SECURITIES AND EXCHANGE COMMISSION
      
                            Washington, D.C. 20549
      
                                 FORM 10-QSB
      
              QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
      
      
               For the quarterly period ended September 30, 1998
      
                      Commission file number 0-13642
      
      
                       HUDSON'S GRILL OF AMERICA, INC.
               (Name of small business issuer in its charter)
      
      
                              California
               (State or other jurisdiction of incorporation)
      
                              95-3477313
                   (IRS Employer Identification Number)
      
            16970 Dallas Parkway, Suite 402, Dallas, Texas  75248
                  (Address of Principal Executive Offices)
      
      
             Issuer's telephone number, including area code:
                           (972) 931-9237
      
      <PAGE>
      
           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
      
              APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                 PROCEEDINGS DURING THE PRECEDING FIVE YEARS
      
           Check whether the registrant filed all documents and
      reports required to be filed by Section 12, 13 or 15(d) of
      the Exchange Act after the distribution of securities
      under a plan confirmed by a court.  Yes        No
      
      
                  APPLICABLE ONLY TO CORPORATE REGISTRANTS
      
           State the number of shares outstanding of each of the
      issuer's classes of common equity, as of the latest
      practicable date. 6,056,986
      
      

                        PART I   FINANCIAL INFORMATION

   Item 1.  Financial Statements


                       HUDSON'S GRILL OF AMERICA, INC.

                         CONSOLIDATED BALANCE SHEETS 
                                 (UNAUDITED)


                              ASSETS               
                         
                                        September 30,  December 28,
                                            1998           1997            

CURRENT ASSETS:
  Cash and cash equivalents             $    80,217     $    42,401
  Accounts receivable, net of allowance
    for doubtful accounts of $85,000
    and $49,000 respectively                 42,665          69,830
  Current portion of notes and leases
    receivable                              100,000         100,000
  Prepaid expenses and other
   receivables                               29,833          23,185   

       Total current assets                 252,715         235,416

PROPERTY AND EQUIPMENT, at cost:
  Leasehold improvements                     91,171           2,969
  Restaurant equipment                       33,378          33,378
  Furniture and fixtures                      5,851           5,851

       Total property and equipment         130,400          42,198

  Less accumulated depreciation
    and amortization                        (12,079)         (7,030)

       Property and equipment, net          118,321          35,168


LONG TERM PORTION OF NOTES
  AND LEASES RECEIVABLE, net of 
  allowance for doubtful accounts
  of $33,000 and $33,000 respectively       770,247         791,858 

LIQUOR LICENSES-net of 
  accumulated amortization
  of $30,000 at December 28, 1997                            30,815
     
OTHER ASSETS                                 54,457          23,463

      Total assets                      $ 1,195,740     $ 1,116,720


                       HUDSON'S GRILL OF AMERICA, INC.

                         CONSOLIDATED BALANCE SHEETS 
                                 (UNAUDITED)


                  LIABILITIES AND SHAREHOLDERS' EQUITY
                  
                                           September 30, December 28,
                                                1998          1997    


CURRENT LIABILITIES:
  Accounts payable                          $   73,656     $   40,886
  Accrued liabilities                          258,731        201,343

    Total current liabilities                  332,387        242,229

LONG-TERM DEBT                                 100,000

OTHER LONG-TERM LIABILITIES                    146,986        206,494

DEFERRED INCOME                                726,633        778,367

COMMITMENTS AND CONTINGENCIES
   (Note 4)

SHAREHOLDERS' EQUITY:
  Preferred stock, 5,000,000 
    shares authorized, none 
    issued or outstanding
  Common stock, no par value
     100,000,000 shares authorized
     6,056,986 shares issued and 
     outstanding                             4,456,457      4,456,457
  Accumulated deficit                       (4,566,723)    (4,566,827)
    Total shareholders' equity                (110,266)      (110,370)

    Total liabilities and
      and shareholders' equity              $1,195,740     $1,116,720





                       HUDSON'S GRILL OF AMERICA, INC.

                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (UNAUDITED)

                                           For the three months ended 
                                         September 30,   September 30,
                                             1998            1997     

REVENUES:                              
  Net sales                              $                $   103,890
  Franchising fees from restaurants
    under sales contracts                                       3,316
  Franchise revenues                          68,760           69,604
  Equipment lease income                      12,109           18,097
  Gain on sales of restaurants                 4,223           17,021
  Other income                                18,335           17,177     

    Total revenues                           103,427          229,105

COSTS AND EXPENSES:
  Cost of sales                                   11          116,938 
  General and administrative                 112,954          168,158
  Depreciation and amortization                1,984            8,068
    Total costs and expenses                 114,949          293,164

    Income (loss) from operations            (11,522)         (64,059)

OTHER INCOME (EXPENSE):
  Interest expense                      
  Interest income                             15,028           20,315
    Total other income (expense)              15,028           20,315


INCOME (LOSS) BEFORE INCOME TAXES              3,506          (43,744)

Provision for income taxes                                           

NET INCOME (LOSS) AND 
  COMPREHENSIVE INCOME (LOSS)            $     3,506      $   (43,744)

INCOME (LOSS) PER SHARE
  Basic and diluted net 
    income (loss) and comprehensive
    income (loss) per share              $     .0003      $     (.007)
             





                       HUDSON'S GRILL OF AMERICA, INC.

                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (UNAUDITED)

                                            For the nine months ended  
                                         September 30,   September 30,
                                             1998            1997     

REVENUES:                              
  Net sales                              $   301,441      $   103,890
  Franchising fees from restaurants
    under sales contracts                                      15,573
  Franchise revenues                         212,952          252,463
  Equipment lease income                      45,172           56,139
  Gain on sales of restaurants                36,591           53,165
  Other income                                52,164           51,440     
    Total revenues                           648,320          532,670

COSTS AND EXPENSES:
  Cost of sales                              310,442          116,938
  General and administrative                 368,155          445,584
  Depreciation and amortization                8,324           24,371
    Total costs and expenses                 686,921          586,893 

    Income (loss) from operations            (38,601)         (54,223)

OTHER INCOME (EXPENSE):
  Interest expense                              (251)            (672)
  Interest income                             38,955           61,494
    Total other income (expense)              38,704           60,822


INCOME (LOSS) BEFORE INCOME TAXES                103            6,599 

Provision for income taxes                                           

NET INCOME (LOSS)                        $       103      $     6,599 

INCOME (LOSS) PER SHARE
  Basic and diluted net 
    income (loss) and comprehensive
    income (loss) per share              $    .00001      $     .0007 
             






                       HUDSON'S GRILL OF AMERICA, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOW

                                            For the nine months ended  
                                         September 30,   September 30,
                                             1998            1997      

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                       $      103     $    6,599 
  Adjustments to reconcile net income
   (loss) to net cash used by operating
   activities:
     Depreciation and amortization             8,324         24,371
     (Gain) loss on sales and closures
       of restaurants                        (36,591)       (53,165)
  Changes in assets and liabilities:
     Accounts receivable                     (19,273)         3,944 
     Prepaid expenses and other               (4,947)        (8,315)
     Accounts payable                         32,770        (17,100)
     Accrued liabilities and other            (5,534)      (118,848)
       Net cash provided (used)
       by operating activities               (25,148)      (162,514)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net proceeds from sale of assets            20,120          4,634 
  Notes receivable principal payments         31,712        170,125
  Leases receivable principal payments        37,148         51,692
  Fixed assets and other                    (126,016)        (4,528)
      Net cash provided (used) by  
      investing activities                   (37,036)       221,923

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from notes payable             100,000 
     Repayments of notes payable                            (35,542)
      Net cash provided (used) by  
      financing activities                   100,000        (35,542)

NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                            37,816         23,867 

CASH AND CASH EQUIVALENTS, beginning
  of period                                   42,401         78,680

CASH AND CASH EQUIVALENTS, end 
  of period                               $   80,217     $  102,547 

SUPPLEMENTAL CASH FLOW INFORMATION:
     Interest paid                        $      251     $      902
     Income taxes paid                    $              $         


                       HUDSON'S GRILL OF AMERICA, INC.

              CONSOLIDATED STATEMENTS OF CASH FLOWS,  continued

SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:


Period ended September 30, 1998
The Company sold the restaurant located in Carrollton, TX.  No note 
receivable or lease receivable was generated with this sale.

Period ended September 30, 1997
In connection with the sale of a restaurant and equipment, the Company
received a note receivable of $114,200 and a lease receivable of $240,000.




                   HUDSON'S GRILL OF AMERICA, INC.

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A.   Basis of Presentation

     Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes
the disclosures are adequate to make the information presented not
misleading.  These interim financial statements should be read in
conjunction with the Company's annual report and most recent audited
financial statements included in the report on Form 10-KSB for the
year ended 
December 28, 1997, filed with the Securities and Exchange Commission.

     The interim financial information included hereto is unaudited;
however, such information reflects all the adjustments (consisting
solely of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of results of operations
and cash flows for the interim periods.  The results of operations
for the nine months ended September 30, 1998 are not necessarily
indicative of the results to be expected for the full year.



      
   Item 2.  Management Discussion and Analysis.
      
     Material changes in the financial condition of the issuer and
in the results of its operations since the end of its last fiscal
year and its results from the comparable period in its last fiscal
year include the following.

     The issuer's accounts receivable at September 30, 1998 ("Q3")
were  $42,665 as compared to $69,830 at December 28, 1997 ("FYE"). 
Cash was $80,217 as compared to $42, 401 at FYE, due largely in part
to a long term borrowing of $100,000.  Leasehold improvements
increased at Q3 to $91,171 from $2,919 at FYE because of the
leasehold development of the Richardson, Texas, location by a 
subsidiary.
      
     Accounts payable increased at Q3 to $73,656 from $40,886 at
FYE.  Accrued liabilities also increased in Q3 to $258,731 from
$201,343 at FYE, reflecting an increase in lease obligations.

     Material changes in the results of operations of Q3 compared to
the  third quarter of 1997 ("Q97") include the following.  Net Sales
decreased to $0 in Q3 from $103,890 in Q97, while cost of sales also
decreased to $11 in Q3 from $116,938 in Q97.  These are a result of
the disposition of a restaurant that was in operation as a
subsidiary in 1997; their results were consolidated into the
financial statements of the Company in 1997. Franchising fees,
franchise revenues, equipment lease income, and other income
remained about the same from Q97 to Q3.  Gneral and administrative
expenses dropped to $112,954 at Q3 from $168,158 at FYE due to the
termination of a consulting agreement as of December 31, 1997. 
Income from operations improved from a loss of ($64,059) to a loss
of only ($11,522).
      
     The issuer incurred a gain of $3,506 ($.0003 per share) in Q3
as compared to a loss of $43,744 (($.007) per share) in Q97.


                 PART II - OTHER INFORMATION

     Item 1.  Legal Proceedings.
      
    The registrant incorporates by reference its response in its
Form 10-KSB filed with the Securities and Exchange Commission on May
15, 1998.  Currently the only litigation against the registrant are
two lawsuits involving leases at former Hudson's Grills in Westlake,
California, and Whittier, California, and a lawsuit by a franchisee
attempting to recover expenses incurred by the franchisee when they
operated a Hudson's Grill in Pomona, California.  The lawsuit
involving the lease of the former Hudson's Grill at Whittier, was
filed during the third quarter of 1998; the current landlord at that
location is asking for more than $2 million.  The registrant has
filed an answer and denies that it owes that much, if anything at
all, because of potential defenses and counterclaims.

     Item 2.  Changes in Securities.

     There were no changes in securities or in the rights of the
holders  of the registrant's securities during Q3.

     Item 3.  Defaults Upon Senior Securities.

     The registrant does not currently have any senior securities
outstanding.  Consequently, there are no defaults on senior securities.

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

    There were no matters submitted to a vote of security holders
during Q3.

     Item 5.  Other Information.

     The registrant does not have any material new information that
has not already been disclosed in Forms 8-K and 10-KSB filed since
July 1, 1998.

     Item 6.  Exhibits and Reports on Form 8-K.
      
     (a)  Exhibit Index.  Following are the exhibits required under
Item 601 of Regulation S-B for Form 10-QSB:

     Item 601
     Exhibit No.   Description                      Page Number
      
     (2)           Plan of Acquisition, Reorgani-
                    zation, Arrangement, Liquida-
                    tion, or Succession              n/a
      
     (4)           Instruments Defining the Rights
                    of Holders Including Indentures  n/a
      
     (6)           No Exhibit Required.              n/a
      
     (11)          Statement Re: Computation of
                    Per Share Earnings               n/a <FN1>
      
     (12)          No Exhibit Required.              n/a
      
     (15)          Letter on Unaudited Interim
                    Financial Information            n/a <FN2>
      
     (18)          Letter on Change in Accounting
                    Principles                       n/a
      
     (19)          Previously Unfiled Documents      n/a
      
     (20)          Reports Furnished to Security
                    Holders                          n/a
      
     (23)          Published Report Regarding
                    Matters Submitted to Vote        n/a
      
     (24)          Consent of Experts and Counsel    n/a
      
     (25)          Power of Attorney                 n/a
      
     (27)          Financial Data Schedule           attached
      
     (28)          Additional Exhibits               n/a
      
      
     <FN1>     No explanation of the computation of per share
earnings on both the primary and fully diluted basis is necessary
because the  computation can be clearly determined from the
financial statements and  the notes to the financial statements.

     <FN2>     No reports on unaudited interim financial information
have been prepared by the Company's independent accountants, and
therefore, no letter is required from the Company's independent 
accountants.

     (b)  Reports on Form 8-K.  The following reports on Form 8-K
were filed during the quarter ending September 30, 1998, or shortly 
thereafter:

     1. September 21, 1998. The Company announced the opening of the
Hudson's Grill in Jackson, Michigan, the anticipated opening of the
Hudson's Grill in Richardson, Texas, and the results of the annual
shareholders meeting.


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


                 (Registrant)     HUDSON'S GRILL OF AMERICA, INC.
      
      
                                 By: s/s David L. Osborn
                                     David L. Osborn, President
      
      
                                     Date:     November 16, 1998
      
      
      
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