<PAGE> 1

                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 June 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:  33-14065-D

                        DRY DAIRY INTERNATIONAL, INC.
             ----------------------------------------------------
            (Exact name of registrant as specified in its charter)

             UTAH                                              87-0476117
--------------------------------                           -------------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)

      1133 4th Street, Suite 304, Sarasota, FL           33236
      ----------------------------------------        ----------
      (Address of principal executive offices)        (Zip Code)

                             (941) 362-0470
           ----------------------------------------------------
           (Registrant's telephone number, including area code)

                             NOT APPLICABLE
------------------------------------------------------------------------------
 (Former name, former address, and former fiscal year, if changed since last
                                report.)

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

     The number of shares outstanding of each of the issuer's classes of
common stock, was 45,995,688 shares of common stock, par value $0.001, as of
June 30, 1998.

<PAGE>
<PAGE> 2

                                   PART F/S

ITEM 1.  FINANCIAL STATEMENTS

     The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders'
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.

     The unaudited balance sheet of the Company as of June 30, 1998, and
the related audited balance sheet of the Company as of December 31, 1997, and
the related unaudited statements of operations, and cash flows for the three
and six month period ended June 30, 1998 and 1997, and the unaudited statement
of stockholders' equity for the period from December 31, 1996 through June 30,
1998, are attached hereto and incorporated herein by this reference.

     Operating results for the six months ended June 30, 1998, are not
necessarily indicative of the results that can be expected for the year ending
December 31, 1998.


<PAGE>
<PAGE> 3

                                 DRY DAIRY INTERNATIONAL, INC.
                                  CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                             June 30,                  DECEMBER 31,
                                              1998                         1997
                                           (Unaudited)                  (Audited)
                                          ------------               ------------
ASSETS
<S>                                   <C>                         <C>
Current Assets:
Cash                                       $  (   182)                 $       0
Accounts receivable,
net of allowance.(Note 2)                      15,310                    120,275
Inventory.(Note 4)                             49,848                     86,158
Deposits and other receivables                 24,181                     18,993
                                              -------                   --------
          Total current assets                 89,157                    225,426
                                              -------                   --------
Property and Equipment,
Net.(Note 5)                                  587,567                    626,170
                                             --------                   --------
          Total Assets                     $  676,724                 $  851,596
                                             ========                   ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Cash overdraft                           $        0                 $   19,162
  Accounts payable                            105,223                    110,975
  Notes payable - current.
  (Note 7)                                      3,769                      5,886
  Taxes payable                                16,819                     10,743
  Payable - related party
  (Note 10)                                   119,468                    115,839
  Line of credit - related party
  (Note 9)                                    610,098                    520,713
                                              -------                    -------
         Total current liabilities            855,377                    783,318
Long Term Debt
     Notes payable - (Note 7)                  52,107                      2,107
                                              -------                    -------
         Total Liabilities                    907,484                    785,425
                                              -------                    -------
    Stockholders' Equity:
    Stock authorized 50,000,000
    shares at $0.001 par value;
    45,995,688 shares issued and
    outstanding.                               45,996                     45,996
    Additional paid-in capital              2,611,897                  2,611,897
    Accumulated deficit                    (2,888,653)                (2,591,722)
                                            ---------                  ---------
         Total Stockholders' Equity          (230,760)                    66,171
                                              -------                     ------
         Total Liabilities and
         Stockholders' Equity              $  676,724                    851,596
                                              =======                    =======
</TABLE>


<PAGE>
<PAGE> 4

                          DRY DAIRY INTERNATIONAL, INC.
                          CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                    FOR THE THREE MONTHS               FOR THE SIX MONTHS
                                       ENDED June 30,                     ENDED June 30,
                                 1998              1997                 1998           1997
                           (Unaudited)        (Unaudited)           (Unaudited)       (Unaudited)
                           -----------        -----------          ------------      -----------
<S>                     <C>                <C>                   <C>               <C>
Revenues:
sales                      $    64,178         $  436,538           $   591,806       $  497,192

Cost of sales                   33,199            333,200               363,206          387,334
                                ------            -------               -------          -------

Gross profit                    30,979            103,338               228,600          109,858


Operating Expenses:
  Selling, general, and
  administrative               124,909            268,650               427,259          359,074

   Depreciation                 21,000              9,164                42,000           19,127
                               -------            -------               -------          -------

   Total operating
   Expenses                    145,909            277,814               469,259          378,201
                               -------            -------               -------          -------

Net loss from
operations                    (114,930)          (174,476)             (240,659)        (268,343)


Other income (expenses):
   Interest                   ( 10,414)            (5,719)             ( 20,828)          (8,296)
   Loss on disposition        ( 56,501)          ( 56,501)                1,900
   Rental Income                15,000                                   26,096
   Other expenses                                    (535)               (5,039)            (657)
                               -------            -------               -------           ------
   Total other income
   (expense)                  ( 51,915)            (6,254)             ( 56,272)          (7,053)
                               -------            -------               -------            -----
Net Income (Loss)             (166,845)          (180,730)             (296,931)        (275,396)
                               =======            =======               =======          =======

Net gain (loss)
per share                     $  (0.00)          $  (0.00)             $  (0.01)         $ (0.01)
                                ======             ======                 =====           ======


Weighted average
 number of shares
 outstanding.               43,695,688         39,079,618            39,245,688       43,695,688
                            ==========         ==========            ==========       ==========
</TABLE>


<PAGE>
<PAGE> 5
                                 DRY DAIRY INTERNATIONAL, INC.
                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                      Common Stock

                                   Shares          Amount           Paid-in           Accumulated
                                                                    Capital           Development
                                                                                                   Stage
                                                           --------       ---------        ----------         ------------
<S>                        <C>              <C>              <C>                <C>

Balances,
December 31, 1996               35,295,688        $35,296         $1,707,797         ($1,536,314)

Common stock issued for
cash at $0.075 per share         3,800,000          3,800            281,200              -

Common stock issued for
Equipment at $0.100 per
share                            2,800,000          2,800            277,200              -

Common stock issued for
cash at $0.100 per share         1,000,000          1,000             99,000              -

Common stock issued for
cash at $0.050 per share         1,800,000          1,800             89,000              -

Common stock issued for
cash at $0.11 per share            500,000            500             50,500              -

Reverse canceled shares            800,000            800            107,200              -

Net loss for the year
ended December 31, 1997               -              -                  -            $(1,055,408)
                                  --------       --------           --------           ---------

Balance, December 31, 1997      45,995,688       $ 45,996         $2,611,897         $(2,591,722)
                                ==========         ======          =========           =========

Net loss for the period ended
  June 30, 1998                       -              -            -               (296,931)

Balance, June 30, 1998          45,995,688       $ 45,996         $2,611,897         $(2,888,653)
                                ==========        =======         ==========           =========

</TABLE>


<PAGE>
<PAGE> 6

                                       DRY DAIRY INTERNATIONAL, INC.
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                    FOR THE SIX MONTHS                FOR THE THREE MONTHS
                                    ENDED JUNE 30,                    ENDED JUNE 30,

                                     1998          1997                1998            1997
                                  (Unaudited)      (Unaudited)       (Unaudited)      (Unaudited)
                                  -----------      -----------        ----------       ----------
<S>                            <C>              <C>                <C>              <C>
Operating Activities:
Net gain (loss)                   $ (166,846)      $ (180,730)       $ (296,931)      $ (275,396)

Adjustments to reconcile
net gain (loss) to net cash
provided by operating
activities:
  Depreciation                        21,000            9,164            42,000           19,127
  (Increase) decrease in
  accounts receivable                146,087          (88,833)          104,965          (89,046)
  (Increase) decrease in
  inventory                           21,882          (29,056)           36,310          (25,486)
  (Increase) decrease in
  other current assets                 5,256           66,915            (5,188)          (2,480)
  Increase (decrease) in
  accounts payable                   (71,394)         105,443           (24,732)         161,565
  Increase (decrease) in
  accrued taxes                       (1,807)             275             6,076               (3)
                                      ------          -------          --------          -------
   Net cash used by
    operating activities             (45,822)        (116,822)         (137,500)        (211,719)
                                      ------          -------           -------          -------
Investing Activities:
  Purchase of property
  and equipment                         -            (581,725)           (3,397)        (581,726)
                                      ------          -------             -----          -------
    Net cash used by
    investing activities                -            (581,725)           (3,397)        (581,726)
                                      ------          -------             -----          -------
Financing Activities:
  Increase in notes
  payable                             49,407           24,334            47,883           18,391
  Increase (decrease) in Loan
  from shareholder                    (3,585)          36,883            93,014          107,151
  Issuance of common stock              -             655,000              -             680,000
                                      ------          -------           -------          -------
   Net cash provided by
    financing activities              45,822          716,217           140,897          805,542
                                      ------          -------           -------          -------
(Decrease) Increase
in Cash                                    0           17,670                 0           12,097
Cash at beginning of period                0            4,032                 0            9,605
                                      ------          -------           -------           ------
Cash at end of period                 $    0         $ 21,702           $     0         $ 21,702
                                      ======          =======           =======           ======
Supplemental cash flows information:
Cash paid for:
  Interest                         $  10,414        $  20,828         $   5,719        $   8,295

  Taxes                            $    -           $    -            $    -           $    -

</TABLE>
<PAGE> 7

                           DRY DAIRY INTERNATIONAL, INC.
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       June 30, 1998 AND DECEMBER 31, 1997

NOTE 1 - ORGANIZATION
----------------------
     Dry Dairy International, Inc. (The Company) was incorporated under the
laws of the state of Utah on March 6, 1987.  The Company was organized for the
purpose of providing a vehicle which could be used to raise capital and seek
business opportunities believed to hold a potential for profit.  The Company
has decided to focus on specialty gourmet foods.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------------
     Accounting Method:  The Company's financial statements are prepared using
the accrual method of accounting.  The Company has a calendar fiscal year end.
Cash and cash equivalents: Cash equivalents include short-term, highly liquid
investments with maturities of three months or less at the time of
acquisition.

     Gain or loss per share: The computations of gain or loss per share of
common stock are based on the weighted average number of shares outstanding at
the date of the financial statements.

     Provision for taxes on income:  At December 31, 1997, the Company had net
operating loss carry forwards totaling approximately $2,590,000 that may be
offset against future taxable income through the year 2012.  No tax benefit
has been reported in the financial statements, as the Company believes there
is a 50% or greater chance the carry forwards will expire unused.
Accordingly, the potential tax benefits of the loss carry forwards are offset
by a valuation account of the same amount.

     Principles of consolidation:  The accompanying financial statements
include the accounts of Dry Dairy International, Inc. and its wholly owned
subsidiaries Lombardo's Pastaria, Inc., Tulip Bakery, Inc. and NGU
Distribution, Inc. All significant intercompany transactions have been
eliminated.

     Inventories:  Inventory are stated at the lower of cost or market.

     Property and Equipment:  Property and equipment are stated at cost, less
accumulated depreciation.  Depreciation is provided on the straight-line basis
over the estimated useful lives of the related assets.  Major improvements and
betterments of property are capitalized.  Maintenance, repairs and minor
improvements are charged to expense in the period incurred.  Upon the sale or
other disposition of property, the cost and related accumulated depreciation
are removed from the accounts and any gain or loss is reflected in income.

<PAGE>
<PAGE> 8


                           DRY DAIRY INTERNATIONAL, INC.
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       June 30, 1998 AND DECEMBER 31, 1997

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
----------------------------------------------------------------
     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 revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

     Loss from Discontinued Operations:  The Company has discontinued all
yogurt operations and is now focusing on the pasta and bakery operations.  The
loss from discontinued operations for the year ended December 31, 1996,
including sales of $116,131 as well as costs of $160,136 resulting in a net
loss from discontinued operations of $44,005 for the year ended December 31,
1996.

     Accounts Receivable:  Accounts receivable are shown net of the allowance
for doubtful accounts of $2,930 and $2,930 at June 30, 1998 and December 31,
1997.

NOTE 3 - GOING CONCERN
-----------------------
     The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business.  However, the Company has little cash and has
experienced losses from inception.  On October 20, 1995, the Company announced
that it had completed the sale of a controlling interest in the Company to
Philip Lacerte of Dallas, Texas.  The terms of the purchase agreement provided
that the Company issue to Lacerte 13,827,500 shares of the Company's
restricted common stock, which constitute 50.5% of the Company's outstanding
shares, in exchange for cash of $110,000 and the extension of a line of credit
for up to $250,000 to meet the Company's current needs.

NOTE 4 - INVENTORIES
---------------------
     Inventories are comprised of the following at June 30, 1998 and December
31, 1997 respectively:

          Raw materials                   $15,991          $12,341
          Packaging & other                29,987           32,941
          Finished goods                    3,870           40,876
                                           ------           ------
                                          $49,848          $86,158
                                           ======           ======


<PAGE> 9


                           DRY DAIRY INTERNATIONAL, INC.
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       June 30, 1998 AND DECEMBER 31, 1997


NOTE 5 - PROPERTY AND EQUIPMENT
--------------------------------
     Property and equipment consisted of the following at June 30, 1998 and
December 31, 1997 respectively:
Machinery and equipment                  $624,070         $620,673
          Vehicle                          27,715           27,715
          Furniture and fixtures           35,234           35,234
          Leasehold improvements          151,215          151,215
                                          -------          -------
                                          838,234          834,837
          Less accumulated depreciation  (250,667)        (208,667)
                                          -------          -------
          Property and equipment, net    $587,567         $626,170
                                          =======          =======

NOTE 6 - LEASES
----------------
     The Company has a five year lease on the 7,200 square foot facility where
it produces its products, with two one-year options after that period.  The
lease requires the Company to maintain normal wear and tear maintenance on the
premises.  The Company will also pay for its pro-rated share of any and all
increases in real estate taxes and building insurance.

     Future minimum lease payments under this lease as of June 30, 1998 and
December 31, 1997 respectively are:

     1998                                   48,206           48,206
     1999                                   49,732           49,732
     2000                                    8,331            8,331
                                           -------          -------
                                          $106,269         $106,269
                                           =======          =======

NOTE 7 - NOTES PAYABLE
-----------------------
     Long-term debt is comprised of the following at June 30, 1998 and
December 31, 1997 respectively:
                                                 June 30          December 31
                                                   1998              1997
                                                 -------          -----------
Installment note payable to a financial
institution, collateralized by vehicle,
interest at 10.75%, monthly payments of
$538 including interest, final payment
due February 1999.                               $ 5,876                7,993

<PAGE> 10

                           DRY DAIRY INTERNATIONAL, INC.
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       June 30, 1998 AND DECEMBER 31, 1997

NOTE 7 - NOTES PAYABLE (continued)
---------------------------------
Promissory Note issued May 1998, due in
0ne year with interest at 8%                     $50,000
     Total notes payable                          55,876                7,993
     Less current maturities                      (3,769)              (5,886)
                                                  ------                -----
     Long-term debt                              $52,107              $ 2,107
                                                  ======                =====
The scheduled maturities
of long-term debt at June 30, 1998
and December 31, 1997 are as follows:
                  1998                3,769               $5,886
                1999                               52,107            2,107
                                                  ------                -----
      Total long-term debt                       $55,876               $7,993
                                                  ======                =====

NOTE 8 - STOCK TRANSACTIONS
----------------------------
     During the year ended 1997, the Company issued 6,600,000 shares for cash
at the average price of $0.07 per share, for net proceeds of $475,000. The
Company also issued 500,000 shares for the payment of rent valued at $51,000.

     In April of 1997 the Company issued 2,800,000 shares of its restricted
common stock to acquire the assets of Tulip Pita Bread Center II. The net
assets were valued at $250,000, which approximates the predecessor cost to the
seller.

NOTE 9 - LINE OF CREDIT - RELATED PARTY
----------------------------------------
     A shareholder of the Company has agreed to provide a line of credit to
the Company of up to $600,000 for the purpose of purchasing raw material
inventory and the direct costs related thereto.  The line of credit bears
interest a 8% per annum on the average monthly balance.  The balance owed on
the line of credit is $610,098 at June 30, 1998 and $520,713 at December 31,
1997.

NOTE 10 - RELATED PARTY TRANSACTIONS
-------------------------------------
     In addition to the shares issued to acquire Lombardo's the Company
assumed a payable to the former shareholders of Lombardo's.  The payable is
unsecured, and is properly classified as a current liability.  At June 30,
1998 and December 31, 1997 respectively the balance due to the shareholders
was $10,343 and $10,343.

<PAGE>
<PAGE> 11

                           DRY DAIRY INTERNATIONAL, INC.
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       June 30, 1998 AND DECEMBER 31, 1997

NOTE 11 - STOCK OPTION PLANS
-----------------------------
     The Company has granted stock options pursuant to the various stock
options plans referred to in the table below:

                                  1995                         1996
                       -------------------------     -------------------------
                       Non-Qualified  Incentive      Non-Qualified  Incentive
                       Stock Option   Stock Option   Stock Option   Stock
Option
                          Plan           Plan           Plan             Plan
                       ---------       ---------     ---------       ---------
Outstanding,
December 31, 1994          -              -              -               -

Options Authorized    1,500,000      1,500,000           -               -
Options Issued
During Fiscal
Year 1995              (955,000)          -              -               -
                       ---------       ---------      --------        --------
Unissued at
December 31, 1995       545,000      1,500,000           -               -

Options Canceled
April 1996              800,000           -              -               -

Options Issued April
1996 net of non
performance
cancellations           560,000           -         2,500,000       5,050,000
Options Exercised
July, August and
September 1996         (250,000)          -              -               -

Options Exercised
October through
December, 1996         (300,000)          -              -               -
                        -------      ---------      ---------       ---------
Unissued at June
31,1997                 785,000      1,500,000      2,500,000       5,050,000
                        =======      =========      =========       =========

<PAGE>
<PAGE> 12
                           DRY DAIRY INTERNATIONAL, INC.
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       June 30, 1998 AND DECEMBER 31, 1997

NOTE 12 - ASSET PURCHASE
-------------------------
     In April of 1997, the Company closed an asset purchase transaction with
privately held Tulip Pita Bread Center II to purchase a production line for
the manufacturing of pita bread and sweet bread loaves. The equipment is
located in Ft. Myers, FL. In addition, the Company has purchased the
distribution rights and assumed control of the direct store distribution
system in place for "Tulip" bakery products. The Company has created two new
subsidiaries, Tulip Bakery, Inc. to produce fresh baked goods for distribution
and NGU Distribution, Inc. to manage the distribution of Tulip Bakery
products.

     The agreement to purchase the equipment line calls for the Company to pay
$165,000 and 1,600,000 shares of its restricted common stock to the owners of
the equipment line. In a separate purchase agreement, "Tulip's" distribution
rights and delivery system were purchased for 1,200,000 restricted shares. In
addition, the Company will assume up to $45,000 of existing Tulip debt.

     Currently, the Tulip products are distributed via direct store delivery
to approximately 300 supermarkets in Florida.


<PAGE>
<PAGE> 13

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   RESULTS OF OPERATIONS

Plan of Operation
------------------
     The Company is in the specialty food manufacturing and distribution
business in the East and Southeast United States. The Company develops,
manufactures and markets a line of specialty frozen pasta items and fresh
baked pita and specialty bread items. In addition, the Company distributes
fresh baked goods in the Southeastern United States.

     Although the Company is producing product for sale, it does not at this
time have substantial assets to support future development, manufacturing and
marketing of these products without additional working capital.  Due to the
lack of assets and working capital, the Company's financial statements contain
a "going concern" modification that places into question the Company's ability
to continue without substantial increases in revenue or additional equity
capital.

     The Company has entered the specialty bread business as a manufacturer
and distributor with its purchase of certain assets and distribution routes of
the Florida based Tulip Pita Bread Center II.

     In November of 1997, the Company purchased the exclusive distribution
rights for all fresh baked products produced by A&C Italian Bakery of Miami,
FL. With distribution routes already in place, the addition of the A&C line on
the Company=s trucks it was felt would increase the profitability of each of
the routes.

     The Company paid $250,000 cash for the exclusive rights to the A&C line.
In February of 1998, A&C terminated the agreement with the Company without
cause. The Company is at this time exploring its options for legal remedies
concerning this matter.

     In April of 1998, the Company entered into an operating agreement with
the previous owners of Tulup Pita Bread II, from which the Company acquired
certain assets in 1997. The operating agreement calls for a lease payment of
$15,000 per quarter for use of the Company=s assets and the Company in turn
transferred all operations along with the current accounts receivable and
payable to the previous owners.

     In effect, the previous owners will assume the operations of the business
and the Company will discontinue operations in the specialty bread business as
of April 1, 1998. The debt incurred in purchasing the assets originally will
continue on the books of the Company until the assets are sold.

Liquidity and Capital Resources
--------------------------------
     At June 30, 1998, the Company had current assets of $89,157 and
current liabilities of $855,377 resulting in working capital deficit
of $766,220.
<PAGE> 14

     During the second quarter of 1998, the Company increased the borrowing
against its line of credit, including interest, by $10,415.

     Management anticipates the Company will continue to rely on both debt and
equity financing of the Company's operations.  The adverse situation with A&C
Bakery has put additional cash flow pressure on the Company=s operations. The
Company is hopeful that the extension of the line of credit with Mr. Lacerte,
will allow the Company to continue building revenues in hopes of future
profitability.

     The Company will continue to seek other sources of financing in addition
to its existing arrangements. However, due to the Company's overall financial
condition, the Company does not anticipate substantial, if any, additional
debt financing.

Results of Operations
----------------------
     During the six months ended June 30, 1998, the Company recorded
sales of $591,806, compared to sales of $497,192 for the same six month
period ended June 30, 1997. The Company expects a substantial decrease in
sales during the remainder of the fiscal year due to the discontinuing of
operations in the Company's pita bread and sweet bread bakery business.  With
the expected decrease in sales projected, the Company expects to decrease
operating expenses.


                                    PART II

ITEM 1.  LEGAL PROCEEDINGS

         None.


ITEM 2.  CHANGES IN SECURITIES

         None.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES


         None.


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

         None.

ITEM 5.  OTHER INFORMATION

         None.

<PAGE> 15

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


(a) EXHIBITS.

EXHIBIT
  NO.           DESCRIPTION
--------        -----------
  27            Financial Data Schedule

(b)  REPORTS ON FORM 8-K.

           NONE


                                   SIGNATURES

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


                                         DRY DAIRY INTERNATIONAL, INC.
                                         [Registrant]


Dated:  July 28, 1999
                                         /S/Robert L. Matzig
                                             President