Securities And Exchange Commission
                            Washington, D.C. 20549

               --------------------------------------------------

                                  Form 10-QSB

            [X] Quarterly Report Pursuant to Section 13 or 15(d)
                  of the Securities Exchange Act of 1934

            [ ] Transition Report Pursuant to Section 13 or 15(d)
                  of the Securities Exchange Act of 1934

                For the Transition Period From _____ to _____

                         Commission File Number 0-21397
                                               ---------

              ---------------------------------------------------

                               Coffee People, Inc.
             (Exact name of registrant as specified in its charter)

             Oregon                                    93-1073218
  (State or other jurisdiction of                    (I.R.S Employer
  incorporation or organization)                   Identification No.)

               15100 SW Koll Parkway, Suite J, Beaverton, OR 97006
                                 (503) 672-9603


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                      Yes [ X ]                    No [   ]

As of March 31, 1998,  there were 3,268,718  shares of the  registrant's  Common
Stock outstanding.
------------------------------------------------------------------------------


<PAGE>



                               COFFEE PEOPLE, INC.

                                      INDEX

                                                                        Page
                                                                        ----
PART I.     FINANCIAL INFORMATION

Item 1.     Financial Statements                                          1

Item 2.     Management's Discussion and Analysis
            of Financial Condition and Results of
            Operations                                                    6

PART II.    OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K                             10

Signatures                                                               12





<PAGE>



                                                     
PART I.           FINANCIAL INFORMATION
Item 1.           Financial Statements

                               COFFEE PEOPLE, INC.
                                  BALANCE SHEETS
                             (Dollars in thousands)
                                     ASSETS
                                                       March 31   December 31
                                                         1998         1997
                                                     -----------  -----------
                                                     (Unaudited)
Current assets:
  Cash and cash equivalents                            $ 2,597      $ 2,545
  Accounts receivable                                      377          227
  Inventories                                              565          632
  Prepaid expenses                                         226          205
  Income taxes receivable                                  149          157
  Other current assets                                       -           20
                                                       -------       ------
     Total current assets                                3,914        3,786

Property and equipment, net                              7,091        7,338
Goodwill, net                                            5,681        5,781
Other assets                                               116          118
                                                       -------      -------
     Total assets                                      $16,802      $17,023
                                                       =======      =======


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt and capital
    lease obligations                                  $ 1,276      $ 1,285
  Current portion of long-term debt to related
    parties                                                 20           22
  Line of credit                                           400            -
  Accounts payable                                       1,118        1,011
  Accrued liabilities                                      479          560
  Provision for store closures and restructuring         1,339        1,434
                                                       -------      -------
     Total current liabilities                           4,632        4,312

Long-term debt and capital lease obligations             3,980        4,298
Long-term debt to related parties                          134          137

Stockholders' equity:
  Common Stock, no par value; authorized,
    50,000,000 shares; 3,268,718 and 3,263,872
    shares issued and outstanding                       14,574       14,563
  Stock subscription notes receivable                     (308)        (302)
  Retained earnings (accumulated deficit)               (6,210)      (5,985)
                                                       -------      -------
     Total stockholders' equity                          8,056        8,276
                                                       -------      -------
     Total liabilities and stockholders' equity        $16,802      $17,023
                                                       =======      =======

             See accompanying notes to financial statements.

                                      -1-

<PAGE>



                               COFFEE PEOPLE, INC.
                              STATEMENTS OF INCOME
                   (Dollars in thousands, except per share data)
                                   (Unaudited)

                                                        Three Months Ended
                                                      -----------------------
                                                       March 31     March 31
                                                         1998         1997
                                                      ----------   ----------
Revenues:
  Retail sales                                         $ 5,544      $ 3,160
  Wholesale and other                                       82           33
                                                       -------      -------
    Total revenues                                       5,626        3,193

Cost of sales and related occupancy expenses             2,773        1,559

Store operating expenses                                 1,951        1,134

Other operating expenses                                     1            -

Depreciation and amortization                              421          203

General and administrative expenses                        608          717
                                                        ------       ------
    Income (loss) from operations                         (128)        (420)

Other income, net                                           33          126

Interest expense                                          (130)         (15)
                                                        ------       ------
    Income (loss) before benefit (provision)
      for income taxes                                    (225)        (309)

Benefit (provision) for income taxes                         -          119
                                                        ------       ------
Net income (loss)                                       $ (225)      $ (190)
                                                        ======       ======

Earnings (loss) per share - basic and diluted           $(0.07)      $(0.06)
                                                        ======       ======
Shares used in computing earnings per share -
   basic and diluted                                 3,268,610    3,271,184

             See accompanying notes to financial statements.

                                      -2-

<PAGE>


                               COFFEE PEOPLE, INC.
                            STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)

                                                        Three Months Ended
                                                      -----------------------
                                                       March 31     March 31
                                                         1998         1997
                                                      ----------   ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                    $  (225)     $  (190)
  Adjustments to reconcile net income (loss)
    to net cash (used in) provided by operating
    activities-
      Depreciation and amortization                        421          203
      Interest income on stock subscriptions                (6)          (5)
      Provision for store closures and restructuring       (95)           -
      Changes in operating assets and liabilities:
        (Increase) decrease in accounts receivable        (150)           2
        Decrease (increase) in inventories                  67          (53)
        Increase in prepaid expenses                       (21)         (47)
        (Decrease) increase in income taxes receivable       8         (110)
        Decrease in other current assets                    20           31
        Increase in accounts payable                       107          189
        (Decrease) increase in accrued liabilities         (81)         183
        Decrease in income taxes payable                     -          (47)
                                                       -------      -------
          Net cash provided by operating activities         45          156

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment, net                  (74)      (2,030)
  Decrease (increase) in other assets                        2          (14)
  Construction accounts payable                              -           50
                                                       -------      -------
          Net cash used in investing activities            (72)      (1,994)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of debt and capital lease obligations         (327)         (35)
  Repayment of debt to related parties                      (5)          (5)
  Proceeds from line of credit                             400            -
  Issuance of common stock, net                             11            4
                                                       -------      -------
          Net cash provided (used)by financing
            activities                                      79          (36)
                                                       -------      -------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS            52       (1,874)

CASH AND CASH EQUIVALENTS, beginning of the period       2,545       10,274
                                                       -------      -------
CASH AND CASH EQUIVALENTS, end of the period           $ 2,597      $ 8,400
                                                       =======      =======

             See accompanying notes to financial statements.

                                      -3-

<PAGE>


                               COFFEE PEOPLE, INC.
                          NOTES TO FINANCIAL STATEMENTS

                  For the Three Months Ended March 31, 1998 and 1997
                                   (Unaudited)

NOTE 1.  FINANCIAL STATEMENT PRESENTATION:

     The  interim  financial  data is  unaudited;  however,  in the  opinion  of
management, the interim data includes all adjustments, consisting only of normal
recurring  adjustments,  necessary  for a fair  statement of the results for the
interim periods.  The financial statements included herein have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission.  Certain information and footnote  disclosures  normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles   have  been  condensed  or  omitted   pursuant  to  such  rules  and
regulations,  although the Company believes that the disclosures included herein
are adequate to make the information  presented not misleading.  These financial
statements  should be read in conjunction with the annual  financial  statements
and notes thereto included in the Company's 1997 Annual Report on Form 10-KSB.

NOTE 2.  PROVISION FOR STORE CLOSURES AND RESTRUCTURING:

     During the second quarter of 1997, the Company took a $5,500,000  charge to
provide for the closure of seven stores  outside its primary  Oregon and Arizona
markets and for related  restructuring.  The charge  included the  write-down of
$3,157,000  in fixed  assets,  $36,000 in prepaid  assets,  and $73,000 in other
assets,  and  established  a current  liability of $2,234,000 as a provision for
store closures and  restructuring  costs.  The primary  portion of the liability
established by the Company  relates to payments under existing lease  agreements
for  closed  stores,  net of  anticipated  recoveries,  and  employee  severance
payments and related exit costs.  As of March 31, 1998, the Company had incurred
approximately  $1,095,000 in  expenditures,  net of  recoveries,  which had been
charged to the provision.

     The stores  identified  for  closure  consisted  of two  stores  located in
Denver,  Colorado,  three stores located in southern California,  and two stores
located in Chicago,  Illinois. As of December 31, 1997, Coffee People had closed
the three stores in southern California and the two stores in Chicago, Illinois,
but continued making payments on the lease obligations with respect to such five
stores.  In  February  1998,  the  Company  sold two of the  stores in  southern
California,  and assigned the leases with respect to such stores. In April 1998,
the Company sold one of the stores  located in Chicago,  Illinois,  and assigned
the lease  with  respect  to that  store.  The two  stores in  Denver,  Colorado
continue  to  operate.  The  Company  continues  to work with local real  estate
brokers to market,  re-lease  or sublease  the  remaining  four  stores  located
outside Oregon and Arizona.

NOTE 3.  MERGER WITH GLORIA JEAN'S INC.:

     On November 13, 1997, the Company entered into a definitive  agreement with
The Second Cup Inc.  (Second Cup), a  wholly-owned  subsidiary of The Second Cup
Ltd.,  which  provides  for the merger of the Company  with  Gloria  Jean's Inc.

                                      -4-
<PAGE>

(Gloria Jean's),  a wholly-owned  subsidiary of Second Cup. Under the agreement,
the Company will issue  approximately  7,500,000  shares of the Company's common
stock to Second Cup in  exchange  for 100% of the  outstanding  common  stock of
Gloria Jean's.

     The merger  requires  shareholder  approval.  The  shareholder  vote on the
merger transaction is currently scheduled for May 19, 1998. Upon consummation of
the merger,  Second Cup will own 69.5% of the  outstanding  common  stock of the
Company.

     The  Company's  bank loan  includes a provision  which  requires the bank's
consent to any combination in which there is a change of control. Currently, the
bank has not consented to the merger;  however,  the Company believes the bank's
consent is forthcoming.

     For  accounting  purposes,  the merger will be  accounted  for as a reverse
merger.  The  historical  records of Gloria  Jean's will  become the  historical
records of the Company, and the purchase method of accounting will be applied to
the Coffee People assets acquired and liabilities assumed which will be recorded
at their fair values on the books of Gloria Jean's. The results of operations of
the  Company  will be  included  with those of Gloria  Jean's  beginning  on the
acquisition date.

     The combined  company  will  continue as Coffee  People,  Inc. The combined
company is expected to change the Coffee People year-end to a fiscal year ending
the last Saturday in June.

                                      -5-

<PAGE>


Item 2:   Management's Discussion and Analysis of Financial Condition and 
Results of Operations

     The following  discussion  contains forward looking  statements  within the
meaning  of the  federal  securities  laws and  involves  a number  of risks and
uncertainties.  Actual  results  and  trends  may  differ  materially  from  the
statements contained in this discussion, depending on a variety of factors. Such
factors include,  but are not limited to, the Company's ability to control costs
associated  with planned store  closures;  the price and  availability  of green
coffee; timely consummation of the merger with Gloria Jean's Inc.; the impact on
the  Company  if  the  merger  is  not  consummated;   effects  of  competition;
availability  of  additional  capital;  and  changes  in  applicable  government
regulations  and other risks  detailed in the Company's  annual  reports on Form
10-KSB for 1997 and 1996 and its Registration  Statement on Form S-4, filed with
the Securities and Exchange  Commission on April 24, 1998. The shareholder  vote
on the merger transaction with Gloria Jean's is currently  scheduled for May 19,
1998. The timing of the closing of the merger  transaction,  however, is subject
to uncertainty due to several factors outside the Company's  control,  including
obtaining  the required  shareholder  vote,  obtaining  governmental  approvals,
obtaining  the  consent of various  third  parties  to the  transaction  and the
satisfaction of other conditions to closing  contained in the Agreement and Plan
of  Merger,  dated  February  19,  1998,  a copy of  which  was  filed  with the
Securities and Exchange  Commission as an exhibit to its Registration  Statement
on Form S-4.

OVERVIEW

     Coffee People sells coffee beverages,  coffee beans, cookies,  pastries and
coffee related  merchandise  through retail specialty  coffee stores.  The first
Coffee People store opened in 1983. As of March 31, 1998,  the Company  operated
41 stores.

     In January 1996, the Company raised net proceeds of $3,725,000 in a private
placement of Common Stock. In September  1996, the Company  completed an initial
public  offering in which it raised net proceeds of $9,717,000  from the sale of
1,225,000  shares of Common Stock.  At the time of its initial public  offering,
the Company operated 19 stores, all of which were located in Oregon.  During the
period from October 1996 through June 30, 1997,  the Company  opened 14 stores -
two in Denver,  Colorado,  three in southern California,  seven in the Portland,
Oregon metropolitan area, and two in Chicago,  Illinois.  The Company closed one
store in Portland, Oregon, in April 1997, as anticipated, upon expiration of the
store lease.

     On May 21,  1997,  the  Company  acquired  15 Coffee  Plantation  stores in
Phoenix and Tucson, Arizona for cash consideration of approximately  $8,651,000.
The transaction  was an acquisition of assets,  accounted for under the purchase
method of accounting.  Assets acquired included property and equipment,  leases,
inventories,  prepaid expenses, wholesale business assets and intangible assets.
Of the total  purchase  price,  $6,000,000  was financed  with  proceeds  from a
five-year  term  loan  from the  Company's  principal  bank.  One of the  Coffee
Plantation  stores was closed at the end of August 1997,  as  anticipated,  upon
expiration of the store lease.

                                      -6-
<PAGE>


     During  the  second  quarter  of  1997,  Coffee  People  took a  charge  of
$5,500,000  relating  to the  anticipated  closure  or sale of the seven  stores
located  outside  its  primary  Oregon  and  Arizona  markets  and  for  related
restructuring.  Such  stores  consisted  of the two  stores  located  in Denver,
Colorado,  the three stores located in southern  California,  and the two stores
located in Chicago,  Illinois.  Coffee  People has  endeavored to dispose of the
stores as  expeditiously  as possible  while  working to maximize  the amount of
store value and to minimize  Coffee  People's  total future cash outlays.  As of
December  31,  1997,  Coffee  People  had closed  the three  stores in  southern
California  and the two  stores  in  Chicago,  Illinois,  but  continued  making
payments on the lease  obligations with respect to such five stores. In February
1998,  the Company sold two of the stores in southern  California,  and assigned
the leases with respect to such stores.  In April 1998,  the Company sold one of
the stores located in Chicago,  Illinois, and assigned the lease with respect to
that store. The two stores in Denver,  Colorado continue to operate. The Company
continues to work with local real estate brokers to market, re-lease or sublease
the remaining four stores located outside Oregon and Arizona.

     The  Company's  decision  to dispose of or close the seven  stores was made
because sales at these stores had not developed as  anticipated  and because the
stores were incurring significant operating losses. The Company believes that by
disposing  of these  stores,  by  focusing  on its core  markets,  and by making
substantial  reductions in general and administrative  overhead expense,  it can
return  itself  to  profitability.  Due in part to  reductions  in  general  and
administrative  overhead expense,  the Company did achieve profitable results in
the  fourth  quarter  of 1997.  The  Company  was  unable,  however,  to sustain
profitable  operations in the first  quarter of 1998.  There can be no assurance
that the actions taken by the Company to dispose of  underperforming  stores and
to  reduce  general  and  administrative  expenses  will  result  in  profitable
operations in future periods.

     After the closure or  disposition  of the seven stores  outside  Oregon and
Arizona,  the Company  will have a total of 39 stores -- 25 stores in Oregon and
14 in Arizona.

     On November 13, 1997,  Coffee  People  entered into a definitive  agreement
that  provides for the  combination  of Coffee People with Gloria Jean's Inc., a
wholly-owned  subsidiary of The Second Cup Ltd. The merger  agreement is subject
to the  satisfaction  or waiver of certain  conditions  to closing.  Because the
merger  will be treated for  accounting  purposes  as a reverse  acquisition  of
Coffee People by Gloria Jean's,  the historical  financial  statements of Gloria
Jean's will, after consummation of the merger,  become the historical  financial
statements of Coffee People.


RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997

     Revenues. Total revenues increased 76.2% to $5,626,000 for the three months
ended March 31, 1998 from  $3,193,000 for the same period in 1997.  Retail sales

                                      -7-
<PAGE>

increased  75.4% to $5,544,000 for the 1998 period from  $3,160,000 for the 1997
period.

     Comparable  store  sales for the 19 stores  open for the full three  months
ended March 31, 1998 and 1997 declined 6.8%.  Comparable  store sales during the
quarter  were  adversely  affected  by a 21.3%  decline  in  sales at one of the
Company's  stores located in a shopping center that is undergoing  redevelopment
and by a 4.9% decline in sales at the Company's stores at Portland International
Airport. Incremental sales from the 16 stores opened or acquired since the first
quarter of 1997 accounted for the entirety of the increase in retail sales.

     Wholesale and other sales increased  148.4% to $82,000 for the three months
ended March 31, 1998 from $33,000 for the same period in 1997.  The increase was
due to  sales  from  the  wholesale  business  acquired  as part  of the  Coffee
Plantation acquisition.  Sales from the Arizona wholesale business accounted for
$50,000 of the total  wholesale  and other  sales for the  quarter.  The Company
anticipates  a  reduction  in  wholesale  and other sales due to a change in the
relationship with its primary Arizona customer.

     Costs and  expenses.  Cost of sales and  related  occupancy  expenses  as a
percentage of total revenues increased to 49.2% for the three months ended March
31, 1998 from 48.8% for the same period in 1997. The primary  components were an
increase of 0.7% in cost of sales and a decrease of 0.3% in occupancy costs.

     Store  operating   expenses  as  a  percentage  of  retail  sales  remained
relatively  flat at 35.2% for the three  months ended March 31, 1997 as compared
to 35.8% for the same period in 1996.

     Depreciation and  amortization as a percentage of total revenues  increased
to 7.5% for the three  months ended March 31, 1998 from 6.4% for the same period
in 1996,  due  primarily to the  amortization  of goodwill  associated  with the
acquisition of the Coffee Plantation stores in Arizona.

     General and  administrative  expenses  decreased  to $608,000 for the three
months  ended  March 31,  1998  from  $717,000  for the same  period in 1997 due
primarily to general and  administrative  cost  reduction  actions  taken in the
third  quarter  of  1997.  As  a  percentage  of  total  revenues,  general  and
administrative  expenses decreased to 10.8% for the three months ended March 31,
1997 from 22.5% for the same period in 1997.

     Average  store sales and store  contribution  margin.  For the three months
ended March 31, 1998, the Company's 26  neighborhood  and  drive-through  stores
open for the full period achieved average store sales of $164,000 and an average
store contribution margin of 10.4% compared to $151,000 and 14.3%, respectively,
for the 15 stores open during the full three month period of 1997.  The increase
in average store sales is primarily  due to the average  store sales  associated
with the Company's Coffee Plantation stores acquired in May 1997. The decline in
store  contribution  margins is due both to a decline in the store  contribution
margins of the  Company's  Oregon  stores as compared  with the first quarter of
1997 as well as the effect of the Company's Coffee  Plantation stores in Arizona
which have lower average store  contribution  margins than the Company's  Oregon
stores.  The six airport  stores and seven kiosk  stores open for the full three

                                      -8-
<PAGE>

month  period  achieved  average  store  sales of $98,000  and an average  store
contribution margin of 13.1%,  respectively,  compared to $112,000 and 15.6% for
six airport  stores and one kiosk open for the full three month  period of 1997.
The decrease in average store sales for the  Company's  airport and kiosk stores
was due to the  decline in sales at the  Company's  airport  stores and to lower
average  sales  volumes at the four kiosk and two cart units located in Arizona.
The decrease in store  contribution  margins at the Company's  airport and kiosk
stores is due primarily to higher  operating costs and lower unit  contributions
at the airport stores.

         Other income.  Other income as a percentage of total revenues decreased
to 0.6% for the three  months ended March 31, 1998 from 3.9% for the same period
in 1997, as a result of reductions in  interest-bearing  investments  due to the
use of resources for operations and expansion.

         Interest  Expense.  Interest  expense as a percentage of total revenues
increased to 2.3% for the three  months ended March 31, 1998,  from 0.5% for the
same period in 1997, as a result of interest  incurred on the bank loan obtained
to finance part of the Coffee Plantation acquisition in May 1997.

LIQUIDITY AND CAPITAL RESOURCES

         With respect to the remaining  four of the seven stores  identified for
sale,  disposition or closure,  Coffee People will continue to make cash outlays
for store losses and for such items as rent,  utilities and insurance until such
time as it is able to sell the  store or  until  it can  negotiate  satisfactory
arrangements  with  landlords for re-leasing the store premises or for otherwise
terminating  the lease.  There can be no  assurance  that Coffee  People will be
successful  at  selling  its stores or in  negotiating  with  landlords  for the
re-leasing of the store premises or for terminating the leases. If Coffee People
is not  successful in these  efforts,  such cash outlays  could  continue for an
indeterminate  period  during  the term of the store  leases.  Coffee  People is
working  with local real estate  brokers to market,  re-lease  or  sublease  the
remaining  stores  outside of Oregon and  Arizona.  The lease terms for the four
remaining stores range from six to nine years with expiration dates ranging from
August 2003 through May 2007.  Minimum  future  rental  payments as of March 31,
1998 under the four remaining leases total $1,770,000.

     Coffee People  suspended  its plans to open or acquire new stores,  pending
the  disposition  of its stores  outside its core  Oregon and  Arizona  markets,
although  Coffee People has  committed to build an  additional  unit at Portland
International  Airport during the second quarter of 1998.  Upon  consummation of
the merger,  the Company  expects to resume  development  activities in its core
markets of Oregon and Arizona.

     As of  March  31,  1998,  Coffee  People  had  $2,597,000  in cash and cash
equivalents.

     The Company had a working capital deficit of $718,000 as of March 31, 1998,
as compared to a working capital deficit of $526,000 at December 31, 1997.

                                      -9-
<PAGE>


     For the three months ended March 31, 1998 and 1997,  cash provided by 
     operating  activities  was $45,000,  and $156,000, respectively.

     For the three  months  ended  March 31,  1998,  Coffee  People had net cash
provided by  financing  activities  of $79,000,  as compared to net cash used by
financing activities of $36,000 for the three months ended March 31, 1997.

     Coffee  People has a line of credit with its  primary  bank  providing  for
borrowings through August 1, 1998 of up to $500,000. Borrowings bear interest at
the rate of 0.5% over the bank's  prime rate (9.0% as of March 31, 1998) and are
secured by  substantially  all of Coffee  People's  assets,  including  accounts
receivable,  inventories,  trade fixtures and  equipment.  As of March 31, 1998,
borrowings of $400,000 were outstanding  under the line of credit.  In addition,
the sum of $73,000 of the line was  reserved for a letter of credit dated August
1, 1997. The line of credit agreement contains restrictive covenants relating to
certain  financial  ratios  as  well  as  the  bank's  standard   covenants  and
restrictions.  As of March 31, 1997, the Company was in compliance with all such
debt covenants. The bank loan agreement also contains a provision which requires
the bank's  consent to any  combination in which there is a change in control of
the Company.  As of the date of this report,  the bank has not  consented to the
merger with Gloria Jean's;  however,  the Company believes the bank's consent is
forthcoming.

     For the three  months  ended  March 31,  1998,  and 1997,  net cash used in
investing activities was $72,000 and $1,994,000,  respectively.  The primary use
of net cash used in investing  activities  during the first  quarter of 1998 was
capital expenditures for improvements to existing stores. The primary use of net
cash used in investing  activities  during the first quarter of 1997 was for the
development of new retail stores.

     Coffee People believes that anticipated cash flow from operations, existing
cash and bank debt will be sufficient to meet the  Company's  cash  requirements
through the end of 1998.


NEW ACCOUNTING STANDARDS

     Commencing  with the first  quarter of 1998,  the  Company  has adopted the
accounting  principles prescribed by Statement of Financial Accounting Standards
No.  130,  "Reporting  Comprehensive  Income."  The  Company  did not  have  any
"comprehensive  income" items during the three-month period ended March 31, 1998
which would require reporting pursuant to SFAS 130.


PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

      (a) Exhibits

          27 Financial Data Schedule

      (b) Reports on Form 8-K

                                      -10-

<PAGE>

                  No current  Reports  on Form 8-K were filed  during the period
covered by this report.

                                      -11-

<PAGE>


                                SIGNATURES


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

                                 Coffee People, Inc.


                                 /s/ Kenneth B. Ross
                                 -----------------------
                                 Kenneth B. Ross
                                 Chief Financial Officer

                                 Signing on behalf of the registrant and 
                                 as principal financial officer


                                      -12-