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 June 30, 1997
      
                      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
      
      
      <PAGE>
      Item 1.  Financial Statements.
      
                        HUDSON'S GRILL OF AMERICA, INC.

                         CONSOLIDATED BALANCE SHEETS 
                                  (UNAUDITED)


                              ASSETS               
                         
                                          June 30,     December 29,
                                            1997           1996            

CURRENT ASSETS:
  Cash and cash equivalents             $    58,371     $    78,680
  Accounts receivable, net of allowance
    for doubtful accounts of $27,645
    and $22,907 respectively                 28,611          66,165
  Current portion of notes and leases
    receivable                              200,938         121,055
  Prepaid expenses and other                 24,392          16,492   

       Total current assets                 312,312         282,392

PROPERTY AND EQUIPMENT, at cost:
  Leasehold improvements                    558,211         614,706
  Restaurant equipment                      354,480         518,674      
Furniture and fixtures                      120,149         188,507

       Total property and equipment       1,032,840       1,321,887

  Less accumulated depreciation
    and amortization                       (838,587)     (1,080,338)

       Property and equipment, net          194,253         241,549


LONG TERM PORTION OF NOTES
  AND LEASES RECEIVABLE                     870,566         748,222 

LIQUOR LICENSES-net of 
  accumulated amortization
  of $27,000 at June 30, 1997 
  and $30,000 at December 29, 1996           33,000          45,186
     
OTHER ASSETS                                 26,116          34,711

      Total assets                      $ 1,436,247     $ 1,352,060





                        HUDSON'S GRILL OF AMERICA, INC.

                         CONSOLIDATED BALANCE SHEETS 
                                  (UNAUDITED)


                  LIABILITIES AND SHAREHOLDERS' EQUITY
                  
                                             June 30,    December 29,
                                                1997          1996    


CURRENT LIABILITIES:
  Current portion of long-term debt         $              $   35,542
  Accounts payable                              15,203         46,922
  Accrued liabilities                           31,730         82,500

    Total current liabilities                   46,933        164,964

LONG-TERM DEBT

OTHER LONG-TERM LIABILITIES                    260,000        293,908

DEFERRED INCOME                                798,143        612,360

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                       (4,125,286)    (4,175,629)
    Total shareholders' equity                 331,171        280,828 

    Total liabilities and
      and shareholders' equity              $1,436,247     $1,352,060











                        HUDSON'S GRILL OF AMERICA, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

                                           For the six months ended  
                                           June 30,        June 30, 
                                             1997            1996    

REVENUES:                              
  Net sales                              $                $   109,806
  Joint venture revenues                                       26,939
  Franchising fees from restaurants
    under sales contracts                     12,257           49,882
  Franchise revenues                         182,859          147,736
  Equipment lease income                      38,042           35,339
  Gain on sales of restaurants                36,144           14,635
  Other income                                34,263                      
    Total revenues                           303,565          384,337

COSTS AND EXPENSES:
  Cost of sales                                               154,557
  General and administrative                 277,426          348,448
  Depreciation and amortization               16,303           23,693
    Total costs and expenses                 293,729          526,698

    Income (loss) from operations              9,836         (142,361)

OTHER INCOME (EXPENSE):
  Interest expense                              (672)         (49,016)
  Interest income                             41,179           83,893
    Total other income (expense)              40,507           34,877


INCOME (LOSS) BEFORE INCOME TAXES             50,343         (107,484)

Provision for income taxes                                           

NET INCOME (LOSS)                        $    50,343      $  (107,484)

INCOME (LOSS) PER SHARE
  Net income (loss) per share            $      .005      $    (.0178)
             








                        HUDSON'S GRILL OF AMERICA, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

                                          For the three months ended  
                                           June 30,        June 30, 
                                             1997            1996    

REVENUES:                              
  Net sales                              $                $   
  Joint venture revenues                                       15,128
  Franchising fees from restaurants
    under sales contracts                      4,164           33,917
  Franchise revenues                         106,871           74,069
  Equipment lease income                      21,230           18,535
  Gain on sales of restaurants                20,041            5,260
  Other income                                17,792                      
    Total revenues                           170,098          146,909

COSTS AND EXPENSES:
  Cost of sales                                                 8,368
  General and administrative                 143,192          169,913
  Depreciation and amortization                8,004           11,573
    Total costs and expenses                 151,196          189,854

    Income (loss) from operations             18,902          (42,945)

OTHER INCOME (EXPENSE):
  Interest expense                              (106)         (24,450)
  Interest income                             20,822           42,897
    Total other income (expense)              20,716           18,447


INCOME (LOSS) BEFORE INCOME TAXES             39,618          (24,498)

Provision for income taxes                                           

NET INCOME (LOSS)                        $    39,618      $   (24,498)

INCOME (LOSS) PER SHARE
  Net income (loss) per share            $      .004      $     (.004)
             








                        HUDSON'S GRILL OF AMERICA, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOW

                                           For the six months ended  
                                           June 30,        June 30, 
                                              1997          1996     
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                       $   50,343     $ (107,484)
  Adjustments to reconcile net income
   (loss) to net cash used by operating
   activities:
     Depreciation and amortization            16,303         23,693
     (Gain) loss on sales and closures
       of restaurants                        (36,144)       (14,635)
  Changes in assets and liabilities:
     Accounts receivable                      28,470          1,554 
     Prepaid expenses and other                  574          6,548         
Accounts payable                             (31,720)        14,092 
     Accrued liabilities and other          (107,718)       (54,542)
       Net cash used by operating
       activities                            (79,892)      (130,774)
CASH FLOWS FROM INVESTING ACTIVITIES:
  Net proceeds from sale of assets             4,634          5,230 
  Notes receivable principal payments         53,991         80,415
  Leases receivable principal payments        36,500         61,038
      Net cash provided (used) by  
      investing activities                    95,125        146,683
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayments of notes payable                (35,542)       (43,825)
      Net cash provided (used) by  
      financing activities                   (35,542)       (43,825)
NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                           (20,309)       (27,916)
CASH AND CASH EQUIVALENTS, beginning
  of period                                   78,680         48,295
CASH AND CASH EQUIVALENTS, end 
  of period                               $   58,371     $   20,379 

SUPPLEMENTAL CASH FLOW INFORMATION:
     Interest paid                        $      902     $   47,225
     Income taxes paid                    $              $    2,400











                        HUDSON'S GRILL OF AMERICA, INC.

               CONSOLIDATED STATEMENTS OF CASH FLOWS,  continued

SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:

Period ended June 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.

Period ended June 30, 1996
In connection with the sale of the Oxnard, CA restaurant, the Company received
a note receivable of $282,086 and a lease receivable of $450,000.  The note and
lease receivable were foreclosed on during 1996 and the fixtures and equipment
repossessed.

A note and lease receivable in the total amount of $195,000 relating to the
Westlake, CA restaurant were foreclosed upon by the Company and the location
repossessed.

































                     HUDSON'S GRILL OF AMERICA, INC.

                Notes to Consolidated Financial Statements

     1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     
Hudson's Grill of America, Inc. (the "Company") franchises and previously
owned and operated full-service restaurants, primarily in Southern
California and Texas.  As of June 30, 1997, the Company has thirteen
franchised restaurants.  Additionally, it owns two restaurants, both of
which are held for sale.  

The consolidated financial statements include the Company and its wholly-
owned subsidiaries, Equipco, Inc. and Hudson's Grill of Whittier, Inc.  All
significant intercompany balances and transactions have been eliminated in
consolidation.

Management is in the process of attempting to sell and franchise the
Company's restaurants and believes that these and other cost cutting
actions will assist the Company in meeting its cash flow requirements over
the next twelve months.

Restaurants Held for Sale
As of June 30, 1997, all of the restaurants held for sale are operated
pursuant to sales agreements with prospective purchasers.  The Company has
ceased recording operating revenues and expenses on these restaurant
locations, but records franchising and advertising fees from restaurants
under sales contracts and equipment rental fees (see Note 8).  The assets
of the restaurants held for sale are primarily property and equipment and
liquor licenses.  Management has evaluated the remaining net assets of the
restaurants held for sale and believes the carrying values do not exceed
the net realizable values of those assets.  Previously, certain restaurants
held for sale were operated under joint venture agreements with prospective
purchasers.

Cash and Cash Equivalents
Cash and cash equivalents for purposes of reporting the cash flows consist
of cash and short-term investments purchased with an original maturity of
three months or less.
                                     
Non-current Assets
Substantially all of the Company's property and equipment is leased under
operating leases to prospective purchasers at June 30, 1997. Depreciation
of property and equipment is recognized using the straight-line method over
the estimated lives of the assets (generally five to seven years). 
Amortization of leaseholds is recognized using the straight-line method
over the shorter of the initial term of the respective lease or the service
life of the leased asset.


                     HUDSON'S GRILL OF AMERICA, INC.

                Notes to Consolidated Financial Statements

Liquor licenses are recorded at cost and are amortized over ten years.

Revenue Recognition
Initial franchise fees are recognized as revenue when all material services
or conditions relating to the sale have been substantially performed or
satisfied.  Continuing franchise fees are recognized as revenue as the fees
are earned and become receivable from the franchisee.

Income Taxes
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred
taxes related primarily to differences between the financial and income tax
reporting bases of assets and liabilities.  The deferred tax assets and
liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled.

Stock-Based Compensation
In 1996, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 123 "Accounting for Stock-Based Compensation", which requires
recognition of the value of stock options and warrants granted based on an
option pricing model.  However, as permitted by SFAS No. 123, the Company
continues to account for stock options and warrants granted to directors
and employees pursuant to APB Opinion No. 25, "Accounting for Stock Issued
to Employees", and related interpretations.  See Note 7.

Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and 
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.  Significant
items in the accompanying financial statements that include estimates are
notes and leases receivable and lease contingencies.  Actual results could
differ materially from those estimates.







                     HUDSON'S GRILL OF AMERICA, INC.

                Notes to Consolidated Financial Statements


Income (loss) per share
Income (loss) per common share is computed based upon the weighted average
number of common and common equivalent shares  outstanding during the
period. Common equivalent shares are not considered if their effect is
antidilutive.  Common stock equivalents consist of outstanding stock
options and warrants.  Common stock equivalents are assumed to be exercised
with the related proceeds used to repurchase outstanding shares except when
the effect would be antidilutive.  Common equivalent shares were
antidilutive in the periods ended June 30, 1997 and December 29, 1996.

     The weighted average number of shares outstanding used in the income
(loss) per share computation was 10,056,986 for the period ended June 30,
1997 and 6,056,986 for the period ended June 30, 1996.

Impact of Recently Issued Pronouncements
The Financial Accounting Standards Board (FASB) has issued Statement No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" and Statement No. 128, "Earnings Per
Share".  The Company intends to adopt these standards in 1997.  Management
believes they will not have a material impact on the Company's financial
statements.

     2.   FRANCHISE ACTIVITIES 

In 1991, the Company commenced franchising its Hudson's Grill concept. 
Under the terms of the standard franchise agreement, the franchisees are
obligated to pay the Company an initial franchise fee of $25,000, and a
weekly continuing royalty fee of 4% of gross restaurant revenues, and must
spend 3% of gross sales on approved advertising, including a weekly 1%
marketing fee contributed to the Company's marketing fund.  The Company is
obligated to provide initial training, continuing management assistance,
administration of advertising and sales promotion programs and
establishment and monitoring of a marketing fund.  Franchising revenues
consisted of:
                                  
                                   June 30,           June 30, 
                                     1997               1996    

   Initial franchise revenues     $   25,000         $      521
   Continuing franchise
       revenues                      157,859            147,215
     Total franchise revenues     $  182,859         $  147,736


                     HUDSON'S GRILL OF AMERICA, INC.

                Notes to Consolidated Financial Statements

In November, 1995, the Company received $150,000 from a franchisee to
prepay franchise fees.  The Company recorded the amount received as
deferred income and will amortize it to income over the life of the
agreement.  The balance at June 30, 1997 is $121,101.

     3.   NOTES AND LEASES RECEIVABLE

     At December 31, 1995, the Company had a note receivable with a balance
of $1,199,114 from its Texas franchisee.  A principal shareholder of the
Company owns an interest in this entity and 
Travis L. Bryant (see Note 5) owned an interest in this entity until 1994. 
Monthly payments of principal and interest in the amount of $14,006 were
required for ten years at which time all remaining principal and accrued
interest was due. The note bore interest at a rate of 8% per year and was
collateralized by restaurant equipment and improvements.  In addition, an
offset agreement existed in which the Company could offset any past due
amounts on the note against a note payable to Travis L. Bryant. During
1996, the balance of this note and related accrued interest was reduced by
$118,221 as described below.  In December 1996, the Company entered into
an agreement with Travis L. Bryant whereby the Company assigned its
interest in the reduced note receivable described above to Bryant in full
satisfaction of the note payable to Bryant.

The reduction of the balance of the note receivable and accrued interest
of $118,221 was charged to expense.  In exchange for the note reduction,
the Texas franchisee assigned a 2% royalty interest in the sales of certain
restaurants to the Company.  

In connection with the sale of restaurants in the period ended January 2,
1994, the Company received a note for $490,000 with annual installments of
principal and interest at prime plus 2% due over five years.  The balance
of the note at June 30, 1997 and December 29, 1996 was $100,000 and
$118,486 respectively.

In connection with the sale of a restaurant in the period ended January 1,
1995, the Company received a note for $262,800.  The note bears interest
at a rate equal to the greater of prime plus 2% or 9%, adjusted on a
quarterly basis.  Payments of interest only were required for one year,
after which ninety-six monthly payments are required in amounts necessary
to amortize the remaining principal balance of the note.  The balance of
the note was $241,410 at June 30, 1997 and $250,300 at December 29, 1996.

In connection with the sale of a restaurant in the period ended 



                     HUDSON'S GRILL OF AMERICA, INC.

           Notes to Consolidated Financial Statements (Cont'd)

December 29, 1996, the Company received a $294,000 note which bears
interest at 10.25%.  The note requires annual installments of principal and
interest of $76,800 due over four years and a final payment of $76,655. 
The balance of the note receivable at June 30, 1997 was $253,583 and
$278,245 at December 29, 1996.  

In connection with the sale of a restaurant in the period ended June 30,
1997, the Company received a $114,200 note which bears interest at the
greater of prime plus 2% or 12.0%.  Payments of interest only are required
for one year, after which ninety-six monthly payments are required in
amounts necessary to amortize the remaining principal balance of the note. 
The balance of the note receivable at June 30, 1997 was $114,200.

Each of the notes that arose from the sales of the various restaurants
referred to above are collateralized with certain assets of those
restaurants.

The Company also leased the restaurant equipment to the purchasers of the
restaurants sold in the periods ended June 30, 1997 and December 29, 1996. 
The leases have been classified as sales-type leases.  The net carrying
value of the leases receivable at June 30, 1997 and December 29, 1996 is
$350,997 and $207,697 respectively.  

Future lease payments required under these agreements are as follows:

Due in fiscal periods ending:

     January 4, 1998               $   39,921     
     January 3, 1999                   78,000     
     January 2, 2000                   78,000     
     January 1, 2001                   78,000     
     December 31, 2001                 78,000
     Thereafter                       246,880     
       Total                          598,801     
       Less amount representing
         unearned interest           (247,804)    
                                   $  350,997

   







                     HUDSON'S GRILL OF AMERICA, INC.

           Notes to Consolidated Financial Statements (Cont'd)

     4.   COMMITMENTS AND CONTINGENCIES

The Company's restaurant buildings and certain equipment are operated under
noncancelable operating leases.  Terms of these leases extend from 3 to 25
years.  Certain leases are guaranteed by former directors.  In addition to
amounts included below, the leases generally provide that the Company pay
taxes, maintenance, insurance and certain other operating expenses
applicable to the leased property, plus a percentage of gross receipts in
excess of certain limits stated in the lease agreements.  As explained in
Note 8, all of the Company's remaining restaurants are operated by third
parties pursuant to sales agreements and the rental payments are being made
by those parties.

The following is a summary by periods of future minimum lease payments on
the restaurant locations:

          Fiscal Period Ending:

       January 4, 1998                        $  107,258
       January 3, 1999                           214,416
       January 2, 2000                           214,416
       January 1, 2001                           214,416
       December 31, 2001                         225,636
       Thereafter                              3,021,434

         Total minimum lease payments         $3,997,576

In addition to the leases discussed above, the Company has assigned to the
purchasers the leases of buildings for eight restaurants previously sold. 
The Company is secondarily liable for the lease payments on these
restaurants should the purchasers not fulfill their responsibility under
the leases.  The future lease payments for these restaurants total
approximately $8,989,406 at June 30, 1997.  In addition, the Company may
be secondarily liable under other leases for restaurants sold in prior
years.

Total rental expenses for operating leases were $8,832 and $23,355 for the
periods ended June 30, 1997 and June 30, 1996, respectively.








                     HUDSON'S GRILL OF AMERICA, INC.

           Notes to Consolidated Financial Statements (Cont'd)


During 1996, the Company settled a lawsuit with a vendor to the operator
of a former joint venture in which the Company is obligated to pay $58,000
to the plaintiff in monthly payments until October 1997. If the Company
fails to perform under the payment arrangement above, a stipulated judgment
of $100,000 will be entered by the court and the Company will be liable for
the full amount.  The balance remaining at June 30, 1997 was $18,000.

     5.   LONG-TERM DEBT

Long-term debt at June 30, 1997 and December 29, 1996, is summarized as
follows:
                                     June 30,        December 29,
                                       1997              1996    

     Note payable to Corona Market
      Partnership, due in monthly
      installments of $5,327, 
      including interest of 8%
      through June 1997.            $                $   31,230
     Other note payable                                   4,312
     Total                                               35,542
     Less current portion                               (35,542)
      Long-term debt                $                $         

In the year ended January 1, 1995, Travis L. Bryant formally agreed to
reduce a $3,360,000 note payable to him into a $1,300,000 note due in
monthly installments as described above.  In addition, Bryant agreed to
forgive certain other amounts due him by the Company, which totalled
approximately $720,000.  In connection with the restructuring transaction,
Bryant also received a warrant to purchase 4,000,000 shares of the
Company's common stock at $.0625 per share anytime over the next ten years. 
Consummation of the agreement was contingent on the Company's performance
of certain conditions, including the loan of an additional amount to the
Texas franchisee to increase that note receivable from $300,000 to
$1,300,000 (see Note 3) and the compromise and satisfaction of certain
liabilities due lessors of certain closed restaurant locations (see Note
4).  These conditions were satisfied in the year ended January 1, 1995 and
the debt restructure was consummated.  The total debt forgiveness of
$1,747,233, net of approximately $1,033,000 of the write-off of associated
goodwill, was recorded as an extraordinary item.     



                     HUDSON'S GRILL OF AMERICA, INC.

               Notes to Consolidated Financial Statements 

As discussed in Note 3, during the year ended December 29, 1996, the
Company entered in to an agreement with Bryant whereby the Company assigned
the note receivable from the Texas franchisee to Bryant in full
satisfaction of this note payable.

     6.   INCOME TAXES

There was no income tax provision at June 30, 1997 or December 29, 1996 due
to a loss in 1996 and the application of tax net operating loss
carryforwards.  The actual tax expense differs from the "expected" tax
expense computed by applying the U.S. Federal corporate tax rate of 34% to
earnings before income taxes primarily due to differences between financial
reporting and income tax treatment of the debt restructuring described in 
Note 5.

Deferred income taxes are provided for temporary differences between income
tax and financial reporting as of June 30, 1997  and December 29, 1996 as
follows:
                                  June 30,          December 29,
                                    1997                1996    
 
          Deferred tax asset:
       Depreciation              $  134,000          $  137,000
       Net operating loss           197,000             197,000
       Accrued settlement            27,000              27,000
       Deferral income and rent     157,000             171,000
       Valuation allowance         (515,000)           (532,000)
                                 $                   $         

At December 29, 1996, the Company had net operating loss (NOL) and
investment tax credit carryforwards for Federal income tax purposes of
approximately $890,000 and $180,000, respectively.  Use of these
carryforwards (with the exception of approximately $575,000 of the NOL
carryforward) is limited due to issuance of the warrant described in Note
5.












                     HUDSON'S GRILL OF AMERICA, INC.

               Notes to Consolidated Financial Statements 

     7.   SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

During 1996, the shareholders of the Company increased the Company's
authorized shares of common stock from 10,000,000 shares to 100,000,000
shares.

During 1997, the shareholders of the Company granted the Company the
authority to issue up to 5,000,000 shares of preferred stock.

Stock Option Plans
The Company has an incentive stock option plan ("ISO") which provides for
the issuance of options to officers, directors and employees to purchase
up to 825,000 shares of the Company's common stock.  Options are
exercisable at prices equal to the fair market value of common stock at the
grant date, vest 20% annually and expire generally within five years.  The
Company also has a Directors Stock Option Plan ("DSO").  This plan provides
for the issuance of up to 200,000 shares of stock to non-employee directors
in increments of 10,000 shares every two years.  Options will be issued at
the average of the closing bid-ask price on the date of the grant.  No
options were outstanding as of June 30, 1997 or December 29, 1996 under
either plan.

Other Options and Warrants
In January 1994, in connection with a debt restructuring agreement
described in Note 5, the Company issued warrants to Travis L. Bryant.  The
warrants are exercisable for 4,000,000 shares of common stock at $.0625 per
share and expire in ten years. The exercise price approximated the market
value of the stock at the time of grant.  None of the warrants had been
exercised as of June 30, 1997.  

During 1995, the Company granted options to an officer to purchase 400,000
shares of common stock with 100,000 shares vesting each year from 1995 to
1998.  The exercise price is the market price at time of vesting.  The
exercise price of the shares vested in 1997, 1996, and 1995 are $.14, $.17,
and $.11 per share, respectively.  All the options expire, if not exercised
in 2003.


<PAGE>

                     HUDSON'S GRILL OF AMERICA, INC.

               Notes to Consolidated Financial Statements 

The following summarizes the option and warrant activity for the period
ended June 30, 1997:


                                              Weighted  
                                               Average
                                 Number of    Exercise
                                  Shares        Price 

Outstanding,              
beginning of year               4,300,000         .07
  Granted to:
    Officer and
    director
    Former director
    Exercised                                              
Outstanding, June 30, 1997      4,300,000         .07

In addition to the warrants and options in the table above, there are
options to purchase 100,000 shares of common stock which were granted in
1995 and vest in 1998 and expire in 2003.  The exercise price will be
determined based on the market value at the time of vesting and therefore
these options are not included in the table above.

During 1996, the Company agreed to issue warrants to a potential franchisor
in connection with the successful development of several restaurants.  The
franchisor was to be granted 25,000 warrants with an exercise price of
$.09375 per share and a five year term with each successful opening of a
franchise restaurant.  This agreement was terminated before any warrants
were granted.

As of June 30, 1997, 4,300,000 of the 4,400,000 outstanding options and
warrants were exercisable.  If not previously exercised, warrants and
options outstanding at June 30, 1997 will expire as follows:
                             Number of        Weighted Average
       Period Ending          Shares           Exercise Price

           2003              300,000                 .14
           2004            4,000,000                 .06   

                           4,300,000





                     HUDSON'S GRILL OF AMERICA, INC.

               Notes to Consolidated Financial Statements 


The weighted average exercise price equaled the market price for all
warrants and options granted during the periods ended June 30, 1997 and
December 29, 1996.

Pro Forma Stock Based Compensation Disclosures
As reflected in Note 1, the Company applies APB Opinion No. 25 and related
interpretations in accounting for its stock options.  Accordingly, no
compensation cost has been recognized for grants of options to the
employees since the exercise prices were not less than the fair value of
the Company's common stock on the measurement date.  Had compensation been
determined based on the fair value at the measurement dates for awards
under those plans consistent with the method prescribed by SFAS No. 123,
the Company's net income (loss) and earnings per share would have been
changed to the pro forma amounts indicated below:

                                       Period ended
                                     December 29, 1996

Net income (loss)                     
     As reported                      $  (261,334)
     Pro forma                           (276,334)
Net income (loss) per common share
     As reported                      $      (.04)
     Pro forma                               (.05)

The fair value of the options granted in 1996 were estimated on the date
of vesting using the Black-Scholes option-pricing model with the following
weighted assumptions:

                                       Period ended
                                     December 29, 1996
Expected volatility                       116.3%
Risk-free interest rate                     6.25%
Expected dividends                 
Expected terms (in years)                     7    











                     HUDSON'S GRILL OF AMERICA, INC.

               Notes to Consolidated Financial Statements 

   
     8.   RESTAURANT SALES AND CLOSURES

During the period ended June 30, 1997, a franchisee in Austin, Texas closed
its restaurant.  An experimental food court location in Paramus, New Jersey
also closed in June, 1997.  Revenues recognized for these locations for the
period ended June 30, 1997 were $10,399 and $2,866, respectively.

During the period ended June 30, 1997, the Company sold a restaurant and
initially recorded deferred gain of $232,685 to be amortized into income
over the terms of the related note and lease receivables (see Note 3).  The
balance of deferred gain at June 30, 1997 was $224,664.

During the period ended December 29, 1996 the Company sold a restaurant and
initially recorded deferred gain of $204,152 to be amortized into income
over the terms of the related note and lease receivables (see Note 3).  The
balance of the deferred gain at June 30, 1997 and December 29, 1996 was
$172,565 and $189,347, respectively.
 
During the period ended January 1, 1995 the Company sold one restaurant and
recorded a deferred gain of $348,782 on the sale, which will be amortized
into income over the terms of the related note and lease receivables (see
Note 3).  The balance of the deferred gain at June 30, 1997 and December
29, 1996 was $279,813 and $294,029, respectively.

The Company is endeavoring to sell both of the remaining restaurants owned
as of June 30, 1997 and has granted purchase options for each of these
restaurants.  These purchase agreements include certain provisions,
whereby, the future purchasers 
operate the restaurants and the Company receives royalty and advertising
fees based on the restaurants' sales.  In addition, certain purchasers have
agreed to lease in-store assets over the term of the agreements, which
expire upon sale of the restaurants.  Based on the option price provided
in these agreements, management does not anticipate recording a loss on
sale of these restaurants.









                     HUDSON'S GRILL OF AMERICA, INC.

               Notes to Consolidated Financial Statements 



9.  FINANCIAL INSTRUMENTS

Concentrations of credit risk
Credit risk represents the accounting loss that would be recognized at the
reporting date if counterparties failed completely to perform as
contracted.  Concentrations of credit risk (whether on or off balance
sheet) that arise from financial instruments exist for groups of customers
or counterparties when they have similar economic characteristics that
would cause their ability to meet contractual obligations to be similarly
affected by changes in economic or other conditions.  In accordance with
FASB Statement No. 105, Disclosure of Information about Financial
Instruments with Off-Balance-Sheet Risk and Financial Instruments with
Concentrations of Credit Risk, the credit risk amounts shown do not take
into account the value of any collateral or security.

Financial instruments that subject the Company to credit risk consist
principally of accounts receivable, cash on deposit and notes and leases
receivable.

At June 30, 1997, accounts receivable totaled $28,611 net of an allowance
for doubtful accounts of $27,645.  The Company does not require collateral
for accounts receivable, but performs periodic credit evaluations on its
customers' financial condition and believes that the allowance for doubtful
accounts is adequate.

The Company periodically maintains cash balances in excess of FDIC
insurance limits.

Notes and leases receivables are described in Note 3.

Fair Value of Financial Instruments
The estimated fair values of the Company's financial instruments were
determined by management using available market information and appropriate
valuation methodologies.  The estimates are not necessarily indicative of
the amounts the Company could realize in a current market exchange.

At June 30, 1997, cash, accounts receivable and accounts payable have fair
values that approximate book values based on their short term or demand
maturity. The fair values of notes receivable and notes payable are based
on estimated discounted cash flows.  The fair values of these instruments
approximates book values at June 30, 1997.      
      
      
      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 June 30, 1997 ("Q2") were
      $28,611 as compared to $66,165 at December 29, 1996 ("FYE").  The
      current portion of issuer's notes and leases receivable at Q2 was
      $200,938 as compared to $121,055 at FYE.  Leasehold improvements at Q2
      were $558,211, while at FYE they were $614,706.  At the same time,
      restaurant equipment decreased from $518,674 at FYE to $354,480 at Q2. 
      The decreases in these last two asset accounts were due mostly from the
      sale of a restaurant in the first quarter.  For that same reason, the
      long term portion of notes receivable increased in the first quarter
      from $748,222 to $870,566.
      
          Current liabilities decreased at Q2 to $46,933 from $164,964 at FYE. 
      The current portion of long term debt, accounts payable, and accrued
      liabilities all decreased in Q2, as debts were being paid.  Deferred
      income increased at Q2 to $798,143 from $612,360 at FYE. This reflects
      the sale of a restaurant in the first quarter.
      
          Material changes in the results of operations of Q2 compared to the
      second quarter of 1996 ("Q96") include the following.
      
          Net Sales dropped to $0 in Q2 from $15,128 in Q96, and cost of
      sales also dropped to $0 in Q2 from $8,368 in Q96.  These are a result
      of the sale of restaurants during the last year and because the issuer no
      longer recorded the sales of restaurants that were contracted to be
      sold.  
      
          General and administrative expenses decreased in Q2 to $143,192 from
      $169,913 in Q96.  Interest expense decreased to $106 in Q2 from $24,450
      in Q96 as various notes have been paid off during the past year.
      
          The issuer made a profit of $39,618 ($.004 per share) in Q2 as
      compared to a loss of $24,498 ($.004 per share) in Q96.
      
      
      
                         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 April 15,
      1997.  Currently all major litigation involving the registrant has been
      settled, and the registrant is not aware of any material litigation in
      process.
      
      Item 2.  Changes in Securities.
      
         There was one change in securities or in the rights of the holders
      of the registrant's securities during Q2.  At the annual shareholders
      meeting, the shareholders passed a resolution to permit the issuance
      of preferred shares of stock.  At the time, no preferred shares were
      authorized.   Since the resolution passed, the issuer will have
      authority to issue up to 5,000,000 shares of preferred stock, with
      rights to be determined by the directors on a series by series basis.
      
      Item 3.  Defaults Upon Senior Securities.
      
          The registrant does not currently have any senior securities. 
      Consequently, there are no defaults on senior securities.
      
      Item 4.  Submission of Matters to a Vote of Security Holders.
      
          Several matters were submitted to a vote of security holders during
      Q2. On May 27, 1997, at the annual shareholders meeting,
      shareholders voted directly and through proxies on the election
      of three directors, the appointment of the registrant's auditors, and to
      amend the issuer's articles of incorporation to permit the issuance of
      preferred shares of stock.  At the time, the issuer had only two nominees
      for the three director posts; the two running for directorships were
      David L. Osborn and Thomas A. Sacco.  As a result of the votes, David
      Osborn and Thomas Sacco were elected as directors, Hein + Associates were
      appointed as the Company's auditors, and the Company's articles were
      amended to authorize the issuance of up to 5,000,000 shares of
      preferred stock.  Since the annual meeting, the Company's directors
      have filled the third directorship; the Company's outside counsel,
      Robert W. Fischer, Esq., was elected a director in July 1997.
      
      Item 5.  Other Information.
      
           The registrant has been in "off and on" discussions with various
      potential franchisees to develop restaurants.  No new agreements have
      been signed since the signing of the registrant's first franchise in
      Michigan, which was announced in April 1997.  The registrant has
      contracted with a regional investment broker with the hope of
      raising capital for the registrant.  A private placement memorandum has
      been prepared for delivery to prospective investors in the registrant.
      A lease has been signed by the registrant as part of a plan to open a
      company owned restaurant for the purpose of using the new restaurant as
      a model and training site.  The lease is conditioned on the registrant's
      receipt of financing for its furniture, fixtures and equipment for the
      restaurant. It may also purchase two restaurants from a franchisee that
      is affiliated with the registrant's`president, Mr. Osborn.
      
      
      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
      
      <PAGE>
      
      <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 June 30, 1996:
      
           1. April 18, 1997.  The Company announced that its Chief Financial
      Officer, D. Marion Wood, had resigned; the directors had recommended a
      vote to amend the registrant's articles to authorize the issuance of  
      preferred shares of stock; it had begun negotiations with an investment
      banker to raise funds; it had exchanged a note to pay off a note
      payable; and that it had signed a new development agreement for parts
      of Texas.
      
           2.  June 6, 1997.  The Company signed an agreement for investment
      banking services to be provided to it by Rauscher Pierce Refnes, a Dallas,
      Texas, regional investment banker. It also announced that the Company had
      approved an amendment to its articles authorizing the issuance of up
      to 5,000,000 shares of preferred stock and also had elected David Osborn
      and Thomas Sacco as directors of the Company.
  
           3.  July 21, 1997.  The Company announced that its directors had
      voted Robert Fischer to fill a vacancy on the Company's board of
      directors; it also announced various news items about potential new
      franchisees, former franchisees, former developers, and Company
      restaurants for sale.
  
      
      <PAGE>
      
                                 SIGNATURES
      
           In accordance with Section 13 or 15(d) of the Exchange Act, the
      registrant caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.
      
      
                (Registrant)     HUDSON'S GRILL OF AMERICA, INC.
      
      
                                 By: s/s David L. Osborn
                                     David L. Osborn, President
      
      
                                     Date:     August 15, 1997
      
      
      
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