**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

**FORM 10-Q**

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

Commission File Number: 333-94797

**HUDSON'S GRILL INTERNATIONAL, INC.**

(Exact name of registrant as specified in its charter)

Texas

(State or other jurisdiction of incorporation)

75-2738727

(I.R.S. Employer Identification No.)

16970 Dallas Parkway, Suite 402, Dallas, Texas  75248

(Address of principal executive offices)

(972) 931-9237



Indicate by checkmark 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



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.  See the definitions of "large
accelerated filer,""accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

Non-accelerated filer (Do not check if a smaller reporting company)

Smaller reporting company		X



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).

Yes        No  X

APPLICABLE ONLY TO CORPORATE REGISTRANTS

State the number of shares outstanding of each of the issuer's classes of common equity, as
of the latest practicable date.

10,388,986 shares of Class A Common Stock outstanding as of August 22, 2008.

____________________________________________

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.



See the attached statements at the end of this Form 10-Q.

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

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS AND OTHER PORTIONS OF THIS REPORT CONTAIN
FORWARD-LOOKING INFORMATION THAT INVOLVES RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED BY THE FORWARD-LOOKING INFORMATION. FACTORS
THAT MAY CAUSE SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO,
AVAILABILITY OF FINANCIAL RESOURCES FOR LONG TERM NEEDS, PRODUCT
DEMAND, MARKET ACCEPTANCE AND OTHER FACTORS DISCUSSED
ELSEWHERE IN THIS REPORT. THIS MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SHOULD
BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE
RELATED NOTES INCLUDED ELSEWHERE IN THIS REPORT.

Material changes in the consolidated financial condition of the Company and its
subsidiary and in the results of their operations since the end of its last fiscal year and their
results from the comparable period in their last fiscal year include the following:

**Consolidated Balances as of June 30, 2008, Compared to December 31, 2007**

The Company's cash and cash equivalents balance at June 30, 2008 ("Q2") was
$7,016, which is $1,737 more than it was at December 31, 2007 ("FYE"), when it was
$5,279.  Accounts receivable increased $21,661 because the Company's franchisees have
been paying their fees slower due to increased pressures from slower sales during the current
economic slowdown.  The Company feels, nevertheless, that all of these will be collected,
and thus, no allowance for reserves is currently deemed necessary.  The Company's Oshkosh
building and land were transferred to the mortgagee in May 2008, and on June 27, 2008, the
Company's subsidiary that held title to the Oshkosh property filed for protection under
chapter 7 of the federal bankruptcy code.  It was classified as a discontinued operation until
June 2008; thus, the Company has now written it off.  As a result, the assets of discontinued
operations decreased $1,234,444 from FYE, and at Q2 are now zero.  Thus, current assets
decreased by $1,210,064.

Net property and equipment decreased from FYE because of depreciation.
Consequently, net property and equipment decreased by $526, which is the amount
accumulated depreciation increased since FYE. As a result, total assets at Q2 decreased by
$1,210,590 to $70,279 from $1,280,869 at FYE.

Current liabilities decreased by $1,005,335 to $269,245 at Q2 from $1,274,580 at
FYE.   Accounts payable and accrued expenses increased by $23,063.  At the same time,
accounts payable to related parties has increased to $154,632 from $96,374 at FYE.  This
reflects the Company's current policy of paying its third party vendors instead of paying
related parties.  The notes and liabilities related to the original purchase of the land for the
franchisee at Oshkosh were classified as current liabilities of discontinued operations until
the property was transferred to the mortgagee in May 2008.  The mortgagee agreed to take
back the property and release the Company from all liability except for $35,000, provided
this amount is paid when the Company is able to reorganize.   The Company's majority
shareholders have agreed to provide enough stock to a third party to enable the
reorganization, which is anticipated to be completed in August 2008.  As a result, the
Company has written off all but $35,000 of its obligations to the mortgagee, which is now
classified as a current note payable, and has written off all of the liabilities associated with
its discontinued operations, which at FYE was $1,121,656.  As a result, the Company's
working capital decreased from $4,859 at FYE to negative working capital of ($199,870) at
Q2.

**The Three Months Ended June 30, 2008, Compared to June 30, 2007**

Significant changes in the results of operations for the three months ended June 30,
2008 ("Q2") compared to the second quarter of 2007 ("Q07") include the following:
revenues from continuing operations decreased from $65,699 in Q07 to $59,432 in Q2. This
was a result of system wide decreases in franchise fees. No franchisee improved from its
prior year fees except for Escanaba, Michigan, and no new franchises opened during Q2.

Operating costs decreased by $2,418 during Q2 to $78,456 from $80,874 during Q07.
General and administrative costs decreased by $2,158.  This was largely the result of
decreases in salaries, travel and consulting expenses, which were offset by an increase in
legal and accounting costs, which had been higher in Q2 because of the additional
compliance work necessitated by new requirements from the Sarbanes Oxley Act and due
to work necessitated by the disposition of the discontinued operations and a potential
reorganization.

As a result, loss from operations increased $3,849 during Q2, when compared to
Q07.  The net loss from continuing operations was ($19,024) in Q2.  The Company incurred
a loss of ($153,696) on the disposition of its discontinued operations in Oshkosh.  The loss
from discontinued operations at the Oshkosh location prior to the disposition was ($4,994)
in Q2, which was a decrease in loss of $19,281, when compared to a loss in Q07 of
($24,275).  The Company had interest expense of $2,210 in Q2 and zero in Q07, and thus,
net loss for Q2 was ($179,924) compared to a net loss in Q07 of ($39,450).

Loss per basic and diluted common share for continuing operations was $.00 per
share for Q2 and $.00 for Q07. For discontinued operations and all operations in Q2 the loss
was ($.02) per share and for Q07 the loss for discontinued operations was ($.01) per share
and for all operations it was ($.01) per share.

**The Six Months Ended June 30, 2008, Compared to June 30, 2007**

Significant changes in the results of operations for the six months ended June 30,
2008 ("YTD08") compared to the first six months of 2007 ("YTD07") include the following:
revenues from continuing operations decreased from $134,973 in YTD07 to $116,138 in
YTD08. This was a result of system wide decreases in franchise fees. No franchisee
improved from its prior year fees, and no new franchises opened during YTD08.

Operating costs decreased by $12,216 during YTD08 to $135,200 from $147,416
during YTD07.  General and administrative costs decreased by $11,694.  This was largely
the result of decreases in salaries, travel and consulting expenses, which were partially offset
by an increase in legal and accounting costs, which had been higher in YTD08 because of
the additional compliance work necessitated by new requirements from the Sarbanes Oxley
Act and due to work necessitated by the disposition of the discontinued operations and a
potential reorganization.

As a result, loss from operations increased $6,619 during YTD08, when compared
to YTD07.  The net loss from continuing operations was ($19,062) in YTD08.  The
Company incurred a loss of ($153,696) on the disposition of its discontinued operations in
Oshkosh and also incurred $3,276 in interest expense.  The loss from discontinued
operations at the Oshkosh location prior to the disposition was ($29,221) in YTD08, which
was a decrease in loss of $8,084, when compared to a loss in YTD07 of ($37,305).  The
Company had interest expense of $3,276 in YTD08 and zero in YTD07, and thus, net loss
for YTD08 was ($205,255) compared to a net loss in YTD07 of ($49,748).

Loss per basic and diluted common share for continuing operations was $.00 per
share for YTD08 and $.00 for YTD07. For discontinued operations in YTD08 the loss was
($.03) per share and for all operations it was ($.03) and for YTD07 the loss for discontinued
operations was ($.01) per share and for all operations it was ($.01) per share.

**Liquidity and Capital Resources**

Normally, changes in the Company's liquidity and capital will depend primarily on
continuing royalty fees received from franchisees using the Company's trademark and
restaurant concept.  This in turn will be reflective of the general economies in the areas
where Hudson's Grill restaurants are located.  The Company does not currently plan to raise
any capital or borrow funds to meet liquidity needs, and thus, will rely solely on cash flows
from operations or from funds or services provided by its directors.  The Company's
subsidiary HGIO, however, borrowed money to buy real property in Oshkosh, Wisconsin,
that was modified to be a Hudson's Grill and had been leased to a new franchisee.  This has
affected the Company's liquidity since then, including  Q2, since the Company paid and has
been paying for major expenses and interest related to the restaurant facilities that HGIO was
leasing out in Oshkosh, which has since closed; subsequently, this property was transferred
to the mortgagee in May 2008.  It had been classified as discontinued operations.  Currently,
the Company's shortfall in cash flow has continued to be covered by increased payables to
related parties.

The Company had scheduled payments with its creditors, including the related party
creditors, to fit within its cash flow constraints, but as of August 1, 2007, the Company has
suspended the mortgage payments on the Oshkosh property because the most recent Oshkosh
franchisee closed down its operations there on July 31, 2007, due to poor sales and ceased
making any rent payments.

The mortgagee of the Oshkosh property was working with the Company and was
waiting for the Company to sell or lease the property.  The Company had listed the property
for sale, but no meaningful offers were ever received.  In the mean time, the Company had
agreed on a forbearance agreement with the mortgagee to pay a reduced interest rate of
5.25% and to pay interest only each month.  This became effective November 2007.  The
Company was not able to keep these payments current, and as a consequence turned the
property over the  mortgagee in June 2008.  The Company lost significant resources that
were in place at the property.

The franchises that have closed the last two years have significantly decreased the
Company's royalty streams; these losses have not been offset.  The lack of cash flow is a
significant problem, and the Company's ability to stay in business has been compromised
by it.

The Company does not sustain much seasonal volatility in revenues since its
franchisees are dispersed geographically and climactically.  Additionally, it does not have
any material commitments for capital expenditures and doesn't plan any in the foreseeable
future.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS REPORT, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING OUR
BUSINESS AND PROSPECTS.

CONDITIONS EXIST WHICH CAUSE SUBSTANTIAL DOUBT ABOUT OUR ABILITY
TO CONTINUE AS A GOING CONCERN.

The Report of our independent registered public accounting firm with respect to our financial
statements as of December 31, 2007, and for the year then ended contains a qualification
with respect to our ability to continue as a going concern.

The Company believes that available cash resources, together with anticipated revenues from
operations may not be sufficient to satisfy our capital requirements through December 31,
2008. If sufficient capital cannot be maintained or obtained, the Company may be forced to
significantly reduce operating expenses to a point which would be detrimental to business
operations, sell certain business assets or discontinue some or all of our business operations,
take other actions which could be detrimental to business prospects and result in charges
which could be material to its operations and financial position, or cease operations
altogether. In the event of a cessation of operations, there may not be sufficient assets to
fully satisfy all creditors, in which case the holders of equity securities will be unable to
recoup any of their investment.

Item 4T.  Controls and Procedures.

DISCLOSURE CONTROLS AND PROCEDURES

The Company maintains "disclosure controls and procedures," as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that are designed to ensure that information required to be disclosed by the Company
in reports it files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to our management, including the Company's
principal executive officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the Company's
disclosure controls and procedures, management recognized that disclosure controls and
procedures, no matter how well conceived and operated, can provide only reasonable
assurance of achieving the desired control objectives, and the Company necessarily is
required to apply its judgment in evaluating the cost-benefit relationship of possible
disclosure controls and procedures.

The Company's management, including its principal executive officer and principal financial
officer, evaluated the effectiveness of the design and operation of its disclosure controls and
procedures as of June 30, 2008, and concluded that the disclosure controls and procedures
were not effective, because certain deficiencies involving internal controls constituted a
material weakness as discussed below. The material weakness identified did not result in the
restatement of any previously reported consolidated financial statements or any other related
financial disclosure, nor does management believe that it had any effect on the accuracy of
the Company's financial statements for the current reporting period.

MANAGEMENT'S QUARTERLY REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING.

The Company's management is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Its internal control system was designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes, in accordance with generally accepted accounting
principles. Because of inherent limitations, a system of internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate
due to change in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.

The Company's management, including its principal executive officer and principal
accounting officer, conducted an evaluation of the effectiveness of our internal control over
financial reporting using the criteria set forth by the Securities and Exchange Commission.
Based on its evaluation, the Company's management concluded that there is a material
weakness in its internal control over financial reporting. A material weakness is a deficiency,
or a combination of control deficiencies, in internal control over financial reporting such that
there is a reasonable possibility that a material misstatement of the Company's annual or
interim financial statements will not be prevented or detected on a timely basis.

The material weakness relates to the monitoring and review of work performed by the
Company's sole accounting employee in the preparation of audit and financial statements,
footnotes and financial data provided to the Company's registered public accounting firm
in connection with the annual audit and the quarterly reviews. All of the Company's
financial reporting is carried out by its one accounting employee, and although the Company
has an audit committee, the committee has only one member and no financial resources to
hire others. This lack of accounting staff results in a lack of segregation of duties and
accounting echnical expertise necessary for an effective system of internal control.

In order to mitigate this material weakness to the fullest extent possible, all financial reports
are reviewed by the sole audit committee member and the President for reasonableness. All
unexpected results are investigated. At any time, if it appears that any control can be
implemented to continue to mitigate such weaknesses, it is immediately implemented. If the
Company's finances allow, it will hire sufficient accounting staff and implement appropriate
procedures for monitoring and review of work performed by our sole accounting employee,
but at the current time, that seems very unlikely.

This quarterly report does not include an attestation report of the Company's registered
independent public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered public
accounting firm pursuant to temporary rules of the SEC that permit the Company to provide
only management's report in this quarterly report.

This report shall not be deemed to be filed for purposes of Section 18 of the Securities
Exchange Act of 1934, or otherwise subject to the liabilities of that section, and is not
incorporated by reference into any filing of the Company, whether made before or after the
date hereof, regardless of any general incorporation language in such filing.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in the Company's internal control over financial reporting that
occurred during the quarter ended June 30, 2008, that have materially affected, or are
reasonable likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

In March 2008 the Company was sued in Wisconsin by a sign company that provided
signage to the Company's Oshkosh subsidiary and to its original Oshkosh franchisee.  The
Company has denied any liability.  The franchisee is bankrupt.  The Plaintiff is seeking
approximately $30,000 in damages from the Company.  The Company is not involved in any
other legal proceedings and knows of no other matters that have been threatened against the
Company.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities during the quarter.  Subsequent
to the quarter, the Company issued 500,000 shares to Robert W. Fischer ("Fischer"), 270,000
shares to Roy Millender ("Millender"), and 1,975,000 shares to Concept Franchising LLC
("Concept").  The shares were issued to pay certain current and future obligations owed to
Fischer and Millender, and were issued in exchange for Concept's assuming certain
liabilities of the Company.

Item 3.  Defaults Upon Senior Securities.

None.

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

None.

Item 5.  Other Information.

None.

Item 6.  Exhibits.

(a) The following exhibits are filed herewith:

|Exhibit No. | Description                                           | Page Number
|----------- | ----------------------------------------------------- | -----------
|            |                                                       |            
|            |                                                       |            
|(31.1)      | Certification Pursuant toSarbanes-Oxley Act Sec.
302  | attached   
|(32.1)      | Certification Pursuant to Sarbanes-Oxley Act Sec.
906 | attached   

SIGNATURES

I, David L. Osborn, the President of Hudson's Grill International, Inc., certify that:
(i) this report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, and (ii) the information contained in this report fairly presents, in all
material respects, the financial condition and results of operations of Hudson's Grill
International, Inc.

| | (Registrant)

HUDSON'S GRILL INTERNATIONAL,
INC.

By: s/s David L. Osborn

David L. Osborn, President

Date:     August 29, 2008
| | --------------------------------------------------------------------------------------------------------------------------------

| |                                  |                                                                         | HUDSON'S GRILL INTERNATIONAL, INC.                  |  
| | -------------------------------- | ----------------------------------------------------------------------- | --------------------------------------------------- | -
| |                                  |                                                                         |                                                     |  
| |                                  |                                                                         | CONSOLIDATED BALANCE SHEETS                         |  
| |                                  |                                                                         |                                                     |  
| |                                  |                                                                         | ASSETS                                             
| |                                  |                                                                         |                                                     |  
| |                                  |                                                                         |                                                     |  
| | Current
assets:                  |                                                                         |                                                     |  
| |                                  | Cash
and cash
equivalents                                               |                                                     | $
| |                                  | Accounts
receivable, net                                                |                                                     |  
| |                                  | Other
current
assets                                                    |                                                     |  
| |                                  | Assets
of
discontinued
operations                                       |                                                     |  
| |                                  |                                                                         | Total
current
assets                                |  
| |                                  |                                                                         |                                                     |  
| |                                  |                                                                         |                                                     |  
| | Property
and
equipment, at
cost: |                                                                         |                                                     |  
| |                                  | Office
furniture
and
equipment                                          |                                                     |  
| |                                  | Accumulated
depreciation                                                |                                                     |  
| |                                  |                                                                         | Property
and
equipment, net                         |  
| |                                  |                                                                         |                                                     |  
| |                                  |                                                                         |                                                     |  
| |                                  |                                                                         | TOTAL
ASSETS                                        | $
| |                                  |                                                                         |                                                     |  
| |                                  |                                                                         |                                                     |  
| |                                  |                                                                         | LIABILITIES
AND
STOCKHOLDERS'
EQUITY
(DEFICIT)      |  
| | Current
liabilities:             |                                                                         |                                                     |  
| |                                  | Accounts
payable
and
accrued
expenses                                   |                                                     | $
| |                                  | Accounts
payable
to
related
parties                                     |                                                     |  
| |                                  | Note
payable                                                            |                                                     |  
| |                                  | Note
payable,
related
party                                             |                                                     |  
| |                                  | Liabilities of
discontinued
operations (see
note 4)                     |                                                     |  
| |                                  | Liabilities of
discontinued
operations,
related
party
(see
notes 4
& 5) |                                                     |  
| |                                  |                                                                         | Total
current
liabilities                           |  
| |                                  |                                                                         |                                                     |  
| | Stockholders'
equity
(deficit):  |                                                                         |                                                     |  
| |                                  | Common stock,
Class A,
no par
value,
100,000,000
shares                 |                                                     |  
| |                                  |                                                                         | authorized,
7,643,986 shares
issued
and
outstanding |  
| |                                  |                                                                         | at June
30, 2008
and
December 31,
2007              |  
| |                                  | Common stock,
Class B,
no par
value,
15,000,000
shares                  |                                                     |  
| |                                  |                                                                         | authorized, no
shares
issued
and
outstanding        |  
| |                                  | Accumulated
deficit                                                     |                                                     |  
| |                                  |                                                                         | Total
stockholders'
equity
(deficit)                |  
| |                                  |                                                                         |                                                     |  
| |                                  |                                                                         | TOTAL
LIABILITIES
AND                               |  
| |                                  |                                                                         | STOCKHOLDERS'
EQUITY
(DEFICIT)                      | $

| |                                      |                                 |                                       | HUDSON'S
GRILL
INTERNATIONAL,
INC.    |   |                    |   |             |                  |   |             |   |            
| | ------------------------------------ | ------------------------------- | ------------------------------------- | ------------------------------------- | - | ------------------ | - | ----------- | ---------------- | - | ----------- | - | -----------
| |                                      |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      |                                 |                                       | CONSOLIDATED STATEMENTS OF OPERATIONS |   |                   
| |                                      |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      |                                 |                                       |                                       |   | Three Months
Ended |   |             | Six
Months
Ended |   |            
| |                                      |                                 |                                       |                                       |   | June
30,           |   | June
30,    |                  |   | June
30,    |   | June
30,   
| |                                      |                                 |                                       |                                       |   | 2008               |   | 2007        |                  |   | 2008        |   | 2007       
| |                                      |                                 |                                       |                                       |   | (Unaudited)        |   | (Unaudited) |                  |   | (Unaudited) |   | (Unaudited)
| |                                      |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| | Revenues                             |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      | Franchise
fees                  |                                       |                                       | $ | 59,432             | $ | 65,699      |                  | $ | 116,138     | $ | 134,973    
| |                                      |                                 | Total
revenues                        |                                       |   | 59,432             |   | 65,699      |                  |   | 116,138     |   | 134,973    
| |                                      |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| | Operating
costs:                     |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      | General
and
administrative      |                                       |                                       |   | 78,192             |   | 80,350      |                  |   | 134,674     |   | 146,368    
| |                                      | Depreciation                    |                                       |                                       |   | 264                |   | 524         |                  |   | 526         |   | 1,048      
| |                                      |                                 | Total
operating
costs                 |                                       |   | 78,456             |   | 80,874      |                  |   | 135,200     |   | 147,416    
| |                                      |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      |                                 | Loss
from
operations                  |                                       |   | (19,024)           |   | (15,175)    |                  |   | (19,062)    |   | (12,443)   
| |                                      |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| | Other
income
(expense):              |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      | Interest
expense                |                                       |                                       |   | (2,210)            |   | -           |                  |   | (3,276)     |   | -          
| |                                      |                                 | Total
other
expense                   |                                       |   | (2,210)            |   | -           |                  |   | (3,276)     |   | -          
| |                                      |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| | Discontinued
operations
(see
note
4) |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      | Loss
on
discontinued
operations |                                       |                                       |   | (4,994)            |   | (24,275)    |                  |   | (29,221)    |   | (37,305)   
| |                                      | Loss
on
disposal
of
operations  |                                       |                                       |   | (153,696)          |   | -           |                  |   | (153,696)   |   | -          
| |                                      |                                 | Total
loss
on
discontinued
operations |                                       |   | (158,690)          |   | (24,275)    |                  |   | (182,917)   |   | (37,305)   
| |                                      |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| | Net
loss                             |                                 |                                       |                                       | $ | (179,924)          | $ | (39,450)    |                  | $ | (205,255)   | $ | (49,748)   
| |                                      |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| | Net
loss
per
share-                  |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      | basic
and
diluted               |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      | Continuing
operations           |                                       |                                       | $ | -                  | $ | -           |                  | $ | -           | $ | -          
| |                                      | Discontinued
operations         |                                       |                                       | $ | -0.02              | $ | -0.01       |                  | $ | -0.03       | $ | -0.01      
| | Net
loss
per
share-                  |                                 |                                       |                                       | $ | -0.02              | $ | -0.01       |                  | $ | -0.03       | $ | -0.01      
| |                                      |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| | Weighted
average                     |                                 |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      | outstanding
shares-             |                                       |                                       |   |                    |   |             |                  |   |             |   |            
| |                                      | basic
and
diluted               |                                       |                                       |   | 7,643,986          |   | 7,643,986   |                  |   | 7,643,986   |   | 7,643,986  

| |                                       |                                               |                                             |                                              |                                       | HUDSON'S
GRILL
INTERNATIONAL,
INC.    |  |                           |  |  |            
| | ------------------------------------- | --------------------------------------------- | ------------------------------------------- | -------------------------------------------- | ------------------------------------- | ------------------------------------- |  | ------------------------- |  |  | -----------
| |                                       |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| |                                       |                                               |                                             |                                              |                                       | CONSOLIDATED
STATEMENTS OF CASH
FLOWS |  |                          
| |                                       |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| |                                       |                                               |                                             |                                              |                                       |                                       |  | Six Months Ended June 30,
| |                                       |                                               |                                             |                                              |                                       |                                       |  | 2008                      |  |  | 2007       
| |                                       |                                               |                                             |                                              |                                       |                                       |  | (Unaudited)               |  |  | (Unaudited)
| |                                       |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| | Cash
Flows
From
Operating
Activities: |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| |                                       | Net
loss                                      |                                             |                                              |                                       |                                       |  | $
(205,255)               |  |  | $
(49,748) 
| |                                       | Adjustments to
reconcile
net
loss
to net
cash |                                             |                                              |                                       |                                       |  |                           |  |  |            
| |                                       |                                               | provided
by
(used
in)
operating
activities: |                                              |                                       |                                       |  |                           |  |  |            
| |                                       |                                               |                                             | Amortization of
loan
origination
costs       |                                       |                                       |  | 5,386                     |  |  | 1,224      
| |                                       |                                               |                                             | Loss
on
disposal of
operations               |                                       |                                       |  | 153,696                   |  |  | -          
| |                                       |                                               |                                             | Depreciation                                 |                                       |                                       |  | 526                       |  |  | 20,619     
| |                                       |                                               |                                             | Changes in
operating
assets
and
liabilities: |                                       |                                       |  |                           |  |  |            
| |                                       |                                               |                                             |                                              | Accounts
receivable                   |                                       |  | (21,661)                  |  |  | 6,845      
| |                                       |                                               |                                             |                                              | Other
current
assets                  |                                       |  | (982)                     |  |  | (1,532)    
| |                                       |                                               |                                             |                                              | Accounts
payable and
accrued
expenses |                                       |  | 11,769                    |  |  | (327)      
| |                                       |                                               |                                             |                                              | Accounts
payable to
related
parties   |                                       |  | 58,258                    |  |  | 22,093     
| |                                       |                                               |                                             |                                              |                                       | Net
cash
provided
by                  |  |                           |  |  |            
| |                                       |                                               |                                             |                                              |                                       | (used
in)
operating
activities        |  | 1,737                     |  |  | (826)      
| |                                       |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| |                                       |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| | Cash
Flows
From
Financing
Activities: |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| |                                       |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| |                                       | Proceeds
from
issuance
of
notes
payable       |                                             |                                              |                                       |                                       |  | -                         |  |  | 2,628      
| |                                       |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| |                                       |                                               |                                             |                                              |                                       | Net
cash
provided
by                  |  |                           |  |  |            
| |                                       |                                               |                                             |                                              |                                       | financing
activities                  |  | -                         |  |  | 2,628      
| |                                       |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| | Net
Increase In
Cash                  |                                               |                                             |                                              |                                       |                                       |  | 1,737                     |  |  | 1,802      
| |                                       |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| | Cash,
beginning
of
period             |                                               |                                             |                                              |                                       |                                       |  | 5,279                     |  |  | -          
| |                                       |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| | Cash,
end
of
period                   |                                               |                                             |                                              |                                       |                                       |  | $
7,016                   |  |  | $
1,802    
| |                                       |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| | Supplemental
Disclosures:             |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| |                                       | Cash
paid
for
income
taxes                    |                                             |                                              |                                       |                                       |  | $ 0                       |  |  | $ 0        
| |                                       | Cash
paid
for
interest                        |                                             |                                              |                                       |                                       |  | $
20,876                  |  |  | $
40,748   
| | Non-cash
Transaction:                 |                                               |                                             |                                              |                                       |                                       |  |                           |  |  |            
| |                                       | Accrued
compensation
paid
with
stock          |                                             |                                              |                                       |                                       |  | $ 0                       |  |  | $
12,900   
| |                                       | Cancellation of
debt
through
building         |                                             |                                              |                                       |                                       |  |                           |  |  |            
| |                                       |                                               | foreclosure
and
new
$35,000
note
payable    |                                              |                                       |                                       |  | $
1,110,362               |  |  | $ 0        

**1.	UNAUDITED INFORMATION**



The consolidated balance sheet of Hudson's Grill International, Inc. (the "Company") as of
June 30, 2008, and the consolidated statements of operations for the three and six month
periods ended June 30, 2008 and 2007, have not been audited.  However, in the opinion of
management, such information includes all adjustments (consisting only of normal recurring
adjustments) which are necessary to properly reflect the financial position of the Company
as of June 30, 2008, and the results of operations for the three and six months ended June 30,
2008 and 2007.



Certain information and notes normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of America
have been condensed or omitted, although management believes that the disclosures are
adequate to make the information presented not misleading.  Interim period results are not
necessarily indicative of the results to be achieved for an entire year.  These financial
statements should be read in conjunction with the financial statements and notes to financial
statements included in the Company's consolidated financial statements as filed on Form 10-K for the year ended December 31, 2007.

As noted in the Company's consolidated financial statements as filed on Form 10-K, one of
the Company's directors owns one franchise that does not pay any franchise fees.  This is
the result of a previous agreement with the Company prior to the director's involvement with
the Company; the Company is not required to perform any services for the franchise owned
by the director.

**2. 		ACCOUNTING CHANGES**

In September 2006, the FASB issued Statement of Financial Accounting Standard ("SFAS")
No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value,
establishes a market-based framework or hierarchy for measuring fair value, and expands
disclosures about fair value measurements. SFAS 157 is applicable whenever another
accounting pronouncement requires or permits assets and liabilities to be measured at fair
value. SFAS 157 does not expand or require any new fair value measures; however the
application of this statement may change current practice. The requirements of SFAS 157
are first effective for the Company's fiscal year beginning January 1, 2008. However, in
February 2008 the FASB decided that an entity need not apply this standard to nonfinancial
assets and liabilities that are recognized or disclosed at fair value in the financial statements
on a nonrecurring basis until the subsequent year. Accordingly, the Company's adoption of
this standard on January 1, 2008, is limited to financial assets and liabilities. The adoption
of SFAS 157 has not had a material effect on the Company's financial condition or results
of operations. However, the Company is still in the process of evaluating this standard with
respect to its effect on nonfinancial assets and liabilities and therefore has not yet determined
the impact that it will have on its financial statements upon full adoption.

In February 2007, FASB issued SFAS No. 159, *The Fair Value Option for Financial Assets
and Financial Liabilities ---- Including an Amendment of FASB Statement No. 115.*The fair
value option permits entities to choose to measure eligible financial instruments at fair value
at specified election dates. The entity will report unrealized gains and losses on the items on
which it has elected the fair value option in earnings. SFAS 159 is effective beginning in
fiscal year 2008 and became effective with the Company on January 1, 2008. It has not had
a material impact on the Company's consolidated results of operations or financial condition.

**3.	EARNINGS PER SHARE**



Basic earnings per share are calculated on the weighted average number of common shares
outstanding during each period.  Diluted earnings per share is computed by dividing net
income by the weighted average number of common shares and common stock equivalents
outstanding for the period.  Common stock equivalents are excluded from the computation
if such inclusion would have an anti-dilutive effect.

**4.	DISCONTINUED OPERATIONS**



On June 9, 2006, HGI-Oshkosh LLC ("HGIO"), a Texas limited liability company and
wholly owned subsidiary of the Company, purchased a building and land in Oshkosh,
Wisconsin, for $1,115,000.  It also purchased furniture and equipment for $114,927, which
was used to finish out the building as a Hudson's Grill.  HGIO borrowed $1,075,000 on a
twenty year note from the Upper Peninsula State Bank in Escanaba, Michigan, and $50,000
from the Company, to buy the building, land, furniture and equipment; the Company
borrowed the $50,000 that it loaned to HGIO from Border City Ale House, Inc.  ("BCAH"),
a company owned by Anthony B. Duncan, one of the Company's directors.  HGIO leased
the building, land, furniture and equipment to two franchisees, but each one failed, and the
property became vacant in August 2007.

Effective November 1, 2007, pursuant to a forbearance agreement, the monthly payments
were reduced; however, the bank had the power to file a deed in lieu of foreclosure at the
earlier of July 1, 2008, or a default on the forbearance agreement by the Company.  In May
2008, the Company  defaulted on the forbearance agreement, and the bank exercised its right
to file the deed on May 14, 2008.  The bank now has title to the real property and all of the
Company's personal property that was situated on the premises.  Subsequent to the transfer
of the property to the bank, the bank has agreed to accept $35,000 for a complete release of
any remaining liability.  The $35,000 is to be paid when the Company reorganizes and is not
interest bearing as a result of the short time frame.

The Company is currently paying interest only on the BCAH note.  The unpaid balance of
the BCAH note was due on May 23, 2008, but it has been extended without any definite due
date by the note holder, based on the cash flow of the Company.

The BCAH note has been classified as a current liability as "Note payable, related party"
since it is currently due.  The bank note was classified as a current liability as "Liabilities
from discontinued operations" since the note secured the land and building that was for sale.
Pursuant to EITF Issue Number 87-24, the Company has allocated all of the interest on the
bank note to the discontinued operations because the proceeds from the loan were used
solely to  purchase the building and land, and, except for the remaining $35,000 owed to the
bank, the loan was paid off when the building and land were transferred to the bank.

The operations of the Company related to its ownership of the building and land have been
accounted for as discontinued operations under generally accepted accounting principles, and
therefore, the results of operations related to the building and land have been reflected
separately from the Company's results from continuing operations for all periods presented
in the accompanying financial statements.  The discontinued operations were disposed of as
May 14, 2008, pursuant to the bank's exercise of its right to file a deed in lieu of foreclosure;
subsequently, HGIO filed for bankruptcy liquidation under chapter 7 of the bankruptcy code
on June 27, 2008.  The Company wrote off all of its assets associated with the discontinued
operations, which were $1,229,058, and, except for the remaining $35,000 owed to the bank,
it wrote off all of its liabilities associated with the discontinued operations, which amounted
to writing off $1,075,362.  Thus, there was a loss on the disposal of the discontinued
operations of $153,696.



**5.	SUBSEQUENT EVENTS**



On July 1, 2008, the Company issued 500,000 shares of stock to Robert Fischer in exchange
for his waiver of interest on the Company's account payable to him.  Also, on July 1, 2008,
the Company issued 270,000 shares of stock to Roy Millender as payment for the
outstanding balance of $7,200 owed to him as of June 30, 2008, and for prepayment of
$4,800, which represents the last remaining payments due him on his consulting agreement,
which agreement ends October 2008.  On August 11, 2008, the Company delivered
1,975,000 shares of its common stock and transferred all of its remaining assets to Concept
Franchising, LLC ("Concept"), in exchange for Concept's assumption of almost all of the
liabilities of the Company.