

                      Aid Auto Stores, Inc. and Subsidiaries

                      CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>

                ASSETS                       June 30, 1998      Dec. 31,1997
                                             --------------     ------------
<S>                                          <C>                <C>
CURRENT ASSETS
  Cash and cash equivalents                   $     141,051     $    287,941
  Accounts receivable - trade, net                  398,866          659,667
  Notes receivable, net                             354,449          358,549
  Inventories                                    11,237,914       12,649,691
  Prepaid expenses and other current assets       1,489,577          955,303
                                               ------------     ------------
   Total current assets                          13,621,857       14,911,151


FIXED ASSETS - AT COST, net                       4,190,187        4,651,488


COSTS IN EXCESS OF NET ASSETS ACQUIRED, net       3,304,930        3,441,335


OTHER ASSETS                                        326,907          396,676

                                                -----------      -----------
                                               $ 21,443,881     $ 23,400,650
                                                ===========      =========== 
 
</TABLE>
The accompanying notes are an integral part of these statements.


 
                                       3

<PAGE>

                       Aid Auto Stores, Inc. and Subsidiaries
 
                       CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY          June 30, 1998     Dec. 31, 1997
                                              --------------    ------------- 
<S>                                            <C>              <C>
CURRENT LIABILITIES
  Revolving credit line                         $  6,790,112     $  7,866,772
  Demand note                                      3,473,681        2,161,401
  Accounts payable                                 3,507,973        3,464,766
  Accrued expenses                                   342,197          453,085
  Current portion of long-term debt                  457,474          447,222
  Term note                                           19,444          145,833
                                                ------------     ------------
           Total current liabilities              14,590,818       14,539,079


LONG-TERM DEBT, net of current portion             1,193,950        1,475,078

DEFERRED OCCUPANCY COSTS                             439,265          420,700

NOTE PAYABLE - OFFICER                             2,187,500        2,187,500

COMMITMENTS AND CONTINGENCIES


STOCKHOLDERS' EQUITY
  Preferred stock, $.001 par value;
    authorized, 2,000,000 shares;
    none issued
  Common stock, $.001 par value; authorized,
    15,000,000 shares; 3,957,596 shares issued
    and outstanding  in 1998 and 1997                  3,958            3,958
  Additional paid-in capital                       9,006,809        9,006,809
  Retained earnings                               (5,978,419)      (4,232,474)
                                                 -----------      -----------
                                                   3,032,348        4,778,293
  
                                                 -----------      -----------
                                                $ 21,443,881     $ 23,400,650
                                                 ===========      ===========
</TABLE>
  
The accompanying notes are an integral part of these statements.


 
                                     4

<PAGE>

 
                   Aid Auto Stores, Inc. and Subsidiaries

              CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                 
                                           Six Months Ended June 30,
                                         ---------------------------- 
                                             1998            1997
                                          -----------     -----------

<S>                                       <C>             <C>
Net sales                                $  8,673,032    $ 12,313,990


Costs and expenses
  Cost of sales                             4,811,110       6,854,435
  Selling and shipping                      3,784,929       3,754,401
  General and administrative                1,126,419       1,156,936
                                           ----------     -----------
                                         $  9,722,458    $ 11,765,772
                                           ----------     -----------

     (Loss) income from operations         (1,049,426)        548,218


Interest expense                             (711,433)       (551,622)
Interest and other income                      14,914          13,733 
                                           ----------      ----------
  (Loss)income before income taxes         (1,745,945)         10,329

Provision for income taxes                         -              - 
                                           ----------      ----------     
              NET (LOSS)INCOME           $ (1,745,945)   $     10,329
                                           ==========      ==========

Loss per common share
 Net loss per common share-basic
   and diluted                                 $(.44)           $  -
                                               ======           ======

Weighted average common shares
 outstanding                                3,957,596        3,957,596
                                            =========        =========


</TABLE>

The accompanying notes are an integral part of these statements.



                                    5

<PAGE>

                      Aid Auto Stores, Inc. and Subsidiaries

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                     Three Months Ended June 30, 1998
                                     --------------------------------
                                          1998             1997
                                      ------------      ------------
<S>                                   <C>               <C>

Net Sales                              $ 4,160,593       $ 6,221,392


Costs and expenses
  Cost of sales                          2,330,777         3,311,616
  Selling and shipping                   1,687,751         1,985,662
  General and administrative               560,330           580,834
                                        ----------        ----------
                                       $ 4,578,858       $ 5,878,112
                                        ----------        ----------

       (Loss) income from operations      (418,265)          343,280


Interest expense                          (354,624)         (282,214)
Interest and other income                   13,352             7,249
                                        ----------        ----------
   (Loss) income before income taxes      (759,537)           68,315

Provision for income taxes                      -                 -
                                        ----------        ----------
               NET (LOSS)INCOME        $  (759,537)      $    68,315
                                        ==========        ==========


Loss per common share
  Net loss per common share-basic          
    and diluted                            $(.19)              $.02    
                                           ======              ====

Weighted average common shares
  outstanding                           3,957,596          3,957,596
                                        =========          =========
</TABLE>

The accompanying notes are an integral part of these statements.



                                   6

<PAGE>
                   

                       Aid Auto Stores, Inc. and Subsidiaries

                  CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 
                                                Six Months Ended June 30,
                                              ---------------------------- 
                                                 1998             1997
                                              ------------   -------------
<S>                                           <S>            <S>
Cash flows from operating activities 
  Net loss(income)                           $ (1,745,945)    $    10,329
  Adjustments to reconcile net (loss)income
   to net cash used in operating
   activities
      Depreciation and amortization               782,337         651,276
      Deferred occupancy costs                     18,565          65,904
     (Increase) decrease in operating assets
        Accounts receivable                       260,801         463,436
        Notes receivable                           26,456          20,441
        Inventories                             1,411,777         467,619
        Prepaid expenses and other
         current assets                          (647,989)     (1,147,817)  
        Security deposits                          (2,465)         (6,270)
        Other assets                               49,878         (25,968)
      Increase(decrease) in operating liabilities
        Accounts payable                           43,207          67,092
        Accrued expenses                         (110,888)        (96,738)
                                               ----------      ----------  
    Net cash provided by operating activities      85,734         469,304
                                               ----------      ----------

Cash flows from investing activities
   Capital expenditures                           (70,916)       (355,917)
                                               ----------      ----------
   Net cash used in investing activities          (70,916)       (355,917)
                                               ----------      ----------

</TABLE>

                                        7

<PAGE>

                          Aid Auto Stores, Inc. and Subsidiaries

              CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (continued)

<TABLE>
<CAPTION>
                                                                 
                                            Six Months Ended June 30,
                                           ---------------------------
                                               1998            1997
                                           ------------    ------------
<S>                                        <C>             <C>
Cash flows from financing activities
  Net borrowings under revolving
    credit line                           $ (1,076,660)      $  304,418
  Principal repayment of long-term debt       (211,208)        (230,481)
  Demand note                                1,312,217             -0- 
  Term note                                   (126,389)            -0- 
  Repayment of notes payable under
    capital lease obligations                  (59,668)            -0-   
                                            ----------      -----------
Net cash (used in) provided by
  financing activities                        (161,708)          73,937
                                            ----------      -----------

  Net (decrease) increase in cash and
    cash equivalents                         (146,890)          187,324

    Cash and cash equivalents, at 
      beginning of period                      287,941          331,019
                                            ----------      -----------

    Cash and cash equivalents, at
      end of period                        $   141,051      $   518,343
                                           ===========      ===========    


Supplemental disclosures of cash  flow information:
  Cash paid during the year for
    Interest                               $   603,924      $   517,455



</TABLE>
The accompanying notes are an integral part of these statements<PAGE>



                                    8

<PAGE>                      

                    AID AUTO STORES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS



A.    CONSOLIDATED FINANCIAL STATEMENTS:

     The consolidated balance sheet as of June 30, 1998 and the consolidated
     statements of operations for the three and six month periods ended June 30,
     1998 and the consolidated statement of cash flows for the six month period
     ended June 30, 1998 have been prepared by the Company without audit. In 
     the opinion of management, all adjustments (which include only recurring
     adjustments) necessary to present fairly the financial position at June 30,
     1998, and the results of operations and cash flows for the periods 
     presented, have been made. Results of operations for the three and six
     month periods ended June 30, 1998 are not necessarily indicative of the
     operating results to be expected for the full year.
     
     For information concerning the Company's significant accounting policies,
     reference is made to the Company's audited financial statements for the
     year ended December 31, 1997 contained in the Company's Annual Report on
     Form 10-K filed with the Securities and Exchange Commission. While the
     Company believes that the disclosures presented are adequate to make the
     information contained herein not misleading, it is suggested that these
     statements be read in conjunction with the consolidated financial 
     statements and the notes included in the Form 10-K.

B.   INVENTORIES

     Inventories consists primarily of merchandise purchased for resale.

C.   NEW PRONOUNCEMENT

     The Company adopted the provisions of Statement of Financial Accounting
     Standards No. 130 (SFAS 130), Reporting Comprehensive Income, in the first
     quarter of 1998, which requires companies to disclose comprehensive income
     separately of net income from operations. Comprehensive income is defined
     as the change in equity during a period from transactions and other events
     and circumstances from non-ownership sources. It includes all changes in 
     equity during a period, except those resulting from investments by owners
     and distributions to owners. The adoption of this statement had no effect
     on the Company for the three and six month periods ended June 30, 1998
     and 1997, respectively.


D.   RECLASSIFICATIONS

     Certain reclassifications have been made to the 1997 presentation to
     conform to the 1998 presentation.



                                  9
<PAGE>


                      AID AUTO STORES, INC.


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


General

     Aid Auto Stores, Inc. (the "Company"), formed in 1953, is a retailer,
wholesaler and franchiser of automotive parts and accessories. As of  June 30,
1998, the Company supplied products to 42 Aid Auto Stores, including 22 
Company-owned stores and 20 franchised stores, and, through its wholly-owned
subsidiary, Ames Automotive Warehouse, Inc. ("Ames"), to non-automotive chain
stores. The Aid Auto Stores sell an extensive variety of name-brand automotive
parts, accessories and chemicals, as well as an assortment of products marketed
under the "Aid" and "Perfect Choice TM" brands, to both do-it-yourself and
commercial customers. Pursuant to a growth strategy initiated in 1995, the
Company commenced the opening of Company-owned Superstores and de-emphasized
its franchise operations. As of June 30, 1998, the Company opened eight new 
Superstores and had acquired (in December 1995) ten franchised Aid Auto Stores
in Long Island, New York, of which nine have been converted and reopened as
Superstores. Through termination and non-renewal of franchise agreements, the
number of franchised stores has decreased since the end of the second quarter
of 1997 from 32 to 20. In addition, consistent with its retail Superstore growth
strategy, the Company further de-emphasized its wholesale operations by reducing
the number of its Ames customers by 55% from inception of the Superstore growth
program in 1995 to June 30, 1998. Due to the Company's limited cash resources
at June 30, 1998, the Company has not recently pursued its growth program. The
Company has retained Josephthal & Co. Inc. to assist it in exploring strategic
alternatives, which may include, among other things, a significant merger/
acquisition of the Company.
  


                                 10
<PAGE>


Results of Operations

Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997. 
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997.


     The Company's operating revenues are primarily derived from net sales
consisting of both retail and wholesale sales.  Retail sales are made from the
Company-owned Aid Auto Stores, of which 22 existed at June 30, 1998 and 21 at
June 30, 1997. Wholesale sales include sales to the Company's franchised Aid
Auto Stores, of which 20 existed at June 30, 1998 and 32 at June 30, 1997, and
through Ames, to other customers. Revenues decreased by $3,640,958 (or 29.6%)
from $12,313,990 for the six months ended June 30, 1997 to $8,673,032 for the
six months ended June 30, 1998 and by $2,060,799 (or 33.1%) from $6,221,392
for the three months ended June 30, 1997 to $4,160,593 for the three months
ended June 30, 1998. The decrease in revenues in 1998 was due primarily 
to the decrease in wholesale sales to franchisees and through Ames, by
$2,310,076 from $3,682,181 to $1,372,105 for the six months ended June 30, 1997
and 1998, respectively, and by $1,026,319 from $1,642,226 to $615,187 for the 
three months ended June 30, 1997 and 1998, respectively. The reduction in 
wholesale sales for the six and three  month periods ended June 30, 1998 is
consistent with the Company's strategy to de-emphasize its wholesale business.
Retail sales decreased by $1,330,882 from $8,631,809 to $7,300,927 for the six
months ended June 30, 1997 and 1998, respectively, and by $1,034,480 from 
$4,579,886 to $3,545,406 for the three months ended June 30, 1997 and 1998, 
respectively. The decline in retail sales can be attributed to several factors
which include the reduction in advertising expenditures and inventory purchase
levels due to working capital constraints. In addition, the recent industry-wide
softness and the warmest winter since records have been kept also contributed
to the decline in retail revenues. The Company has initiated a program in 1998
to substantially increase its commercial sales. In addition, despite the decline
in retail revenues, earnings before interest, depreciation and amortization and
corporate allocation at the store level was $415,807 for the six months ended 
June 30, 1998 as compared to $416,694 for the comparable period in 1997. For 
the six  months ended June 30, 1998, retail sales represented 84.2% of total
net sales as compared to 70.1% for the comparable prior year period.

     Cost of sales decreased by $2,043,325 (29.8%) and $980,839 (29.6%), from
$6,854,435  to $4,811,110 for the six months ended June 30, 1997 and 1998, 
respectively, and from $3,311,616 to $2,330,777 for the three months ended 
June 30, 1997 and 1998, respectively. As a percentage of net sales, cost of
sales decreased from 55.7% to 55.5%  for the six month period ended June 30,
1997 and 1998, respectively, reflecting the significantly higher margins on 
retail sales (as compared to  wholesale sales). Cost of sales increased from
53.2% to 56.0% for the three months ended June 30, 1997 and 1998, respectively,
which can be attributed to the Company's working capital constraints causing 
inventory out-of-stock position which negatively impacted sales.

     Selling and shipping expenses increased by $30,528 (or 0.8%) from 
$3,754,401 (30.5% of net sales) for the six months ended June 30, 1997 to 
$3,784,929 (43.6% of net sales) for the six months ended June 30, 1998. Selling
and shipping expenses decreased by $297,911 (or 15.0%) from $1,985,662 (31.9% of
net sales) for the three months ended June 30, 1997 to $1,687,751 (40.6% of net 
sales) for the three months ended June 30, 1998. The increase in absolute 
dollars and as percentage of net sales for the six months was due primarily to
selling expenses associated with the opening of two new Company-owned stores in
1997 which were fully operational  in the first half of 1998. Selling expenses


                             11

<PAGE>

are higher for a retail operation than for a wholesale operation, reflecting the
nature of those operations. The decrease in absolute dollars for the quarter
ended June 30, 1998 was the direct result of the Company's efforts to reduce
expenses to reflect the decline in  sales and its transition from a wholesaler
to a retailer.

     General and administrative expenses decreased by $30,517 (or 2.6%) from
$1,156,936 (9.4% of net sales) for the six months ended June 30, 1997 to 
$1,126,419 (13.0% of net sales) for the six months ended June 30, 1998. General
and administrative expenses decreased by $20,504 (or 3.5%) from $580,834 (9.3% 
of net sales) for the three months ended June 30, 1997 to $560,330 (13.5% of
net sales) for the three months ended June 30, 1998. The decrease in absolute
dollars for the latest six and three month periods was due to the Company's 
concentration on reducing its corporate overhead as it continues to de-emphasize
its wholesale operations. The increase of this expense as a percentage of 
revenues was due to the significant decline in revenues, as the Company 
continues to leverage its corporate overhead. At the end of the second quarter 
of 1998, the Company reduced its corporate workforce by 33% and restructured its
warehouse operations. Additional cost reductions are planned for the balance of
1998.  

     Interest expense increased by $159,811 from $551,622 for the six months
ended June 30, 1997 to $711,433 for the six months ended June 30, 1998. Interest
expense increased by $72,410 from $282,214 for the three months ended June 30, 
1997 to $354,624 for the three months ended June 30, 1998. These increases were
due to an increase in the average outstanding debt balance during the first six
months of 1998 as compared to the same period in the prior year.  

     For the foregoing reasons, the net loss  for the six and three month 
periods ending June 30, 1998 was approximately $1,745,945 and $759,537, 
respectively, as compared to a net income of approximately $10,329 and $68,315 
for the six and three month periods  ended June 30, 1997, respectively.


Liquidity and Capital Resources

     The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. However, the Company had a deficit working capital 
of $968,961 at June 30, 1998,  compared to a positive  working capital of 
$372,072 at December 31, 1997. The decrease of  $1,341,033 was primarily caused
by the operating loss incurred during the six months ended June 30, 1998 and a 
decrease in inventory. In addition, the Company incurred additional indebtedness
to a bank in the form of an unsecured demand note ($3,473,618 at June 30, 1998)
that resulted from the conversion of overdraft balances in the Company's 
operating accounts. Management has taken steps during 1998 to improve its 
working capital position by implementing several cost cutting steps which 
include the reduction of corporate payroll and the reduction of inventory by
11% as of June 30, 1998. The effect of the reduction in costs will continue to
be realized in future periods. In addition, the Company is continuing the 
process to reduce 60% of space at the Company's distribution center, which
space the Company believes is not necessary for its operations, which will 
result in major cost reductions. The Company has successfully negotiated with
its vendors for their assistance throughout 1998. In connection with the 
development and implementation of this financial strategy, the Company has 
retained a financial advisor, Josephthal & Co. Inc., to assist therewith. 
Furthermore, the Company has retained Josephthal & Co., Inc. to assist it in
exploring strategic alternatives, which may include, among other things, a 
significant merger/acquisition of the Company. The Company is currently involved
in discussion with several interested parties with respect to a significant 
transaction. These steps, among others, are intended to enable the Company to
improve its cash flow from operations and working capital position. However,
cash generated from operations alone would 
  
                                   12
<PAGE>


not be sufficient to pay the demand note if the bank were to demand immediate 
payment thereof. The bank has indicated to the Company that it will not pursue
such action provided the Company is successful in its pursuit of strategic 
alternatives. There can be no assurance that the Company will be successful 
in its attempt to consummate one of the strategic alternatives or that the 
bank will otherwise continue to defer seeking payment.  In addition, the Company
will continue to pursue substantial sources of debt or equity financing to 
improve the working capital position and resume the growth strategy of the
Company, for which there can be no assurance of obtaining. The financial 
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and classification of 
liabilities that might be necessary should the Company be unable to continue
in existence. Management believes that the steps outlined above are sufficient
to provide the Company with the ability to continue in existence and will 
ultimately enhance the Company's performance, balance sheet and returns.

     Net cash provided by operating activities was $85,734 for the six months
ended June 30, 1998 as compared to $469,304 for the six months ended June 30,
1997. The decline in 1998 was attributable primarily to the loss incurred in
the six month period ended June 30, 1998 as compared to the prior comparable
period offset by reductions in inventory and accounts receivable combined with
increases in depreciation and amortization due to the capital expenditures made
in connection with the Superstore growth program in 1996 and 1997. Net cash 
utilized in investing activities was $70,916  and  $355,917 for the six month
period ending June 30, 1998 and 1997, respectively. The decrease reflects 
decreases in capital expenditures due to a decrease in the funds available to
fund the Superstore growth strategy.  Net cash used in financing activities 
was $161,708 as compared to net cash provided by financing activities of 
$73,937 for the six months ended June 30, 1998 and 1997, respectively. 
Financing activities in 1998, reflect the repayment of debt under the revolving
credit facility offset in part by the  unsecured demand note the Company 
currently has.


     The Company receives volume purchasing discounts and cooperative 
advertising and development funds from certain of its suppliers. The amounts of
these incentives generally range from 5% to 10% of the listed purchase prices.


     On September 29, 1997, the Company entered into a $10,000,000 revolving
credit facility with a financial institution ("lender"). The agreement expires
September 30, 2000.  This facility replaced the existing facility which provided
for maximum borrowings of $10,000,000.  This new facility initially allowed the
Company to borrow at the prime rate plus 1%. Maximum borrowings under the 
revolving credit facility are based upon the sum of 62% of eligible inventory
and 85% of eligible accounts receivable. The advance rate for inventory 
gradually declines over the first year of the agreement to, the lower of 60%,
or 80% of the appraised value of the inventory. Additionally, substantially 
all of the Company's assets are pledged as collateral under the new credit 
agreement. The terms of the revolving credit facility contain, among other 
provisions, financial covenants for maintaining defined levels of net worth,
net earnings before interest, taxes, depreciation and amortization and annual
capital expenditures.  Because of the operating loss reported by the Company 
for the year ended December 31, 1997, the Company would not have been in 
compliance with such covenants had the lender not granted waivers of such 
defaults as of December 31, 1997. Pursuant to a First Amendment, dated April 24,
1998, the lender amended the financial covenants and increased the interest rate
to the prime rate plus 2%. Pursuant to a Second Amendment, dated July 31, 1998,
the Lender further amended the financial covenants and granted waivers of 
default of the financial covenants


                             13
<PAGE>

of the First Amendment. In addition, the Second Amendment reduced the advance
rate for inventory to, the lower of 55%, or 100% of the appraised value of
the inventory, and provided the Company with an overadvance of $750,000. A 
scheduled reduction of the overadvance for $50,000 took place on August 17, 
1998. The remainder of the overadvance shall be continued or reduced subject
to the Company entering into a significant transaction. There can be no 
assurance that the Company will be able to comply with future covenants and/or
obtain future waivers or amendments  that would prevent the entire amount of 
the credit facility from becoming due and payable. At June 30, 1998, outstanding
borrowings under this facility were $6,790,112, and the interest rate was 10.5%.
     
     In connection with this new facility, the Company was required to pay an
early termination fee of $175,000 to its previous lender. The fee was paid 
from the proceeds of a loan to the Company by the lender in the form of a one
year term loan with principal and interest payable monthly. The term loan
interest rate is at the prime rate plus 1%. Pursuant to the First Amendment of
the credit facility, the term loan was fully paid on July 15, 1998.

     
     At June 30, 1998, the Company was indebted to the Chief Executive Officer,
President and majority shareholder in the form of a promissory note aggregating
$2,187,500. The note bears interest monthly at the same rate as the revolving 
credit facility with principal payable in quarterly installments through 
February 1, 2000.  The new revolving credit facility allows the Company to 
make quarterly principal payments and scheduled monthly interest payments so
long as prior to and after giving affect to such payments no default has 
occurred and is continuing or would occur on the revolving credit indebtedness
as a result thereof. As of April 14, 1998, the holder of the note has deferred
all principal and interest payments due to April 15, 1999. The note provides 
for immediate payment thereof upon, among other things, a change in a majority
of the continuing directors of the Company (as defined in the note) or a demand
by the lender of payment in full of outstanding indebtedness to it.
     

     As of the date hereof, other than in the event tha the Company resumes
the Superstore growth program, the Company has no material commitments for
capital expenditures. 

     The Company has used net proceeds ($7,300,000) of its 1995 initial public
offering as well as funds from borrowings, to finance the implementation of its
Superstore growth program. The Company will need to seek substantial additional
debt or equity financing, as the Company's current resources and cash flow from
operations are not sufficient to fund the continuing cost of its growth program.
To the extent that the Company seeks financing through the issuance of equity 
securities, any such issuance of equity securities would result in dilution to
the interests of the Company's stockholders. Additionally, to the extent that 
the Company incurs indebtedness to fund increased levels of inventory or to 
finance the acquisition of capital equipment or issues debt securities to fund
the Superstore growth program, the Company will be subject to risks associated
with incurring substantial indebtedness, including the risks that interest 
rates may fluctuate and cash flow may be insufficient to pay principal and
interest on any such indebtedness. The Company has no current arrangements
with respect to, or sources of, additional financing and it is not anticipated
that the existing majority stockholder will provide any portion of the Company's
future financing requirements or additional personal guarantees. There can be no
assurance that additional financing will be available to the Company on 
acceptable terms, or at all.


                               14
<PAGE>

     In December 1997, the Company engaged Josephthal Lyon & Ross, Inc., an 
investment banking and securities brokerage firm, to work closely with the 
Company to develop and implement its strategic plan including evaluating 
appropriate sources of capital and assisting with selected strategic 
acquisitions and other corporate and financial matters. In March 1998, the 
Company further retained Josephthal & Co. Inc. to assist the Company in 
connection with a possible transaction, which may include among other things,
a significant merger/acquisition of the Company. The Company is currently 
involved in discussions with several interested parties with respect to a 
significant transaction.


Seasonality

     The Company's business is seasonal to some extent primarily as a result
of the impact of weather conditions on store sales. Store sales and profits 
have historically been higher in the second and third quarters (April through
September) of each year than in the first and fourth quarters, for which the 
Company generally achieves only nominal profits or incurs net losses. Weather
extremes tend to enhance sales by causing a higher incidence of parts failure
and increasing sales of seasonal products. However, extremely severe winter 
weather or rainy conditions tend to reduce sales by causing deferral of 
elective maintenance.


Impact of Inflation

     Inflation has not had a material effect on the Company's operations.


                               15
<PAGE>


                        AID AUTO STORES, INC.



Part II   -  OTHER INFORMATION



Item 6.        Exhibits and Reports on Form 8-K

                
              (a)  The following document is filed as part of this report:

                     (i)   Second Amendment to Loan and Security Agreement
                           dated July 31, 1998, by and between Aid Auto Stores,
                           Inc. and Ames Automotive Warehouse, Inc. and
                           Foothill Capital Corporation.




              (b)  Reports on Form 8-K


                                   NONE







                               16

<PAGE>


SIGNATURES


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



                                      AID AUTO STORES, INC.          
                                   ---------------------------------
                                        (Registrant)



August 19, 1998               By: /s/Philip L. Stephen
                                  ---------------------------------------
                                   Philip L. Stephen
                                   Chairman, Chief Executive Officer, 
                                   And President (Principal Executive
                                   Officer)


August 19, 1998               By: /s/ Frank Mangano
                                  --------------------------------------
                                   Frank Mangano
                                   Chief Financial Officer,
                                   (Principal Financial and Accounting 
                                    Officer)


                              17
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