<PAGE>

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

                                   FORM 10-KSB

/X/      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934
         For the fiscal year ended December 31, 1997



/ /      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: 0-9812

                        GREASE MONKEY HOLDING CORPORATION
                        ---------------------------------
                         (Name of small business issuer
                                 in its charter)

               UTAH                                    87-0321320
------------------------------------      -------------------------------------
(State or other jurisdiction              (I.R.S. Employer
 of incorporation or organization)         Identification No.)

             216 16th Street, Suite 1100
                   DENVER, COLORADO                       80202
                   ----------------                       -----
     (Address of principal executive offices)           (Zip Code)

                    Issuer's telephone number: (303) 534-1660

        Securities registered pursuant to Section 12(b) of the Act: None

                        Securities registered pursuant to
                           Section 12(g) of the Act:

                          $0.03 PAR VALUE COMMON STOCK
                        ---------------------------------
                                (Title of class)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 / /

     Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.                                      [   ]

     The issuer's revenue for its most recent fiscal year was:   $21,169,314

     The aggregate market value of the issuer's voting stock held as of February
27, 1998, by nonaffiliates of the issuer was $3,914,430.

     As of February 27, 1998, the issuer had 4,646,805 shares of its $0.03 par
value common stock outstanding.

     Transitional Small Business Disclosure Format.     Yes / /      No /X/
<PAGE>


                        GREASE MONKEY HOLDING CORPORATION

                          Annual Report on Form 10-KSB

                                December 31, 1997

                                Table of Contents

                                     PART I                                PAGE

Item  1  -  Description of Business . . . . . . . . . . . . . . . . . . . . . 1

Item  2  -  Description of Property . . . . . . . . . . . . . . . . . . . . . 5

Item  3  -  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 6

Item  4  -  Submission of Matters to a Vote of Security Holders . . . . . . . 6


                                    PART II

Item  5  -  Market for Common Equity and Related Stockholder Matters  . . . . 7

Item  6  -  Management's Discussion and Analysis or Plan of Operation . . . . 8

Item  7  -  Financial Statements . . . . . . . . . . . . . . . . . . . . . . 20

Item  8  -  Changes In and Disagreements With Accountants on Accounting
               and Financial Disclosure  . . . . . . . . . . . . . . . . . . 20


                                    PART III

Item  9  -  Directors, Executive Officers, Promoters and Control Persons,
               Compliance with Section 16(a) of the Exchange Act . . . . . . 21

Item 10  -  Executive Compensation . . . . . . . . . . . . . . . . . . . . . 26

Item 11  -  Security Ownership of Certain Beneficial Owners
               and Management  . . . . . . . . . . . . . . . . . . . . . . . 30

Item 12  -  Certain Relationships and Related Transactions . . . . . . . . . 31

Item 13  -  Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 34

                                      ii
<PAGE>


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

         Grease Monkey Holding Corporation ("GMHC") was incorporated on April 9,
1976. On April 22, 1980, GMHC acquired 100% of the issued and outstanding shares
of Grease Monkey International, Inc. ("GMI"). GMI is the primary operating
entity for GMHC and GMHC derives substantially all of its operating revenue
through GMI. GMI is engaged in the business of owning, operating, leasing,
managing and franchising automotive fast service lubrication and oil change
centers under the trade name of Grease Monkey ("Grease Monkey Centers" or
"Centers") in the United States. In 1987, GMHC established a wholly-owned
subsidiary, GM Properties, Inc. ("GMP"), for the purpose of acquiring
(purchasing or leasing) real estate, which in turn is leased to GMI franchisees.
In addition, GMI began franchising Centers in Mexico in 1993. On June 30, 1997,
Grease Monkey de Mexico SA de CV ("GMM") was formed and is the operating entity
for Mexico. GMM is a wholly-owned subsidiary of GMHC. GMHC, GMI, GMP and GMM are
collectively referred to as the "Company".

         THE CONCEPT. Grease Monkey Centers provide the automobile user with
convenient preventative fluid maintenance services. In about ten minutes,
without an appointment, Grease Monkey service technicians change the oil,
install a new oil filter, lubricate the chassis, adjust tire pressure, wash
windows and vacuum the interior of an automobile. At the same time, all fluid
levels are checked and topped off, if necessary. The price for this basic
service is $22.99 to $30.99 in the United States ($11.65 to $19.50 in Mexico),
depending upon the location of the Center. Grease Monkey Centers also offer
transmission fluid changes, differential fluid changes, radiator flushes, air
conditioning recharges, automotive light bulb replacement, an oil additive
package, and will replace air filters and install new wiper blades.

         Grease Monkey Centers are two or three bay drive-through buildings
built to the Company's specifications. Grease Monkey buildings utilize service
basements from which the underneath portion of the vehicle is serviced at the
same time other technicians service the vehicle from above. The buildings also
include a pleasant customer waiting area.

         COMPANY-OWNED CENTERS. As of January 31, 1998, the Company owned and
operated a total of 31 Grease Monkey Centers. The Grease Monkey Centers owned by
the Company were either purchased from franchisees or opened (21 Centers),
acquired as a result of the Company's exercise of its right of first refusal (3
Centers), or taken over from failed franchisees (7 Centers). The Company
believes the operation of Company-owned Centers is important to its overall
success and expects to continue to purchase and develop Company-owned Centers.
The Company does not expect the acquisition of failed franchisees' Centers to be
significant in the future.

           THE FRANCHISE. The Company licenses franchisees to operate Grease
Monkey Centers pursuant to a franchise agreement with the Company. A franchisee
is required to pay a franchise fee totaling $28,000 for the initial license and
$16,800 for each additional license. If three or more licenses are purchased
concurrently, an Exclusive Territory Development Agreement ("ETD Agreement") may
be executed. When an ETD Agreement is executed, the franchisee pays a
development fee equal to $28,000 for the first Center to be developed and $8,400
for the second and each subsequent Center to be developed. The development
fee is

                                      1
<PAGE>

nonrefundable. The initial franchise fee of $28,000 is charged for the first
franchise and $16,800 for the second and each subsequent franchise acquired
under the ETD Agreement. The portion of the development fee paid for each Center
to be developed is applied toward the initial franchise fee for that franchise.
The Company also offers to select qualified persons the opportunity to acquire a
larger nonexclusive area ("Development Area") than under the ETD Agreement. If a
Development Area is purchased, an Area Development Agreement ("AD Agreement") is
executed. When an AD Agreement is executed, the franchisee pays an area
development fee equal to $5,000 times the estimated number of franchises which
may be established in the Development Area. The initial franchise fee of $28,000
is charged for the first franchise and $16,800 for the second and each
subsequent franchise acquired under the AD Agreement.

                                      2
<PAGE>

         CENTERS. On January 31, 1998, the Company had a total of 214 Grease
Monkey Centers open. The following table provides certain information pertaining
to Grease Monkey Centers as of January 31, 1998:

<TABLE>
<CAPTION>
                                                                                    CENTERS OPEN
                        FRANCHISE                                    --------------------------------------
                        APPLICANTS        FRANCHISES SOLD (1)        FRANCHISED     COMPANY-OWNED     TOTAL
                        ----------        -------------------        --------------------------------------
<S>                     <C>               <C>                        <C>            <C>               <C>
Arizona                      2                     4                      3               1             4
California                   2                    17                     13               2            15
Colorado                     4                    40                     33              19            52
Florida                                            5                      3                             3
Georgia                                            2                      2                             2
Idaho                                              3                      3                             3
Illinois                                           1                      1                             1
Indiana                                           10                     10               1            11
Iowa                                               7                      6                             6
Kansas                                             7                      5                             5
Kentucky                                           1                      1                             1
Maryland                                           6                      5                             5
Massachusetts                                      2                      2                             2
Missouri                     4                     4                      2                             2
Montana                                            1                      1                             1
Nebraska                                           2                      2                             2
New Jersey                                         9                      8                             8
New Mexico                                         1                      1                             1
New York                                           3                      2                             2
North Carolina                                     8                      6                             6
North Dakota                                       1                      1                             1
Ohio                                              12                      8                             8
Pennsylvania                                      10                      9                             9
Rhode Island                                       1                      1                             1
South Carolina                                    12                     12                            12
Tennessee                                          2                      1                             1
Texas                        1                     5                      5                             5
Virginia                                          10                      8                             8
Washington                                         5                      4               8            12
West Virginia                                      2                      2                             2
Wyoming                                            2                      2                             2
Mexico                       8                    36                     21                            21
                           ---                  ----                   ----                          ----
TOTALS:                     21                   231                    183              31           214
                          ----                  ----                   ----            ----          ----
                          ----                  ----                   ----            ----          ----
</TABLE>

(1) Does not include those Centers operated by the Company.

         During 1997, fourteen franchise licenses were sold and fifteen
franchised Grease Monkey Centers were opened. In 1997, six franchise agreements
were terminated for non-performance, three franchise agreements were canceled
concurrently with the Company taking over the operations of the Centers, and
five franchises of open Grease Monkey Centers were terminated, in accordance
with the franchise agreement when the Centers were closed or sold.

                                      3
<PAGE>

         PATENTS, TRADEMARKS AND LICENSES.  The Company owns no patents or
concessions.  As described above, the sale of franchises is materially important
to the operations and growth of the Company.

         The Company is the owner of, and has registered with the United States
Patent and Trademark Office on the Principal Register, the following trademarks
and service marks: "GREASE MONKEY", "GREASE MONKEY, THE 10 MINUTE LUBE PROS"
(including variations thereof), "MONKEY TALK", "SEYMORE MILES" and "MONKEY
SHINE", as well as various designs and logotypes associated with and used in
connection therewith. The trademark and service mark registrations expire
between 2001 and 2009 and may be renewed for successive periods of 10 years. The
Company intends to maintain the above stated registrations in the manner
required by applicable statute, namely, the Trademark Act of 1946, as amended.

         The mark, "GREASE MONKEY, 10 MINUTE LUBE & OIL PROS" and Design, was
registered in the State of Colorado and is effective until November of 2004. The
mark "GREASE MONKEY, THE TEN MINUTE LUBE PROS" was registered in the State of
Colorado and is effective to March 1999.

         The Company has also registered its mark "GREASE MONKEY, THE 10 MINUTE
LUBE PROS" and Design with the Canadian Register of Trademarks, its mark "GREASE
MONKEY" and Design with the Mexico Register of Trademarks and the Trinidad and
Tobago Register of Trademarks, and the monkey design with the United Kingdom
Register of Trademarks. These foreign registrations expire between 1999 and
2007.

         COMPETITION. The Company experiences competition for customers at the
retail level and also experiences competition from other fast lube operators for
franchisees and sites for Centers.

         At the retail level, the Centers experience competition from automobile
dealers, independent mechanic shops, other fast lube operations, department
store auto centers, and full service gas stations. The largest source of
competition, however, may be the do-it-yourself market.

         The Company believes that the Grease Monkey Centers comprise the 4th
largest fast lube chain with 213 Grease Monkey Centers operating at February 28,
1998. The largest chain is Jiffy Lube International, Inc., owned by Pennzoil,
which has 1,541 centers open, followed by Quaker State Minit-Lube, Inc. (also
d/b/a Q Lube), owned by Quaker State Oil Company with 581 centers open. Ashland
Oil Co. (d/b/a Rapid Oil Co. or Valvoline Instant Oil Change) follows with 535
open centers.

         The Company recognizes that the barriers to enter the fast lubrication
business are significant, and in the future the Company may experience
additional direct competition from other companies with greater strength and
financial resources than those of the Company.

         ENVIRONMENTAL REGULATIONS. The Company and its franchisees are subject
to various federal, state, and local provisions regarding the storage and
disposal of waste materials, including the collection and disposal of used
lubricating oils and other automotive fluids and waste oil filters. Each Grease
Monkey Center is equipped with facilities for the collection of waste materials
that comply with all applicable laws and regulations. Waste materials are
disposed of with fully qualified and licensed collection services. Some used oil
and used filters are sold to recyclers. Compliance with current and anticipated
future federal, state and local requirements regarding the

                                      4
<PAGE>

collection and disposal of these materials and storage and transfer of used
oil and used oil filters to recyclers is not expected to materially affect
capital expenditures, earnings, or the competitive position of the Company.

         The Company (with respect to any Center it owns or operates) and its
franchisees are subject to federal, state or local regulations regarding the
design, construction, operation and closure of storage tanks, including
regulations applicable to underground storage tanks ("UST's"). In those locales
where required, the operator of a Center must register the number and location
of UST's. The registration fee is not a significant capital expenditure and the
registration requirement does not place the Company at a competitive
disadvantage. In 1998, Federal regulations will require UST's either be removed
or equipped with leak monitoring devices. Effective in approximately 1988, it
was the Company's recommendation to its franchisees to discontinue installing
UST's. Costs associated with the removal or upgrade of UST's at Company-owned
Centers and at franchised Centers which have UST's where the Company is on the
lease is not expected to exceed $300,000, which includes replacement tank
related costs.

         The regulations issued by the Environmental Protection Agency and the
parallel state regulations require insurance or proof of the financial ability
of the owner or operator of an underground storage tank to cover any damage
caused by leaks from the underground storage tanks. The fee will vary from state
to state. However, all lubrication centers in the same state will be required to
purchase the insurance and, therefore, this requirement should not place the
Company or its franchisees at a competitive disadvantage, but may result in an
increase in the cost of the service.

         Some states have passed regulations that designate used oil and oil
filters and their contents as hazardous waste. Such regulations require the
Center operator to first crush the filter and then dispose of it and the used
oil through use of a regulated hazardous waste carrier. Other states are
considering such regulations. These regulations are imposed on all fast lube
operators and do not place the Company or its franchisees at a competitive
disadvantage, but may result in an increase in the cost of the service.

         EMPLOYEES. At January 31, 1998, the Company had 40 full-time employees
at its corporate offices, 15 full-time employees at its field offices, and 229
full-time employees in its Company-owned Grease Monkey Centers for a total of
284 employees. From time to time the Company hires part-time employees at its
Company-owned Centers.

ITEM 2.  DESCRIPTION OF PROPERTY

         At January 31, 1998, the Company owned the buildings, on leased land,
at nine Grease Monkey Centers. Of the nine properties, one is leased to a
franchisee, and eight are used for Company-owned Centers.

         In addition, the Company owns one parcel of real estate in St. Louis,
Missouri, one parcel of real estate in Littleton, Colorado, and one parcel of
real estate in Warwick, Rhode Island. The property in Missouri is vacant and for
sale, the property in Colorado houses a Company-owned Center, and the property
in Rhode Island is leased to a franchisee.

                                      5
<PAGE>

         The Company's offices and training facility are located at 216 16th
Street, Suite 1100, Denver, Colorado, 80202. The Company leases a total of
20,297 rentable square feet, which includes the offices and training facility,
pursuant to a lease from an unaffiliated entity. The lease expires on June 30,
1998. Rent is approximately $18,000 per month.

         The Company has guaranteed leases or leased and subleased real estate
for franchised Grease Monkey Centers. The Company is directly liable on the
leases at 30 locations if the franchisees or third parties do not make the lease
payments. (See Note F, Consolidated Financial Statements.)

ITEM 3.  LEGAL PROCEEDINGS

         The Company is a party to legal proceedings including claims by
franchisees against the Company that arise in the ordinary course of business.
In the opinion of management, the outcome of these matters will not have a
material effect on the financial condition, results of operations, or cash flows
of the Company.


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

         During the Company's fourth fiscal quarter of the year ended December
31, 1997, no matter was submitted to a vote of the Company's security holders,
either by proxy solicitation or otherwise.

                                      6
<PAGE>

                                   PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

         (a)      MARKET INFORMATION.

                  The Company's common stock trades on The Nasdaq SmallCap
Market tier of The Nasdaq Stock Market under the symbol GMHC. The following
table reports high, low and last sales prices of the common stock as reported by
Nasdaq for the periods indicated:

<TABLE>
<CAPTION>
         PERIOD               HIGH TRADE          LOW TRADE         LAST TRADE
---------------------         ----------          ---------         ----------
<S>                           <C>                 <C>               <C>
1996:
     First Quarter               $1.25              $1.00              $1.06
     Second Quarter              $1.31              $1.00              $1.13
     Third Quarter               $1.19              $1.00              $1.00
     Fourth Quarter              $0.94              $0.63              $0.84


1997:
     First Quarter               $2.13              $1.63              $1.75
     Second Quarter              $2.06              $1.75              $1.75
     Third Quarter               $2.06              $1.63              $1.63
     Fourth Quarter              $1.44              $1.19              $1.19
</TABLE>

         Prices represent quotations between dealers and do not include retail
mark-ups, mark-downs, or commissions.

         (b)      HOLDERS.

                  As of February 27, 1998, the Company had 2,357 shareholders of
record.


         (c)      DIVIDENDS.

                  To date, the Company has not paid any cash dividends on its
common stock. Holders of the Company's common stock are entitled to receive
dividends when and as declared by the Board of Directors out of funds legally
available. All accrued and unpaid dividends on the Company's outstanding shares
of Series C Preferred stock must be paid before dividends are paid on the
Company's common stock.

                                      7
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
         OPERATION

RESULTS OF OPERATIONS

         The Company reported a net loss of $1,158,586 in 1997 compared to a net
loss of $577,123 in 1996 and net income of $238,190 in 1995.

         The net loss reported in 1997 is in part due to costs associated with:
the sale, disposition and closure of Centers of approximately $368,000; the
accrual of the Company's obligation under a Consultant Agreement with the
Company's former Chairman of the Board, President and Chief Executive Officer of
approximately $379,000; increases of approximately $435,000 in the general and
administrative areas of salaries, wages and personnel expenses, professional
fees, and Company-owned Center division overhead; and losses incurred and or
accrued for settlements related to employment, real estate and environmental
issues of approximately $176,000. These losses were offset by royalty revenue
and other revenue recognized due to a settlement agreement entered into with a
former franchisee of approximately $375,000. In addition, other income of
approximately $118,000 was recognized based on settlements with two franchisees.
1997 ended with a net increase of three franchised Centers while the number of
Company-owned Centers remained at 31 for both year ends. During 1997, the
Company opened 15 new franchised Centers and terminated 11 franchised Centers.
This compares to the 11 new franchised Center openings in 1996 and 6 franchised
Center terminations in 1996. In 1997, the Company also opened one new
Company-owned Center, purchased three Centers from franchisees, sold two Centers
and closed two Centers. Franchise sales were down in 1997 with 14 new franchise
licenses sold compared to 27 sold in 1996.

         The net loss reported in 1996 is in part due to costs of $550,608
related to litigation and terminated projects. Similar costs in 1995 were
$106,176. 1996 ended with a net increase of three franchised Centers and two
Company-owned Centers over 1995. During 1996, the Company opened 11 new
franchised Centers and terminated six franchised Centers. This compares to the
18 new franchised Center openings in 1995 and 13 franchised Center terminations
in 1995. Franchise sales improved significantly in 1996, with 27 new franchise
licenses sold compared to seven new franchise licenses sold in 1995. These
sales, net of related costs, will be recognized as revenue when the Centers open
for business.

         The Company ended 1995 with 181 franchised Centers and 29 Company-owned
Centers. This compares to 176 franchised Centers and 29 Company-owned Centers at
the end of 1994. Center openings for 1995 were comparable to 1994 with eleven
new U.S. Centers and seven new Mexico Centers. During 1995, thirteen Centers
were terminated. Those Centers which remained in the system and were open at the
end of 1994, realized a 3% growth in ticket average and a 3% growth in sales,
which contributed to the growth in royalty income. In addition to growth in
existing Centers, the Company positioned itself to increase the number of total
Centers open with the addition of a Vice President of Franchise Development and
a corresponding support staff.

                                      8
<PAGE>

         Operating revenue totaled $21,169,314 in 1997 compared to $20,142,793
in 1996 and $18,668,143 in 1995. The changes in revenue are due primarily to
increases or decreases in the number of Company-owned Centers operated, the
number of Center openings, and increases or decreases in royalty fees. In
addition, an increase in other revenue was recognized in 1997 due primarily to
settlements with franchisees as discussed previously.

         Royalty fees are a percentage of sales (ranging from 3% to 5%) paid
monthly by all franchised Grease Monkey Centers. Royalty fee revenue
increased by 10% in 1997 to $3,454,238 and decreased 2% in 1996 to
$3,143,933. The increase in royalty fees from 1996 to 1997 is due to the
recording of a settlement agreement with a former franchisee. Under the
settlement agreement, the Company recognized approximately $207,000 of
royalty fees not previously recognized and approximately $168,000 of other
income related to the reimbursement of costs previously expensed. In
addition, under the settlement agreement, the five Centers owned by the
franchisee re-entered the system for a brief period of time generating
approximately $31,000 in royalty revenue for the period. On a same Center
basis, royalty income remained relatively constant increasing 4% or
approximately $130,000 over the prior year. In addition new Centers generated
approximately $71,000 more in royalties over the prior year. These increases
were offset by the loss of royalties related to terminated centers and to
Centers purchased from franchisees of approximately $112,000. The decrease in
royalty fees from 1995 to 1996 can be attributed to a net decrease of mature
Centers over the two year period. While these mature Centers were replaced by
new Centers, the new Centers are in the early stages of development and do
not generate the level of sales of a mature Center. On a same Center basis,
royalty income remained relatively constant which reflects a 3% decrease in
car counts, but an increase in the average sale per vehicle. Royalty fees in
1996 were also adversely affected by the acquisition by the Company of two
high performing franchised Centers. The Company has a "non-accrual" policy
wherein royalties are not accrued on certain financially troubled
franchisees. In 1997 estimated royalties totaling $146,875 were not
recognized as revenue pursuant to this policy, as compared to $111,525 in
1996 and $170,500 in 1995. Any such royalty subsequently collected is
recorded as revenue in the period the funds are received.

         The Company has a royalty rebate program for franchisees under which
eligible franchisees can receive a rebate of royalties paid. To be eligible,
franchisees must be in compliance with their franchise agreement, must be
current on amounts owed the Company and pay all amounts coming due the Company
on time during the period of the royalty rebate program. Management implemented
this program to reward those franchisees who comply with their franchise
agreement, have paid the Company on a regular and consistent basis, to
accelerate cash flow, and to provide an incentive for franchisees to continue to
pay on a timely basis. During 1997, the Company paid a total of $233,486 to
franchisees under this program, as compared to $259,133 in 1996 and $248,431 in
1995. The rebate is recorded as a reduction of royalty revenue. The royalty
rebate program is not a requirement of the franchise agreement. Continuation of
the program is reviewed by management on an annual basis. The royalty rebate
program has been extended through December 31, 1998.

                                      9
<PAGE>

         The following table presents the activity of operating Centers:

<TABLE>
<CAPTION>
                                                 1997             1996             1995
                                            -----------       ----------       ----------
     <S>                                    <C>               <C>              <C>
     Open at beginning of year   .  .  .  .        215              210              205
     Opened during year .  .  .  .  .  .  .         16               11               18
     Terminated   .  .  .  .  .  .  .  .  .        (11)              (6)             (13)
     Closed .  .  .  .  .  .  .  .  .  .  .         (2)            -                -
                                            -----------       ----------       ----------
     Open at end of year   .  .  .  .  .  .        218              215              210
                                            -----------       ----------       ----------
                                            -----------       ----------       ----------
</TABLE>

         The following table presents the number of Centers open, systemwide
retail sales, royalty fees, total vehicles serviced and average sale per vehicle
for the United States, Mexico and systemwide:

<TABLE>
<CAPTION>
                                                    1997                         1996                         1995
                                            -------------------          -------------------          -------------------
<S>                                         <C>                          <C>                          <C>
Centers Open:
  US  .  .  .  .  .  .  .  .  .  .  .  .  .                 197                          195                          194
  Mexico .  .  .  .  .  .  .  .  .  .  .  .                  21                           20                           16
                                            -------------------          -------------------          -------------------
  Systemwide   .  .  .  .  .  .  .  .  .  .                 218                          215                          210
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------
Sales (000's):
  US  .  .  .  .  .  .  .  .  .  .  .  .  . $            89,803                       88,910                       89,254
  Mexico .  .  .  .  .  .  .  .  .  .  .  .               3,457                        2,159                        1,323
                                            -------------------          -------------------          -------------------
  Systemwide   .  .  .  .  .  .  .  .  .  . $            93,260                       91,069                       90,577
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------
Percent growth in sales:
  US  .  .  .  .  .  .  .  .  .  .  .  .  .                  1%                    -                                   1%
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------
  Mexico .  .  .  .  .  .  .  .  .  .  .  .                 60%                          63%                          85%
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------
  Systemwide   .  .  .  .  .  .  .  .  .  .                  2%                           1%                           1%
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------

Royalty fees (000's):
  US  .  .  .  .  .  .  .  .  .  .  .  .  . $             3,325                        3,078                        3,153
  Mexico .  .  .  .  .  .  .  .  .  .  .  .                 129                           66                           58
                                            -------------------          -------------------          -------------------
  Systemwide   .  .  .  .  .  .  .  .  .  . $             3,454                        3,144                        3,211
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------
Percent growth in royalties:
  US  .  .  .  .  .  .  .  .  .  .  .  .  .                  8%                         (2%)                           4%
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------
  Mexico .  .  .  .  .  .  .  .  .  .  .  .                 95%                          14%                          80%
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------
  Systemwide   .  .  .  .  .  .  .  .  .  .                 10%                         (2%)                           5%
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------

Vehicles serviced (000's):
  US  .  .  .  .  .  .  .  .  .  .  .  .  .               2,730                        2,731                        2,850
  Mexico .  .  .  .  .  .  .  .  .  .  .  .                 154                          103                           63
                                            -------------------          -------------------          -------------------
  Systemwide   .  .  .  .  .  .  .  .  .  .               2,884                        2,834                        2,913
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------
Average sale per vehicle:
  US  .  .  .  .  .  .  .  .  .  .  .  .  . $             32.89                        32.55                        31.32
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------
  Mexico .  .  .  .  .  .  .  .  .  .  .  . $             22.41                        21.04                        21.05
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------
  Systemwide   .  .  .  .  .  .  .  .  .  . $             32.33                        32.14                        31.09
                                            -------------------          -------------------          -------------------
                                            -------------------          -------------------          -------------------
</TABLE>

                                      10
<PAGE>

         Franchise sales revenue represents initial payments received by the
Company from the buyers of its franchise. The fee is $28,000 (less for
franchises purchased prior to September 1992 and for additional franchises
purchased by existing franchisees) and is not refundable. In addition, the
Company collects development fees under ETD and AD Agreements as discussed
previously. Initial franchise fees and certain development fees are deferred and
recognized as revenue when the related Center opens for business. The following
table presents the number of franchises issued including related fees and costs,
and the nature of franchise sales revenue recognized:

<TABLE>
<CAPTION>
                                                    1997                         1996                         1995
                                            -------------------          -------------------          -------------------
<S>                                         <C>                          <C>                          <C>
Franchise licenses issued:
  US (1) .  .  .  .  .  .  .  .  .  .  .  .                 10                           20                             4
  Mexico .  .  .  .  .  .  .  .  .  .  .  .                  4                            7                             1
                                            ------------------           ------------------           -------------------
    Total   .  .  .  .  .  .  .  .  .  .  .                 14                           27                             5
                                            ------------------           ------------------           -------------------
                                            ------------------           ------------------           -------------------
Franchise fees paid:
  US  .  .  .  .  .  .  .  .  .  .  .  .  . $          250,500                      386,600                       116,800
  Mexico .  .  .  .  .  .  .  .  .  .  .  .            124,000                      154,800                        12,200
                                            ------------------           ------------------           -------------------
    Total   .  .  .  .  .  .  .  .  .  .  . $          374,500                      514,400                       129,000
                                            ------------------           ------------------           -------------------
                                            ------------------           ------------------           -------------------
Franchise costs deferred:
  US  .  .  .  .  .  .  .  .  .  .  .  .  . $           61,976                       99,964                        23,996
  Mexico .  .  .  .  .  .  .  .  .  .  .  .              7,600                       11,177                        54,134
                                            ------------------           ------------------           -------------------
    Total   .  .  .  .  .  .  .  .  .  .  . $           69,576                      111,141                        78,130
                                            ------------------           ------------------           -------------------
                                            ------------------           ------------------           -------------------
Franchises opened:
  US (1) .  .  .  .  .  .  .  .  .  .  .  .                 14                            6                            11
  Mexico .  .  .  .  .  .  .  .  .  .  .  .                  1                            4                             7
                                            ------------------           ------------------           -------------------
    Total   .  .  .  .  .  .  .  .  .  .  .                 15                           10                            18
                                            ------------------           ------------------           -------------------
                                            ------------------           ------------------           -------------------
Franchise fees recognized on openings:
  US (2) .  .  .  .  .  .  .  .  .  .  .  . $          229,401                      104,900                       234,110
  Mexico .  .  .  .  .  .  .  .  .  .  .  .             28,000                       78,400                       196,000
                                            ------------------           ------------------           -------------------
    Total   .  .  .  .  .  .  .  .  .  .  . $          257,401                      183,300                       430,110
                                            ------------------           ------------------           -------------------
                                            ------------------           ------------------           -------------------
Franchise costs recognized on openings:
  US (3) .  .  .  .  .  .  .  .  .  .  .  . $           78,222                       11,683                        27,677
  Mexico .  .  .  .  .  .  .  .  .  .  .  .              7,600                       21,160                        72,094
                                            ------------------           ------------------           -------------------
    Total   .  .  .  .  .  .  .  .  .  .  . $           85,822                       32,843                        99,771
                                            ------------------           ------------------           -------------------
                                            ------------------           ------------------           -------------------
Undeveloped franchise
licenses/applications cancelled  .  .  .  .          -                                    5                             6
                                            ------------------           ------------------           -------------------
                                            ------------------           ------------------           -------------------
Income recognized on
cancellations  .  .  .  .  .  .  .  .  .  . $        -                               27,563                        18,075
                                            ------------------           ------------------           -------------------
                                            ------------------           ------------------           -------------------
</TABLE>

(1) Excludes franchise licenses related to refranchised Company-owned Centers
during the year; three in 1997, five in 1996 and two in 1995.

                                      11
<PAGE>

(2) Excludes franchise fees related to refranchised Company-owned Centers;
$58,800 in 1997, $128,800 in 1996 and $56,000 in 1995.

(3) Excludes franchise costs related to refranchised Company-owned Centers; none
in 1997, $5,000 in 1996 and $7,500 in 1995.


         At December 31, 1997, 49 franchises had been sold which were not open
and commitment fees for 24 franchises had been paid, representing $985,470 in
deferred franchise sales revenue, compared to 50 unopened franchises and
commitment fees for 21 franchises representing $907,371 in deferred franchise
sales revenue at the end of 1996.

         The Company terminated five undeveloped licenses/applications in 1996
and six undeveloped licenses/applications in 1995 for non-performance,
representing income of $27,563 and $18,075, respectively. There were no
undeveloped license terminations during 1997.

         In 1997, the Company realized marketing allowances and gross margins on
product and equipment sales of $460,359, as compared to $436,033 in 1996 and
$463,184 in 1995. Product and equipment revenue represents the sale of fluid
dispensing equipment and other supplies to franchisees, and marketing allowances
relate to the sale of oil filters, air filters, oil additives and certain other
products. The number of Center openings in a period impacts product and
equipment revenue, thus revenue for 1997 was comparable to that of 1996 and 1996
was below 1995.

         Company-owned Centers at December 31, 1997, include 19 Centers located
in Denver, Colorado, 8 Centers in Seattle, Washington, 2 Centers in California
and 1 Center each in Arizona and New Jersey.

                                      12
<PAGE>

         The following table shows the Company's activity with respect to
Company-owned Centers over the past three years:

<TABLE>
<CAPTION>
                                                     1997                     1996                    1995
                                                     ----                     ----                    ----
          <S>                                   <C>                      <C>                     <C>
          Company-owned Centers at
             the beginning of the year  .  .  .              31                       29                      29
          New Centers built or purchased   .  .               4                        2                       1
          Centers acquired from
             failed franchisees   .  .  .  .  .               -                        5                       1
          Centers refranchised .  .  .  .  .  .              (2)                      (5)                     (2)
          Centers closed .  .  .  .  .  .  .  .              (2)                 -                       -
                                                ----------------         ----------------        ----------------
          Company-owned Centers at
             the end of the year  .  .  .  .  .              31                       31                      29
                                                ----------------         ----------------        ----------------
                                                ----------------         ----------------        ----------------
          Average number of Centers operated
          during the year based on number of
          months operated   .  .  .  .  .  .  .              31                       32                      29
                                                ----------------         ----------------        ----------------
                                                ----------------         ----------------        ----------------
</TABLE>

         Company-owned Centers have become a significant portion of the
Company's business since 1990 and are expected to increase in the future.
Historically, Company-owned Centers were Centers relinquished by failed
franchisees, acquired from franchisees through the Company's exercise of its
right of first refusal, or purchased by the Company. In the future, the Company
expects to increase the number of Company-owned Centers by leasing new
built-to-suit Centers and by acquiring existing quick lubes from Grease Monkey
franchisees and independent operators. Centers which, in the past, have been
acquired from failed franchisees were acquired due to the failure of the
franchisee to pay amounts due the Company, principally rent and royalties. The
acquisition of Centers from failed franchisees is expected to be limited in the
future due to an overall improvement in performance of the franchisees' Centers
and improved compliance by the franchisees with the terms of the Company's
franchise agreements.

                                      13
<PAGE>

         The following table sets forth the results of operations from Centers
which were built or purchased by the Company as compared to the results of
operations from Centers acquired from failed franchisees:

<TABLE>
<CAPTION>
                                                                         YEAR ENDED DECEMBER 31,
                                              ------------------------------------------------------------------------------
                                                      1997                         1996                         1995
                                              --------------------         --------------------         --------------------
<S>                                           <C>                          <C>                          <C>
Centers built or purchased:
  Revenue  .  .  .  .  .  .  .  .  .  .  .    $         12,403,904                   11,262,863                   10,258,432
  Expenses .  .  .  .  .  .  .  .  .  .  .              10,179,465                    9,010,709                    8,545,028
                                              --------------------         --------------------        ---------------------
  Income (loss) before depreciation,
    amortization and division
    overhead  .  .  .  .  .  .  .  .  .  .               2,224,439                    2,252,154                    1,713,404
                                              --------------------         --------------------        ---------------------

Centers acquired from failed franchisees:
  Revenue  .  .  .  .  .  .  .  .  .  .  .               2,338,895                    3,153,338                    2,204,200
  Expenses .  .  .  .  .  .  .  .  .  .  .               2,510,630                    3,394,063                    2,272,279
                                              --------------------         --------------------        ---------------------
  Income (loss) before depreciation,
    amortization and division
       overhead  .  .  .  .  .  .  .  .  .                (171,735)                    (240,725)                     (68,079)
                                              --------------------         --------------------        ---------------------
Combined income (loss) before
  depreciation, amortization and
  division overhead .  .  .  .  .  .  .  .               2,052,704                    2,011,429                    1,645,325

Depreciation  .  .  .  .  .  .  .  .  .  .                (564,846)                    (565,490)                    (527,050)
Amortization  .  .  .  .  .  .  .  .  .  .                (259,812)                    (225,518)                    (144,465)
Company-owned Centers division
  overhead (1)   .  .  .  .  .  .  .  .  .                (819,154)                    (678,476)                    (564,719)

                                              --------------------         --------------------        ---------------------
Operating income (loss) from
  Company-owned Centers (2)  .  .  .  .  .    $            408,892                      541,945                      409,091
                                              --------------------         --------------------        ---------------------
                                              --------------------         --------------------        ---------------------
Number of Centers by category:
  Built or purchased   .  .  .  .  .  .  .                      25                           21                           20
  Failed franchises acquired .  .  .  .  .                       6                           10                            9
                                              --------------------         --------------------        ---------------------
     Total .  .  .  .  .  .  .  .  .  .  .                      31                           31                           29
                                              --------------------         --------------------        ---------------------
                                              --------------------         --------------------        ---------------------
</TABLE>

(1)      Consists of management, accounting and administrative personnel and
         their related expenses which are directly identifiable to the
         Company-owned Centers division and is included in general and
         administrative expenses in the Company's financial statements.

(2)      Included in the above operating results are results from refranchised
         centers through the date of sale.

                                      14
<PAGE>

         Leasing revenue represents revenue primarily derived from properties
subleased by the Company to franchisees. Leasing revenue, which includes rent
and interest income related to capital and operating leases, was $1,547,876 in
1997; $1,434,086 in 1996; and $1,391,886 in 1995.

         Leasing expense represents leasing costs incurred in connection with
properties leased by the Company and then subleased to franchisees. Leasing
expense, which includes rent and interest expense related to capital and
operating leases, was $1,549,315 in 1997; $1,376,677 in 1996; and $1,401,978 in
1995.

         The following table summarizes General and Administrative Expenses:
<TABLE>
<CAPTION>
                                                      1997                       1996                         1995
                                              --------------------       -------------------         --------------------
<S>                                           <C>                        <C>                          <C>
Salaries, wages and personnel
   expenses  .  .  .  .  .  .  .  .  .  .  .  $          2,213,721                 2,007,997                    1,992,406
Travel and entertainment
   expenses  .  .  .  .  .  .  .  .  .  .  .               374,664                   375,460                      357,140
Office expenses .  .  .  .  .  .  .  .  .  .               631,062                   648,552                      611,998
Franchise development and
   training expenses  .  .  .  .  .  .  .  .               121,467                    48,555                       55,139
Franchise sales and promotional
   expenses  .  .  .  .  .  .  .  .  .  .  .                98,875                    90,276                       30,610
Terminated projects   .  .  .  .  .  .  .  .                12,644                   206,469                       26,250
Litigation, including legal fees
   and related costs  .  .  .  .  .  .  .  .               137,612                   344,139                      106,176
Professional fees - legal, tax and
   accounting   .  .  .  .  .  .  .  .  .  .               233,909                   145,733                      166,306
Company-owned Centers division
   overhead  .  .  .  .  .  .  .  .  .  .  .               819,146                   678,476                      564,719
Loss on sale of assets/asset
   impairment   .  .  .  .  .  .  .  .  .  .                65,558                     1,110                        9,886
Consultant Agreement/severance
   expenses  .  .  .  .  .  .  .  .  .  .  .               459,420                      -                            -
Other  .  .  .  .  .  .  .  .  .  .  .  .  .               214,395                   193,614                      189,536
                                              --------------------          ----------------          -------------------
  Total general and
   administrative expenses  .  .  .  .  .  .  $          5,382,473                 4,740,381                    4,110,166
                                              --------------------          ----------------          -------------------
                                              --------------------          ----------------          -------------------
</TABLE>

         General and Administrative expenses increased 14% in 1997 over 1996.
This increase is a result of several factors. One such factor was the accrual of
the Company's obligation under a Consultant Agreement with the Company's former
Chairman of the Board, President

                                      15
<PAGE>

and Chief Executive Officer. The term of the agreement is from March 4, 1997
through March 3, 1999. The agreement requires the former executive to perform
such duties and services as may be assigned to him from time to time at the
direction or request of the Company's President and Chief Executive Officer.
Under the agreement, the former executive will be paid a monthly fee for the
term of the agreement. The Company is obligated to make the payments
regardless of whether services are requested or performed. General and
administrative expenses include approximately $379,000 related to this
agreement. Other factors include increases in Company-owned Centers division
overhead, professional fees related to legal issues, salaries, wages and
personnel expenses and franchise development and training expenses. These
increases were offset by decreases in costs associated with litigation,
including legal fees and related costs, terminated projects, unsuccessful
financing and acquisition costs.

         The 15% increase in general and administrative expenses from 1995 to
1996 is due primarily to litigation, including legal fees and costs related to
enforcement of certain franchise agreements, terminated projects, including
unsuccessful financing and acquisition costs, and Company-owned Centers division
overhead.

         The provision for credit losses increased in 1997 to $253,368 from
$206,221 in 1996 and from $151,800 in 1995. The increase in 1997 is due
primarily to a more aggressive policy for addressing non-performing accounts
which resulted in additional provisions on eight non-performing franchisee
accounts. Subsequent to year end, two of the accounts have resulted in GMI
taking over operations of the Centers, four Centers have closed, one Center is
operating under a repayment agreement and the remaining Center is currently
negotiating a repayment agreement. The increase in 1996 is due to additional
provisions for two non-performing franchisee accounts, two franchisees who filed
for bankruptcy and a note receivable.

         Depreciation expense totaled $688,041 in 1997 compared to $694,241 in
1996 and $638,352 in 1995. The depreciation expense remained relatively constant
between 1996 and 1997, but increased from 1995 to 1996. The increase in 1996 is
due to an increase in the average number of Company-owned Centers operated (32
in 1996 and 29 in 1995) and capital expenditures. Amortization expense totaled
$284,689 in 1997 compared to $245,454 in 1996 and $177,553 in 1995. The increase
in amortization expense is due to the purchase of two Company-owned Centers in
1996 and in 1997.

         Gain (loss) on sale/disposition/closure of Centers represents the net
results of the refranchising/disposal/closure of Company-owned Centers. When the
Company refranchises a Center, a franchise license fee is included in the sales
price and included in the resulting gain or loss on sale. The loss of $368,169
in 1997 represents the refranchising of two Company-owned Centers, the sale of
one Center, the closure of three Centers, and marketing allowances paid based on
subsidies granted certain franchisees on the refranchising of Company-owned
Centers in 1996. In regards to the closure of three Centers, the Company decided
to close two under-performing Company-owned Centers and one franchise Center
(which was leased from the Company), resulting in $280,445 of the total
$368,169. The loss is a result of costs associated with the closing of the
Centers, as well as an impairment assessment at each location. The loss of
$83,780 in 1996 represents the refranchising of five Company-owned Centers. The
gain of $31,705 in 1995 represents the refranchising of two Company-owned
Centers and the refranchising of one closed Center.

                                      16
<PAGE>

         Interest expense includes interest on debt financing and interest
recorded on capital leases of Company-owned Centers. The increase in interest
expense from $659,996 in 1996 to $774,671 in 1997 was caused primarily by
additional borrowings to acquire two Company-owned Centers. In addition, the
Company entered into two capital leases (thus incurring interest expense) at two
Company-owned Centers. The Company also made a change in vendor financing which
resulted in financing costs being transferred out of cost of goods sold and into
financing costs. The increase in interest expense from $562,105 in 1995 to
$659,996 in 1996 is due primarily to an increase in the number of Company-owned
Centers that are leased due to acquisitions during the year and an increase in
debt to finance the acquisition of two Centers.

                                      17
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

CAPITAL RESOURCES

         In September 1997, the Company entered into a $5,000,000 Loan
Agreement with a major bank. In connection with the Company entering into a
Master Supply Contract with a motor oil supplier, the supplier agreed to
guarantee the line. Draws under the Loan Agreement were used for the purpose
of paying off certain debt, including the Company's former Loan Agreement and
Fast Lube Supply Agreement, and will be used for acquiring, constructing
and/or developing Company Centers. Any draws are evidenced by notes which
amortize over ten years with a five year ballon payment and bear interest at
a rate provided under the Loan Agreement plus guarantee fees. For an
increased guarantee fee, the Company can extend the payment terms an
additional five years. An initial draw of $2,620,000 was made on September
29, 1997, with interest at 9.26% plus guarantee fees which approximated
$20,000 in 1997.

         In May 1996, the Company entered into a Business Loan Agreement with
a major bank for a $2,000,000 three year line of credit. Funds drawn under
the line are restricted to the development of new Centers. The Company has
the right to select an optional interest rate as described in the agreement,
however, in no case will the interest rate exceed the bank's reference rate.
In exchange for a supply agreement on any Centers built utilizing the line of
credit, a motor oil supplier agreed to guarantee the line. As of December 31,
1997, $190,000 is outstanding under this line of credit.

         During April 1995, the Company entered into two agreements with a
motor oil supplier - a Loan Agreement and a Fast Lube Supply Agreement. Under
the Loan Agreement, as amended, a $2,481,000 line of credit was established.
All loans drawn under this line accrued interest at 9% per annum and were
repaid in quarterly installments over a ten year period from date of
disbursement. The line was secured by the assignment of real property, leases
and lubrication equipment of certain Company-owned Centers. The line was paid
in full on September 30, 1997.

         The growth of the Grease Monkey system is dependent on the ability
of the Company and its franchisees to obtain real estate development capital.
Historically, Grease Monkey Centers have been built utilizing build-to-suit
services, whereby the land is purchased and the building is constructed to
the Company's specifications, then leased to the Company or to a franchisee,
by a third party. Recently, franchisees have moved toward purchasing and
developing the real estate for their own account, thereby creating greater
value in their business.

LIQUIDITY

         Cash provided by operations during 1997 was $931,907 as compared to
$775,108 provided by operations in 1996. The most significant factors
contributing to this variance were the settlement agreement entered into with
a former franchisee and the non-cash accrual for the Consultant Agreement (as
described previously) and the non-cash portion of the loss on
sale/disposition/closure of Centers.

                                       18
<PAGE>

         Cash used for investing activities was $714,473 in 1997 and
$1,251,993 in 1996. This consisted primarily of cash used for the acquisition
of Centers of $688,191 in 1997 and $394,389 in 1996 and capital expenditures
of $297,570 in 1997 and $724,861 in 1996. Also, in 1996, a parcel of land and
a building in Warwick, Rhode Island were purchased. The building is recorded
as a direct financing lease. In 1996, $415,000 was advanced to developers
under the terms of notes receivable from the developers. The notes are due
when the Centers are completed and permanent financing has been obtained. In
1997, $225,000 of these advances were paid back. Cash provided by investing
activities included receipts on direct financing leases of $189,926 and
$177,656 in 1997 and 1996, respectively. Additional cash was received in 1997
and 1996 with the refranchising of three and five Company-owned Centers,
respectively. Additional cash was used for the development of an updated
operations manual and updated training materials and the development of a
strategic planning and marketing database model. The cash used appears as a
variance in other assets.

         Cash used in financing activities was $359,965 in 1997 and cash
provided by financing activities was $416,463 in 1996. Cash provided by
financing activities in 1997 consisted primarily of proceeds from long-term
debt of $3,045,000, (of which approximately $2,048,000 was used to repay
existing debt) and the sale of common stock of $282,563. Cash provided by
financing activities in 1996 includes proceeds from long-term debt of
$1,257,000. Cash used to reduce long-term debt was $3,316,796 in 1997 and
$493,249 in 1996 and cash used to reduce capital lease obligations was
$409,115 in 1997 and $348,365 in 1996.

         The Company is aware of the issues associated with the programming
code in existing computer systems as the millennium (year 2000) approaches.
The "year 2000" problem is pervasive and complex as virtually every computer
operation will be affected in some way by the rollover of the two digit year
value to 00. The issue is whether computer systems will properly recognize
date sensitive information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data or cause a
system to fail. The Company's current system is not Year 2000 compliant. The
Company is currently addressing this issue, primarily through the development
of a new system.

         The Company does not have any material commitments for capital
expenditures at December 31, 1997, other than as noted in the environmental
section for the required replacement or upgrade of underground storage tanks.
The Company is currently seeking additional financing through equity and or
debt to provide working capital for current and future operating needs as
well as to fund development projects. The Company believes, but cannot
guarantee, that such financing will be obtained. If new financing is not
secured, the Company's ability to grow would be substantially limited.

NEW ACCOUNTING STANDARDS

         In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 128, EARNINGS PER
SHARE (Statement 128). Statement 128 supersedes APB Opinion No. 15, EARNINGS
PER SHARE (APB 15) and specifies the computation, presentation, and
disclosure requirements for earnings per share (EPS) for entities with
publicly

                                       19
<PAGE>

held common stock or potential common stock. Statement 128 was issued to
simplify the computation of EPS and to make the U.S. standard more compatible
with the EPS standards of other countries and that of the International
Accounting Standards Committee. It replaces the presentation of primary EPS
with a presentation of basic EPS and fully diluted EPS with diluted EPS. It
also requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.
Statement 128 is effective for financial statements for both interim and
annual periods ending after December 15, 1997. Earlier application is not
permitted. The adoption of Statement 128 did not have a significant effect on
the Company's reported earnings per share.

Forward-Looking Statements

         The foregoing discussion contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, which are intended to be covered
by the safe harbors created thereby. These statements include the plans and
objectives of management for future operations. Such statements are dependent
on certain risks and uncertainties including such factors among others as,
obtaining financing, construction delays that may be encountered in opening
new Centers, market or customer acceptance, market demand, competition,
pricing, changing regulatory environment, changing economic conditions, risks
in new service development, and other risk factors. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. Assumptions relating to the foregoing
involve judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. Although the Company believes that the
assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could be inaccurate and, therefore, there can be no assurance
that the forward-looking statements included in this Form 10-KSB will prove
to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.

ITEM 7.  FINANCIAL STATEMENTS

         All financial statements required to be filed hereunder are attached
hereto following the signature page.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

         None.

                                       20
<PAGE>

                                  PART III
ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         (a)   IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS.

               DIRECTORS.

         The present term of office of each director will expire at the next
Annual Meeting of Shareholders. The name and position with the Company and age
of each director and the period during which each director has served are as
follows:

<TABLE>
<CAPTION>

              NAME AND POSITION, IF                                   DIRECTOR
              ANY, IN THE COMPANY             AGE                      SINCE
              -----------------------      ---------                  --------
              <S>                          <C>                        <C>
              James B. Wallace                69                        1991
              (Chairman of the Board)

              Charles E. Steinbrueck          54                        1994
              (President and Chief
              Executive Officer)

              Jerry D. Armstrong              67                        1991

              Jim D. Baldwin                  65                        1994

              Cortlandt S. Dietler            76                        1995

              Wayne H. Patterson              52                        1994

              George F. Wood                  54                        1991

</TABLE>

There are no arrangements or understanding between any director and any other
person pursuant to which any director was selected as such.

                                       21
<PAGE>

               EXECUTIVE OFFICERS.

         The executive officers of the Company are elected annually at the
first meeting of the Company's Board of Directors held after each Annual
Meeting of Shareholders. Each executive officer will hold office until his or
her successor is duly elected and qualified or until his or her death or
resignation or until he or she shall have been removed in the manner provided
in the Company's Bylaws. The current executive officers of the Company are as
follows:

<TABLE>
<CAPTION>

              NAME OF EXECUTIVE OFFICER                               OFFICER
              AND POSITION IN COMPANY        AGE                       SINCE
              -------------------------   ---------                  --------
              <S>                          <C>                        <C>
              Charles E. Steinbrueck          54                        1997
              (Director, President and
              Chief Executive Officer)

              Gary L. Wofford                 54                        1997
              (Senior Vice President -
              Operations and Development)

              Michael J. Brunetti             41                        1995
              (Vice President -
              Franchise Sales)

              Dana Klapper Cohen              30                        1998
              (Vice President-
              Administration, General Counsel
              and Corporate Secretary)

</TABLE>

T. Timothy Kershisnik served as Vice President, Controller, Treasurer and
Corporate Secretary through March 13, 1998.

                                       22
<PAGE>
               BUSINESS EXPERIENCE.

         The following is a brief account of the business experience for at
least the last five years of each director and executive officer of the
Company:

<TABLE>
<CAPTION>

     <C>                        <S>
     NAME OF DIRECTOR
     OR EXECUTIVE OFFICER       PRINCIPAL OCCUPATION DURING THE LAST FIVE YEARS
     --------------------       -----------------------------------------------
     Charles E. Steinbrueck     President and Chief Executive Officer of
                                Grease Monkey Holding Corporation ("GMHC"),
                                Grease Monkey International, Inc. ("GMI"),
                                and all other wholly-owned subsidiaries of
                                the Company, since February 1997;  Managing
                                partner of Retail Venture Partnership, a
                                partnership specializing in investments of
                                emerging public companies, since 1993;
                                Founder, President, and CEO of Pace
                                Membership Warehouse from 1983 to 1993.

     Gary L. Wofford            Senior Vice President, Operations and
                                Development since March 1998; Vice President,
                                System Sales and Support from May 1997 to
                                March 1998; Director of GMI's Company Center
                                Operations from December 1996 to May 1997;
                                Consultant to GMI from August 1996 to
                                December 1996; Vice President of Operations
                                and Franchise Services, Taco Johns
                                International, Inc., a franchisor of fast
                                food Mexican style restaurants, from June
                                1988 to July 1996.

     Michael J. Brunetti        Vice President, Franchise Development of GMI
                                since July 1995; Director of Region
                                Development - Western Region for Moto Photo
                                Inc., a franchisor of photography imaging
                                centers, from March 1993 to July 1995.
                                Employed by Taco Johns International, Inc., a
                                franchisor of fast food Mexican style
                                restaurants, most recently as Vice President
                                of Franchise Development, from August 1987 to
                                August 1992.

     Dana Klapper Cohen         Vice President - Administration, General
                                Counsel and Corporate Secretary since March
                                26, 1998. Manager of Strategic and Legal
                                Affairs from May 1997 to March 1998.
                                Associate attorney for the law firm of Hogan
                                and Hartson, LLP, from March 1996 to April
                                1997. Associate attorney for the law firm of
                                Holland & Hart, LLP, from October 1994 to
                                March 1997. Prior to October 1994, Ms. Cohen
                                attended Columbia University School of Law.


                                       23
<PAGE>


     Jerry D. Armstrong         Partner in Brownlie, Wallace, Armstrong and
                                Bander Exploration (BWAB), an oil and gas
                                company, since 1992; Senior Vice President and
                                member of the Board of Directors of BWAB
                                Incorporated from 1980 to 1992.

     Jim D. Baldwin             Retired President of King Soopers, a retail
                                grocery store chain owned by Dillon Companies,
                                a subsidiary of The Kroger Company, from 1979 to
                                1990.  Mr. Baldwin was with Dillon Companies for
                                over 40 years.  Mr. Baldwin is on the Board of
                                Directors for Channel 6 KRMA TV.

     Cortlandt S. Dietler       Chairman and CEO of TransMontaigne Oil
                                Company, an oil and gas company, since April
                                1995; Chairman, Founder and CEO of Associated
                                Natural Gas Corporation, a gas gathering,
                                processing and marketing company from 1980 to
                                1994. Mr. Dietler is also on the Board of
                                Directors for the following public companies:
                                Forest Oil Corporation, Key Production
                                Company, Inc., and Hallador Petroleum
                                Corporation.

     Wayne H. Patterson         Chairman, QuickPen International, a
                                commercial software and systems company,
                                since December 1992; Principal, Patterson
                                Consulting, a management consulting firm,
                                since December 1991; Chairman, Live
                                Entertainment, 1990 to 1991; Chairman, Pace
                                Membership Warehouse, from 1988 to 1990.

     James B. Wallace           Partner in Brownlie, Wallace, Armstrong and
                                Bander Exploration (BWAB) since 1992;
                                President and member of the Board of
                                Directors of BWAB Incorporated from 1980 to
                                1992. Mr. Wallace is also a member of the
                                Board of Directors of Tom Brown, Inc., (a
                                public company).

     George F. Wood             President of Wood and Co., an investment
                                management firm, since 1982.

</TABLE>

         (b)  IDENTIFICATION OF SIGNIFICANT EMPLOYEES:   None.


         (c)  FAMILY RELATIONSHIPS.  None


         (d)  INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS.    None.

                                       24
<PAGE>

         (e)  SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors and persons who own more than ten percent of
the Company's outstanding common stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Officers, directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.

         Based solely on a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during and for the Company's fiscal year ended
December 31, 1997, the only director, officer or more than 10% shareholder of
the Company who failed to timely file a Form 3, Form 4 or Form 5 was Charles
E. Steinbrueck who filed a late Form 4 reporting three transactions.

                                       25
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

         (a) and (b) GENERAL AND SUMMARY COMPENSATION TABLE

         The following table shows all plan and non-plan compensation paid by
the Company and its subsidiaries to the Chief Executive Officers of the
Company for services rendered for the fiscal years ended December 31, 1997,
1996 and 1995. No other executive officers of the Company total cash
compensation exceeded $100,000 for the fiscal years ended December 31, 1997,
1996 or 1995:

                         SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                                                     LONG TERM
                                                                                                     OTHER           SECURITIES
                                                                                                     ANNUAL          UNDERLYING
    NAME                 PRINCIPAL POSITION                               YEAR        SALARY      COMPENSATION    OPTIONS/SAR'S(#)
    ----                 ------------------                               ----        ------      ------------    ----------------
<C>                 <S>                                                   <C>       <C>           <C>             <C>
Charles E.          President and Chief Executive
Steinbrueck         Officer and Director of GMHC and GMI (1)              1997      $ 114,182          -               750,000

                                                                          1996      $    -             -                10,000

                                                                          1995      $    -             -                20,000
Rex L. Utsler       President and Chairman of the Board of
                    Directors of GMHC and GMI(2)                          1997      $ 179,868     $      8,386(3)         -

                                                                          1996      $ 163,417     $     11,450(3)       12,500

                                                                          1995      $ 157,842     $     11,328(3)       50,000

</TABLE>

(1)  Mr. Steinbrueck became President and Chief Executive Officer on February
6, 1997, and has been a Director since 1994.  Mr. Steinbrueck has an
Employment Agreement with the Company.  See "Item 12. Certain Relationships
and Related Transactions."

(2)  Mr. Utsler resigned as the Chairman of the Board and President of the
Company on February 6, 1997.  Mr. Utsler continues to be paid under a
consulting contract through March 31, 1999.  See "Item 12.  Certain
Relationships and Related Transactions."

(3) Includes costs of a leased car, country club dues and the Company's
401(k) matching contribution.

         COMPENSATION UNDER PLANS

         On May 4, 1992, GMI adopted the Grease Monkey International, Inc.
401(k) Savings and Retirement Plan and Trust Agreement (the "Plan"),
effective as of April 1, 1992. Colorado National Bank Trust and Investment
Group is Trustee under the Plan. At present, the Company contributes to the
Plan on a quarterly basis in an amount equal to 50% of the employees'
contribution, up to a maximum of 6% of the employees' compensation. The
Company's contribution is paid with its $0.03 par value common stock valued
at market on the date of the contribution. During 1997, the Company
contributed 33,234 shares to the Plan at an average

                                       26
<PAGE>

of $1.36 per share. During 1996, the Company contributed 40,616 shares to the
Plan at an average of $1.14 per share.

         (c) and (d)  STOCK OPTION, GRANTS AND EXERCISES.

         STOCK OPTION PLANS

         The Company adopted the 1986 Incentive Stock Option Plan ("1986
Plan") which was approved by the shareholders on February 17, 1987, in which
the employees of the Company and its subsidiaries are eligible to
participate. The 1986 Plan authorized the granting of options to purchase up
to 66,667 shares of the Company's common stock. No further options can be
granted under the 1986 Plan.

         The Company adopted the 1993 Incentive Stock Option Plan ("1993
Plan") which was approved by the shareholders on June 30, 1993. All employees
of the Company and its subsidiaries are eligible to participate. The 1993
Plan authorizes the granting of options to purchase 300,000 shares of the
Company's common stock.

         The Company adopted the 1994 Stock Incentive Plan ("1994 Plan")
which was approved by the shareholders on July 11, 1994. All employees,
officers, directors and consultants of the Company and its subsidiaries are
eligible to participate. The 1994 Plan originally reserved 500,000 shares for
grant or awards under the Plan. In June 1997, the Company's shareholders
approved an additional 500,000 shares.

         The 1986, 1993 and 1994 Plans are administered by an Option
Committee of not less than three persons appointed by the Board of Directors.
The members of the Option Committee for 1997 were Jerry D. Armstrong, Jim D.
Baldwin and George F. Wood. The Option Committee met once during 1997. All
members were present at the meeting. New members of the Option Committee will
be selected after the Annual Meeting of Shareholders.

         The Option Committee selects the persons to whom options are
granted, determines the time or times when any option granted becomes
exercisable, determines the period within which it becomes exercisable and
determines the price per share at which the option is exercisable, provided
that no option may be exercised more than 10 years after it is granted and
the exercise price must be at least the fair market value of the Company's
common stock on the date of the grant. If an employee owns more than 10% of
the Company's outstanding common stock, then the Option Committee may grant
an incentive option to such employee only if the exercise price of the option
is at least 110% of the fair market value of the Company's common stock on
the date of the grant. An incentive option granted to any employee owning
more than 10% of the Company's outstanding common stock may not be
exercisable for longer than five years from the date of the grant.

         Payment for shares of common stock purchased upon exercise of any
option must be in full and in cash or, with certain restrictions, the
surrender of other shares of common stock of the Company owned by the
employee at the time the option is exercised.

                                      27
<PAGE>

         The following table sets forth information pertaining to options
that were granted by the Company to Charles E. Steinbrueck during the year
ended December 31, 1997.

                      Option Grants in Last Fiscal Year

                              INDIVIDUAL GRANTS

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------------
                              NUMBER OF                       % OF TOTAL
                              SECURITIES                      OPTIONS GRANTED                EXERCISE OR
                              UNDERLYING                      TO EMPLOYEES IN                BASE PRICE                EXPIRATION
NAME                          OPTIONS GRANTED                 FISCAL YEAR                    ($/SH)                    DATE
---------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                             <C>                            <C>                       <C>
Charles E.                    300,000(1)                      40%                            1.3125                    12/31/02
Steinbrueck
                              450,000(2)                      60%                            1.3125                    12/31/02

</TABLE>

     (1) Options relating to 300,000 shares are fully vested and exercisable.

     (2) Options relating to 200,000 shares vest on December 31, 1998, and
options relating to 250,000 shares vest on December 31, 1999 provided the
Company has attained certain performance criteria.  See "Item 12. Certain
Relationships and Related Transactions."

     No options were granted to Rex L. Utsler during the year ended December
31, 1997.

                                      28
<PAGE>

     The following table sets forth information pertaining to the options
that were held by Charles E. Steinbrueck and Rex L. Utsler as of December 31,
1997. Neither Mr. Steinbrueck nor Mr. Utsler exercised any options during the
year ended December 31, 1997.

   Aggregated Option/SAR Exercises in Last Fiscal Year and Option/SAR Values

<TABLE>
<CAPTION>
                   NUMBER OF SECURITIES                VALUE OF UNEXERCISED IN-
                  UNDERLYING UNEXERCISED              THE-MONEY OPTIONS/SARS AT
                 OPTIONS/SARS AT FY-END(#)                      FY-END
                 -------------------------            -------------------------
Name             EXERCISABLE/UNEXERCISABLE            EXERCISABLE/UNEXERCISABLE
                 -------------------------            -------------------------
<S>              <C>                                  <C>
Charles E.
Steinbrueck          330,000/450,000                          - 0 - (1)

Rex L. Utsler           62,500/0                              - 0 - (1)

</TABLE>

     (1) The exercise prices were above the market price of the common stock on
December 31, 1997.

         (e)  LONG-TERM INCENTIVE PLAN.  None.

         (f)  COMPENSATION OF DIRECTORS.

         Directors of the Company who are not employees or officers are
granted stock options as compensation. Options are granted for services
provided as a director, with additional options granted for committee
participation. Options for 5,000 shares are granted annually for service as a
director, options for 2,500 shares are granted annually for service on the
Option/Compensation and Audit Committees and options for 5,000 shares are
granted annually for service on the Executive Committee.

         Options were granted on March 24, 1998, for services rendered for
the period June 1997 to June 1998.

         (g) EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS. See "Item 12. Certain Relationships and
Related Transactions" for information pertaining to a consultant agreement
with Rex L. Utsler and an employment agreement with Charles E. Steinbrueck.

         (h)  REPORT ON REPRICING OF OPTIONS/SARS.  None.

                                      29
<PAGE>

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT

         (a) and (b)  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

         The following table sets forth as of February 27, 1998, the number
of shares of the Company's $0.03 par value common stock owned by each person
who owned of record, or was known to own beneficially, more than 5% of the
number of shares of the Company's outstanding common stock, sets forth the
number of shares of the Company's outstanding common stock beneficially owned
by each of the Company's directors, and sets forth the number of shares of
the Company's common stock beneficially owned by all of the Company's
directors and officers as a group:

<TABLE>
<CAPTION>

                                                                                   SHARES
                                                                                 UNDERLYING
                                                                                 PRESENTLY
                                                           SHARES               CONVERTIBLE
                                                         UNDERLYING               SERIES C
                                    SHARES OF            PRESENTLY               PREFERRED
         NAME OF                      COMMON            EXERCISABLE                STOCK                                  PERCENT
       BENEFICIAL                     STOCK             OPTIONS AND              AND UNPAID              TOTAL           OF CLASS
        OWNER(1)                      OWNED             WARRANTS (3)            DIVIDENDS(4)           OWNERSHIP            (6)
------------------------------      ---------           ------------            ------------           ---------         --------
<S>                                 <C>                 <C>                     <C>                    <C>               <C>
Rex L. Utsler(2)(5)                  640,315              206,800                  53,478               900,593            18.4%
Jerry D. Armstrong(2)                438,820              118,925                  82,786               640,531            13.2%
James B. Wallace(2)                  443,821              113,925                  58,177               615,923            12.8%
Ray O. Brownlie(2)                   442,375               88,925                  58,177               589,477            12.3%
J. H. Bander(2)                      407,709               88,925                  58,177               554,811            11.6%
Charles E. Steinbrueck(2)            190,476              330,000                  36,914               557,390            11.1%
Cortlandt S. Dietler(2)               55,556               20,000                  19,687                95,243             2.0%
George F. Wood(2)                     38,639               25,000                   4,922                68,561             1.5%
Wayne H. Patterson(2)                   -                  35,000                  24,609                59,609             1.3%
Jim D. Baldwin(2)                       -                  25,000                  12,305                37,305             0.8%

All officers and directors as
 a group (9 persons)               1,167,312              767,850                 249,244             2,184,406            38.6%

</TABLE>

-------------
Note:  Included as an officer is T. Timothy Kershisnik who resigned from his
positions of Vice President, Controller, Treasurer and Corporate Secretary
effective March 13, 1998.  Excluded is Dana Klapper Cohen who became an
officer on March 26, 1998.

         (1) All beneficial owners listed have sole voting and/or investment
power with respect to the shares shown unless otherwise indicated.

                            30
<PAGE>

         (2)  The address for Rex L. Utsler is Trinity Place, Suite 720, 1801
Broadway, Denver, Colorado 80202.  The address for Messrs. Armstrong,
Wallace, Brownlie and Bander is 475 17th Street, Suite 1300, Denver, Colorado
80202.  The address for Charles E. Steinbrueck is 216 16th Street, Suite
1100, Denver, Colorado 80202.  The address for Cortlandt S. Dietler is 2750
Republic Plaza, 370 Seventeenth St., Denver, Colorado 80202.  The address for
George F. Wood is 55 Madison Street, Suite 680, Denver, Colorado 80206.  The
address for Wayne H. Patterson is 384 Inverness Drive South, Suite 200,
Englewood, Colorado 80112. The address for Jim D. Baldwin is 706 Golf Club
Drive, Castle Pines Village, Colorado 80104.

         (3)  Represents shares of common stock underlying presently
exercisable options and warrants.

         (4) Represents shares of common stock underlying shares of Series C,
6% Preferred stock with a stated value of $100 per share plus accumulated
unpaid dividends, convertible into common stock at $2.50 per share.

         (5) Does not include 3,100 shares held by Mr. Utsler's children, of
which he disclaims beneficial ownership.

         (6) Assumes all options and warrants are exercised and all Series C
Preferred stock and accumulated dividends are converted.

         (c)  CHANGES IN CONTROL.  None.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On February 5, 1997, the Company entered into a Consultant Agreement
with Rex L. Utsler, the Company's former Chairman of the Board, President and
Chief Executive Officer. The term of the agreement is from March 4, 1997
through March 3, 1999. The agreement requires Mr. Utsler to perform such
duties and services as may be assigned to him from time to time at the
direction or request of the Company's President and Chief Executive Officer.
For these services, Mr. Utsler will be paid a fee of $16,071 per month, be
reimbursed for his expenses incurred on behalf of the Company and receive the
medical benefits provided generally to the Company's employees.

         On August 5, 1991, the Company issued warrants to First of September
Corporation to purchase 500,000 shares of its common stock for $1.50 per
share. In exchange, First of September Corporation provided the Company with
a $750,000 line of credit which was repaid on March 23, 1994, and canceled.
The warrants were to expire on August 4, 1996, but were extended in March
1996 by the Board of Directors to August 4, 1998, as consideration for First
of September Corporation's agreement to cooperate in an equity and debt
financing, then under consideration. The increase in the estimated fair value
of the warrants of $54,000 was recorded as an increase in stockholder's
equity and deferred offering costs. The offering costs were subsequently
written off when the proposed financing was abandoned. On June 30, 1997,
First of September Corporation was dissolved and any ownership of the
Company's common stock, preferred stock and the warrants mentioned previously
were transferred to First of September Corporation's shareholders.

                                      31
<PAGE>

         On March 12, 1998, the Company entered into an Employment Agreement
("Agreement") with Charles E. Steinbrueck pursuant to which the Company
employed Mr. Steinbrueck as the President and Chief Executive Officer of the
Company effective January 20, 1997. The Agreement will terminate on January
20, 2000, unless terminated earlier pursuant to the terms thereof. Pursuant
to the Agreement, the Company has agreed to pay Mr. Steinbrueck an initial
base salary of $125,000 per year. The base salary is to be reviewed annually
by the Compensation Committee of the Board of Directors and the base salary
for each year (or portion thereof) beginning January 1, 1998, shall be
determined by the Compensation Committee which shall authorize an increase in
the base salary. Mr. Steinbrueck also is entitled to receive bonuses in such
amount as determined by the Board of Directors of the Company. Further, Mr.
Steinbrueck is eligible to participate in all plans available to the
executive officers of the Company. Pursuant to the Agreement, Mr. Steinbrueck
was granted stock options for 750,000 shares of the Company's common stock
that have an exercise price of $1.3125 per share. The options vested as to
100,000 shares as of January 20, 1997, and options for the remaining 650,000
shares were to vest over a three year period, subject to the attainment by
the Company of certain performance criteria, so that options with respect to
200,000 shares would become exercisable on December 31, 1997, options with
respect to 200,000 shares would become exercisable on December 31, 1998, and
options for 250,000 shares would become exercisable on December 31, 1999. The
options were only to become exercisable if the Company attained minimum
corporate earnings for the years ended December 31, 1997, 1998 and 1999 of
$500,000, $1,000,000 and $1,500,000, respectively, if the Company achieved a
compounded growth rate in gross revenue of 20% for each year from 1997
through 1999 and if the Company was within 75% of the growth target for new
unit openings in the business plan established by the Board of Directors for
the Company. Although the Company did not meet the performance criteria for
the year ended December 31, 1997, the Board of Directors of the Company and
the Compensation Committee have determined that 200,000 shares would be
exercisable as of December 31, 1997, pursuant to the option granted to Mr.
Steinbrueck. The options expire on December 31, 2002, if not previously
exercised.

         The Agreement provides that the Company may terminate the Agreement
for cause without paying Mr. Steinbrueck any additional compensation.
However, if the Company terminates the Agreement other than for cause, the
Company is required to pay Mr. Steinbrueck severance compensation for a
period of the lesser of the remaining portion of the term of the Agreement or
two years from the date of such termination, reduced by any compensation that
Mr. Steinbrueck may receive from a new employer ("Severance Compensation").
Mr. Steinbrueck also has the ability to terminate the Agreement voluntarily
or upon a change in control of the Company. A change in control in the
Company is deemed to occur if (i) any person or group acquires direct or
indirect beneficial ownership of 20% or more of the Company's outstanding
securities unless a majority of the "Continuing Directors" approves the
acquisition or (ii) on the first day on which a majority of the members of
the Board of Directors are not "Continuing Directors." A "Continuing
Director" is any member of the Company's Board of Directors who (i) was a
member of that Board of Directors on January 20, 1997, (ii) has been a member
of that Board of Directors for the two years immediately preceding such date
of determination, or (iii) was nominated for election or elected to the
Company's Board of Directors with the affirmative vote of the greater of (x)
a majority of the Continuing Directors who are members of the Company's Board
of Directors at the time of such nomination or election or (y) at least three
Continuing Directors. If Mr. Steinbrueck terminates the Agreement
voluntarily, he is entitled to no additional compensation. However, if the
termination is within 120 days following a change in control, Mr. Steinbrueck
is entitled to receive Severance Compensation which Mr. Steinbrueck can elect
to receive in a lump sum. In no event, however, shall the Severance
Compensation upon a Change in

                            32
<PAGE>

Control exceed any amount that the Company is prohibited from deducting for
federal income tax purposes by virtue of Section 280G of the Internal Revenue
Code.

         The Agreement also provides that Mr. Steinbrueck will not compete
with the Company during the term of the Agreement and for a period of two
years following the termination thereof.

         On January 20, 1997, the Company sold 190,476 shares of the
Company's common stock to Mr. Steinbrueck for a total of $250,000.

         On January 30, 1998, the Company entered into Employment Agreements
("Agreements") with Gary L. Wofford and with Dana Klapper Cohen pursuant to
which the Company employed Mr. Wofford as Vice President of System Sales and
Support and Ms. Cohen as Manager of Strategic and Legal Affairs. The
agreements will terminate on January 30, 2001, unless terminated earlier
pursuant to the terms thereof. Pursuant to the Agreements, the Company has
agreed to pay Mr. Wofford an initial base salary of $92,500 per year and Ms.
Cohen an initial base salary of $57,500 per year. The base salaries are to be
reviewed annually by the President and CEO. Mr. Wofford and Ms. Cohen are
entitled to receive bonuses and to participate in all plans available to the
executive officers of the Company. Pursuant to the Agreements, Mr. Wofford is
entitled to the grant of stock options for 100,000 shares of the Company's
common stock and Ms. Cohen is entitled to the grant of 50,000 shares of the
Company's common stock.

         The Agreements provide that the Company may terminate the Agreements
for cause without paying Mr. Wofford or Ms. Cohen any additional
compensation. However, if the company terminates the Agreements other than
for cause, the Company is required to pay Mr. Wofford and Ms. Cohen severance
compensation for a period of the lesser of the remaining portion of the term
of the Agreement or one year from the date of such termination, ("Severance
Compensation"). Mr. Wofford and Ms. Cohen also have the ability to terminate
the Agreement voluntarily or upon a change in control of the Company. A
change in control in the Company is deemed to occur if (i) any person or
group acquires direct or indirect beneficial ownership of 20% or more of the
Company's outstanding securities unless a majority of the "Continuing
Directors" approves the acquisition or (ii) on the first day on which a
majority of the members of the Board of Directors are not "Continuing
Directors." A "Continuing Director" is any member of the Company's Board of
Directors who (i) was a member of that Board of Directors on January 30,
1998, (ii) has been a member of that Board of Directors for the two years
immediately preceding such date of determination, or (iii) was nominated for
election or elected to the Company's Board of Directors with the affirmative
vote of the greater of (x) a majority of the Continuing Directors who are
members of the Company's Board of Directors at the time of such nomination or
election or (y) at least three Continuing Directors. If Mr. Wofford or Ms.
Cohen terminate their respective Agreements voluntarily, he/she is entitled
to no additional compensation. However, if the termination is within 120 days
following a change in control, Mr. Wofford and Ms. Cohen are entitled to
receive Severance Compensation which they can elect to receive in a lump sum.
In no event, however, shall the Severance Compensation upon a Change in
Control exceed any amount that the Company is prohibited from deducting for
federal income tax purposes by virtue of Section 280G of the Internal Revenue
Code.

         The Agreements also provide that Mr. Wofford and Ms. Cohen will not
compete with the Company during the term of the Agreements and for a period
of two years following the termination thereof.

                                      33
<PAGE>


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K


    (a)      (3)      LIST OF EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-B.
                      -------------------------------------------------------

    3.       Articles of Incorporation and Bylaws.

             (a)      Bylaws, as amended through March 4, 1991,
                      incorporated by reference to the Annual Report on
                      Form 10-KSB for the fiscal year ended December 31,
                      1992.

             (b)      Restated Articles of Incorporation, filed November 1,
                      1991, incorporated by reference to the Annual Report
                      on Form 10-K for the fiscal year ended December 31,
                      1991.

             (c)      Articles of Amendment to Articles of Incorporation filed
                      June 29, 1992 incorporated by reference to the Annual
                      Report on Form 10-KSB for the fiscal year ended
                      December 31, 1992.

             (d)      Articles of Amendment to the Articles of
                      Incorporation filed August 15, 1996, incorporated by
                      reference to the Quarterly Report on Form 10-QSB for
                      the quarter ended June 30, 1996.

    4.       Instruments Defining the Rights of Holders Including Indentures.

             (a)      Statement of Designation, Voting Powers, Preferences,
                      and Rights of the Series C Preferred stock of Grease
                      Monkey Holding Corporation incorporated by reference
                      to the Annual Report on Form 10-KSB for the fiscal
                      year ended December 31, 1993.

    10.      Material Contracts.

             (a)      1986 Incentive Stock Option Plan, incorporated by
                      reference to the Annual Report on Form 10-KSB for the
                      fiscal year ended December 31, 1993.

             (b)      1993 Incentive Stock Option Plan, incorporated by
                      reference to the Annual Report on Form 10-KSB for the
                      fiscal year ended December 31, 1994.

             (c)      Amendment to 1993 Incentive Stock Option Plan,
                      incorporated by reference to the Annual Report on
                      Form 10-KSB for the fiscal year ended December 31,
                      1996.

                                      34
<PAGE>
             (d)      1994 Stock Incentive Plan, incorporated by reference
                      to the Annual Report on Form 10-KSB for the fiscal
                      year ended December 31, 1994.

             (e)      Amendment to 1994 Stock Incentive Plan, incorporated
                      by reference to the Annual Report on Form 10-KSB for
                      the fiscal year ended December 31, 1996.

             (f)      Lease Agreement dated August 20, 1991, between
                      Clarmont Enterprises, Inc., and Grease Monkey
                      International, Inc., incorporated by reference to the
                      Annual Report on Form 10-K for the fiscal year ended
                      December 31, 1991.

             (g)      Amendment Number One dated May 5, 1993, to Lease
                      Agreement dated August 20, 1991, between Venture West
                      Investments Limited (f.k.a. Clarmont Enterprises,
                      Inc.) and Grease Monkey International, Inc.,
                      incorporated by reference to the Annual Report on
                      Form 10-KSB for the fiscal year ended December 31,
                      1994.

             (h)      Current form of Grease Monkey Franchise Agreement
                      currently in effect.

             (i)      Mobil Oil Company Supply Contract dated February 24,
                      1993, for Center #234 (similar contract form used for
                      all centers), incorporated by reference to Annual
                      Report on Form 10-KSB for the fiscal year ended
                      December 31, 1992.

             (j)      Business Loan Agreement with Bank of America for
                      $2,000,000 three year line of credit, incorporated by
                      reference to the Annual Report on Form 10-KSB for the
                      fiscal year ended December 31, 1996.

             (k)      Consultant Agreement between Grease Monkey Holding
                      Corporation and Rex L. Utsler, incorporated by
                      reference to the Annual Report on Form 10-KSB for the
                      fiscal year ended December 31, 1996.




             (l)      $5,000,000 Loan Agreement with Citicorp Leasing,
                      Inc., incorporated by reference to the Quarterly
                      Report on Form 10-QSB for the period ended September
                      30, 1997.

             (m)      Master Supply Contract dated September 29, 1997, with
                      Mobil Oil Corporation.

                                      35
<PAGE>
             (n)      Employment Agreement dated March 12, 1998, with Charles E.
                      Steinbrueck.

             (o)      Employment Agreement dated January 30, 1998, with Gary L.
                      Wofford.

             (p)      Employment Agreement dated January 30, 1998, with Dana
                      Klapper Cohen.

    21.      Subsidiaries of the Registrant

             (a)      Grease Monkey International, Inc., incorporated in
                      the State of Colorado (100% owned).

             (b)      GM Properties, Inc., incorporated in the State of
                      Colorado (100% owned).

             (c)      Grease Monkey de Mexico SA de CV., incorporated in
                      Mexico (100% owned).

    23.      Consent of Experts and Counsel

             (a)      Consent of KPMG Peat Marwick LLP.

    27.1     Financial Data Schedule - 1997.

    27.2     Financial Data Schedule - 1996 and 1995 annual periods restated.

(b)      REPORTS ON FORM 8-K.

         No Reports on Form 8-K were filed during the last quarter of the period
         covered by this report.

                                      36

<PAGE>

                                  SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

     Dated:  March 26, 1998

                                         GREASE MONKEY HOLDING CORPORATION,
                                             a Utah corporation

                                         By:/s/ Charles E. Steinbrueck
                                         -----------------------------------
                                         Charles E. Steinbrueck, President
                                         and Chief Executive Officer

     In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
   DATE                 NAME AND TITLE                           SIGNATURE
---------------         --------------------                     ---------------------------
<S>                    <C>                                       <C>
March 26, 1998         CHARLES E. STEINBRUECK, Director,         /s/ Charles E. Steinbrueck
                       President and Chief                       ----------------------------
                       Executive Officer                         Charles E. Steinbrueck
                       (Principal Executive
                       Officer, Chief Financial
                       Officer and Principal
                       Accounting Officer)

March 26, 1998         JAMES B. WALLACE, Director and            /s/ James B. Wallace
                       Chairman of the Board                     ----------------------------
                                                                 James B. Wallace

March 26, 1998         JERRY D. ARMSTRONG, Director              /s/ Jerry D. Armstrong
                                                                 ----------------------------
                                                                 Jerry D. Armstrong

March 26, 1998         JIM D. BALDWIN, Director                  /s/ Jim D. Baldwin
                                                                 ----------------------------
                                                                 Jim D. Baldwin

March 26, 1998         CORTLANDT S. DIETLER, Director            /s/ Cortlandt S. Dietler
                                                                 ----------------------------
                                                                 Cortlandt S. Dietler

March 26, 1998         WAYNE H. PATTERSON, Director
                                                                 ----------------------------
                                                                 Wayne H. Patterson

March 26, 1998         GEORGE F. WOOD, Director                  /s/ George F. Wood
                                                                 ----------------------------
                                                                 George F. Wood
</TABLE>

                                      37

<PAGE>

                                 INDEPENDENT AUDITORS' REPORT




THE BOARD OF DIRECTORS AND STOCKHOLDERS
GREASE MONKEY HOLDING CORPORATION:


We have audited the accompanying consolidated balance sheets of Grease Monkey
Holding Corporation and subsidiaries as of December 31, 1997 and 1996, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Grease
Monkey Holding Corporation and subsidiaries as of December 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1997, in conformity with
generally accepted accounting principles.

                                 KPMG Peat Marwick LLP

Denver, Colorado
March 12, 1998

                                     F-1


<PAGE>

                         GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES
                                        CONSOLIDATED BALANCE SHEETS

                                                  ASSETS
<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                                      -------------------------
                                                                         1997           1996
                                                                     -----------   ----------
<S>                                                                   <C>          <C>
Current Assets:
  Cash ............................................................   $  182,214      324,745
  Restricted cash including certificates of deposit ...............        -           34,927
  Accounts receivable, net of allowance for doubtful
     accounts of $478,553 in 1997 and $252,795 in 1996 ............    1,212,014    1,042,259
  Current portion of notes receivable, net of
     allowance for uncollectible amounts (Note D) .................      318,658      500,705
  Current portion of net investment in direct financing
   leases (Note F) ................................................      204,921      225,053
  Inventories .....................................................      758,116      887,203
  Prepaid expenses and supplies ...................................      113,648      125,208
                                                                     -----------    ---------
  TOTAL CURRENT ASSETS                                                 2,789,571    3,140,100
                                                                     -----------   ----------

Property and Equipment, at Cost, Pledged (Notes E and F):
  Land ............................................................      543,838      445,917
  Buildings (including buildings under capital leases).............    6,430,000    5,728,492
  Furniture and fixtures ..........................................      536,329      562,235
  Leasehold improvements ..........................................      718,672      662,001
  Machinery and equipment .........................................    1,774,196    1,735,844
                                                                     -----------   ----------
                                                                      10,003,035    9,134,489
  Less accumulated depreciation and amortization ..................   (3,985,940)  (3,540,784)
                                                                     -----------   ----------
  NET PROPERTY AND EQUIPMENT ......................................    6,017,095    5,593,705
                                                                     -----------   ----------

Other Assets:
  Net investment in direct financing leases (Note F) ..............    3,154,581    3,499,162
  Notes receivable, net of allowance for uncollectible
    amounts (Note D) ..............................................      225,177      270,761
  Deferred franchising costs ......................................      189,528      211,849
  Goodwill and covenants not to compete, net of accumulated
    amortization of $1,215,026 in 1997 and $966,729 in 1996 .......    2,688,103    2,401,586
  Other assets, net of accumulated amortization of $167,145
    in 1997 and $141,355 in 1996...................................      333,795       99,960
                                                                     -----------   ----------
    TOTAL OTHER ASSETS                                                6,591,184     6,483,318
                                                                     ----------    ----------
                                                                     $15,397,850   15,217,123
                                                                     -----------   ----------
                                                                     -----------   ----------
</TABLE>
                                  (continued on next page)

                                      F-2

<PAGE>


                            GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

                                  CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                   LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
                                                                     ------------------------
                                                                         1997         1996
                                                                     -----------   ----------
<S>                                                                  <C>           <C>
Current Liabilities:
  Accounts payable ................................................  $ 1,400,633    1,043,149
  Accrued salaries and wages ......................................      195,787      203,073
  Other accrued liabilities .......................................      371,143      347,158
  Current portion of long-term obligations (Note E) ...............      715,289    1,066,283
  Current portion of obligations under capital leases
    (Note F).......................................................      464,955      427,917
                                                                     -----------   ----------
    TOTAL CURRENT LIABILITIES .....................................    3,147,807    3,087,580
                                                                     -----------   ----------
Long-Term Obligations (Note E) ....................................    3,800,082    3,126,148

Obligations Under Capital Leases (Note F) .........................    6,848,249    6,649,017

Deferred Franchise Sales Revenue ..................................      985,470      907,371

Stockholders' Equity (Note G):
  Series C Preferred stock, stated value of $100.00 per
     share, 20,896 shares issued and outstanding in 1997 and
       1996 .......................................................    2,089,638    2,089,638
  Common stock, par value $0.03, 20,000,000 shares
  authorized, 4,633,570 and 4,379,860 shares issued and
  outstanding in 1997 and 1996, respectively ......................      139,007      131,396
  Capital in excess of par value ..................................    6,197,880    5,877,670
  Accumulated deficit .............................................   (7,810,283)  (6,651,697)
                                                                     -----------   ----------
    TOTAL STOCKHOLDERS' EQUITY ....................................      616,242    1,447,007

Commitments and Contingencies (Notes F and J) .....................
                                                                     -----------   ----------
                                                                     $15,397,850   15,217,123
                                                                     -----------   ----------
                                                                     -----------   ----------
</TABLE>


                    See notes to the consolidated financial statements

                                     F-3

<PAGE>

                          GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

                                 CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                         YEARS ENDED DECEMBER 31,
                                                -----------------------------------------
                                                    1997           1996           1995
                                                -----------      ---------      ---------
<S>                                             <C>              <C>           <C>
Operating Revenue:
  Royalty fees ...............................  $ 3,454,238      3,143,933      3,211,716
  Franchise sales - center openings ..........      257,401        183,300        430,110
  Product and equipment revenue ..............      777,285        776,333      1,021,730
  Sales by Company-owned Centers .............   14,742,786     14,416,201     12,462,632
  Leasing revenue ............................    1,547,876      1,434,086      1,391,886
  Other.......................................      389,728        188,940        150,069
                                                -----------      ---------      ---------
                                                 21,169,314     20,142,793     18,668,143
                                                -----------     ----------     ----------

Operating Expenses:
  Franchise costs - center openings ..........       85,822         32,843         99,771
  Product and equipment costs ................      316,926        340,300        558,546
  Company-owned Centers ......................   12,690,085     12,404,772     10,817,307
  Leasing expense ............................    1,549,315      1,376,677      1,401,978
  General and administrative expenses (Note H)    5,382,473      4,740,381      4,110,166
  Provision for credit losses ................      253,368        206,221        151,800
  Depreciation ...............................      688,041        694,241        638,352
  Amortization ...............................      284,689        245,454        177,553
                                                -----------     ----------     ----------
                                                 21,250,719     20,040,889     17,955,473
                                                -----------     ----------     ----------
Operating income (loss) ......................     (81,405)       101,904        712,670
                                                -----------     ----------     ----------

Other income (expense):
  Gain (loss) on sale/disposition/closure
   of centers ...............................     (368,169)        (83,780)        31,705
  Undeveloped franchise licenses canceled ....        -             27,563         18,075
  Interest income ............................      65,659          37,186         37,845
  Interest expense (Note F) ..................    (774,671)       (659,996)      (562,105)
                                                -----------     ----------     ----------
                                                (1,077,181)       (679,027)      (474,480)
                                                -----------     ----------     ----------
Net income (loss) ............................ $(1,158,586)       (577,123)       238,190
                                                -----------     ----------     ----------
                                                -----------     ----------     ----------

Earnings (loss) per common share (Note L) ....  $     (0.29)          (0.16)          0.03
                                                -----------      ---------      ---------
                                                -----------      ---------      ---------

Earnings (loss) per common share -
assuming dilution (Note L)  ..................  $    (0.29)         (0.16)            0.03
                                                -----------      ---------      ---------
                                                -----------      ---------      ---------
Weighted average shares outstanding ..........    4,390,116      4,361,163        4,354,680
                                                -----------      ---------      ---------
                                                -----------      ---------      ---------
</TABLE>

                      See notes to the consolidated financial statements

                                     F-4
<PAGE>

             GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                 PREFERRED STOCK                COMMON STOCK
                                             ----------------------   ---------------------------------
                                                                                             CAPITAL IN
                                             NUMBER OF                NUMBER OF               EXCESS OF   ACCUMULATED
                                              SHARES       AMOUNT      SHARES      AMOUNT     PAR VALUE     DEFICIT       TOTAL
                                             ---------   ----------   ---------   --------   ----------   -----------   ----------
<S>                                          <C>         <C>          <C>         <C>        <C>          <C>           <C>
Balance at December 31, 1994...............   22,205     $2,220,500   4,305,359   $129,161    5,707,382    (6,312,764)   1,744,279
Issuance of common stock pursuant
   to employee benefit plan................      -            -          11,542        346       20,682          -          21,028
Conversion of Series C Preferred stock
   to common stock, including payment
   of accumulated dividends................   (1,247)      (124,662)     49,863      1,496      113,224          -          (9,942)
Offering costs of Series C Preferred
   stock...................................      -            -            -          -          (7,500)         -          (7,500)
Common stock reacquired and canceled.......      -            -         (30,000)      (900)     (60,540)         -         (61,440)
Net income.................................      -            -            -          -            -          238,190      238,190
                                              ------     ----------   ---------   --------   ----------    ----------    ---------
Balance at December 31, 1995...............   20,958      2,095,838   4,336,764    130,103    5,773,248    (6,074,574)   1,924,615
Issuance of common stock pursuant to
  employee benefit plan....................      -            -          40,616      1,219       45,025          -          46,244
Conversion of Series C Preferred stock
   to common stock, including payment
   of accumulated dividends................      (62)        (6,200)      2,480         74        5,397          -            (729)
Increase in fair value of warrants
   extended................................      -            -            -          -          54,000          -          54,000
Net loss...................................      -            -            -          -            -         (577,123)    (577,123)
                                              ------     ----------   ---------   --------   ----------    ----------    ---------
Balance at December 31, 1996...............   20,896      2,089,638   4,379,860     131,396   5,877,670    (6,651,697)   1,447,007
Issuance of common stock pursuant to
   employee benefit plan...................      -            -          33,234         996      44,262          -          45,258
Issuance of common stock upon
   exercise of employee stock options......      -            -          30,000         900      31,663          -          32,563
Issuance of common stock...................      -            -         190,476       5,715     244,285          -         250,000
Net loss...................................      -            -            -           -           -       (1,158,586)  (1,158,586)
                                              ------     ----------   ---------   --------   ----------    ----------    ---------
Balance at December 31, 1997...............   20,896     $2,089,638   4,633,570    $139,007   6,197,880    (7,810,283)     616,242
                                              ------     ----------   ---------   --------   ----------    ----------    ---------
                                              ------     ----------   ---------   --------   ----------    ----------    ---------
</TABLE>

               See notes to the consolidated financial statements

                                     F-5
<PAGE>

             GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                             YEARS ENDED DECEMBER 31,
                                                                                 ------------------------------------------------
                                                                                     1997                1996              1995
                                                                                 -------------         ---------         --------
<S>                                                                              <C>                   <C>               <C>
Cash flows from operating activities:
  Net income (loss) ............................................................ $ (1,158,586)         (577,123)          238,190
  Adjustments to reconcile net income (loss) to net cash provided
   by operating activities:
      Increase in deferred franchise sales revenue .............................      374,500           541,400           129,000
      Franchise sales revenue recognized - center openings .....................     (257,401)         (183,300)         (430,110)
      Increase in deferred franchising costs ...................................      (75,176)         (111,141)          (78,130)
      Franchise costs recognized - center openings .............................       85,822            32,843            99,771
      Provision for credit losses ..............................................      253,368           206,221           151,800
      Loss realized on retirement of property and equipment ....................      131,532             1,110            18,130
      Depreciation and amortization ............................................      972,730           939,695           815,905
      Loss (gain) on sale/disposition/closure of centers .......................      327,850            58,421           (31,705)
      Accrual of Consultant Agreement ..........................................      357,113              -                 -
      Undeveloped franchise licenses canceled ..................................         -              (27,563)          (18,075)
      Interest on litigation award .............................................         -                 -               20,723
      Increase in fair value of warrants extended ..............................         -               54,000              -
      Other, net ...............................................................      (6,099)               380            17,113

      Change in assets and liabilities:
        Increase in accounts receivable ........................................    (582,461)          (448,549)         (422,484)
        Decrease in notes receivable ...........................................      76,799              8,456            29,150
        Decrease (increase) in inventories .....................................     104,109           (153,658)          (13,513)
        Decrease (increase) in prepaid expenses and supplies ...................      11,560             30,453           (30,634)
        Increase (decrease) in accounts payable ................................     260,656            273,797          (194,363)
        Increase (decrease) in accrued salaries and wages and other
         accrued liabilities ...................................................      55,591            129,666           (62,370)
                                                                                 -------------         ---------         --------

         Net cash provided by operating activities ............................. $   931,907            775,108           238,398
                                                                                 -------------         ---------         --------

</TABLE>

                           (Continued on next page)

                                    F-6
<PAGE>

             GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (CONTINUED)

<TABLE>
<CAPTION>
                                                                                             YEARS ENDED DECEMBER 31,
                                                                                 -------------------------------------------------
                                                                                     1997                1996              1995
                                                                                 -----------          ----------          --------
<S>                                                                              <C>                   <C>               <C>
Cash flows from investing activities:
  Principal receipts on direct financing leases ..............................   $   189,926             177,656           181,155
  Acquisition of centers .....................................................      (688,191)           (394,389)         (870,388)
  Sale of centers ............................................................       116,901              75,354           123,233
  Capital expenditures .......................................................      (297,570)           (724,861)         (218,041)
  Notes receivable from developers ...........................................       225,000            (415,000)             -
  Decrease (increase) in other assets ........................................      (260,539)             29,247           (41,925)
                                                                                 -----------          ----------          --------

    Net cash used in investing activities ....................................      (714,473)         (1,251,993)         (825,966)
                                                                                 -----------          ----------          --------

Cash flows from financing activities:
  Proceeds from long-term obligations ........................................     3,045,000           1,257,000         1,241,880
  Principal payments on long-term obligations ................................    (3,316,796)           (493,249)         (350,372)
  Principal payments on capital lease obligations ............................      (409,115)           (348,365)         (307,669)
  Issuance of common stock ...................................................       282,563                -                 -
  Issuance of preferred stock, net of offering costs .........................          -                   -               (7,500)
  Payment of accumulated dividends upon conversion of preferred stock
   to common stock ...........................................................          -                   (729)           (9,942)
  Decrease (increase) in restricted cash .....................................        34,927              (2,694)          149,407
  Increase in lease deposit obligations ......................................         3,456               4,500               300
                                                                                 -----------          ----------          --------

    Net cash provided by (used in) financing activities ......................      (359,965)            416,463           716,104
                                                                                 -----------          ----------          --------

Net increase (decrease) in cash ..............................................      (142,531)            (60,422)          128,536

Cash, beginning of year ......................................................       324,745             385,167           256,631
                                                                                 -----------          ----------          --------

Cash, end of year ............................................................   $   182,214             324,745           385,167
                                                                                 -----------          ----------          --------
                                                                                 -----------          ----------          --------
Supplemental disclosures of cash flow information -
    Cash paid during the year for interest ...................................   $ 1,226,054           1,066,840           955,889
                                                                                 -----------          ----------          --------
                                                                                 -----------          ----------          --------

</TABLE>

             See notes to the consolidated financial statements

                                    F-7
<PAGE>

GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS


A.       DESCRIPTION OF BUSINESS

         Grease Monkey Holding Corporation (GMHC) is the parent company of
Grease Monkey International, Inc. (GMI), which operates, leases, manages and
franchises automotive quick-service preventive fluid maintenance Centers
(Grease Monkey Centers or Centers). GMHC established a wholly-owned
subsidiary, GM Properties, Inc. (GMP), for the purpose of acquiring
(purchasing or leasing) real estate, which in turn is leased to GMI
franchisees. In 1997, GMHC established a wholly-owned subsidiary, Grease
Monkey de Mexico SA de CV ("GMM"), for the purpose of franchising automotive
quick-service preventive fluid maintenance centers in Mexico. The four
companies, collectively are referred to as the "Company".

         Grease Monkey Centers provide the automobile user with convenient
preventive fluid maintenance services. In about ten minutes, without an
appointment, Grease Monkey service technicians change the oil, install a new
oil filter, lubricate the chassis, adjust tire pressure, wash windows and
vacuum the interior of an automobile. At the same time, all fluid levels are
checked and topped off if necessary. Grease Monkey Centers also offer
transmission fluid changes, differential fluid changes, radiator flushes, air
conditioning recharges, automotive light bulb replacement, and oil additive
packages, and will replace air filters and install new wiper blades.

         The principal markets in which Grease Monkey operates include
thirty-one states and Mexico with concentrations in California, Colorado,
Iowa, Indiana, North Carolina, New Jersey, Ohio, Pennsylvania, South
Carolina, Texas, Virginia and Washington.

         The following table summarizes the number of Grease Monkey Centers
in operation during the last three fiscal years:

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                            -------------------------
                                                            1997       1996      1995
                                                            ----       ----      ----
<S>                                                        <C>         <C>       <C>
Franchised Grease Monkey Centers.........................    187        184       181
Company-owned Grease Monkey Centers......................     31         31        29
                                                            ----       ----      ----
Total Grease Monkey Centers in operation at year end.....    218        215       210
                                                            ----       ----      ----
                                                            ----       ----      ----
</TABLE>

Included in Franchised Grease Monkey Centers are twenty-one Centers in
1997, twenty Centers in 1996 and sixteen Centers in 1995 located in Mexico.

B.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


         BASIS OF PRESENTATION -- The consolidated financial statements
include the accounts of GMHC and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated.

                                      F-8
<PAGE>

B.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


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

         RESTRICTED CASH - Included in restricted cash at December 31, 1996,
is a certificate of deposit pledged to secure long-term debt with a balance
of $33,000. The debt was paid off in 1997.

         INVENTORIES - Inventories are stated at the lower of cost,
determined by the first-in, first-out (FIFO) method, or market. Inventories
consist primarily of automotive service products and promotional materials.

         NET INVESTMENT IN DIRECT FINANCING LEASES AND OBLIGATIONS UNDER
CAPITAL LEASES - The Company has entered into leasing arrangements with
franchisees of Grease Monkey Centers. In some cases, the Company leases the
property from an outside party and, in turn, sublets the property to the
franchisee. Certain of these leases and subleases meet the criteria of
capitalized leases and direct financing leases. In addition, the Company
leases buildings at certain Companyowned Grease Monkey Centers. Certain of
these leases are capital leases. Capital leases are recorded at the lesser of
the building's fair market value at the inception of the lease or the net
present value of the minimum lease payments.

         PROPERTY AND EQUIPMENT - Property and equipment are stated at cost,
less accumulated depreciation and amortization. Depreciation and amortization
are computed using the straight-line method over the following estimated useful
lives:

<TABLE>
         <S>                                              <C>
         Buildings accounted for as
           capitalized leases.................            term of the lease (generally 15 to 20 years)
         Buildings............................            20 years
         Furniture and fixtures...............            10 years
         Leasehold improvements...............            term of the lease (generally 15 to 20 years)
         Machinery and equipment..............            5 to 10 years
</TABLE>

         INTANGIBLE ASSETS - The cost of Grease Monkey Centers acquired in
excess of the fair value of tangible assets acquired at the date of
acquisition is recorded as goodwill and covenants not to compete. Goodwill is
amortized on a straight-line basis over the remaining term of the underlying
lease (15-20 years). The covenants not to compete are amortized on a
straight-line basis over the period of the agreements.

         IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED
OF - The Company reviews its long-lived assets and intangibles for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of the asset to the
future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be

                                     F-9
<PAGE>

B.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


recognized is measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets.

         MARKETING COSTS - The Company participates in various advertising
and marketing programs, individually and in conjunction with product
suppliers. Certain of the Company's costs incurred in connection with these
programs are reimbursed. All costs related to marketing and advertising are
expensed in the period incurred.

         AREA DEVELOPMENT FEES, INITIAL FRANCHISE FEES AND RELATED FRANCHISE
COSTS - GMI licenses franchisees to operate Grease Monkey Centers pursuant to
a franchise agreement with GMI. A franchisee is required to pay a franchise
fee totaling $28,000 for the initial license and $16,800 for each additional
license. If three or more licenses are purchased concurrently, an Exclusive
Territory Development Agreement ("ETD Agreement") may be executed. When an
ETD Agreement is executed, the franchisee pays a development fee equal to
$28,000 for the first Center to be developed and $8,400 for the second and
each subsequent Center to be developed. The development fee is nonrefundable.
The initial franchise fee of $28,000 is charged for the first franchise and
$16,800 for the second and each subsequent franchise acquired under the ETD
Agreement. The portion of the development fee paid for each Center to be
developed is applied toward the initial franchise fee for that franchise. The
Company also offers to select qualified persons the opportunity to acquire a
larger nonexclusive area ("Development Area") than under the ETD Agreement.
If a Development Area is purchased, an Area Development Agreement ("AD
Agreement") is executed. When an AD Agreement is executed, the franchisee
pays an area development fee equal to $5,000 times the estimated number of
franchises which may be established in the Development Area. The initial
franchise fee of $28,000 is charged for the first franchise and $16,800 for
the second and each subsequent franchise acquired under the AD Agreement. The
development fees and license fees are deferred and recognized as franchise
sales when the Grease Monkey Centers open. Incremental development costs are
deferred, but not in excess of the deferred revenue, net of the estimated
cost to open the Grease Monkey Center, and are expensed when the revenue is
recognized.

         ROYALTY FEES - Royalties as allowed by the franchise agreement are
accrued on a percentage of sales (ranging from 3% to 5%) as reported by
franchisees.

         Based upon many factors, including the age of amounts owed the
Company, the extent of collateralization, and historical performance, the
Company may place certain financially troubled franchisees on a non-accrual
status. During 1997, approximately $147,000 ($112,000 in 1996 and $171,000 in
1995) in estimated royalty revenue was not recognized as a result of the
non-accrual policy. The Company actively pursues collection of all
receivables, including receivables that are not recognized as income until
collected.

         ALLOWANCE FOR DOUBTFUL ACCOUNTS - The allowance for doubtful
accounts is maintained at amounts the Company deems adequate to cover
estimated losses on accounts and notes receivable. In determining the level
to be maintained, the Company evaluates many factors including the
franchisees' ability to pay, historical performance, the collateral value of
the franchisees' Centers and any undeveloped franchises owned by the
franchisee, and prevailing and anticipated economic conditions. In the
opinion of the

                                     F-10
<PAGE>

B.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Company, the allowances are adequate to absorb reasonably foreseeable losses.
Charge-offs to the allowances are made when accounts and notes receivable are
considered uncollectible.

         COMPANY-OWNED CENTERS - At December 31, 1997, the Company owned 31
Grease Monkey Centers. The combined revenue and expenses (excluding
depreciation, amortization and interest expense) for those Grease Monkey
Centers operated by the Company are reported on the Consolidated Statements
of Operations as Company-owned Centers.

         INCOME TAXES - The Company accounts for income taxes in accordance
with Statement of Financial Accounting Standards No. 109, ACCOUNTING FOR
INCOME TAXES (Statement 109). Under the asset and liability method of
Statement 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date.


         STOCK OPTION PLAN - Prior to January 1, 1996, the Company accounted
for its stock option plans in accordance with the provisions of Accounting
Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. As such, compensation expense was
recorded on the date of grant only if the current market price of the
underlying stock exceeded the exercise price. On January 1, 1996, the Company
adopted the disclosure requirement of SFAS No. 123, Accounting for
Stock-Based Compensation, which permits entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income (loss) and
pro forma earnings (loss) per share disclosures for employee stock option
grants made in 1995 and future years as if the fair-value-based method
defined in SFAS No. 123 had been applied.

         EARNINGS (LOSS) PER COMMON SHARE - Effective for the year ended
December 31, 1997, earnings (loss) per common share (EPS) is computed using
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share." SFAS No. 128 established standards for computing and presenting EPS and
supersedes all prior EPS guidance found in APB Opinion 15. Basic EPS is computed
by dividing income available to common shareholders by the weighted-average
number of common shares outstanding during the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common shares. All prior periods
have been restated to conform with SFAS No. 128.

         RECLASSIFICATIONS - Certain amounts in the 1995 and 1996 financial
statements have been reclassed to conform to the 1997 presentation.

                                     F-11
<PAGE>

C.       ACQUISITIONS

         During 1997, the Company acquired three Grease Monkey Centers from
franchisees. The Company paid cash and assumed liabilities for total
consideration of $1,077,456 for the Centers.

         During 1996, the Company acquired seven Grease Monkey Centers from
franchisees (five foreclosed Centers and two purchased Centers). The Company
foreclosed on amounts due the Company, received a note receivable and assumed
liabilities resulting in total consideration of $260,158 for the five
foreclosed Centers, and paid cash and assumed liabilities for total
consideration of $1,604,521 for the two purchased Centers.

         During 1995, the Company acquired one Grease Monkey Center from a
franchisee for total consideration of $870,388.

         The results of operations of the Grease Monkey Centers acquired are
included in the accompanying Consolidated Financial Statements from the date
of acquisition. All acquisitions were recorded under the purchase method of
acquisition accounting.

                                     F-12
<PAGE>

D.       NOTES RECEIVABLE

Notes receivable consist of the following:

<TABLE>
<CAPTION>                                                                                         DECEMBER 31
                                                                                        -----------------------------
                                                                                             1997                1996
                                                                                        ---------            --------
<S>                                                                                      <C>                <C>
   Notes receivable from franchisees. Both interest and non-interest
      bearing with interest rates ranging from 6% to 10% at December 31,
      1997. Due in monthly installments of approximately $6,900
      including interest (maturities range through February 2006).
      Generally collateralized by franchise rights, property and
      equipment of Grease Monkey Centers, and undeveloped licenses...................    $354,694             304,714
   Notes receivable from franchisees. Both interest and non-interest
      bearing with interest rates ranging from 8% to 10% at December 31, 1997.
      Due in monthly installments of approximately $7,500 (maturities range
      through March 2002).  Unsecured................................................      92,339              52,006
   Notes receivable from developers.  Interest at 9.04%.   Monthly
      payments of interest only, with principal due April 1998.......................     190,000             415,000
   Other notes receivable.  Both interest and non-interest bearing
      with interest rates ranging from 7% to 8% at December 31, 1997
     (maturities range through February 2006)........................................     141,399             145,190
                                                                                        ---------            --------
                                                                                          778,432             916,910
   Less allowance for uncollectible amounts..........................................    (234,597)           (145,444)
   Less current portion..............................................................    (318,658)           (500,705)
                                                                                        ---------            --------
                                                                                         $225,177             270,761
                                                                                        ---------            --------
                                                                                        ---------            --------

</TABLE>

Maturities of notes receivable (excluding the allowance for uncollectible
amounts) are as follows:

<TABLE>
<CAPTION>

 YEAR ENDED
DECEMBER 31,
<S>                                                                                                 <C>
  1998.............................................................................                 $   393,314
  1999.............................................................................                      96,912
  2000.............................................................................                      79,118
  2001.............................................................................                      77,102
  2002.............................................................................                      57,956
  Thereafter.......................................................................                      74,030
                                                                                                   ------------
                                                                                                    $   778,432
                                                                                                   ------------
                                                                                                   ------------
</TABLE>

                                     F-13
<PAGE>

E.       LONG-TERM OBLIGATIONS

Long-term obligations consists of the following:
<TABLE>
<CAPTION>                                                                                       DECEMBER 31
                                                                                         ------------------------
                                                                                            1997           1996
                                                                                         ----------     ---------
<S>                                                                                      <C>            <C>
   Notes payable under an aggregate line of credit of $5,000,000 with
      interest at 9.26% plus guarantee fees, maturing in September 2002, with
      an option to extend to September 2007 under an increased guarantee fee,
      guaranteed by a motor oil supplier with a related Master Supply
      Contract, and restricted to the paying off of certain debt, and for
      acquiring, constructing and/or developing of Grease Monkey Centers.............    $2,579,775          -
    Notes payable under an aggregate line of credit of $2,400,000 with
      interest at 9%, maturing in June 2005, secured by conditional
      assignment of leases and lubrication equipment and restricted to the
      acquisition or development of Grease Monkey Centers............................        -          1,787,312
    Notes payable to oil suppliers which are non-interest bearing and
      amortized based on product purchases, maturing at various times through
      August 2011, secured by lubrication equipment at Grease Monkey Centers
      having a net book value of $135,356 at December 31, 1997.......................       303,607       402,447
    Notes payable with interest rates ranging from 8.5% to 12%, maturing at
      various times through July 2011, secured by mortgages on real property
      and lubrication equipment having a net book value of $522,004 at
      December 31, 1997..............................................................       377,686       619,464
    Notes payable with interest rates ranging from 7.5% to 12%, maturing at
      various times through April 2008, secured by assets at Grease Monkey
      Centers having a net book value of $1,026,491 at December 31, 1997.............       648,786       784,051
    Notes payable under a line of credit of $2,000,000 guaranteed by a
      motor oil supplier with interest at 9% (including a guarantee fee of
      3.3%) expires in April 1998, and is restricted to the development
      of Grease Monkey Centers ......................................................       190,000       415,000
    Long-term obligation to a former executive with an imputed interest
      rate of 9%, maturing March 1999 ...............................................       230,639          -


    Other long-term obligations......................................................       184,878       184,157
                                                                                         ----------    ----------
                                                                                          4,515,371     4,192,431
    Less current portion.............................................................      (715,289)   (1,066,283)
                                                                                         ----------    ----------
                                                                                         $3,800,082     3,126,148
                                                                                         ----------    ----------
                                                                                         ----------    ----------
</TABLE>

                                     F-14
<PAGE>

E.       LONG-TERM OBLIGATIONS (CONTINUED)

Aggregate maturities of long-term obligations as of December 31, 1997, are as
follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------
<S>                                                                                                 <C>
  1998...........................................................................                   $   715,289
  1999...........................................................................                       489,086
  2000...........................................................................                       331,691
  2001...........................................................................                       358,501
  2002...........................................................................                       374,996
  Thereafter.....................................................................                     2,245,808
                                                                                                     ------------
                                                                                                    $ 4,515,371
                                                                                                     ------------
                                                                                                     ------------
</TABLE>

F.       LEASES

         The Company is a party to a number of leases, as described below.

         As lessee, the Company leases certain Grease Monkey Center sites and
office space under operating lease agreements. Lease terms range from one to
twenty years. The Company pays the property taxes, insurance, and maintenance
costs related to the leased property where applicable. Rent expense under
operating leases was $2,565,414 for 1997, $2,524,578 for 1996 and $2,274,542 for
1995.

         The Company also leases additional Grease Monkey Center sites under
capital lease agreements. These sites are either sublet to franchisees or
operated as Company-owned Centers. The typical lease period is 15 to 20 years
and some leases contain renewal options. These leases are accounted for as
capital leases and are capitalized using interest rates appropriate at the
inception of each lease.

         As lessor, the Company sublets 30 sites to franchisees and third
parties. The typical sublease period coincides with the primary lease term, and
some leases contain renewal options. The franchisees or tenants pay the property
taxes, insurance and maintenance costs related to the leased property. Certain
of the subleases are accounted for as direct financing leases. In those cases
where the Company subleases only land, or the lease or sublease does not meet
the criteria for capitalization, the sublease is accounted for as an operating
lease.

         The Company has guaranteed leases for six of its franchisees. At
December 31, 1997, the aggregate contingent liability under the lease guarantees
amounted to approximately $1,557,281.

                                     F-15
<PAGE>

F.       LEASES (CONTINUED)

         Future minimum commitments under leasing arrangements for Grease
Monkey Centers at December 31, 1997, are as follows:

<TABLE>
<CAPTION>
                                                      PAYABLE AS LESSEE        RECEIVABLE AS LESSOR
                                                  ------------------------   ------------------------
                YEARS ENDED                         CAPITAL      OPERATING     CAPITAL     OPERATING
                DECEMBER 31,                         LEASES        LEASES       LEASES       LEASES
                ------------                      ------------  -----------  ----------   -----------
<S>                                               <C>           <C>          <C>          <C>
1998 ...........................................  $ 1,254,523    2,057,782     541,629       909,240
1999 ...........................................    1,262,203    1,974,959     551,508       846,200
2000 ...........................................    1,290,483    1,924,611     581,818       868,048
2001 ...........................................    1,299,355    1,828,444     584,685       845,139
2002 ...........................................    1,257,554    1,789,534     542,944       794,074
Thereafter .....................................    5,866,231    7,308,635   2,724,877     3,340,945
                                                  -----------   ----------  ----------     ---------
Total minimum commitments ......................   12,230,349   16,883,965   5,527,461     7,603,646
Less portion representing interest .............   (4,917,145)  ----------  (2,167,959)    ---------
                                                  -----------   ----------  ----------     ---------
Present value of net minimum commitments .......    7,313,204                3,359,502
Less current portion ...........................     (464,955)                (204,921)
                                                  -----------               ----------
Non-current portion ............................  $ 6,848,249                3,154,581
                                                  -----------               ----------
                                                  -----------               ----------
</TABLE>

Amounts capitalized for Centers under capital leases are included in
buildings (primarily representing Company Centers) and as the net investment
in direct financing leases (representing centers subleased to franchisees).
The following is a summary of Grease Monkey Centers under capital leases
included in buildings:

<TABLE>
<CAPTION>
                                         DECEMBER 31,
                                  ------------------------
                                     1997          1996
                                  -----------   ----------
<S>                               <C>           <C>
Buildings ......................  $ 4,595,274    3,877,414
Less accumulated depreciation ..   (1,481,383)  (1,209,035)
                                  -----------   ----------
                                  $ 3,113,891    2,668,379
                                  -----------   ----------
                                  -----------   ----------
</TABLE>

         Interest expense attributable to leases for Centers sublet to
franchisees is included in leasing expense in the accompanying financial
statements. Interest expense attributable to capital leases of Company
Centers is included in interest expense in the accompanying financial
statements and amounted to $369,233, $364,041 and $360,783 in 1997, 1996 and
1995, respectively.


                                     F-16
<PAGE>

F.       LEASES (CONTINUED)

         The Company leases its office space and training facility under a
lease expiring in June 1998. Rent under the lease is approximately $18,000
per month.

G.       STOCKHOLDERS' EQUITY

         On June 11, 1996, at the Annual Meeting of Shareholders, the
Company's shareholders voted to amend Article IV of the Company's Articles of
Incorporation to increase the authorized shares of common stock with a par
value of $0.03 per share to 20,000,000 shares.

         On January 20, 1997, Charles E. Steinbrueck, President and Chief
Executive Officer, entered into an agreement to purchase from the Company
190,476 shares of restricted common stock of the Company at $1.3125, the last
trade price on January 20, 1997, for a total consideration of $250,000.

         The Company's Series C, 6% cumulative, Preferred stock is redeemable
at the option of the Company upon 60 days prior written notice. At the option
of the holder, at any time prior to the close of business on the redemption
date, each share of Series C Preferred stock, plus any accumulated unpaid
dividends, may be converted into shares of common stock at a conversion price
of $2.50 per share of common stock. During 1995, 1,247 shares of Series C
Preferred stock were converted into 49,863 shares of common stock and related
dividends of $9,942 were paid in cash. During 1996, 62 shares of Series C
Preferred stock were converted into 2,480 shares of common stock and related
dividends of $729 were paid in cash. During 1997, there were no conversions
of Preferred stock into common stock. As of December 31, 1997, accumulated
unpaid dividends totaled $506,946.

         On August 5, 1991, the Company issued warrants to purchase 500,000
shares of its common stock for $1.50 per share to First of September
Corporation, the Company's majority shareholder. In exchange, First of
September Corporation provided the Company with a $750,000 line of credit
which was repaid on March 23, 1994, and canceled. The warrants were to expire
on August 4, 1996, but were extended in March 1996 by the Board of Directors
to August 4, 1998, as consideration for First of September Corporation's
agreement to cooperate in an equity and debt financing, then under
consideration. The increase in the estimated fair value of the warrants of
$54,000 was recorded as an increase in stockholder's equity and deferred
offering costs. The offering costs were subsequently written off when the
proposed financing was abandoned. On June 30, 1997, First of September
Corporation was dissolved and any ownership of the Company's common stock,
preferred stock and the warrants mentioned previously were transferred to
First of September Corporation's shareholders.

         The Company has an employee deferred compensation 401(k) plan and
matches employee contributions to this plan in an amount equal to 50% of the
employees' contribution, up to a maximum of 6% of the employees'
compensation. The Company's contribution is paid with its $0.03 par value
common stock (net of forfeitures) valued at market on the date of the
contribution. During 1997, 1996 and 1995, the Company contributed 33,234,
40,616, and 11,542 shares to this plan at an average of $1.36, $1.14 and
$1.82 per share, respectively.

         At December 31, 1997, the Company has three stock-based compensation
plans. Under the terms of the 1986 and 1993 Plan, the Company may grant
incentive stock options to officers and employees on terms and conditions
determined by the Option Committee. Options are granted at an exercise price
equal to market value on the date of the grant, are exercisable immediately,
expire five years from the date of grant

                                     F-17
<PAGE>

G.       STOCKHOLDERS' EQUITY (CONTINUED)

and expire upon termination of employment. The 1986 Plan reserved 66,667
shares and the 1993 Plan reserved 300,000 shares for grant under the Plan. No
further options can be granted under the 1986 Plan. Under the terms of the
1994 Plan, the Company may grant to officers, directors, consultants and
employees, on terms and conditions determined by the Option Committee,
incentive stock options, cash awards, stock bonuses or stock appreciation
rights. Options granted under the 1994 Plan cannot be exercisable for more
than ten years and the exercise price must be at least 100% of the fair
market value of the Company's common stock on the date of the grant. The 1994
Plan originally reserved 500,000 shares for grant or awards under the Plan.
In June 1997, the Company's shareholders approved an additional 500,000
shares.

         On January 20, 1997, five year options to purchase 650,000 shares of
the Company's common stock at $1.31 per share were granted to Charles E.
Steinbrueck, President and Chief Executive Officer. These options vest upon
certain performance criteria being achieved and were not granted under the
Company's qualified stock option plans. At December 31, 1997, 200,000 of
these options had vested, and are included in the calculation of compensation
costs.

         The Company applies APB Opinion No. 25 and the related
Interpretations in accounting for its plans. Accordingly, no compensation
cost has been recognized for its fixed stock option plans or the performance
based options. Had compensation cost for the Company's stock-based
compensation plans been determined consistent with FASB No. 123, the
Company's net income (loss) and earnings (loss) per share would have been
reduced to the proforma amounts indicated below:

<TABLE>
<CAPTION>
                                                 1997          1996
                                             ------------   ----------
<S>                    <C>                   <C>            <C>
Net income (loss)      As Reported
                        (net of preferred
                         stock dividends)    $(1,283,964)   $(702,889)
                       Pro forma             $(1,408,445)   $(750,717)
Earnings (loss)
per common share       As Reported           $      (.29)   $   (0.16)
                       Pro forma             $      (.32)   $   (0.17)
</TABLE>

         The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1997 and 1996; no dividend
yield; expected volatility approximating 50% percent; risk free interest rate
of approximately 6 percent; and expected lives of five years.


                                     F-18
<PAGE>

G.       STOCKHOLDERS' EQUITY (CONTINUED)

         A summary of the status of the Company's three fixed stock option
plans as of December 31, 1997, 1996 and 1995, and changes during the years
ended on those dates is presented below:

<TABLE>
<CAPTION>
                                                    SHARES        WEIGHTED
                                                  OUTSTANDING      AVERAGE
                                       SHARES         AND         EXERCISE
                                      RESERVED    EXERCISABLE       PRICE
                                     ----------   -----------     ---------
<S>                                  <C>          <C>             <C>
Balances at December 31, 1994 ...      833,333      291,767          2.19
   Granted ......................         -         577,666          1.82
   Canceled .....................         -        (332,767)(1)      2.20
                                     ----------    ---------         ----
Balances at December 31, 1995 ...      833,333      536,666          1.79
   Granted ......................         -         182,200          1.07
   Canceled .....................         -         (52,633)         1.62
   Expired ......................         (133)        -               -
                                     ----------    ---------         ----
Balances at December 31, 1996 ...      833,200      666,233          1.60
   Additional shares reserved ...      500,000         -               -
   Granted ......................         -         100,000          1.31
   Exercised ....................      (30,000)     (30,000)         1.09
   Canceled .....................         -        (103,634)         1.75
   Expired ......................      (10,000)        -               -
                                     ----------    ---------         ----
Balances at December 31, 1997 ...    1,293,200      632,599          1.56
                                     ----------    ---------         ----
                                     ----------    ---------         ----
</TABLE>

<TABLE>
<CAPTION>
                                        1997          1996
                                     ----------    ---------
<S>                                  <C>           <C>
Weighted-average fair value of
   options granted during the
   year .........................      $0.66          $0.42
</TABLE>

(1)  Includes 291,666 of previously granted options with exercise prices of
     $1.88 to $2.53 per share, which were canceled and a corresponding number
     of options granted at $1.75 per share.

The following table summarizes information about fixed stock options
outstanding at December 31, 1997:

<TABLE>
<CAPTION>
                          OPTIONS OUTSTANDING AND EXERCISABLE
                    ----------------------------------------------
                                         WEIGHTED-
                         NUMBER           AVERAGE        WEIGHTED-
                    OUTSTANDING AND      REMAINING        AVERAGE
RANGE OF             EXERCISABLE AT     CONTRACTUAL       EXERCISE
EXERCISE PRICES         12/31/97           LIFE            PRICE
---------------     ---------------     -----------      ---------
<S>                 <C>                 <C>              <C>
  $1.06 - 1.17           143,200         3.63 years        $1.07
          1.31           100,000         4.05               1.31
   1.59 - 1.75           319,399         2.57               1.71
          2.22            70,000         2.30               2.22
                         -------
   1.06 - 2.22           632,599         3.02               1.56
                         -------
                         -------
</TABLE>


                                     F-19
<PAGE>

H.       GENERAL AND ADMINISTRATIVE EXPENSES

         The following is a summary of general and administrative expenses:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                        -------------------------------------------
                                                            1997            1996             1995
                                                        -----------      ---------        ---------
<S>                                                     <C>              <C>              <C>
Salaries, wages and personnel expenses ...............  $ 2,213,721      2,007,997        1,992,406
Travel and entertainment expenses ....................      374,664        375,460          357,140
Office expenses ......................................      631,062        648,552          611,998
Franchise development and training expenses ..........      121,467         48,555           55,139
Franchise sales and promotional expenses .............       98,875         90,276           30,610
Terminated projects ..................................       12,644        206,469           26,250
Litigation, including legal fees and related costs ...      137,612        344,139          106,176
Professional fees - legal, tax and accounting ........      233,909        145,733          166,306
Company-owned Centers division overhead ..............      819,146        678,476          564,719
Loss on sale of assets/asset impairment ..............       65,558          1,110            9,886
Consultant agreement/severance expenses ..............      459,420           -                -
Other ................................................      214,395        193,614          189,536
                                                        -----------      ---------        ---------
   Total general and administrative expenses .........  $ 5,382,473      4,740,381        4,110,166
                                                        -----------      ---------        ---------
                                                        -----------      ---------        ---------
</TABLE>


                                     F-20
<PAGE>

I.       INCOME TAXES

         In 1997, the deferred tax benefit that otherwise would have been
provided for was offset by an increase in the valuation allowance of $447,000.
In 1996, the deferred tax benefit that otherwise would have been provided for
was offset by an increase in the valuation allowance of $184,000. In 1995,
deferred income taxes that would otherwise have been provided for were offset by
recognizing the benefit of a portion of the existing net deferred tax assets and
reducing the valuation allowance by $116,000.

         The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1997 and 1996, are presented below:

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                                ---------------------------------------
                                                                       1997                   1996
                                                                -----------------      ----------------
<S>                                                             <C>                    <C>
Deferred tax assets:
   Accounts and notes receivable, principally due to
      the allowance for doubtful accounts .  .  .  .  .  .  .   $         143,000                49,000
   Property and equipment, principally due to
      differences in basis and depreciation  .  .  .  .  .  .             630,000               570,000
   Goodwill .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .             247,000               215,000
   Deferred franchise sales revenue, due to deferral
      for financial reporting purposes .  .  .  .  .  .  .  .             370,000               340,000
   Other .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .             211,000                62,000
   Net operating loss carry-forwards   .  .  .  .  .  .  .  .           1,548,000             1,474,000
                                                                -----------------      ----------------
     Total gross deferred tax assets   .  .  .  .  .  .  .  .           3,149,000             2,710,000
     Less valuation allowance .  .  .  .  .  .  .  .  .  .  .          (3,078,000)           (2,631,000)
                                                                -----------------      ----------------
     Net deferred tax assets  .  .  .  .  .  .  .  .  .  .  .              71,000                79,000
                                                                -----------------      ----------------
Deferred tax liabilities:
    Deferred franchising costs, due to deferral for
       financial reporting purposes .  .  .  .  .  .  .  .  .             (71,000)              (79,000)
                                                                -----------------      ----------------
       Total gross deferred tax liabilities  .  .  .  .  .  .             (71,000)              (79,000)
                                                                -----------------      ----------------
       Net deferred tax liability   .  .  .  .  .  .  .  .  .   $            -                     -
                                                                -----------------      ----------------
                                                                -----------------      ----------------
</TABLE>

         The valuation allowance as of December 31, 1997 and 1996 represents
deferred tax assets that, based on the Company's earnings history and
uncertainty regarding the timing of recognition, may not be realized.

         The Company has net operating loss carry-forwards at December 31, 1997,
of approximately $4,100,000 for income tax purposes. The net operating loss
carry-forwards expire between 2002 and 2012. As a result of change in control of
the Company in March of 1991, approximately $900,000 of the net operating loss
carry-forward is subject to limitations. The Company is limited to utilizing
approximately $50,000 of such carry-forward annually.

         The Company had deducted approximately $1,692,000 related to the
exercise of non-qualified stock options from 1987 to 1989, which is included in
the net operating loss carry-forward for income tax purposes. If the $1,692,000
in deductions are realized, the tax benefit will be credited to capital in
excess of par value.

                                     F-21
<PAGE>

J.       LITIGATION

         The Company is a party to legal proceedings including claims by
franchisees against the Company that arise in the ordinary course of business.
In the opinion of management, the outcome of these matters will not have a
material effect on the financial condition, results of operations, or cash flows
of the Company.

K.       SUPPLEMENTAL STATEMENT OF CASH FLOW INFORMATION

         The following table sets forth, by period, the amount and nature of
amounts paid and received for the acquisition, sale (refranchising) and closure
of Company-owned Centers:

<TABLE>
<CAPTION>
                                                                                YEARS ENDED DECEMBER 31,
                                                        -------------------------------------------------------------------------
                                                               1997                        1996                        1995
                                                        -------------------        -------------------        -------------------
<S>                                                     <C>                        <C>                        <C>
Acquisition of Centers:
   Number of Centers purchased  .   .   .   .   .   .                     3                          2                          1
                                                        -------------------        -------------------        -------------------
                                                        -------------------        -------------------        -------------------

   Number of Centers foreclosed .   .   .   .   .   .                  -                             5                        -
                                                        -------------------        -------------------        -------------------
                                                        -------------------        -------------------        -------------------

   Receivables applied (net of related
      allowance)    .   .   .   .   .   .   .   .   .   $            18,430                    251,328                        -
   Liabilities assumed  .   .   .   .   .   .   .   .               370,835                  1,218,962                        -
   Cash paid    .   .   .   .   .   .   .   .   .   .               688,191                    394,389                    870,388
                                                        -------------------        -------------------        -------------------
   Cost of assets acquired  .   .   .   .   .   .   .   $         1,077,456                  1,864,679                    870,388
                                                        -------------------        -------------------        -------------------
                                                        -------------------        -------------------        -------------------

Sales:
   Number of Centers refranchised/closed    .   .   .                     6*                         5                          3
                                                        -------------------        -------------------        -------------------
                                                        -------------------        -------------------        -------------------

   Cash received    .   .   .   .   .   .   .   .   .   $           116,901                     75,354                    123,233
   Notes received   .   .   .   .   .   .   .   .   .                26,800                    124,777                     41,993
   Liabilities assumed by purchaser .   .   .   .   .                40,875                     39,750                     40,000
   Loss (gain) on sale  .   .   .   .   .   .   .   .               327,850                     58,421                    (31,705)
   Operating and marketing subsidies
     granted to purchaser   .   .   .   .   .   .   .                  -                       (97,750)                      -
   Franchise fees   .   .   .   .   .   .   .   .   .                14,000                     28,000                     53,000
   Franchise costs  .   .   .   .   .   .   .   .   .                  -                        (5,000)                    (7,500)
   Liability assumed by seller  .   .   .   .   .   .                  -                          -                        (5,000)
                                                        -------------------        -------------------        -------------------
   Net book value of Centers
      refranchised/closed   .   .   .   .   .   .   .   $           526,426                    223,552                    214,021
                                                        -------------------        -------------------        -------------------
                                                        -------------------        -------------------        -------------------
</TABLE>

         * Includes one Center which was originally developed to be a
Company-owned Center, but was sold to a franchisee prior to opening.

         In 1995, the Company assumed temporary operations of a franchised
center, resulting in a direct financing lease being cancelled and a capital
lease building being recorded in the amount of $184,524.

                                     F-22
<PAGE>


K.       SUPPLEMENTAL STATEMENT OF CASH FLOW INFORMATION (CONTINUED)

         During the year ended December 31, 1997, there were the following
non-cash transactions: the Company issued 33,234 shares of stock at an average
value of $1.36 per share in accordance with its matching requirement under the
Company's 401(k) plan; the Company wrote off a direct financing lease receivable
and the corresponding capital lease obligation of $153,316 based on the
franchisee renegotiating the lease resulting in the Company being released from
the lease; a capital lease obligation of $386,045 was recorded; and a direct
financing lease receivable and the corresponding capital lease obligation of
$83,619 was written off based on the sale of the related Center to a third
party. As a result of the sale, the landlord reduced the Company's obligation
from a primary lessor to a guarantor.

         During the year ended December 31, 1996, there were the following
non-cash transactions: the Company issued 40,616 shares of stock at an
average value of $1.14 per share in accordance with its matching requirement
under the Company's 401(k) plan; the Company entered into a settlement
agreement with a franchisee, who owned two Centers, whereby $109,439 of
receivables, $7,000 of lease deposits and one undeveloped license of $16,312
were exchanged for a non-interest bearing note receivable discounted to
$86,127 upon the sale of the Centers to a new franchisee; franchise licenses
in the amount of $15,392, net of deferred costs of $2,222, were canceled and
applied to franchisees' obligations to the Company; a parcel of land and a
building were transferred from Real Estate Held for Sale to Property and
Equipment; and a capital lease obligation of $368,000 was recorded for a
Company-owned Center.

         During the year ended December 31, 1995, there were the following
non-cash transactions: the Company issued 11,542 shares of stock at an average
value of $1.82 per share in accordance with its matching requirement under the
Company's 401(k) plan; $11,612 of lease deposits were applied to past due
accounts receivable, and $312,144 of restricted cash was released to fund a
previously recorded litigation award.

                                     F-23
<PAGE>

L.       EARNINGS PER SHARE

         In February 1997, The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings per Share
(Statement No. 128) effective for periods ending after December 15, 1997.
Statement No. 128 changes the computation, presentation and disclosure
requirements for earnings per share for entities with publicly held common
stock or potential common stock. Under such requirements, the Company is
required to present both basic earnings per share and diluted earnings per
share. Basic earnings per share is computed by dividing income available to
common stockholders by all dilutive potential common shares outstanding
during the period. The Company adopted the provisions of Statement No. 128 as
of December 31, 1997. As prescribed by Statement No. 128, the Company has
restated prior periods' earnings per share of common stock, including interim
earnings per share of common stock, in the period of adoption. Such amounts
are as follows:

<TABLE>
<CAPTION>
                         YEAR ENDED
                         DECEMBER 31,                   QUARTER ENDED - 1996                      QUARTER ENDED - 1997
                       --------------    ------------------------------------------------   -----------------------------------
                        1995    1996      March 31      June 30     Sept. 30     Dec. 31     March 31     June 30     Sept. 30
                       --------------    --------------------------------------------------------------------------------------
<S>                    <C>     <C>       <C>            <C>         <C>          <C>         <C>          <C>         <C>
Earnings per share      0.03   (0.16)    (0.04)         (0.02)          *        (0.10)      (0.11)       0.07        (0.07)
of common stock as
previously reported

Basic earnings          0.03   (0.16)    (0.04)         (0.02)          *        (0.10)      (0.11)       0.08        (0.07)
per share of
common stock


Diluted earnings        0.03   (0.16)    (0.04)         (0.02)          *        (0.10)      (0.11)       0.07        (0.07)
per share of
common stock
</TABLE>

* Less than $.01 per share

                                     F-24
<PAGE>

L.       EARNINGS PER SHARE (CONTINUED)

The following is a reconciliation between the basic and diluted earnings per
common share for income (loss) as calculated under SFAS No. 128.

<TABLE>
<CAPTION>
                                                                   FOR THE YEAR ENDED
                       ---------------------------------------------------------------------------------------------------------
                                DECEMBER 31, 1997                   DECEMBER 31, 1996                   DECEMBER 31, 1995
                          INCOME       EPS      SHARES         INCOME      EPS      SHARES         INCOME      EPS      SHARES
                       ------------  -------  ----------     ----------  -------  ----------     ----------  -------  ----------
<S>                    <C>           <C>      <C>            <C>         <C>      <C>            <C>         <C>      <C>
Income (loss)           (1,158,586)                           (577,123)                            238,190
Preferred dividends       (125,378)                           (125,766)                           (126,632)
                       ---------------------------------     -------------------------------     -------------------------------
Basic EPS               (1,283,964)   (0.29)   4,390,116      (702,889)   (0.16)   4,361,163       111,558     0.03    4,354,680
Effects of dilutive
securities:
   Common stock                                                                                                          109,083
      equivalents
Convertible Preferred                                                                                   **                    **
   Stock
                       ---------------------------------     -------------------------------     -------------------------------
Diluted EPS             (1,283,964)   (0.29)   4,390,116      (702,889)   (0.16)   4,361,163       111,558     0.03    4,463,763
                       ---------------------------------     -------------------------------     -------------------------------
                       ---------------------------------     -------------------------------     -------------------------------
</TABLE>

Options to purchase 70,000 shares of common stock were outstanding at December
31, 1997, but not included in the computation of Diluted EPS, because the
options' exercise price exceeded the average market price of the Company's
common stock during 1997.

** Antidilutive

                                     F-25
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO.                         DOCUMENT                                      PAGE
<C>          <S>                                                                  <C>
     3.       Articles of Incorporation and Bylaws.

              (a)  Bylaws, as amended through March 4, 1991,
                   incorporated by reference to the Annual Report on
                   Form 10-KSB for the fiscal year ended December 31, 1992.       N/A

              (b)  Restated Articles of Incorporation, filed November 1,
                   1991, incorporated by reference to the Annual Report
                   on Form 10-K for the fiscal year ended December 31, 1991.      N/A

              (c)  Articles of Amendment to Articles of Incorporation
                   filed June 29, 1992 incorporated by reference to the
                   Annual Report on Form 10-KSB for the fiscal year ended
                   December 31, 1992.                                             N/A

              (d)  Articles of Amendment to the Articles of
                   Incorporation filed August 15, 1996, incorporated by
                   reference to the Quarterly Report on form 10-QSB for
                   the quarter ended June 30, 1996.                               N/A

     4.       Instruments Defining the Rights of Holders Including Indentures.

              (a)  Statement of Designation, Voting Powers, Preferences,
                   and Rights of the Series C Preferred stock of Grease
                   Monkey Holding Corporation incorporated by reference
                   to the Annual Report on Form 10-KSB for the fiscal
                   year ended December 31, 1993.                                  N/A

     10.      Material Contracts.

              (a)  1986 Incentive Stock Option Plan, incorporated by
                   reference to the Annual Report on Form 10-KSB for the
                   fiscal year ended December 31, 1993.                          N/A

              (b)  1993 Incentive Stock Option Plan, incorporated by
                   reference to the Annual Report on Form 10-KSB for the
                   fiscal year ended December 31, 1994.                          N/A

              (c)  Amendment to 1993 Incentive Stock Option Plan,
                   incorporated by reference to the Annual Report
                   on Form 10-KSB for the fiscal year ended
                   December 31, 1996.                                            N/A

                                       i
<PAGE>

              (d)  1994 Stock Incentive Plan, incorporated by reference
                   to the Annual Report on Form 10-KSB for the fiscal
                   year ended December 31, 1994.                                 N/A

              (e)  Amendment to 1994 Stock Incentive Plan, incorporated
                   by reference to the Annual Report on Form 10-KSB for
                   the fiscal year ended December 31, 1996.                      N/A

              (f)  Lease Agreement dated August 20, 1991, between
                   Clarmont Enterprises, Inc., and Grease Monkey
                   International, Inc., incorporated by reference
                   to the Annual Report on Form 10-K for the fiscal
                   year ended December 31, 1991.                                 N/A

              (g)  Amendment Number One dated May 5, 1993, to Lease
                   Agreement dated August 20, 1991, between Venture West
                   Investments Limited (f.k.a. Clarmont Enterprises,
                   Inc.) and Grease Monkey International, Inc.,
                   incorporated by reference to the Annual Report on
                   form 10-KSB for the fiscal year ended December 31, 1994.      N/A

              (h)  Current form of Grease Monkey Franchise Agreement
                   currently in effect.                                           --

              (i)  Mobil Oil Company Supply Contract dated February 24,
                   1993, for Center #234 (similar contract form used for
                   all centers), incorporated by reference to Annual
                   Report on Form 10-KSB for the fiscal year ended
                   December 31, 1992.                                            N/A

              (j)  Business Loan Agreement with Bank of America for
                   $2,000,000 three year line of credit, incorporated by
                   reference to the Annual Report on Form 10-KSB for the
                   fiscal year ended December 31, 1996.                          N/A

              (k)  Consultant Agreement between Grease Monkey Holding
                   Corporation and Rex L. Utsler, incorporated by
                   reference to the Annual Report on Form 10-KSB for the
                   fiscal year ended December 31, 1996.                          N/A

              (l)  $5,000,000 Loan Agreement with Citicorp Leasing,
                   Inc., incorporated by reference to the Quarterly
                   Report on Form 10-QSB for the period ended
                   September 30, 1997.                                           N/A

              (m)  Master Supply Contract dated September 29, 1997,
                   with Mobil Oil Corporation.                                    --

                                       ii
<PAGE>

              (n)  Employment Agreement dated March 12, 1998, with Charles E.
                   Steinbrueck.                                                   --

              (o)  Employment Agreement dated January 30, 1998, with Gary L.
                   Wofford.                                                       --

              (p)  Employment Agreement dated January 30, 1998, with Dana
                   Klapper Cohen.                                                 --

     21.      Subsidiaries of the Registrant.

              (a)  Grease Monkey International, Inc., incorporated in
                   the State of Colorado (100% owned).

              (b)  GM Properties, Inc., incorporated in the State of
                   Colorado (100% owned).

              (c)  Grease Monkey de Mexico SA de CV., incorporated in
                   Mexico (100% owned).


     23.      Consent of Experts and Counsel.

              (a)  Consent of KPMG Peat Marwick LLP.                              --

     27.1     Financial Data Schedule - 1997.                                     --

     27.2     Financial Data Schedule - 1996 and 1995 annual periods restated.    --
</TABLE>

                                      iii