UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549

                                   FORM 10-Q


                 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 33-89714



                          RED OAK HEREFORD FARMS, INC.

        (Exact name of small business issuer as specified in its
                                 charter)


            NEVADA                                84-1120614
            ------                                ----------
(State or other jurisdiction of        (IRS Employer Identification No.)
incorporation or organization)


                    2010 Commerce Drive, Red Oak, Iowa  51566
                     (Address of principal executive offices)

                                 (712) 623-9224
                           (Issuer's Telephone Number)



Indicate by check mark whether the registrant (1) has filed all
reports requiredto 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), and (2) 
has been subject to such filing requirements for the past 90 days.

                              Yes x         No
                                 ---          ---


At November 11, 1998, there were 15,050,165 shares of common
stock, $.001 par value, of the registrant outstanding.



                                       1

<PAGE>

INDEX

                                                          Page No.


PART I-FINANCIAL INFORMATION

Item 1.   Financial Statements                               F-1
Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations       3

PART II-OTHER INFORMATION

Item 1.   Legal Proceedings                                  12
Item 2.   Changes in Securities                              12
Item 3    Defaults Upon Senior Securities                    14
Item 4.   Results of Votes of Security Holders               15
Item 5.   Other Information                                  16
Item 6.   Exhibits and Reports on Form 8-K                   16


































                                       2

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

     See pages F-1 to F-7 attached.

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

     The matters discussed in this Form 10-Q contain forward-looking 
statements that involve risks and uncertainties including risk of 
changing market conditions with regard to livestock supplies and demand 
for products of Red Oak Hereford Farms, Inc. (the "Company"), domestic 
and international regulatory risks, competitive and other risks over 
which the Company has little or no control.  Consequently, future 
results may differ from management's expectations. Moreover, past 
financial performance should not be considered a reliable indicator of 
future performance.

     This Form 10-Q contains certain forward-looking statements. For this 
purpose, any statements contained in this Form 10-Q that are not 
statements of historical fact may be deemed to be forward-looking  
statements. Without limiting the foregoing, words such as "may", "will", 
"expect", "believe", "anticipate", "estimate" or "continue" or comparable 
terminology are intended to identify forward-looking statements.  These 
statements by their nature involve substantial risks and uncertainties, 
and actual results may differ materially depending on a variety of 
factors.

     The Company operates through its subsidiaries, Red Oak
Farms, Inc. ("ROF"), Midland Cattle Company ("Midland"), Red Oak Feeders, 
LLC ("Feeders") which has a 50% interest in a joint venture, Quality 
Feeders ("Quality"), Here's The Beef, Corp. ("HTB") of which the Company 
owns 80%, and My Favorite Jerky, LLC ("MFJ") of which the Company owns 60%.

CURRENT QUARTER DEVELOPMENTS

     Currently, there are over 100 nationally known  restaurants serving 
CHB and the Company has increased its premium retail supermarket stores 
from 79 as of June 30, 1998 to 102 as of September 30, 1998.

     A sampling of the Company's supermarket and restaurant
clientele currently includes:

     Retail Supermarkets
     -------------------
     Sutton Place Gourmet in New York, Connecticut and Washington, DC
     Steele's Markets in Colorado
     Sunshine Food Markets in South Dakota
     Quillin's IGA Foodliners in Wisconsin
     Hen House in Kansas City
     Walts's in Illinois
     Kowalski's in Minnesota


                                       3

<PAGE>

     Bud's Family Foods in Oklahoma
     Kincaid & Sons in Indiana

     Restaurants
     -----------
     The New York Hilton (2)
     Newark Hilton
     The Riviera in Las Vegas
     The Fort in Denver
     The Waldorf-Astoria in New York
     Johnny's Cafe in Omaha
     Stackwood Restaurant in Lincoln, NE
     Veladi Ranch Steakhouse in Texas and Puerto Rico

     Market Media.  Market Media, a financial public relations service, 
will continue to service the Company's 800 number for investor 
information requests and maintain the Company's website 
(www.redoakfarms.com).

     Nebraska Beef Agreement.  On March 25, 1998, the Company entered 
into a three-year slaughter and fabrication agreement with Nebraska
Beef. Under this agreement, Nebraska Beef has agreed to slaughter and 
fabricate 500 - 4,500 head of cattle per week.   If the carcass count 
falls below these numbers in any given week, Nebraska Beef has the 
right to terminate the agreement.  Nebraska Beef has also agreed to 
purchase all carcasses that do not meet United States Department of 
Agriculture ("USDA") specifications for CHB.  The Company has met the 
quota of beef processed as required in the agreement and is confident 
they will continue to be in compliance with the agreement.

     CPNM Agreement.  The Company formed a Nevada Corporation; Here's 
The Beef, Corp. ("HTB"), for the purpose of beginning a multi-media 
distribution network. The Company owns 80% of HTB and a minority 
shareholder, Cable/Print Network Marketing, Inc. ("CPNM") owns 20%. 
HTB has an infomercial in production stage, which is tentatively 
scheduled to air nationally in the fourth quarter with a print media 
campaign currently under development.

     McClellan Creek Gourmet Meats Agreement.  The Company established 
a new joint venture with McClellan Creek Gourmet Meats, Inc. to 
produce, market and sell, nationwide, a natural style beef jerky 
through My Favorite Jerky, LLC ("MFJ").  The agreement was finalized 
during the third quarter of 1998 with the Company owning 60% and 
McClellan Creek Gourmet Meats owning 40% of MFJ. 

     MFJ appointed Unicom Marketing Group as its marketing
agency.  The final packaging design has been established and MFJ 
anticipates productrole out to begin mid-November 1998.

     Although production has not commenced, MFJ has incurred initial 
operating expenses and start-up costs associated with developing the 
product and coordinating production and selling activities.

     Stubbs Barbeque Agreement. Stubbs Barbeque and the Company through 
ROF have determined that it's in the best interest of both parties to 
discontinue negotiations in a line of precooked beef products until a 
future date.

                                       4

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     As of September 30, 1998, the Company had a consolidated
cash and cash equivalents balance of $ 0.

     The Company's sources of capital are primarily the issuance
of private debt, borrowings on lines of credit and the issuance of 
equity securities.  As the Company continues its investment in brand 
development, these resources will be critical to the success of the 
Company.  The Company will require additional resources to move to the 
next stage of development.

     The Company has three notes payable to a major stockholder
and director totaling $410,000.  The notes are payable on demand and 
bear interest of 9%. Total interest expense related to these notes was 
approximately $6,700 for the nine months ended September 30, 1998.

     The Company commenced a private placement on January 14, 1998. 
The private placement was for 840,000 Units at $4.00 per Unit.  Each 
Unit consists of one share of common stock of the Company and a 
Warrant to purchase one share of common stock of the Company at $6.00 
per share.  The private placement was closed on September 14, 1998. 
The Company raised $1,328,500 through the sale of 332,125 units before 
deducting offering expenses of $152,352.  The Company used the capital 
raised from this offering for working capital.

     Pursuant to the 1997 Stock Option Plan, options for 555,000 shares 
have been granted to date.  As of September 30, 1998, none of the 
options granted pursuant to the 1997 Stock Option Plan have been 
exercised.

      On September 30, 1998, the Company's Board of Directors granted 
150,000 shares of common stock to three Directors in recognition of the
outstanding service provided by each individual.  As a result of the 
grant of common stock, the Company recognized $258,000 of compensation 
expense.

      On May 8, 1998, the Company's Board of Directors resolved that 
all Directors shall receive as consideration for the participation in 
each board meeting, 1,000 shares of common stock issued to such 
Director for each regular meeting attended during the year.  In 
addition, the Board also granted all outside Directors stock options 
for the purchase of 5,000 shares of common stock exercisable at $4.75 
per share.  The right to exercise the options shall vest upon 
completion of each outside Director's one-year term, and shall be 
exercisable for a period of five years.

     On September 30, 1998, the Board amended the resolution such that 
each Director will receive 1,000 shares of common stock for all board 
meetings attended.  As of September 30, 1998, the Company has 
recognized a total of $75,760 in director compensation expense for all 
board meetings held to date. Through September 30, 1998 the Company has 
granted 24,000 shares and 25,000 options to Directors.



                                       5

<PAGE>

   On September 30, 1998, the Company also granted 100,000 shares of 
common stock for consulting services to Andrew Glashow and Empire 
Management Ltd. As a result of this grant, the Company recorded an 
expense totaling $172,000.

     Cash used in operating activities decreased from $6,014,192
in the first nine months of 1997 to $2,486,976 in the first nine 
months of 1998.  The principle uses for the first nine months of 1998 
were attributable to the Company's net loss and an increase in 
inventory and accounts receivable which were partially offset by an 
increase in accounts payable and accrued expenses.

     Cash (used in)/provided by investing activities changed from
providing $32,609 during the first nine months of 1997 to using 
($364,109) in the first nine months of 1998.  The majority of the cash 
used by investing activities in the first nine months of 1998 is 
attributed to the Company's additional investment in Feeders, an 
increase in other assets including contract fees and loan origination 
fees and the purchase of property and equipment.

     Cash provided from financing activities decreased from $5,981,583 
in the first nine months of 1997 to $2,838,092 in the first nine months
of 1998.  Sales of common stock and additional borrowings were the 
primary sources of cash flows for financing activities in the first 
nine months of 1998.

     Revolving Lines of Credit.  The Company continues to receive an 
asset-based line of credit from KBK Capital Corporation ("KBK").  The 
line of credit provides borrowings up to $2,500,000 for accounts 
receivable and $1,500,000 for inventory, based on eligible assets. 
The line of credit is collateralized by substantially all of ROF's 
assets and personal guarantees of the Company's President and a 
Director.  The Company is in technical non-compliance on certain 
financial conditions on its loan agreement with KBK, which gives KBK 
the right to call the loan.  However, KBK has given no indication of 
any intention to call this obligation.

     IDED Loan.  ROF is current on its long term loan obligation with 
the Iowa Department of Economic Development ("IDED") and as of 
September 30, 1998, the principal balance remaining on this loan was 
approximately $463,098.  Management believes that proceeds from capital 
raising activities and product sales revenue will be adequate to 
continue meeting this obligation.

     MoorMan's Loan.  ROF is in technical non-compliance on certain 
non-financial conditions on its loan agreement with MoorMan's, the 
Company's feed supplier (protein  supplement), which gives MoorMan's 
the right to call the loan. However, MoorMan's has given no indication 
of any intention to call this obligation.  The loan amount of 
$1,000,000 is due October  2001, with interest only currently payable 
monthly at approximately $9,000 per month.  On November 1, 1998, 
principal payments over a thirty-six (36) month period will commence.
The  Company is currently meeting the payment obligations from proceeds 
of capital raising activities and believes additional stock sales and 
revenue from product sales will be sufficient to satisfy this 
obligation.



                                       6

<PAGE>

     AHA Contract.  ROF is under contract with the American Hereford 
Association ("AHA"), a non-profit organization, and has exclusive 
license to market CHB.  As of the reporting date the Company has not 
met the pro-rata volume commitment necessary for the royalty 
liability, however, the Company has accrued an amount representative of 
the pro-rata liability as of the reporting date.  The 1998 obligation 
is for $725,000 of which $425,000 was due by August 31, 1998.  The 
Company had paid AHA $108,270 by August 31, 1998, with an additional 
$25,608 paid in September.  Subsequent to quarter end, the Company paid
AHA $116,730 with the remaining $174,392 unpaid. On September 8, 1998, 
ROF was notified by AHA that ROF had failed to pay the royalty fees 
according to the agreement and if such fees were not paid prior to 
October 8, 1998 AHA may terminate the agreement at any time thereafter. 
To date, ROF has not made all required payments and AHA has not 
terminated the agreement.

     Following discussion by the Board of Directors of Red Oak
Hereford Farms, Inc. and the Board of the American Hereford 
Association the exclusive right to market Certified Hereford Beef was 
terminated.  A new non-exclusive agreement in principle has been agreed 
upon by the AHA which Red Oak management believes is beneficial to Red 
Oak Hereford Farms, Inc.  Red Oak's financial responsibilities to the 
AHA are reduced by the change which resulted from the negotiations.  
Red Oak Farms, Inc. continues as the de facto exclusive marketing agent 
but the AHA is allowed to entertain other relationships none of which 
have been identified.  This also facilitates the development of several
potential profit centers which have been evaluated by Red Oak Farms, 
Inc. Management does not expect the change to materially affect the 
Company's business in anything but a positive way, however, there can 
be no assurance regarding the ultimate affect.

     Capital Expenditures. ROF has made a capital commitment for
a management information system that will require payment of 
approximately $56,000 to third party vendors.  The majority of this 
system cost will be financed through a lease from IBM.  The Company 
does not currently have any other capital expenditures commitments. 
The Company anticipates initiating the management information system 
during the fourth quarter of 1998.

     Inflation.  While inflation has not had a material effect on the 
Company's operations in the past, there can be no assurance that the 
Company will be able to continue to offset the effects of inflation on 
the costs of its products or services through price increases to its 
customers without experiencing a reduction in the demand for its 
products; or that inflation will not have an overall effect on the beef 
market that would have a material effect on the Company.

RESULTS OF OPERATIONS

     The Company has suffered recurring losses and negative cash
flows from operations since its inception primarily due to its start-up 
nature in establishing a premium branded Hereford beef product.  The 
Company has not yet been successful in establishing profitable 
operations and is in technical noncompliance with certain loan 
agreements. These factors raise substantial doubt about the ability of 
the Company to continue as a going concern.  In this regard, management 
is considering a private placement offering, and increasing sales and 
product awareness through marketing efforts to improve profitability 
and cash flow.  Efforts are being made to change the product mix of 
sales to increase the volume percentage of branded versus commodity 
sales.  Management believes these steps will enhance the Company's 
ability to achieve favorable operating results. There is no assurance 
that the Company will be successful in raising additional capital or 
achieving profitable operations.  The condensed consolidated financial 
statements do not include any adjustments that might result from the
outcome of these uncertainties.

     Consolidated comparison for the three months ended September
30, 1998 and the three months ended September 30, 1997 and consolidated
comparison for the nine months ended September 30, 1998 and the nine 
months ended September 30, 1997.

                                       7

<PAGE>

Red Oak Hereford Farms, Inc.

     Net sales decreased to $51,074,294 in the first nine months of 
1998 from $79,328,183 in the same period in 1997, a decrease of 
$28,253,889 or 35.62%. Net sales decreased to $19,148,424 in the three 
months ended September 30, 1998 from $29,354,525 in the same period in 
1997, a decrease of $10,206,101 or 34.77%.  Sales of CHB increased for 
the three and nine months ended September 30, 1998; however, the 
overall decrease resulted primarily from lower cattle sales volume. 
Negative returns in the cattle feeding business weakened demand for 
feeder cattle resulting in fewer feeder cattle brokerage sales.  As the 
Company anticipates additional increases in retail customers during 
1998, the number of cattle processed should increase, resulting in an 
increase in cattle brokerage sales and branded CHB sales.

     Cost of goods sold decreased to $52,065,329 in the first nine 
months of 1998 from $79,656,550 in the same period in 1997, a decrease 
of $27,591,221 or 34.64%.  The cost of goods sold as a percentage of 
net sales measured 101.94 % in 1998 versus 100.41% in the first nine 
months of 1997.  For the three months ended September 30, 1998, cost of 
goods sold decreased to $19,153,767 from $29,293,268 in the same period 
in 1997, a decrease of $10,139,501 or 34.61%. The cost of goods sold 
for the three months ended September 30, 1998 and 1997, represent 
100.03% and 99.79% of net sales for that period.  The decrease in cost 
of goods sold resulted from a reduction in cattle brokerage 
transactions, which correlates with reduction in sales demand for live 
cattle. Although total cost of goods sold decreased, the costs 
associated with CHB increased slightly as the demand for CHB increased 
with the addition of more retail stores.

     Gross loss increased $662,668 from a loss of $328,367 for the 
first nine months of 1997, to a $991,035 loss for the first nine months 
of 1998.  These losses as a percentage of net sales measured 1.94% in 
1998 versus 0.41% in the first nine months of 1997.  The gross loss 
increased $66,600 to a loss of $5,343 for the three months ended 
September 30, 1998, from a profit of $61,257 for the same period in 
1997, representing 0.03% and 0.21% of net sales for the three months 
ended September 30, 1998 and 1997, respectively. The increase in gross 
loss primarily resulted from a decrease in gross margin on the 
Company's cattle brokerage business.

     Selling, general and administrative expenses increased to 
$3,020,830 in the first nine months of 1998 from $2,646,953 in the same 
period in 1997, an increase of $373,877 or 14.12%.  For the three 
months ended September 30, 1998, selling, general and administrative 
expenses increased to $1,299,262 from $1,072,874 in the same period in 
1997, an increase of $266,388 or 21.10%.  The increase results 
primarily from an increase in compensation expense through the grants 
of common stock described on pages 5 and 6 under the liquidity and 
capital resources section of this Management Discussion and Analysis.






                                       8

<PAGE>

     Losses from operations increased to $4,011,865 in the first nine 
months of 1998 from $2,975,320 in the same period in 1997, an increase 
of $1,036,545 or 25.84%.  These losses as a percentage of sales 
measured 7.85% in 1998 versus 3.75% in the first nine months of 1997. 
For the three months ended September 30, 1998, the Company realized 
$1,304,605 of losses from operations compared to $1,011,617 for the 
three months ended September 30, 1997, an increase of $292,988 or 
28.96%.  These losses as a percentage of sales for the three months 
ended measured 6.81% in 1998 versus 3.45% in 1997.  The majority of the 
increase is due to the reduction in sales volume, as well as, a 
decrease in margins on these sales and an increase in stock 
compensation expense.

     Net other expense increased to $699,892 for the first nine months 
of 1998 from $236,898 in the same period in 1997, an increase of 
$462,994 or 195.44%. These expenses as a percentage of sales measured 
1.37% in 1998 versus 0.30% in the first nine months of 1997.  For the 
three months ended September 30, 1998, the Company realized $358,767 of 
expenses, an increase of $297,025 or 481.07% from $61,742 for the three 
months ended September 30, 1997.  This increase is due to the equity in 
partnership losses in its investment of Quality Feeders, LC and an 
increase in interest expense on borrowings.

     As a result of the above, net loss for the first nine months of 
1998 increased to $4,711,757 from $3,212,218 in the same period in 
1997. These losses as a percentage of net sales measured 9.22% in 1998 
versus 4.05% in the first nine months of 1997.  For the three months 
ended September 30, 1998, the Company realized $1,663,372 of losses. 
This represents 8.69% of net sales for the period.  For the same period 
in 1997, the Company incurred losses of $1,073,359, an amount 
representing 3.66% of sales.  The loss per share increased to $0.33 for 
the nine months ended September 30, 1998 from $0.24 for the same period 
in 1997.

     Additional comparison for the three months ended September 30, 
1998 and the three months ended September 30, 1997 and comparison for 
the nine months ended September 30, 1998 and the nine months ended 
September 30, 1997.

Red Oak Farms, Inc.

     ROF is the processor and distributor of CHB beef products
for Red Oak Hereford Farms, Inc.  Net sales in the first nine months of 
1998 were $26,478,847 compared to $24,163,018 for the same period in 
1997. These figures represent a sales increase of $2,315,829 or 9.58%. 
Net sales in the three months ended September 30, 1998 increased to 
$11,604,971 from $7,651,871 for the same period in 1997, an increase of 
$3,953,100 or 51.66%. The increase in net sales resulted from the 
increase in retail stores and changes in customer's mix. ROF is making 
progress in balancing the branded versus commodity sales by increasing 
branded sales in 1998.  ROF has been striving for a balance between 
branded versus commodity sales with the goal to reach profitability by 
selling more CHB at branded prices.  Due to increased marketing and 
sales efforts, ROF continues to increase its retail customers during 
1998; therefore, the number of cattle processed should increase, 
resulting in an increase of branded and overall sales. In addition, 
ROF started to see an increase in export sales of CHB during the third 
quarter of 1998 and anticipates export sales to continue to increase 
during the fourth quarter.

                                       9

<PAGE>


     Cost of goods sold increased in the first nine months from
$25,622,240 in 1997 to $27,270,125 in 1998, an increase of $1,647,885 
or 6.43%. This increase resulted from the addition of more retail 
customers and higher demand for CHB. Cost of goods sold represent 
102.99% and 106.04% of net sales for the nine months ended September 30, 
1998 and 1997, respectively.  For the three months ended September 30, 
1998, cost of goods sold increased to $11,601,055 from $7,996,922 in 
the same period in 1997, an increase of $3,604,133 or 45.07%. As a 
percentage of net sales, cost of goods sold were 99.97% and 104.51% for 
the three months ended September 30, 1998 and 1997, respectively. The 
cost of goods sold includes $286,596 and $508,357 in purchases from 
Midland for the nine months ended September 30, 1998 and 1997, 
respectively. The cost of goods sold includes $0 and $15,885 in 
purchases from Midland for the three months ended September 30, 1998 
and 1997, respectively. These amounts have been eliminated from the 
accompanying financial statements.

     Selling, general and administrative expenses at ROF for the first 
nine months of 1998 were $1,339,878 compared to $1,123,308 for the same 
period in 1997.  This is a 19.28% increase from the first nine months 
of 1997.  For the three months ended September 30, 1998, selling, 
general and administrative expenses decreased slightly to $443,164 from 
$451,668 for the three months ended September 30, 1997, a decrease of 
$8,504 or 1.89%.  An increase in personnel and personnel related 
expenses and an increase in selling costs to position ROF for current 
and future sales growth were the primary contributors of the increase 
in these expenses.

     For the nine months ended September 30, 1998, ROF realized net 
losses in the amount of $2,426,996, compared to $2,700,688 in net 
losses for the same period in 1997.  These losses as a percentage of 
net sales measured 9.17% in 1998 versus 11.18% in the first nine 
months of 1997.  For the three months ended September 30, 1998, ROF 
realized $584,443 in net losses representing 5.04% of net sales for 
that period.  For the three months ended September 30, 1997, ROF 
incurred losses of $836,417, an amount representing 10.93% of net sales 
for that period.  Management attributes the continuing net loss to 
decreased margins and to the current product mix, in which bulk beef 
sales continues to be the dominant revenue source.  During the first 
nine months of 1998, the company has made advances in the retail sector 
for premium CHB by adding 23 new retail stores during the third quarter 
of 1998 and a total of 48 new retail stores for the nine months ended 
September 30, 1998.  ROF is continuing to develop retail prospects and 
it is anticipated that several of these potential buyers will become 
customers.

Midland Cattle Company

     Midland is engaged in cattle brokerage activities and facilitates 
the identification of CHB producers and feeders and supplies cattle 
inventory for ROF.  For the nine months ended September 30, 1998, 
Midland had net sales of $24,882,043 versus $55,673,522 for the same 
period in 1997.  This represents a decrease of $30,851,479 or 55.41% 
from 1997 to 1998.  For the three months ended September 30, 1998, net 
sales decreased to $7,543,453 from $21,183,380 in the same period in 
1997, a decrease of $13,639,927 or 64.39%.  The net sales include 
$286,596 and $508,357 in sales to ROF for the nine months ended 
September 30, 1998 and 1997, respectively. For the three months ended 
September 30, 1998 and 1997, net sales include $0 and $15,885 in sales 

                                    10

<PAGE>

to ROF, respectively. These amounts have been eliminated from the 
accompanying financial statements.

     Midland's customers continued to feed fewer cattle, therefore, 
causing a decrease in volume for cattle revenue in the first nine 
months of 1998.  Cattle were also worth less per head resulting in a 
decrease in total revenue.  In addition, Midland sustained losses as a 
result of Midland's effort to support ROF's demand for CHB cattle 
supply.

     As a result of the decreased volume in sales, Midland's cost of 
goods sold for the first nine months of 1998 decreased to $25,081,800 
versus cost of goods sold for the first nine months of 1997 of 
$54,542,667.  This represents a decrease of $29,460,867 or 54.01% 
between the two periods.  Cost of goods sold were 100.80% and 97.97% of 
net sales for the nine months ended September 30, 1998 and 1997, 
respectively.  For the three months ended September 30, 1998, cost of 
goods sold decreased to $7,552,712 from $20,777,072 for the same period
in 1997, a decrease of $13,224,360 or 63.65%. As a percentage of net 
sales, cost of goods sold increased to 100.12% for the three months 
ended September 30, 1998 from98.08% for the same period in 1997. 

     Selling, general and administrative expenses at Midland for the 
first nine months of 1998 were $638,741 compared to $943,147 for the 
same period in 1997. This represents a $304,406 or 32.28% decrease from 
the first nine months of 1997. For the three months ended September 30, 
1998, selling, general and administrative expenses decreased to 
$203,837 from $323,633 for the same period in 1997, a decrease of 
$119,796 or 37.02%.  These decreases are primarily a result of 
decreased selling costs consistent with decreased sales volumes for 
1998.

       For the nine months ended September 30, 1998, Midland realized a 
net loss in the amount of $887,496, compared to a net profit of $54,921 
for the same period in 1997.  The net loss as a percentage of net sales 
for the nine months ended September 30, 1998, measured 3.57%.  The net 
profit as a percentage of net sales for the nine months ended September 30,
1997, measured 0.09%.  For the three months ended September 30, 1998, 
Midland recognized a loss of $213,096, an amount equal to 2.82% of total 
sales for the period.  For the same three month period in 1997, Midland 
recognized a net profit of $37,424, an amount equal to less than 1% of 
total sales for the period.  Management attributes the increased losses 
in the nine months and three months ended September 30, 1998 to a 
reduction in volume of cattle brokered compared to the nine months and 
three months ended September 30, 1997.  In an effort to minimize risk 
of excessive losses, Midland decided not to aggressively broker cattle; 
therefore, the volume of cattle brokered decreased approximately 50%.  
Midland anticipates volume will expand as ROF's CHB program continues 
to grow.

Red Oak Feeders, L.L.C.

     Feeders has a 50% interest in a joint venture, Quality Feeders, 
LLC ("Quality"), with MoorMan's and commenced operations in the latter 
part of December 1997.  For the nine months ended September 30, 1998, 
Feeders net loss was $353,406, of which $308,359 resulted from losses 
of Feeder's share of the joint venture and $45,047 resulted 
operating and interest expenses.  Feeders net loss for the three months 

                                   11   

<PAGE>

ended September 30, 1998 was $209,251 of which $195,626 resulted from 
losses of Feeder's share of the joint venture and $13,625 from 
operating and interest expenses.

Here's The Beef Corp.

      HTB is owned 80% by the Company and 20% by CPNM.  For the three 
and nine months ended September 30, 1998, HTB had a net loss of $1,990 
due to operating and start-up expenses incurred during the initial 
planning period of the business.

My Favorite Jerky, L.L.C.

     MFJ is owned 60% by the Company and 40% by McClellen Creek Gourmet 
Meats. For the three and nine months ended September 30, 1998, MFJ 
realized a loss of $3,742 from initial operating expenses and start-up 
costs associated with developing the product and coordinating 
production and selling activities.

                           PART II-OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     A settlement was reached with the United States Department of 
Agriculture regarding an administrative proceeding initiated on July 16,
1997 by the Grain Inspection Packers and Stockyards Administration. 
The proceeding was initiated against Cimmaron Properties, Ltd., Wall 
Lake Cattle Co., Inc., Midland Cattle Company and Gordon Reisinger and 
alleged violations of 7 USC 181 et seq. by failing to pass on to 
customers original purchase shrink weight allowances when reselling 
livestock and failure to maintain adequate records. The respondents 
Gordon Reisinger and Midland Cattle Co., Inc., denied the allegations 
of the complaint, and stipulated to a cease and desist order which 
provides that respondents deny they have in the past but shall 
henceforth cease and desist from:

     1.   Arbitrarily adding weight to the actual purchase weight when 
          selling livestock to customers on an actual weight basis
          under any circumstances;

     2.   Failing to pass to its customers the shrink weight allowances
          when selling livestock to customers on an actual weight basis; 
          and

     3.   Falsifying records by listing on invoices to customers a sale 
          weight that is different from the weight at which the cattle 
          were purchased.

Further, the respondents were assessed a civil penalty in the amount of 
$5,000.






                                        12

<PAGE>


ITEM 2.   CHANGES IN SECURITIES

(a) Securities Sold - Exchanges

     Date                   Title         Price Per Unit       Amount
     ----                   -----         --------------       ------
     March 14, 1997         Common        Exchange           10,000,000*

      *Plus options to purchase an additional 3,000,000 common shares 
       of the Company.


     Date                   Title         Price Per Unit       Amount
     ----                   -----         --------------       ------
     May 19, 1997           Common        Exchange            1,538,462

(b) Underwriters and other purchasers

     March 14, 1997 Exchange.  The exchange was with the shareholders 
of Red Oak Farms, Inc.

     May 19, 1997 Exchange.  The exchange was with the shareholders of
Midland Cattle Company.

(c) Consideration

     March 14, 1997 Exchange.  The Company exchanged 10,000,000 common 
shares of the Company plus options to purchase an additional 3,000,000 
common shares of the Company for the total issued and outstanding 
shares of Red Oak Farms, Inc.,  an Iowa Corporation.

     May 19, 1997 Exchange.  The Company exchanged 1,538,462 common 
shares of the Company for all the issued and outstanding shares of 
Midland Cattle Company.

(d) Exemption from Registration Claimed

     For both exchange transactions, the securities were exchanged 
pursuant to Section 4(2) under the Securities Act of 1933, as amended.

(e) Terms of Conversion or Exercise

     March 14, 1997 Exchange.  Each option entitles the holder thereof 
to purchase one Share during the five year period commencing March 17, 
1997 as follows; 1,000,000 of the Shares may be purchased at a price of 
$8.00 per Share; 1,000,000 of the Shares may be purchased at a price of 
$10.00 per Share; and 1,000,000 of the Shares may be purchased at a 
price of $12.00 per Share. No option may be exercised unless such 
exercise is registered or an exemption from registration exists.



                                       13

<PAGE>


(a) Securities Sold - Private Offerings

     Date                        Title      Price Per Unit    Amount
     ----                        -----      --------------    ------
     March through Sept. 1997    Common     $3.00*           1,500,000

     *Each Unit consisted of one share of the Company's common stock 
      and a warrant to purchase a share of the Company's common stock 
      at $5.00 per share.

     January through Sept. 1998  Common     $4.00*            332,125

     *Each Unit consisted of one share of the Company's common stock 
      and a warrant to purchase a share of the Company's common stock
      at $6.00 per share.

(b) Underwriters and other purchasers

     The securities were sold to accredited investors and to no more 
than 35 non-accredited investors.

(c) Consideration

     The aggregate offering price for the March offering was $4,500,000 
and a total of $114,979 was paid in commission or finder's fees.

     The aggregate offering price for the January offering is 
$3,360,000 of which $1,328,500 has been realized through the sale of 
332,125 Units.  To date a total of $152,353 has been paid in 
commissions for this offering.

(d) Exemption from Registration Claimed

     The securities were sold pursuant to Regulation D, Rule 506 as 
promulgated by the Securities and Exchange Commission under Section 
4(2) of the Securities Act of 1933, as amended.

(e) Terms of Conversion or Exercise

     March 1997 Offering.  Each Warrant represents the right to 
purchase one share of Common Stock at an initial exercise price of 
$5.00 per share.  The Warrants are exercisable during the period 
commencing upon the closing date of the offering and ending three 
from the date of the offering.  Holders of Warrants may exercise their 
Warrants for the purchase of shares of Common Stock only if the 
purchase of such shares is exempt from federal registration 
requirements and qualified for sale, or deemed to be exempt from 
qualification under applicable state securities law. The Warrants are 
redeemable, in whole or in part, at the option of the Company, upon not 
fewer than 60 days notice, at a redemption price equal to $.10 per 
Warrant at any time the Common Stock of the Company publicly trades at 
a bid price of $8.00 or above for a period of ten consecutive trading 
days.










                                       14

<PAGE>


     January 1998 Offering.  Each Warrant represents the right to 
purchase one share of Common Stock at an initial exercise price of 
$6.00 per share.  The Warrants are exercisable during the period 
commencing upon the closing date of the offering and ending three years 
from the date of the offering.  Holders of Warrants may exercise their 
Warrants for the purchase of shares of Common Stock only if the 
purchase of such shares is exempt from federal registration 
requirements and qualified for sale, or deemed to be exempt from 
qualification under applicable state securities law.  The Warrants are 
redeemable, in whole or in part, at the option of the Company, upon not 
fewer than 60 days notice, at a redemption price equal to $.10 per 
Warrant at any time the Common Stock of the Company publicly trades at 
a bid price of $8.00 or above for a period of ten consecutive trading 
days.

(a)   Securities Sold - Stock Grants

     Date                        Title    Price Per Unit      Amount
     ----                        ------   --------------      ------
     January 23, 1998            Common     $5.00              5,000
     May 8, 1998                 Common     $4.75              8,000
     July 16, 1998               Common     $3.00              8,000
     September 29, 1998          Common     $1.72              8,000
     September 29, 1998          Common     $1.72            100,000
     September 29, 1998          Common     $1.72            150,000

(b)  Underwriters and other purchasers

      The above stock grants were issued to consultants, officers and 
directors of the Company.

(c)  Consideration

      The above stock grants were issued as compensation for services.

(d)  Exemption from Registration Claimed

      The securities were issued pursuant to Section 4(2) under the 
Securities Act of 1933, as amended.

(e)  Terms of Conversion or Exercise

     Not applicable.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

     None.

ITEM 4.   RESULTS OF VOTES OF SECURITY HOLDERS

     None.

ITEM 5.   OTHER INFORMATION

     None.

                                       15

<PAGE>


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)  The following exhibits are filed as a part of this report.

  Exhibit No.    SEC Reference  Title                          Location
  -----------    -------------  ---------------------------    --------
     10.01            10        My Favorite Jerky Agreement    Attached

     27               27        Financial Data Schedule        Attached

(b)  No reports were required to be filed on Form 8-K for the period 
ending September 30, 1998.





































                                       16

<PAGE>





                                  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.

                          RED OAK HEREFORD FARMS, INC.




November 13, 1998
By:_______________________________________
   Gordon Reisinger, President




November 13, 1998
By:_______________________________________
   Harley Dillard, Chief Financial Officer



























                                       17

<PAGE>





                                  SIGNATURES

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

                          RED OAK HEREFORD FARMS, INC.




November 13, 1998          By:/s/  Gordon Reisinger
                           ---------------------------------------
                           Gordon Reisinger, President




November 13, 1998          By:/s/ Harley Dillard
                           ---------------------------------------
                           Harley Dillard, Chief Financial Officer

























                                       18

<PAGE>



                          RED OAK HEREFORD FARMS, INC.                         

                      CONDENSED CONSOLIDATED BALANCE SHEETS 

                    SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
     
                                  (Unaudited)

                                    ASSETS

                                                September 30,    December 31,
                                                    1998             1997
                                                ------------      -----------
CURRENT ASSETS
  Cash                                          $     -           $    12,993  
  Accounts receivable
     Trade, less allowance for doubtful 
            accounts of $10,000                    3,856,821        2,920,939
     Related parties                                 957,597        1,102,565
  Inventories                                      1,478,027          989,190
  Prepaid expenses and other assets                  338,887           96,404
                                                ------------      -----------
               Total current assets                6,631,332        5,122,091
                                                ------------      ----------- 

PROPERTY AND EQUIPMENT, At cost
   Buildings and leasehold improvements              294,974          292,574 
   Vehicles and equipment                            307,178          237,878
                                                ------------      -----------
                                                     602,152          530,452
   Less accumulated depreciation                    (270,168)        (224,088)
                                                ------------      -----------
               Net book value                        331,984          306,364
                                                ------------      -----------

OTHER ASSETS
   Investment in partnership                         391,640          500,000
   Other assets                                       99,491           47,229
                                                ------------      -----------
               Total other assets                    491,131          547,229
                                                ------------      ----------- 

                                                $  7,454,447      $ 5,975,684
                                                ------------      -----------
                                                ------------      -----------











See Accompanying Notes to Consolidated Financial Statements

                                      F-1

<PAGE>
                                     

                          RED OAK HEREFORD FARMS, INC.                         

                      CONDENSED CONSOLIDATED BALANCE SHEETS 

                    SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
     
                                  (Unaudited)

                                  LIABILITIES

                                                September 30,     December 31,
                                                    1998             1997
                                                ------------      -----------
CURRENT LIABILITIES
   Revolving bank lines of credit               $  2,482,016      $ 1,270,294
   Note payable - related party                      410,000
   Current maturities of long-term debt            1,036,963        1,029,015
   Accounts payable
     Trade                                         2,038,220          546,691
     Related parties                                 981,584           54,528
   Accrued expenses                                  503,463          100,380
   Current maturities of deferred income             300,000          100,000
                                                ------------      -----------
          Total current liabilities                7,752,246        3,100,908
                                                ------------      -----------
LONG-TERM LIABILITIES
   Deferred income                                                    200,000
   Long-term debt                                  1,003,968          971,694
                                                ------------      -----------
          Total long-term liabilities              1,003,968        1,171,694
                                                ------------      -----------
          Total liabilities                        8,756,214        4,272,602
                                                ------------      -----------
                                       
                          STOCKHOLDERS' EQUITY
                                    
Common stock, $.001 par value, authorized 
   50,000,000 shares; issued and outstanding 
   14,762,815 and 14,429,290 shares                   14,763           14,430
Cumulative preferred stock, $.001 par value, 
   authorized 5,000,000 shares; issued and
   outstanding 200,000 shares                            200              200
Additional paid-in capital                         7,445,180        5,738,605
Retained earnings (deficit)                       (8,761,910)      (4,050,153)
                                                ------------      -----------
          Total stockholders' equity              (1,301,767)       1,703,082
                                                ------------      -----------
                                                $  7,454,447      $ 5,975,684
                                                ------------      -----------







See Accompanying Notes to Consolidated Financial Statements

                                      F-2

<PAGE>
                                                             
                          RED OAK HEREFORD FARMS, INC.                         
                                    
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

     FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30,1998 AND 1997

                                  (Unaudited)

                          Three Months Ended            Nine Months Ended
                             September 30,                September 30,
                          1998          1997           1998          1997
                      ------------  ------------   ------------  ------------
NET SALES
   Related parties    $  1,459,539  $  7,285,207   $  5,051,410  $ 11,122,543
   Others               17,688,885    22,069,318     46,022,884    68,205,640
                      ------------  ------------   ------------  ------------
                        19,148,424    29,354,525     51,074,294    79,328,183
                      ------------  ------------   ------------  ------------
COST OF GOODS SOLD
   Related parties       6,463,549     2,160,209     13,833,483     6,004,358
   Others               12,690,218    27,133,059     38,231,846    73,652,192
                      ------------  ------------   ------------  ------------ 
                        19,153,767    29,293,268     52,065,329    79,656,550
                      ------------  ------------   ------------  ------------
GROSS PROFIT (LOSS)         (5,343)       61,257       (991,035)     (328,367)

OPERATING EXPENSES       1,299,262     1,072,874      3,020,830     2,646,953
                      ------------  ------------   ------------  ------------
LOSS FROM OPERATIONS    (1,304,605)   (1,011,617)    (4,011,865)   (2,975,320)
                      ------------  ------------   ------------  ------------
OTHER INCOME (EXPENSE)
   Equity in 
     partnership losses   (195,626)                    (308,359)  
   Interest Income           5,132        23,207          5,792        26,875
   Miscellaneous Income      1,562                        1,562 
   Interest Expense       (169,835)      (84,949)      (398,887)     (263,773)
                      ------------  ------------   ------------  ------------
                        (358,767)      (61,742)      (699,892)     (236,898)
                      ------------  ------------   ------------  ------------
NET LOSS                (1,663,372)   (1,073,359)    (4,711,757)   (3,212,218)
PREFERRED STOCK
   DIVIDEND REQUIREMENT     36,513			        114,466              
                      ------------  ------------   ------------  ------------
NET LOSS APPLICABLE TO
  COMMON STOCKHOLDERS $ (1,699,885) $ (1,073,359)  $ (4,826,223) $ (3,212,218)
                      ------------  ------------   ------------  ------------
                      ------------  ------------   ------------  ------------
BASIC AND DILUTED
   LOSS PER SHARE     $      (0.12) $      (0.07)  $      (0.33) $      (0.24)
                      ------------  ------------   ------------  ------------
                      ------------  ------------   ------------  ------------
WEIGHTED AVERAGE
   SHARES OUTSTANDING   14,762,750    14,431,144     14,644,204    13,367,108
                      ------------  ------------   ------------  ------------
                      ------------  ------------   ------------  ------------

See Accompanying Notes to Consolidated Financial Statements 

                                      F-3

<PAGE>
                            

                          RED OAK HEREFORD FARMS, INC.                         

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

                                  (Unaudited)

                                                     1998             1997
                                                  ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                      $ (4,711,757)   $ (3,212,218)
     Adjustments to reconcile net loss to net
       cash used in operating activities:
     Depreciation and amortization                     86,227          93,120
     Equity in partnership losses                     308,360     
     Stock compensation expense                       530,760 
     Changes in:
       Accounts receivable                           (790,914)        155,329
       Inventories                                   (488,837)       (511,526)
       Prepaid expenses                              (242,483)       (361,631)
       Accounts payable and accrued expenses        2,821,668      (2,177,266)
                                                 ------------    ------------
         Net cash used in operating activities     (2,486,976)     (6,014,192)
                                                 ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                 (71,700)        (25,838)
   Proceeds on sale of equipment                                       59,827
   Change in other assets                             (92,409)         (1,380)
   Investment in partnership                         (200,000)     
                                                 ------------    ------------
         Net cash (used in)/provided by 
           investing activities                      (364,109)         32,609
                                                 ------------    ------------   
CASH FLOWS FROM FINANCING ACTIVITIES
   Net proceeds from issuance of common stock       1,176,148       5,348,827
   Net borrowings on line of credit                 1,211,722         737,624
   Proceeds on issuance of long term debt             115,018         125,000
   Proceeds from issuance of shareholder debt         410,000 
   Payments on long-term debt                         (74,796)       (138,409)
   Purchase of treasury stock                                         (31,000)
   Distributions paid                                                 (60,459)
                                                 ------------    ------------ 
         Net cash provided by financing activities  2,838,092       5,981,583
                                                  -----------    ------------

INCREASE (DECREASE) IN CASH                           (12,993)              0

CASH, BEGINNING OF PERIOD                              12,993               0
                                                 ------------    ------------
CASH, END OF PERIOD                              $          0    $          0
                                                 ------------    ------------ 
                                                 ------------    ------------


See Accompanying Notes to Consolidated Financial Statements

                                      F-4

<PAGE>
                          
                           RED OAK HEREFORD FARMS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                          SEPTEMBER 30, 1998 AND 1997

                                  (Unaudited)

NOTE 1: NATURE OF OPERATIONS AND PRINCIPLES OF CONSOLIDATION

    The condensed consolidated financial statements do not include all 
footnotes and certain financial information normally presented annually under 
generally accepted accounting principles and, therefore, should be read in 
conjunction with the Company's December 31, 1997 10-KSB. Accounting 
measurements at interim dates inherently involve greater reliance on 
estimates than at year-end.  The results of operations for the nine months 
ended September 30, 1998 and 1997 arenot necessarily indicative of results 
that can be expected for the full year.

     The condensed consolidated financial statements included herein are 
unaudited; however, they contain all adjustments (consisting of normal 
accruals) which, in the opinion of the Company, are necessary to present 
fairly its consolidated financial position at September 30, 1998 and 
December 31, 1997, and its consolidated results of operations and cash 
flows for the interim periods September 30, 1998 and September 30, 1997. 
The results of operations for the interim periods shown are not necessarily 
indicative of the results for the entire fiscal year ending December 31, 
1998.

     During the third quarter, the Company incorporated two new subsidiaries, 
Here's The Beef Corp. ("HTB") and My Favorite Jerky, LLC ("MFJ").  The
Company owns 80% of HTB and a minority shareholder, Cable Print 
Network/Marketing, Inc.("CPNM") owns 20%.  HTB was created for the purpose 
of beginning a multi-media distribution network.  MFJ is owned 60% by the 
Company and 40% is owned by McClellen Creek Gourmet Meats, Inc.  MFJ was 
established to produce, market and sell, nationwide, a natural style beef 
jerky.

     The condensed consolidated financial statements include the accounts 
of the Company and its wholly owned subsidiaries, Red Oak Farms, Inc. 
("ROF"), Midland Cattle Company ("Midland"), Red Oak Feeders, LLC ("Feeders") 
and its 80% owned subsidiary, Here's the Beef ("HTB") and its 60% owned 
subsidiary My Favorite Jerky, LLC ("MFJ").  All significant intercompany 
accounts and transactions have been eliminated in consolidation.

     The accompanying financial statements have been prepared in conformity
 with generally accepted accounting principles and presented on a going 
concern basis, which contemplates the realization of assets and satisfaction 
of liabilities in the normal course of business.  The Company has suffered 
recurring losses and negative cash flows from operations since its inception 
primarily due to its start-up nature in establishing a premium branded 
Hereford beef product.  The Company has not yet been successful in 
establishing profitable operations and is in technical non-compliance with 
certain loan agreements. These factors raise substantial doubt about the 
ability of the Company to continue as a going concern. In this regard
management is in the process of considering a private placement offering, 
and increasing sales and product awareness through marketing efforts to 
improve profitability and cash flow.  Efforts are being made to change the 
product mix of sales to increase the volume percentage of branded versus 
commodity sales.  Management believes these steps will enhance the Company's 
ability to achieve favorable operating results.  There is no assurance that 
the Company will be successful in raising additional capital or achieving
profitable operations.  The condensed consolidated financial statements do 
not include any adjustments that might result from the outcome of these 
uncertainties.

                                      F-5

<PAGE>


                          RED OAK HEREFORD FARMS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                          SEPTEMBER 30, 1998 AND 1997

                                  (Unaudited)

NOTE 2: RELATED PARTY TRANSACTIONS

     The Company sells cattle to certain companies, which are owned by
 members of the Company's management or Board of Directors.  The Company 
also purchases cattle and feed from these same entities.  Additionally, both 
Midland and ROF utilize trucking companies that are owned by members of the 
Company's management or Board of Directors. The activity between the Company 
and these related parties for the nine months ended September 30, 1998 and 
1997 are as follows:

                               September 30, 1998     September 30, 1997        
                               ------------------     ------------------
        Sales                     $ 5,051,410            $11,122,543
        Purchases                  13,833,483              6,004,358

     Additionally, during the nine months ended September 30, 1998 and 1997, 
ROF purchased cattle from Midland in the amount of $286,596 and $305,593, 
respectively.  Such intercompany purchases are eliminated in consolidation.

     The Company also has three notes payable to a major stockholder and a 
director totaling $410,000.  The notes are payable on demand and bear 
interest of 9%.  Total interest expense related to these notes was 
approximately $6,700 for the nine months ended September 30, 1998.

NOTE 3: INVENTORIES

     Inventories at September 30, 1998 and December 31, 1997 consisted of
 the following:
                               September 30, 1998     December 31, 1997
                               ------------------     -----------------
        Boxed beef                $  1,295,600           $   639,411
        Cattle                          65,457               296,149
        Other                          116,970                53,630
                               ------------------     -----------------
                                  $  1,478,027           $   989,190
                               ------------------     -----------------
                               ------------------     -----------------

NOTE 4: DEBT

     The Company continues to receive an asset-based line of credit from KBK 
Capital Corporation ("KBK").  The line of credit provides borrowings up to 
$2,500,000 for accounts receivable and $1,500,000 for inventory, based on 
eligible assets.  The line of credit is collateralized by substantially all
of ROF's assets and personal guarantees of the Company's President and a 
Director. The Company is in technical non-compliance on certain financial 
conditions on its loan agreement with KBK, which gives KBK the right to call
the loan.  However, KBK has given no indication of any intention to call 
this obligation.



                                      F-6

<PAGE>
                            

                          RED OAK HEREFORD FARMS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                          SEPTEMBER 30, 1998 AND 1997

                                  (Unaudited)

NOTE 5: STOCKHOLDERS' EQUITY

     On January 14, 1998, the Company began a private placement offering to 
issue up to 840,000 units, each unit comprising one common share and one
common stock purchase warrant, for $4.00 per unit.  The common stock purchase
warrants are callable at $.10 per share upon 60 days' notice and grant the
holder the right to purchase common stock at $6.00 per share.  The private 
placement offering was closed on September 14, 1998.  The Company  raised 
$1,328,500 through the sale of 332,125 units before deducting offering 
expenses of $152,352.

     On September 30, 1998, the Company's Board of Directors granted 150,000 
shares of common stock to three Directors in recognition of the outstanding 
service provided by each individual.  As a result of the grant of common 
stock, the Company recognized $258,000 of compensation expense.

     On May 8, 1998, the Company's Board of Directors resolved that all 
Directors shall receive as consideration for the participation in each board 
meeting, 1,000 shares of common stock issued to such Director for each regular
meeting attended during the year.  In addition, the Board also granted all 
outside Directors stock options for the purchase of 5,000 shares of common 
stock exercisable at a strike price equal to the closing price of the stock on 
May 8, 1998.  The right to exercise the options shall vest upon completion of 
each outside Director's one-year term, and shall be exercisable for a period 
of five years. 

    On September 30, 1998, the Board amended the resolution such that each 
Director will receive 1,000 shares of common stock for all board meetings 
attended.  As of September 30, 1998, the Company has recognized a total of 
$75,760 in director compensation expense for all board meetings held to date.  
Through September 30, 1998 24,000 shares and 25,000 options have been granted 
to Directors.

    On September 30, 1998, the Company also granted 100,000 shares of common 
stock for consulting services to Andrew Glashow and Empire Management Ltd.  As
a result of this grant, the Company recorded an expense totaling $172,000.

NOTE 6:  RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS 

     The financial statements for the quarter ended September 30, 1997 and the 
nine months ended September 30, 1997 have been restated to reflect certain 
marketing costs and professional fees reclassified as operating expenses 
during the fourth quarter of 1997.  The restatements resulted in the following
increase in the Company's operating expenses:

        Quarter Ended September 30, 1997                        $255,676       
                                                                --------
                                                                --------        

        Nine Months Ended September 30, 1997                    $542,738
                                                                --------
                                                                --------
                                      F-7

<PAGE>
                          

                          RED OAK HEREFORD FARMS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                          SEPTEMBER 30, 1998 AND 1997

                                  (Unaudited)

NOTE 7:  SUBSEQUENT EVENTS

     Red Oak Farms, Inc. has a contract with the American Hereford
 Association("AHA"), a non-profit organization, and has exclusive license to 
market CHB.  As of the reporting date the Company has not met the pro-rata 
volume commitment necessary for the royalty liability, however, the Company 
has accrued an amount representative of the pro-rata liability as of the 
reporting date.  The 1998 obligation is for $725,000 of which $425,000 was 
due by August 31, 1998 with an additional $25,608 paid in September. 
Subsequent to quarter end, the Company paid AHA $116,730 with the remaining 
$174,392 unpaid.  On September 8, 1998,ROF was notified by AHA that ROF had 
failed to pay the royalty fees according to the agreement.

     Following discussion by the Board of Directors of Red Oak Hereford Farms, 
Inc. and the Board of the American Hereford Association the exclusive right to
market Certified Hereford Beef was terminated.  A new non-exclusive agreement 
in principle has been agreed upon by the AHA which Red Oak management believes 
is beneficial to Red Oak Hereford Farms, Inc.  Red Oak's financial 
responsibilites to the AHA are reduced by the change which resulted from the 
negotiations.  Red Oak Farms, Inc. continues as the de facto exclusive 
marketing agent but the AHA is allowed to entertain other relationships none 
of which have been identified.  This also facilitates the development of 
several potential profit centers which have been evaluated by Red Oak Farms, 
Inc.  Management does not expect the change to materially affect the 
Company's business in anything but a positive way, however, there can be no 
assurance regarding the ultimate affect.














          
                       

                       

                                      F-8

<PAGE>