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

                                   FORM 10-QSB


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

         For the quarterly period ended September 30, 1998


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

         For the transition period from            to
                                        ----------    ----------
                        Commission file number 000-9812

                        Grease Monkey Holding Corporation
              ----------------------------------------------------
             (Exact name of small business issuer as specified in its charter)


              Utah                                          87-0321320
   ------------------------------               -------------------------------
  (State or other jurisdiction of              (IRS Employer Identification No.)
   incorporation or organization)

                           633 17th Street, Suite 400
                             Denver, Colorado 80202
                     --------------------------------------
                    (Address of principal executive offices)

                                 (303) 308-1660
                            -------------------------
                           (Issuer's telephone number)


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 [ ]


State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

                                                  Outstanding at
                     Class                        October 31, 1998
          -----------------------------           ----------------
          Common Stock, $0.03 par value           4,647,880 shares

Transitional Small Business Disclosure Format  Yes [ ]  No  [X]


<PAGE>
                        GREASE MONKEY HOLDING CORPORATION

                        Commission File Number: 000-9812

                        Quarter Ended September 30, 1998


                                   FORM 10-QSB

                          Part I FINANCIAL INFORMATION



         Consolidated Statements of Operations..........................  Page 1

         Consolidated Balance Sheets....................................  Page 2

         Consolidated Statements of Stockholders' Equity (Deficit)......  Page 4

         Consolidated Statements of Cash Flows..........................  Page 5

         Notes to Consolidated Financial Statements.....................  Page 7

         Management's Discussion and Analysis or Plan
           of Operation................................................  Page 12


                            Part II OTHER INFORMATION


         Legal Proceedings.............................................  Page 20

         Defaults Upon Senior Securities...............................  Page 20

         Other Information.............................................  Page 20

         Exhibits and Reports on Form 8-K..............................  Page 21

         Signatures....................................................  Page 22





<PAGE>

<TABLE>
<CAPTION>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                                       Three Months Ended                   Nine Months Ended
                                                                          September 30,                       September 30,
                                                                      ---------------------             -----------------------
                                                                      1998             1997             1998               1997
                                                                      ----             ----             ----               ----
<S>                                                           <C>                      <C>             <C>                <C>
Operating Revenue:
  Royalty fees..............................................  $       766,172          828,823         2,285,969          2,659,034
  Franchise sales - center openings.........................           25,490           84,000           199,090            172,201
  Product and equipment revenue.............................          147,202          230,971           514,109            574,508
  Sales by Company-owned Centers............................        3,788,628        3,829,962        11,243,408         11,216,333
  Leasing revenue...........................................          248,127          388,085           876,116          1,166,957
  Other.....................................................           25,616          123,769            66,435            325,416
                                                               --------------   --------------   ---------------    ---------------

                                                                    5,001,235        5,485,610        15,185,127         16,114,449
                                                               --------------   --------------   ---------------    ---------------

Operating Expenses:
  Franchise costs - center openings.........................           15,445           19,791            57,871             41,209
  Product and equipment costs...............................           48,875          115,369           218,804            223,762
  Company-owned Centers.....................................        3,162,933        3,270,698         9,427,520          9,590,148
  Leasing expense...........................................          303,404          408,958         1,000,019          1,161,294
  General and administrative expenses.......................        1,886,914        1,216,626         4,550,299          3,864,259
  Provision for credit losses...............................           92,555           30,000           184,220             82,141
  Depreciation..............................................          184,381          175,761           522,474            503,974
  Amortization..............................................           72,917           72,577           216,689            207,614
                                                               --------------   --------------   ---------------    ---------------

                                                                    5,767,424        5,309,780        16,177,896         15,674,401
                                                               --------------   --------------   ---------------    ---------------

Operating income (loss).....................................         (766,189)         175,830          (992,769)           440,048
                                                               --------------   --------------   ---------------    ---------------

Other income (expense):
  Loss on sale/disposition/closure of centers...............          (80,214)        (282,929)         (136,157)          (300,392)
  Undeveloped franchise licenses canceled...................          163,703                -           195,686                  -
  Interest income...........................................            3,247           15,302            24,567             50,976
  Interest expense..........................................         (194,989)        (189,408)         (620,929)          (555,525)
                                                               --------------   --------------   ---------------    ---------------
                                                                     (108,253)        (457,035)         (536,833)          (804,941)
                                                               --------------   --------------   ---------------    ---------------

Net loss...................................................   $      (874,442)        (281,205)       (1,529,602)          (364,893)
                                                               ==============   ==============   ===============    ===============

Loss per common share (Note 5)..............................  $         (0.19)           (0.07)            (0.35)             (0.10)
                                                               ==============   ==============   ===============    ===============

Loss per common share assuming dilution (Note 5)............  $         (0.19)           (0.07)            (0.35)             (0.10)
                                                               ==============   ==============   ===============    ===============

Weighted average shares outstanding.........................        4,698,337        4,442,184         4,645,707          4,384,802
                                                               ==============   ==============   ===============    ===============
</TABLE>





                                   (UNAUDITED)

                                        1

<PAGE>

<TABLE>
<CAPTION>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                                                             September 30,     December 31,
                                                                                 1998             1997
                                                                             -------------     -----------
ASSETS

<S>                                                                      <C>                      <C>
Current Assets:
  Cash..............................................................     $       68,046           182,214
  Accounts receivable, net of allowance for
    doubtful accounts of $367,244 at September 30,
    1998, and $478,553 at December 31, 1997 ..........................          743,202         1,212,014
  Current portion of notes receivable,
    net of allowance for uncollectible amounts .......................           71,799           318,658
  Current portion of net investment
    in direct financing leases .......................................          183,899           204,921
  Inventories ........................................................          707,399           758,116
  Prepaid expenses and supplies ......................................          237,524           113,648
                                                                           ------------      ------------

    TOTAL CURRENT ASSETS .............................................        2,011,869         2,789,571
                                                                           ------------      ------------

Property and Equipment, at Cost, Pledged:
  Land ...............................................................          512,804           543,838
  Buildings (including buildings under capital leases) ...............        6,908,120         6,430,000
  Furniture and fixtures .............................................          624,436           536,329
  Leasehold improvements .............................................          787,204           718,672
  Machinery and equipment ............................................        1,817,623         1,774,196
                                                                           ------------      ------------
                                                                             10,650,187        10,003,035
  Less accumulated depreciation and
    amortization .....................................................       (4,328,209)       (3,985,940)
                                                                           ------------      ------------

    NET PROPERTY AND EQUIPMENT .......................................        6,321,978         6,017,095
                                                                           ------------      ------------

Other Assets:
  Net investment in direct financing leases ..........................        1,988,919         3,154,581
  Notes receivable, net of allowance for uncollectible
    amounts ..........................................................           92,816           225,177
  Deferred franchising costs .........................................          129,013           189,528
  Goodwill and covenants not to compete, net
    of accumulated amortization of $1,311,430 at
    September 30, 1998, and $1,215,026 at December
    31, 1997 .........................................................        2,395,161         2,688,103
  Other assets, net of accumulated amortization of
    $59,007 at September 30, 1998, and $167,145 at
    December 31, 1997 ................................................        1,880,296           333,795
                                                                           ------------      ------------

    TOTAL OTHER ASSETS ...............................................        6,486,205         6,591,184
                                                                           ------------      ------------

                                                                         $   14,820,052        15,397,850
                                                                           ============      ============
                                   (UNAUDITED)
                            (continued on next page)
                                        2

<PAGE>

<CAPTION>
               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (continued)
                                                                             September 30,     December 31,
                                                                                 1998              1997
                                                                             ------------      -----------
<S>                                                                         <C>                <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable...................................................      $ 1,629,172         1,400,633
  Accrued salaries and wages ........................................          215,048           195,787
  Other accrued liabilities .........................................          344,294           371,143
  Current portion of long-term obligations ..........................        1,065,863           715,289
  Current portion of obligations
    under capital leases ............................................          485,532           464,955
                                                                          ------------      ------------

    TOTAL CURRENT LIABILITIES .......................................        3,739,909         3,147,807
                                                                          ------------      ------------

Long-term Obligations ...............................................        5,322,805         3,800,082

Obligations Under Capital Leases ....................................        6,024,451         6,848,249

Deferred Franchise Sales Revenue ....................................          630,965           985,470

Stockholders' Equity (Deficit):
  Series C Preferred stock, stated value of $100.00
   per share, 20,896 shares issued and outstanding at
   September 30, 1998 and December 31, 1997 .........................        2,089,638         2,089,638
  Common stock, par value $.03, 20,000,000
    shares authorized, 4,647,880 and 4,633,570,
    shares issued and outstanding at September 30,
    1998 and December 31, 1997, respectively ........................          139,436           139,007
  Capital in excess of par value ....................................        6,212,733         6,197,880
  Accumulated deficit ...............................................       (9,339,885)       (7,810,283)
                                                                          ------------      ------------

      TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ..........................         (898,078)          616,242

  Commitments and Contingencies
                                                                          ------------      ------------

                                                                          $ 14,820,052        15,397,850
                                                                          ============      ============
</TABLE>

                                   (UNAUDITED)

                                        3

<PAGE>

<TABLE>
<CAPTION>
               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                                                           Preferred Stock                          Common Stock
                                                      ----------------------         -----------------------------------------
                                                                                                                    Capital in
                                                      Number of                      Number of                      Excess of
                                                       Shares         Amount          Shares          Amount        Par Value
                                                      ---------       ------         ---------        ------        ----------
<S>                                                    <C>         <C>              <C>            <C>               <C>
Balance at December 31, 1996 ...................       20,896      $2,089,638       4,379,860      $  131,396        5,877,670
Issuance of common stock pursuant to
  employee benefit plan ........................         --              --            33,234             996           44,262
Issuance of common stock upon
  exercise of employee stock options ...........         --              --            30,000             900           31,663
Issuance of common stock .......................         --              --           190,476           5,715          244,285
Net loss .......................................         --              --              --              --               --
                                                   ----------      ----------      ----------      ----------       ----------
Balance at December 31, 1997 ...................       20,896       2,089,638       4,633,570         139,007        6,197,880
Issuance of common stock pursuant to
  employee benefit plan ........................         --              --            10,810             324           13,145
Issuance of common stock upon
  exercise of employee stock options ...........         --              --             3,500             105            3,613
Issuance of common stock .......................         --              --              --              --             (1,905)
Net loss .......................................         --              --              --              --               --
                                                   ----------      ----------      ----------      ----------       ----------

Balance at September 30, 1998 ..................       20,896      $2,089,638       4,647,880      $  139,436        6,212,733
                                                   ==========      ==========      ==========      ==========       ==========

<CAPTION>

                                                   Accumulated
                                                     Deficit           Total
                                                   -----------         -----
<S>                                                <C>               <C>
Balance at December 31, 1996 ...................   (6,651,697)       1,447,007
Issuance of common stock pursuant to
  employee benefit plan ........................         --             45,258
Issuance of common stock upon
  exercise of employee stock options ...........         --             32,563
Issuance of common stock .......................         --            250,000
Net loss .......................................   (1,158,586)      (1,158,586)
                                                   ----------       ----------
Balance at December 31, 1997 ...................   (7,810,283)         616,242
Issuance of common stock pursuant to
  employee benefit plan ........................         --             13,469
Issuance of common stock upon
  exercise of employee stock options ...........         --              3,718
Issuance of common stock .......................         --             (1,905)
Net loss .......................................   (1,529,602)      (1,529,602)
                                                   ----------       ----------

Balance at September 30, 1998 ..................   (9,339,885)        (898,078)
                                                    ==========       ==========
</TABLE>


                                   (UNAUDITED)

                                        4


<PAGE>

<TABLE>
<CAPTION>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                               Nine Months Ended
                                                                                                  September 30,
                                                                                            -----------------------
                                                                                            1998               1997
                                                                                            ----               ----

<S>                                                                                  <C>                      <C>
Cash flows from operating activities:

  Net loss..............................................................             $   (1,529,602)          (364,893)
  Adjustments to reconcile net loss to net
    cash provided by operating activities:
      Increase in deferred franchise sales revenue......................                    116,200            281,500
      Franchise sales revenue recognized-center openings................                   (199,090)          (172,201)
      Increase in deferred franchising costs............................                    (43,485)           (82,762)
      Franchise costs recognized - center openings......................                     46,771             41,209
      Provision for credit losses.......................................                    184,220             82,141
      Depreciation and amortization.....................................                    739,163            711,588
      Undeveloped franchise licenses canceled...........................                   (195,686)             --
      Loss on sale/disposition/closure of centers.......................                    107,267            275,476
      Impairment of asset value.........................................                    377,871              --
      Accrual of Consultant Agreement/Severance
        Agreements......................................................                    216,440            357,113
      Other, net........................................................                     96,312                372
      Change in assets and liabilities:
        Decrease (increase) in accounts receivable......................                    148,124           (168,364)
        Decrease in notes receivable....................................                    223,542            283,977
        Decrease (increase) in inventories..............................                     47,719            (14,051)
        Decrease (increase) in prepaid expenses and
          supplies......................................................                   (123,875)            52,382
        Decrease in accounts payable....................................                    (98,752)          (158,604)
        Increase in accrued salaries and wages
          and other liabilities.........................................                      1,800             54,570
                                                                                     --------------       ------------

      Net cash provided by operating activities.........................             $      114,939          1,179,453
                                                                                     --------------       ------------


                                   (UNAUDITED)

                            (continued on next page)

                                        5

<PAGE>

<CAPTION>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                                                                                               Nine Months Ended
                                                                                                  September 30,
                                                                                            -----------------------
                                                                                            1998               1997
                                                                                            ----               ----

<S>                                                                                  <C>                      <C>

Cash flows from investing activities:
  Principal receipts on direct financing leases.........................             $      129,846            150,081
  Acquisition of centers................................................                      --              (573,249)
  Sale of centers.......................................................                    115,450            116,901
  Capital expenditures..................................................                   (277,944)          (249,605)
  Increase in projects and development..................................                 (1,544,738)             --
  Increase in other assets..............................................                   (261,901)          (113,709)
                                                                                     --------------       ------------

        Net cash used in investing activities...........................                 (1,839,287)          (669,581)
                                                                                     --------------       ------------


Cash flows from financing activities:
  Proceeds from long-term obligations...................................                  2,483,100          3,045,000
  Principal payments on long-term obligations...........................                   (555,926)        (3,101,022)
  Principal payments on capital lease
    obligations.........................................................                   (326,039)          (306,821)
  Issuance of common stock..............................................                      1,814            271,938
  Decrease in restricted cash...........................................                       --               34,927
  Increase in lease deposit obligations.................................                      7,231              2,306
                                                                                     --------------       ------------

        Net cash provided by (used in) financing activities.............                  1,610,180            (53,672)
                                                                                     --------------       ------------

Net increase (decrease) in cash.........................................                   (114,168)           456,200

Cash, beginning of period...............................................                    182,214            324,745
                                                                                     --------------       ------------

Cash, end of period.....................................................             $       68,046            780,945
                                                                                     ==============       =============

Supplemental disclosures of cash flow
  information -
    Cash paid during the period for interest............................             $      933,399             891,569
                                                                                     ==============       =============
</TABLE>










                                   (UNAUDITED)

                                        6


<PAGE>


               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       In the opinion of management,  the interim financial statements include
         all adjustments,  consisting of normal recurring adjustments, necessary
         in order to make the financial statements not misleading.

2.       Grease  Monkey  Holding  Corporation  ("GMHC")  and   its  wholly-owned
         subsidiaries, Grease Monkey  International, Inc. ("GMI"), Grease Monkey
         de  Mexico  SA de  CV  ("GMM")  and GM  Properties,  Inc.  ("GMP")  are
         collectively referred  to as the "Company".  The accompanying unaudited
         consolidated  financial  statements  have  been  prepared in accordance
         with generally  accepted  accounting  principles for  interim financial
         information.  Accordingly, they do  not include all the information and
         footnotes  required  by generally  accepted  accounting  principles for
         financial  statements.  For  further information,  refer to the audited
         consolidated financial statements  and notes thereto for the year ended
         December 31, 1997,  included  in the  Company's  Annual  Report on Form
         10-KSB filed with the Securities and Exchange  Commission on  March 31,
         1998.

3.       The results for the three-month and nine-month  periods ended September
         30, 1998, are not necessarily  indicative of the results to be expected
         for the entire fiscal year of 1998.

4.       STOCKHOLDERS' EQUITY (DEFICIT)
         On January 20, 1997, Charles E. Steinbrueck, former President and Chief
         Executive Officer, entered into an agreement to purchase 190,476 shares
         of  restricted  common stock at a per share price of $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.  On
         September 30, 1998, accumulated unpaid dividends totaled $600,722.

         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 the first nine months of 1998 and 1997,  the
         Company contributed 10,810 and 27,847 shares to this plan at an average
         of $1.25 and $1.30 per share, respectively.





                                   (continued)



                                        7

<PAGE>
               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5.       EARNINGS (LOSS) PER SHARE
         Effective for periods ending after December 15, 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. 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 Three Months Ended
                      ------------------------------------------------------------------------------------
                                September 30, 1998                            September 30, 1997
                         Income                                     Income
                         (Loss)          EPS         Shares         (Loss)        EPS        Shares
                      ------------   ------------ ------------   ------------ -----------  -----------
<S>                   <C>            <C>          <C>             <C>          <C>         <C>
Income (loss) .....     (874,442)                                 (281,205)
Preferred
dividends .........      (31,602)                                  (31,602)

                      ----------    ----------    ----------    ----------    ----------    ----------
Basic EPS .........     (906,044)        (0.19)    4,698,337      (312,807)        (0.07)    4,442,184

Effects of dilutive
securities:

Common stock
equivalents

Convertible
Preferred Stock
                      ----------    ----------    ----------    ----------    ----------    ----------
Diluted EPS .......     (906,044)        (0.19)    4,698,337      (312,807)        (0.07)    4,442,184
                      ==========    ==========    ==========    ==========    ==========    ==========

<CAPTION>
                           For the Nine Months Ended
                      ------------------------------------------------------------------------------------
                                September 30, 1998                            September 30, 1997
                         Income                                     Income
                         (Loss)          EPS         Shares         (Loss)        EPS        Shares
                      ------------   ------------ ------------   ------------ -----------  -----------
<S>                   <C>            <C>          <C>             <C>          <C>         <C>
Income (loss) .....   (1,529,602)                                  (364,893)
Preferred
dividends .........      (93,776)                                   (93,776)

                      ----------    ----------    ----------     ----------    -----------    ----------
Basic EPS .........   (1,623,378)        (0.35)    4,645,707       (458,669)        (0.10)     4,384,802

Effects of dilutive
securities:

Common stock
equivalents

Convertible
Preferred Stock
                      ----------    ----------    ----------    ----------    ------------    ---------
Diluted EPS .......   (1,623,378)        (0.35)    4,645,707      (458,669)          (0.10)   4,384,802
                      ==========    ==========    ==========    ==========    ============    =========
</TABLE>

                                   (continued)

                                        8

<PAGE>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


6.       COMMITMENTS AND CONTINGENCIES
         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.

7.       COMPREHENSIVE INCOME
         Effective  January 1, 1998, the Company adopted  Statement of Financial
         Accounting  Standards No. 130, "Reporting  Comprehensive  Income." This
         Statement  requires that all items that are recognized under accounting
         standards  as  components  of  comprehensive  income be  reported in an
         annual financial  statement displayed with the same prominence as other
         annual financial statements.  Condensed financial statements of interim
         periods are to include a total for comprehensive  income. The Company's
         total  comprehensive  income  (loss) did not differ from its net income
         (loss).
























                                   (continued)

                                        9

<PAGE>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


8.       Supplemental Schedule 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.


                                                 Nine Months Ended September 30,
                                                 -------------------------------
                                                       1998         1997
                                                       ----         ----
Acquisitions:
  Number of Centers purchased .................          --              2
                                                     ========     ========
  Number of Centers foreclosed ................             3         --
                                                     ========     ========

  Receivables applied (net of related
    allowance) ................................   $    83,843         --
  Liabilities assumed .........................        83,159      375,337
  Loss on foreclosure .........................       (70,500)        --
  Cash paid ...................................          --        573,249
                                                     --------     --------
  Cost of assets acquired .....................   $    96,502      948,586
                                                     ========     ========

Sales:
  Number of Centers
    refranchised/sold/closed ..................             3            6*
                                                     ========     ========

  Cash received ...............................   $   115,450      116,901
  Notes received/accounts receivable
    granted ...................................        15,769       26,800
  Liabilities assumed by purchaser ............          --         40,875
  Loss on sale ................................        36,767      275,476
  Franchise fees ..............................          --         14,000
                                                     --------     --------
  Net book value of Centers ...................   $   167,986      474,052
    refranchised/sold/closed                         ========     ========


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



                                   (continued)

                                       10

<PAGE>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


         During the nine months  ended  September  30,  1998 and 1997,  non-cash
         transactions  consisted of the Company issuing 10,810 and 27,847 shares
         of  common  stock at an  average  value of $1.25  and  $1.30  per share
         respectively,  in accordance  with its matching  requirement  under the
         Company's  401(k) plan.  Other non-cash  transactions  during the first
         nine  months of 1998  included:  a  franchise  license in the amount of
         $10,000,  net of deferred costs of $2,173, was cancelled and applied to
         a franchisee's obligation to the Company; a capital lease obligation of
         $196,900  was  recorded  for  a  Company-owned   Center;  a  franchisee
         abandoned  two sites,  resulting in two direct  financing  leases being
         cancelled  and  two  capital  lease  buildings  being  recorded  for an
         aggregate  amount  of  $447,384;  and the  Company  wrote  off a direct
         financing  lease  receivable  and  the   corresponding   capital  lease
         obligation  of $487,527  based on the Company  being  released from the
         lease.

         Other  non-cash  transactions  during  the  first  nine  months of 1997
         included:  the write-off of a direct financing lease receivable and the
         corresponding  capital  lease  obligation  of  $153,316  based  on  the
         franchisee  re-negotiating  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.

















                                       11

<PAGE>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATIONS

     The Company  reported a net loss of ($1,529,602)  for the first nine months
of 1998,  as compared to a net loss of  ($364,893)  for the first nine months of
1997.  For the third  quarter  of 1998,  the  Company  recognized  a net loss of
($874,442) compared to a net loss of ($281,205) for the same quarter in 1997.

     Total  revenue  decreased  by  $929,322  or 6% for the first nine months of
1998,  compared  to the first  nine  months of 1997.  Revenue  during  the third
quarter of 1998  decreased  $484,375 over the same quarter last year, a decrease
of 9%. The nine and three month  decreases  are due  primarily  to  decreases in
royalty  revenue,  leasing  revenue and other revenue.  The decreases in royalty
revenue and other revenue can be partially  attributed to a settlement agreement
entered  into in 1997 with a former  franchisee  that caused  increases in 1997.
Under the settlement  agreement,  in 1997 the Company  recognized  approximately
$207,200 of royalty fees not previously recognized and approximately $168,000 of
other income  related to the  reimbursement  of costs  previously  expensed.  In
addition, approximately $99,000 of other revenue was recognized in 1997 based on
a settlement  agreement with another  franchisee.  Further  decreases in royalty
revenue  in 1998  are due to,  on  average,  eleven  fewer  franchises  open and
operating.  Leasing revenue has declined  primarily due to: the abandonment of a
franchise  site late in the third quarter of 1997 resulting in the Company being
required to subsidize the rent to obtain a new subtenant;  three franchise sites
have been  acquired by the Company  through both purchase and  foreclosure;  the
Company was released from nine leases at franchised  and third party  locations,
thus reducing not only rental  income,  but the matching  rent expense;  and the
Company sold one of its owned property locations and put another location up for
sale thus losing the third  party  subtenant  income on those sites as well.  In
addition, in 1998 a former franchisee abandoned two sites. Currently the Company
is not receiving  matching revenue for the expense outlay on these Centers.  The
Company is  actively  engaged in finding new  subtenants.  New  subleases  could
require the Company to  subsidize  the payments for an amount less than what the
Company currently pays the landlords. Should this be the case, the Company would
be  required to record  lease loss  reserves  equal to the present  value of the
future minimum sublease  commitment  deficiencies.  Currently the Company cannot
estimate the future  potential  losses  associated with these sites.  Offsetting
these decreases were the  sale/refranchising  of two Company-owned Centers where
the Company remained on the lease.

     Royalty fees are a percentage of gross sales paid monthly by all franchised
Grease  Monkey  Centers.  Royalty  fee revenue for the first nine months of 1998
decreased  by 14%  compared  to the first  nine  months  of 1997 to  $2,285,969.
Royalty fee revenue for the third  quarter of 1998  decreased  by 8% compared to
the third quarter of 1997 to $766,172.  The nine month decrease is due partly to
the recording of the settlement agreement with a former franchisee, as discussed
previously.  The remaining  decreases  are due to an average  decrease of eleven
open and operating franchises for the nine and three month periods. In addition,
on August 1, 1998, the Company entered into a Master Franchise Agreement for the
Republic of Mexico  ("the  Agreement").  The  Agreement is for a term of fifteen
years  and  is  renewable  for an  additional  fifteen  year  term.  The  Master
Franchisee retains eighty percent of royalties and franchise fees collected from
Mexico  franchisees after the effective date of the Agreement  (further reducing
royalty  income),  in exchange,  the Master  Franchisee  is obligated  under the
Agreement to provide training and all types of support for franchisees in Mexico
that Grease Monkey  International would be obligated to provide under its Grease
Monkey Franchise Agreement.

                                  (continued)

                                       12

<PAGE>


               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued)


     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. For the first
nine months of 1998, estimated royalties of $172,485 were not accrued under this
policy,  compared to $89,700 for the first nine months of 1997. During the third
quarter of 1998,  estimated  royalties of $59,385  were not accrued  compared to
$31,325 for the third quarter of 1997.  The Company has a royalty rebate program
for  franchisees  under  which  eligible  franchisees  can  receive  a rebate of
royalties paid. For the first nine months of 1998, the rebate accrued under this
program was  $178,147,  compared to $182,712  for the first nine months of 1997.
The rebate  accrued for the third  quarter of 1998,  was $64,096,  compared to a
rebate of $62,510  for the third  quarter of 1997.  The rebate is  recorded as a
reduction in royalty revenue.

     The Company  recognized  franchise  sales  revenue net of related  costs of
$141,219  during  the  first  nine  months  of 1998,  representing  nine  Center
openings.  For the  third  quarter  of 1998,  franchise  sales net  revenue  was
$10,045,  representing two Center  openings.  The Company  recognized  franchise
sales net  revenue of  $130,992  and $64,209 for the first nine months and third
quarter of 1997,  respectively,  representing fifteen and eight Center openings.
Franchise sales revenue  represents  initial one-time  payments  received by the
Company from buyers of its  franchises.  The fee and any directly  related costs
are  recognized as revenue and expense when the related  franchise  Center opens
for business.

     At September  30, 1998,  the Company  operated 32 centers as compared to 30
centers at September  30, 1997.  For the first nine months of 1998,  the Company
reported  an  operating  margin   (Company-owned  Center  sales  less  expenses,
excluding  interest,  depreciation and amortization) of $1,815,888 on revenue of
$11,243,408  at  Company-owned  Centers,  as compared to an operating  margin of
$1,626,185  on revenue  of  $11,216,333  for the same  period  last  year.  This
represents a slight increase in revenue and a 12% increase in operating  margin.
For the third quarters of 1998 and 1997, the Company reported  operating margins
of $625,695 and $559,264 on revenue of $3,788,628 and $3,829,962,  respectively,
representing a decrease in revenue of 1% and an increase in operating  margin of
12%.

     In the first nine months of 1998, the Company realized marketing allowances
and gross  margins on product and  equipment  sales of $295,305,  as compared to
$350,746  in the first  nine  months  of 1997.  In the  third  quarter  of 1998,
marketing  allowances  and gross  margins on product  and  equipment  sales were
$98,327,  as  compared to  $115,602  in the third  quarter of 1997.  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.

     General  and  administrative  expenses  for the first nine months and third
quarter of 1998 increased 18% or $686,040 and 55% or $670,288 as compared to the
first nine months and third quarter of 1997. Negative variances in both the nine
month and three month periods ended September 30, 1998, were caused by several


                                   (continued)


                                       13

<PAGE>


               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued)


factors.  One such  factor was a  severance  accrual  for the  Company's  former
President  and Chief  Executive  Officer,  the former  Senior Vice  President of
Operations and other employees  terminated  effective September 30, 1998. Should
either of the executives be employed by a new employer during the remaining term
of  the severance accrual,  the severance compensation  payable to the executive
will be  reduced  by the  amount of  compensation  that the  executive  actually
receives from the new  employer.  The severance  accrual  totaled  approximately
$327,000,  but was reduced by  approximately  $86,000,  which was the  remaining
amount  due under the  Consultant  Agreement  for the  Company's  previous,  now
current President. The Company had also previously entered into an agreement for
the  development of a new point of sale system to be used at both  Company-owned
and  franchised  Centers.  Upon review of the  agreement by current  management,
further  development was terminated and costs  capitalized to date were expensed
in the amount of approximately  $230,000.  As mentioned  previously,  during the
quarter the Company entered into a Master  Franchise  Agreement for the Republic
of Mexico.  Based upon this  agreement,  certain assets related to operations in
Mexico were  evaluated and adjusted,  resulting in a write-off of  approximately
$132,000.  During the quarter,  the Company entered into a contract for the sale
of real estate in St. Louis,  Missouri.  Based on the contract,  the real estate
was written down by  approximately  $31,000.  Offsetting these increases was the
prior year accrual of the  Company's  obligation  under a Consultant  Agreement.
General and  administrative  expenses for the first nine months of 1997 included
approximately  $379,000 related to this agreement.  As mentioned  previously and
reported in a September 16, 1998,  Form 8-K, this individual has returned to the
Company as President and Chief Operating  Officer.  Other variances in the first
nine months of 1998 as compared  to the first nine months of 1997  included:  an
increase in salaries, wages and personnel expenses of approximately $194,000; an
increase in litigation  expenses,  including  legal fees and related  costs,  of
approximately  $188,000 and an increase in professional  fees,  including legal,
tax and  accounting  of  approximately  $61,000.  Other  variances  in the third
quarter of 1998 as compared to the same quarter of 1997 included: an increase in
litigation  expenses,  including legal fees and related costs, of  approximately
$11,400;  an increase in professional fees,  including legal, tax and accounting
of approximately  $10,300; and an increase in office expenses primarily due to a
relocation of the corporate offices of $26,500.

     Depreciation and  amortization  expense for the first nine months and third
quarter of 1998  increased 4% as compared to the same  periods in 1997.  This is
due primarily to the average number of Company-owned Centers operated during the
periods increasing slightly and due to capital acquisitions at the Company-owned
Center level.

     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 ($136,157)
for the nine months ended September 30, 1998, represents the closure of two



                                   (continued)

                                       14

<PAGE>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                                   (continued)


Company-owned  Centers in 1998,  marketing  allowances  paid based on  subsidies
granted certain  franchisees on the  refranchising of  Company-owned  Centers in
1996,  and  additional  costs  incurred  in  1998  related  to  the  closure  of
Company-owned Centers closed in 1997. In addition, losses were recognized on the
sale of a  Company-owned  Center  to a third  party,  and the  foreclosure  of a
franchised  Center.  The loss of ($300,392) for the nine months ended  September
30, 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 franchised Center,
(which was leased from the Company) resulting in $236,101 of the total $300,392.
The loss is a result of costs  associated  with the closing of the  Centers,  as
well an impairment assessment at each location.

     In the  first  nine  months  and the third  quarter  of 1998,  the  Company
recognized  $195,686 and  $163,703,  respectively,  in franchise  sales  revenue
resulting from license  cancellations.  There were no license  cancellations  in
1997.

     Interest expense includes  interest on debt financing and interest recorded
on capital leases of  Company-owned  Centers.  The increase in interest  expense
from  $555,525  in the first nine  months of 1997 to  $620,929 in the first nine
months  of 1998 was due in part to a change  in vendor  financing.  This  change
resulted in financing costs being transferred out of cost of goods sold and into
financing  costs.  In  addition,  debt  outstanding  for the nine month  periods
increased approximately  $1,870,000.  This increase is due in part to borrowings
associated  with the purchase of two Centers late in the first  quarter of 1997,
and one Center  purchased  late in the second  quarter of 1998.  In addition,  a
capital  lease was entered  into for a  Company-owned  Center in the early third
quarter of 1997.






                                   (continued)

                                       15

<PAGE>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                                   (continued)


     The following schedule summarizes the activity with regard to Grease Monkey
Company-owned  Centers  as well as  Grease  Monkey  franchised  Centers  for the
nine-months ended September 30, 1998 and 1997.

<TABLE>
<CAPTION>

                                                                               NINE MONTHS ENDED:
                                                  ----------------------------------------------------------------------------------
                                                             September 30, 1998            |              September 30, 1997
                                                  ------------------------------------     |     -----------------------------------
                                                   Company      Franchisee                 |     Company       Franchisee
                                                    Owned         Owned          Total     |      Owned          Owned        Total
                                                   -------      ----------       -----     |     --------      ----------     -----
<S>                                                   <C>           <C>            <C>     |        <C>           <C>         <C>
Centers open, beginning ..................            31            187            218     |        31            184           215
Centers opened ...........................             1              9             10     |         1             15            16
Centers purchased ........................          --             --             --       |         2             (2)         --
Centers sold .............................            (1)          --               (1)    |        (2)             2          --
Centers terminated or                                                                      |
  closed .................................            (2)           (17)           (19)    |        (2)           (13)          (15)
Centers reacquired .......................             3             (3)          --       |      --             --            --
                                               ---------      ---------      ---------     | ---------      ---------     ---------
Centers open, ending (A) .................            32            176            208     |        30            186           216
                                               =========      =========      =========     | =========      =========     =========
Vehicles serviced (000's) ................                                       2,049     |                                  2,171
                                                                             =========     |                              =========
Franchise licenses issued (B) ............                                           6     |                                     11
                                                                             =========     |                              =========
Undeveloped franchise                                                                      |
  licenses (C) ...........................                                          33     |                                     50
                                                                             =========     |                              =========
Franchise applications                                                                     |
  outstanding (C) ........................                                          10     |                                     22
                                                                             =========     |                              =========
Franchise license/application                                                              |
  fees received (D) ......................                                   $ 116,200     |                              $ 281,500
                                                                             =========     |                              =========
</TABLE>

(A)  Includes 20 franchised  centers in Mexico in 1998 and 21 franchised centers
     in Mexico in 1997.
(B)  Represents the number of licenses  issued during the period.
(C)  Represents the number of licenses/applications outstanding at September 30
(D)  Represents amounts received for franchise  licenses/applications during the
     period.

                                   (continued)

                                       16

<PAGE>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                                   (continued)


LIQUIDITY AND CAPITAL RESOURCES

CAPITAL RESOURCES

     The Company  currently has lines of credit with varying interest rates from
a third party.  The lines total  $489,000 of which  $484,500 was  outstanding at
September 30, 1998. Monthly payments are for interest only, and maturities range
from December 1998 to July 1999.

     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 balloon  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.  Additional draws totalling  $1,998,600 were made in the first nine months
of 1998 with an average  interest rate of  approximately 9% plus guarantee fees.
As of September 30, 1998, approximately $4,411,000 is outstanding under the Loan
Agreement.

     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 September 30, 1998,  there were
no amounts outstanding under this line of credit.

     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.





                                   (continued)

                                       17

<PAGE>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                                   (continued)


LIQUIDITY

     Cash  provided  by  operations  during  the first  nine  months of 1998 was
$114,939  as compared to  $1,179,453  in the first nine months of 1997.  Factors
contributing  to the negative  variance as compared to prior year  include:  the
prior  year  settlement  agreements  entered  into with  former  franchisees  as
discussed previously;  a decline in royalty revenue and collections;  a decrease
in franchise sales;  losses in leasing activities and increased financing costs.
Offsetting  these  negative   factors  was  an  improved   operating  margin  at
Company-owned Centers.

     Cash used in investing activities was ($1,839,287) in the first nine months
of 1998,  as compared to cash used in investing  activities of ($669,581) in the
first nine months of 1997. Cash provided in both periods consisted  primarily of
receipts on direct financing leases which decreased over the periods. Additional
cash  was  received  in the  first  nine  months  of  1998  and  1997  with  the
refranchising/sale of one and three Company-owned  Centers,  respectively.  Cash
used in  investing  activities  for the  first  nine  months  of 1998  and  1997
consisted  primarily  of cash  used  for the  development/purchase  of  Centers.
Additional  cash was used in both  periods for capital  expenditures,  primarily
Company Center equipment.

     Cash  provided by financing  activities  was  $1,610,180  in the first nine
months of 1998 as compared to cash used in financing  activities of ($53,672) in
the first nine months of 1997.  Cash  provided by  financing  activities  in the
first  nine  months of 1998  consisted  primarily  of  proceeds  from  long-term
obligations  for  the  development  of  Centers.   Cash  provided  by  financing
activities in the first nine months of 1997 consisted primarily of proceeds from
long-term  obligations and the sale of common stock.  Financing  activities also
included cash used to reduce long-term obligations and capital lease obligations
of $881,965 in the first nine  months of 1998 and  $3,407,843  in the first nine
months of 1997.

     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 has identified as its two main computer systems,  the point of
sale terminals at the  Company-owned  Centers and the corporate  network system,
which includes the accounting system. The Company is currently in the process of
evaluating and  installing new computers and new software for both systems.  The
Company has  identified  selected  vendors and will begin  implementation  soon.
Although  the hardware  and  software  has been  represented  as being Year 2000
compliant,  only  testing of the systems once they are  actually  installed  can
guarantee Year 2000 performance. Testing is expected to begin late in the first,
or early in the second quarter and completion is expected in the third quarter.

                                   (continued)


                                       18

<PAGE>

               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                                   (continued)


The Company will initiate a process of  identifying  and  prioritizing  critical
suppliers  and  communicating  with  them  about  their  plans and  progress  in
addressing  the Year 2000  problem.  Contingency  plans may need to be developed
based upon the results of the vendor evaluation.  The total cost associated with
required  modifications  to become  Year 2000  compliant  is not  expected to be
material to the  Company's  financial  position.  A  significant  portion of the
hardware  for  the  corporate  computer  network  has  already  been  purchased.
Corporate  business  equipment such as the communication  system was replaced in
1997.  Failure  to  correct a  material  Year 2000  problem  could  result in an
interruption  in,  or a  failure  of,  certain  normal  business  activities  or
operations.  Such failures could  materially and adversely  affect the Company's
results of  operations,  liquidity and financial  condition.  Due to the general
uncertainty  inherent in the Year 2000  readiness of  third-party  suppliers and
customers,  the  Company  is  unable  to  determine  at this  time  whether  the
consequences  of Year 2000 failures will have a material impact on the Company's
results of operations, liquidity or financial condition.

     The Company does not have any material commitments for capital expenditures
other than for the required  replacement or upgrade of underground storage tanks
at Company-owned Centers.

     The Company has incurred  substantial losses in 1998 and prior years and is
exploring  alternatives to improve  operating  results and maximize  shareholder
value. Such alternatives  include cost reduction  initiatives,  asset sales or a
corporate  restructuring.  There  is no  guarantee  that  the  Company  will  be
successful  at  improving  its  results or  financial  position.  The Company is
currently  seeking  additional  financing  through equity and or debt to provide
working capital for current and future operating  needs.  The Company  believes,
but cannot guarantee, that such financing will be obtained. Should financing not
be obtained,  the Company may not generate  sufficient  liquidity to timely meet
its financial obligations in 1999.

                                       19

<PAGE>



                        GREASE MONKEY HOLDING CORPORATION

                        Commission File Number: 000-9812

                        Quarter Ended September 30, 1998

                                   FORM 10-QSB

                            PART II OTHER INFORMATION


ITEM 1.  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 3.  DEFAULTS UPON SENIOR SECURITIES.

(b) As of the date of filing this Quarterly  Report on Form 10-QSB,  the Company
is in arrears in the payment of dividends on the Series C Preferred Stock in the
amount of  approximately  $616,000.  Under  Paragraph  5(d) of the  Statement of
Designation,  Voting  Powers,  Preferences  and Rights of the Series C Preferred
Stock ("Statement of Designation"), if dividends on the Series C Preferred Stock
are  in  arrears  in an  aggregate  amount  equal  to at  least  four  quarterly
dividends,  the number of members of the Board of  Directors  of the  Company is
automatically increased by the smallest number of directors that will constitute
at least 25% of the Board of  Directors  after such  increase and the holders of
the  Series C  Preferred  Stock  (voting as a separate  voting  group)  have the
exclusive  right to elect,  remove or replace such  additional  directors of the
Company.  The  holders of the Series C  Preferred  Stock have not  notified  the
Company that they have any intention to elect or serve as Directors.

ITEM 5.  OTHER INFORMATION

     Effective  June  29,  1998,  the  United  States  Securities  and  Exchange
Commission   adopted  new  rules   relating  to  shareholder   proposals   which
shareholders  do not request be included in the Company's  proxy statement to be
used in connection  with the Company's  Annual  Meeting of  Shareholders.  Under
these new rules, proxies that confer discretionary authority will not be able to
be voted on a  shareholder  proposal to be  presented  at the Annual  Meeting of
Shareholders if the shareholder provides the Company with advance written notice
of the shareholder's  proposal on a date in the current year that is at least 45
days  prior to the date the prior  year's  proxy  materials  were  mailed to the
Company's shareholders. If a shareholder fails to so notify the Company, proxies
that confer  discretionary  authority will be able to be voted when the proposal
is presented at the Annual Meeting of Shareholders.

     Unless the Company  receives notice of the proposals by no later than April
7, 1999, proxies which confer  discretionary  authority will be able to be voted
on shareholder proposals that the shareholders do not request be included in the
Company's  proxy  statement  but plan to present at the  Company's  next  Annual
Meeting of Shareholders.


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<PAGE>



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits (numbered in accordance with Item 601 of regulation S-K)
         10.   Material Contracts
               (a) Master  Franchise  Agreement  for the Republic of Mexico
         27.1  Financial Data Schedule - 1998
         27.2  Financial Data Schedule - 1997 restated

(b)      Reports on Form 8-K

         A Current  Report on Form 8-K dated  September  16, 1998,  was filed on
         September 25, 1998,  reporting under Item 5 a change of officers of the
         Company.























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<PAGE>


               GREASE MONKEY HOLDING CORPORATION AND SUBSIDIARIES

                        Commission File Number: 000-9812
                        Quarter Ended September 30, 1998
                                   FORM 10-QSB


                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                           GREASE MONKEY HOLDING CORPORATION



                           By: /s/   Rex L. Utsler
                               -------------------------------------------------
                               Rex L. Utsler
                               President and Chief Operating Officer
                               (Chief Financial Officer and Principal Accounting
                                Officer)



Denver, Colorado
November 13, 1998






















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