SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003

Commission file number 333-94797

HUDSON'S GRILL INTERNATIONAL, INC.

(Name of small business issuer in its charter)

Texas

(State or other jurisdiction of incorporation)

75-2738727

(IRS Employer Identification Number)

16970 Dallas Parkway, Suite 402, Dallas, Texas  75248

(Address of Principal Executive Offices)

Issuer's telephone number, including area code:

(972) 931-9237

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

Yes   X    No



APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS



Check whether the registrant filed all documents and reports required to be filed by Section 12,
13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a
court.

Yes        No

APPLICABLE ONLY TO CORPORATE REGISTRANTS

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

7,256,986 shares of Class A Common Stock

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.



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

Item 2.  Management Discussion and Analysis.

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

**Balances as of September 30, 2003, Compared to December 31, 2002**

The issuer's cash at September 30, 2003 ("Q3") ($99,106), is $52,939 more than it was at
December 31, 2002 ("FYE") ($46,167).  This reflects reduced general and administrative
expenses during the period since the last year end and the resulting profit made during the year to
date.  Due to the increase in cash and some smaller changes in accounts receivable and prepaid
expenses, the current assets at Q3 increased $24,337 from the prior quarter to $128,424 and
increased $49,751 from $78,673 at FYE.  Net property and equipment is roughly the same at Q3
as it was at FYE; long term receivable has decreased $8,774 because of payments received since
FYE in connection with the sale of a restaurant in 1995.  Thus, total assets at Q3 increased by
$40,463 to $223,850 from $183,387 at FYE.

Current liabilities decreased by $31,244 to $109,603 at Q3 from $140,847 at FYE.   This
reflects the continued progress the Company has made in paying off its line of credit, loan
payable and accounts payable from the profits it has made during the period.   Deferred revenue
decreased slightly from $107,552 at FYE to $96,177 at Q3, reflecting the continued amortization
of income deferred from the advance payment of royalties from certain franchisees and the gain
deferred from the 1995 sale of a restaurant.

**The Three Months Ended September 30, 2003, Compared to September 30, 2002**

Material changes in the results of operations for the three months ended Q3 compared to
the third quarter of 2002 ("Q02") include the following:  Because of a one time, initial franchise
fee of $15,000 received in Q02 from the newly opened Hudson's franchisee in Marshfield,
Wisconsin, which opened September 9, 2002, revenues were higher in Q02 than they were in Q3.
Q3's revenue was $74,068, which was a decrease of $19,220 from Q02's revenues of $93,288.
Operating expenses decreased by $9,339 during Q3 to $55,366 from $64,705 during Q02, mostly
as a result of slightly higher travel expense associated with opening the Marshfield franchise in
2002.  As a result, income from operations decreased by $9,881 to $18,702 during Q3 from
$28,583 during Q02. Other income stayed about the same; Q3 had other income of $12,781
compared to other income of $12,311 in Q02.   Thus, because of the decrease in income from
operations, net income in Q3 decreased by $9,411 compared to Q02.

Income per common share (both basic and diluted) was less than $.01 per share for Q3
and Q02.

**The Nine Months Ended September 30, 2003, Compared to September 30, 2002**

Material changes in the results of operations for the nine months ended September 30,
2003 ("YTD03"), compared to the same period in 2002 ("YTD02") include the following: There
was an increase of $12,161 in revenue attributable to the new franchise in Marshfield, Wisconsin
(because it was open during all of YTD03) that was not sufficient to overcome decreases at the
other franchises (most notably at Santa Barbara, California (closed in December 2002), and
Jackson, Michigan), and thus revenues for YTD03 decreased by $9,945 compared to YTD02.
YTD03 operating expenses decreased by $29,829 in YTD03 to $166,393 from $196,222 during
YTD02, mostly as a result of a decrease in legal and accounting expenses.  As a result, income
from operations increased by $19,884 to $48,728 in YTD03 from $28,844 during YTD02. Other
income decreased by $17,928 because of a one time gain of $18,000 from assets disposed in
YTD02, which did not recur in YTD03.  Thus, because the decrease in other income almost
equaled the increase in income from operations, net income in YTD03 increased only slightly by
$1,956 compared to YTD02.

Income per common share (both basic and diluted) was $.01 per share for YTD03 and for
YTD02.

**Liquidity and Capital Resources**

Changes in the issuer's liquidity and capital will depend mostly on continuing royalty fees
received from franchisees using the issuer'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 issuer 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.

The issuer is currently allocating a major part of its cash flow to pay off accounts payable;
it plans to continue to do so until all of its past due debts are paid off.  This may take the next
several years to accomplish. The Company's cash balance of $99,106 at September 30, 2003,
was $52,939 more than at the year ended December 31, 2002.

The issuer 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.  Disclosures; Controls and Procedures.

With the participation of management, the Company's President evaluated the
Company's disclosure controls and procedures as of the end of the quarterly period covered by
this report.  Based on this evaluation, the President concluded that the disclosure controls and
procedures are effective in connection with the Company's filing of its quarterly report on Form
10-QSB for this quarterly period.

Subsequent to the date of the president's evaluation, through the date of this filing of
Form 10-QSB for this quarterly period, there have been no significant changes in the Company's
internal controls or in other factors that could significantly affect these controls, including any
significant deficiencies or material weaknesses of internal controls that would require corrective
action.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

The Company is not involved in any legal proceedings and knows of no matters that have
been threatened against the Company.

Item 2.  Changes in Securities.

There was no change in securities during the quarter ending September 30, 2003.

Item 3.  Defaults Upon Senior Securities.

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

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

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

Item 5.  Other Information.

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

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

(a)  Exhibit Index.  Following are the exhibits required under Item 601 of Regulation S-B
for Form 10-QSB:

|Exhibit No. | Description                                                                  | Page Number
|----------- | ---------------------------------------------------------------------------- | -----------
|            |                                                                              |            
|(2)         | Plan of Acquisition, Reorganization, Arrangement,
Liquidation, or Succession | n/a        
|(4)         | Instruments Defining the Rights of Holders Including
Indentures              | n/a        
|(6)         | No Exhibit Required                                                          | n/a        
|(11)        | Statement Re: Computation of  Per Share Earnings                             | n/a1       
|(12)        | No Exhibit Required                                                          | n/a        
|(15)        | Letter on Unaudited Interim Financial Information                            | n/a2       
|(18)        | Letter on Change in Accounting Principles                                    | n/a        
|(19)        | Previously Unfiled Documents                                                 | n/a        
|(20)        | Reports Furnished to Security Holders                                        | n/a        
|(23)        | Published Report Regarding Matters Submitted to Vote                         | n/a        
|(24)        | Consent of Experts and Counsel                                               | n/a        
|(25)        | Power of Attorney                                                            | n/a        
|(27)        | Financial Data Schedule                                                      | n/a        
|(28)        | Additional Exhibits                                                          | n/a        
|(32.1)      | Certification Pursuant to Sarbanes-Oxley Act Sec. 906                        | 8          

1    No explanation of the computation of per share earnings on both the primary and fully
diluted basis is necessary because the  computation can be clearly determined from the financial
statements and  the notes to the financial statements.

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

(b)  Reports on Form 8-K.  No reports on Form 8-K were filed during the quarter ending
September 30, 2003, or shortly thereafter.

SIGNATURES

I, David L. Osborn, certify that:

1.	I have reviewed this quarterly report on Form 10-QSB of Hudson's Grill International,
Inc.;

2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this quarterly report;

3.	Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this
quarterly report;

4.	The registrant's other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and have:

a)	designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this quarterly report is
being prepared;

b)	evaluated the effectiveness of the registrant's disclosure controls and procedures
as of the end of the quarter presented in this quarterly report (the "Evaluation Date"); and

c)	presented in this quarterly report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.	The registrant's other certifying officers and I have disclosed, based on our most recent
evaluation, to the registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):

a)	all significant deficiencies in the design or operation of internal controls which
could adversely affect the registrant's ability to record, process, summarize and report financial
data and have identified for the registrant's auditors any material weaknesses in internal controls;
and

b)	any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant's internal controls; and

6.	The registrant's other certifying officers and I have indicated in this quarterly report
whether or not there were significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and material weaknesses.

|Date:	November 12, 2003 | /s/David L. Osborn

[Signature]

President
|----------------------- | ------------------------------------------

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hudson's Grill International, Inc., (the
"Company") on Form 10-QSB for the period ending September 30, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"),  I, David L. Osborn, the
President of Hudson's Grill International, Inc., certify that:

(i) The 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 the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.

| | (Registrant)

HUDSON'S GRILL INTERNATIONAL,
INC.

By: s/s David L. Osborn

David L. Osborn, President

Date:     November 12, 2003
| | ----------------------------------------------------------------------------------------------------------------------------------

A signed original of this written statement required by Section 906 has been provided to
the Company and will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.

f\sec\o01.030930

**BALANCE SHEETS**

****ASSETS

|                                     | September 30, |  | December 31,
|------------------------------------ | ------------- |  | ------------
|                                     | 2003          |  | 2002        
|                                     | (Unaudited)   |  |             
|**CURRENT ASSETS:**                  |               |  |             
|Cash                                 | $	99,106      |  | $	46,167    
|Accounts receivable                  | 17,574        |  | 22,371      
|Prepaid expenses and other           | 11,744        |  | 10,135      
|Total current assets                 | 128,424       |  | 78,673      
|                                     |               |  |             
|**PROPERTY AND EQUIPMENT**, at cost: |               |  |             
|Furniture and office equipment       | 17,869        |  | 17,869      
|Less accumulated depreciation        | (16,671)      |  | (16,157)    
|Property and equipment, net          | 1,198         |  | 1,712       
|                                     |               |  |             
|******LONG-TERM RECEIVABLE**         | 94,228        |  | 103,002     
|                                     |               |  |             
|Total assets                         | $	223,850     |  | $	183,387   
|                                     |               |  |             

|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|----------------------------------------------

|                                                                                                            |                    |  |          
|----------------------------------------------------------------------------------------------------------- | ------------------ |  | ---------
|**CURRENT LIABILITIES:**                                                                                    |                    |  |          
|Line of credit                                                                                              | $                - |  | $	9,037  
|Loans payable                                                                                               | 41,000             |  | 45,000   
|Accounts payable and accrued expenses                                                                       | 14,651             |  | 10,068   
|Accounts payable to related parties                                                                         | 53,952             |  | 76,452   
|Advances from related parties                                                                               | -                  |  | 290      
|Total current liabilities                                                                                   | 109,603            |  | 140,847  
|                                                                                                            |                    |  |          
|******DEFERRED REVENUE**                                                                                    | 96,177             |  | 107,552  
|                                                                                                            |                    |  |          
|**STOCKHOLDERS' EQUITY (DEFICIT):**                                                                         |                    |  |          
|Common stock, Class A, no par value, 100,000,000 shares authorized;
7,256,986 shares issued and outstanding | 142,545            |  | 142,545  
|Common stock, Class B, no par value, 15,000,000 shares authorized;

no shares issued and outstanding        | -                  |  | -        
|Accumulated deficit                                                                                         | (124,475)          |  | (207,557)
|Total stockholders' equity (deficit)                                                                        | 18,070             |  | (65,012) 
|                                                                                                            |                    |  |          
|Total liabilities and stockholders' equity (deficit)                                                        | $	223,850          |  | $	183,387

**STATEMENTS OF INCOME**

**(unaudited)**

| | Three Months Ended |  | Nine Months Ended
| | ------------------ |  | -----------------

|                                                                | September 30,           |      | September 30,           |      | September 30,          |      | September 30,              
|--------------------------------------------------------------- | ----------------------- | ---- | ----------------------- | ---- | ---------------------- | ---- | ---------------------------
|                                                                | 2003                    |      | 2002                    |      | 2003                   |      | 2002                       
|                                                                |                         |      |                         |      |                        |      |                            
|**REVENUES******                                                | ****$	74,068            |      | $	93,288                |      | $	215,121              |      | $	225,066                  
|                                                                |                         |      |                         |      |                        |      |                            
|**OPERATING COSTS:**                                            |                         |      |                         |      |                        |      |                            
|General and administrative                                      | 55,195                  |      | 63,826                  |      | 165,879                |      | 191,977                    
|Depreciation and amortization                                   | 171                     |      | 879                     |      | 514                    |      | 4,245                      
|Total operating costs                                           | 55,366                  |      | 64,705                  |      | 166,393                |      | 196,222                    
|                                                                |                         |      |                         |      |                        |      |                            
|Income from operations                                          | 18,702                  |      | 28,583                  |      | 48,728                 |      | 28,844                     
|                                                                |                         |      |                         |      |                        |      |                            
|**OTHER INCOME (EXPENSE):**                                     |                         |      |                         |      |                        |      |                            
|Settlement income                                               | 9,000                   |      | 9,000                   |      | 27,000                 |      | 27,000                     
|Income from sale of assets                                      | 2,266                   |      | 1,971                   |      | 5,969                  |      | 3,186                      
|Gain from assets disposed                                       | -                       |      | -                       |      | -                      |      | 18,000                     
|Interest income                                                 | 1,515                   |      | 1,997                   |      | 4,164                  |      | 6,777                      
|Interest expense                                                | -                       |      | (657)                   |      | (1,774)                |      | (2,681)                    
|Miscellaneous expenses                                          | -                       |      | -                       |      | (1,005)****            | **** | -****                      
|****Total other income (expense)                                | 12,781                  |      | 12,311                  |      | 34,354****             | **** | 52,282****                 
|****                                                            |                         |      |                         |      |                        |      |                            
|**NET INCOME**                                                  | $	31,483                |      | $	40,894                |      | $	83,082               |      | $	81,126                   
|                                                                |                         |      |                         |      |                        |      |                            
|**NET INCOME PER SHARE -**

basic and diluted                   | ****             *      |      | ****            *       |      | .01                    |      | .01                        
|**WEIGHTED AVERAGE
OUTSTANDING SHARES**-

basic and diluted**** | ****
         7,256,986 | **** | ****          7,256,986 | **** | ****         7,256,986 | **** | ********          7,256,986
|                                                                |                         |      |                         |      |                        |      |                            

*********Less than $.01 per share

**STATEMENTS OF CASH FLOWS**

| | Nine Months Ended
| | -----------------
| | September 30,    

|                                                                                   | 2003        |  | 2002          
|---------------------------------------------------------------------------------- | ----------- |  | --------------
|                                                                                   | (Unaudited) |  | (Unaudited)   
|**CASH FLOWS FROM OPERATING ACTIVITIES:**                                          |             |  |               
|Net income                                                                         | $	83,082    |  | $	81,126      
|Adjustments to reconcile net income to net cash provided by

operating activities: |             |  |               
|Depreciation and amortization                                                      | 514         |  | 4,245         
|Amortization of deferred revenue                                                   | (11,375)    |  | (11,124)      
|Gain from assets disposed                                                          | -           |  | (18,000)      
|Changes in operating assets and liabilities:                                       |             |  |               
|Accounts receivable                                                                | 4,797       |  | (2,225)       
|Prepaid expenses and other                                                         | (1,609)     |  | (173)         
|Accounts payable and accrued expenses                                              | 4,583       |  | (33,464)      
|Accounts payable to related parties                                                | (22,790)    |  | (15,660)      
|                                                                                   |             |  |               
|Net cash provided by operating activities                                          | 57,202      |  | 4,725         
|                                                                                   |             |  |               
|**CASH FLOWS FROM INVESTING ACTIVITIES:**                                          |             |  |               
|Repayment of note receivable                                                       | 8,774       |  | 3,801         
|Purchases of property and equipment                                                | -           |  | (2,055)       
|Proceeds from disposal of assets                                                   | -           |  | 20,000        
|                                                                                   |             |  |               
|Net cash provided by investing activities                                          | 8,774       |  | 21,746        
|                                                                                   |             |  |               
|******CASH FLOWS FROM FINANCING ACTIVITIES:**                                      |             |  |               
|Repayment of advances from related parties                                         | (4,000)     |  | (9,000)       
|Repayment of line of credit and notes payable                                      | (9,037)     |  | (16,183)      
|                                                                                   |             |  |               
|Net cash used in financing activities                                              | (13,037)    |  | (25,183)      
|                                                                                   |             |  |               
|******NET INCREASE IN CASH**                                                       | 52,939      |  | 1,288         
|                                                                                   |             |  |               
|**CASH**, beginning of period                                                      | 46,167      |  | 23,894********
|**CASH**, end of period                                                            | $	99,106    |  | $	25,182      

**1.	Unaudited Information**



The balance sheet of Hudson's Grill International, Inc. (the "Company") as of September 30, 2003 and the
income statements for the three and nine month periods ended September 30, 2003 and 2002 were taken from
the Company's books and records without audit.  However, in the opinion of management, such information
includes all adjustments (consisting only of normal recurring accruals) which are necessary to properly reflect
the financial position of the Company as of September 30, 2003 and the results of operations for the three and
nine months ended September 30, 2003 and 2002.



Certain information and notes normally included in financial statements prepared in accordance with
generally accepted accounting principles 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
financial statements as filed on Form 10-KSB for the year ended December 31, 2002.



In December 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 148, *Accounting for Stock-Based Compensation - Transition and
Disclosure - an amendment of FASB Statement 123*("SFAS 148").  SFAS 148 amends SFAS No.123,
*Accounting for Stock-Based Compensation*, ("SFAS 123"), to provide alternative transition methods for an
entity's voluntary change in their accounting for stock-based compensation from the intrinsic value method
prescribed by Accounting Principles Board Opinion No. 25, *Accounting for Stock Issued to Employees*, ("APB
No. 25") and related interpretations to the fair value method under SFAS 123.  In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123 to require disclosure of the pro forma effects of using
the fair value method of accounting for stock-based compensation in interim as well as annual financial
statements.  The Company currently accounts for its stock-based compensation using the intrinsic value
method as prescribed by APB No. 25.  The disclosure provisions of SFAS No. 148 were adopted on December
31, 2002 and are discussed in Note 2.



**2.	Stock Options**



The Company president's compensation includes stock option grants.  Formerly, the president was granted
50,000 stock options per month.  Effective July 1, 2003, the number of stock options granted to the president
was reduced to 18,000 per month.  The Company also grants 10,000 stock options per month to each of the
two directors of the Company, as compensation for services as directors.  All options are fully vested when
granted and expire in seven years.



The Company accounts for stock options granted to its directors and employees using the intrinsic value
method prescribed by APB No. 25 which requires compensation expense be recognized for stock options
when the quoted market price of the Company's common stock on the date of grant exceeds the option's
exercise price.  No compensation cost has been reflected in net income for the granting of director and
employee stock options as all options granted had an exercise price greater than the quoted market price of
the Company's common stock on the date the options were granted.



Had compensation cost for the Company's stock options been determined consistent with the SFAS 123 fair
value approach, the Company's net income and net income per common share for the three and nine-month
periods ended September 30, 2003 and 2002, on a pro forma basis, would have been as follows:



| | Three Months Ended

September 30, |  | Nine Months Ended

September 30,
| | --------------------------------- |  | --------------------------------

|                                                                            | 2003        |  | 2002        |  | 2003     |  | 2002    
|--------------------------------------------------------------------------- | ----------- |  | ----------- |  | -------- |  | --------
|                                                                            |             |  |             |  |          |  |         
|Net income: as reported                                                     | $	31,483    |  | $	40,894    |  | $	83,082 |  | $	81,126
|Add: Stock-based compensation
expense included in reported
net income       | -           |  | -           |  | -        |  | -       
|Deduct: Stock-based
compensation expense
determined under fair value
method | (646)       |  | (965)       |  | (2,669)  |  | (2,895) 
|Net income: pro forma                                                       | $	30,837    |  | $	39,929    |  | $	80,413 |  | $	78,231
|                                                                            |             |  |             |  |          |  |         
|Net income per share:                                                       |             |  |             |  |          |  |         
|as reported - basic and diluted                                             | $         * |  | $         * |  | $	.01    |  | $	.01   
|Pro forma - basic and diluted                                               | $         * |  | $         * |  | $	.01    |  | $	.01   



*  Less than $.01 per share



The fair values of stock options granted during fiscal years 2003 and 2002 were estimated on the dates of
grant using the Black-Scholes option pricing model with the following weighted average assumptions:



|               |  | 2003    |  | 2002   
|-------------- |  | ------- |  | -------
|Volatility     |  | 50%     |  | 50%    
|Interest rate  |  | 3.75%   |  | 4.00%  
|Dividend yield |  | - %     |  | - %    
|Expected life  |  | 7 years |  | 7 years



**3.	Contingency**



The Company's former parent, Hudson's Grill of America, Inc. ("HGAI") was involved in litigation arising
from a lease associated with a franchised restaurant location that has ceased operations.  In addition, HGAI
is secondarily liable under other leases for restaurants it sold in prior years.  None of these restaurants, lease
agreements or obligations were transferred to or assumed by the Company.  The Company, based upon
consultation with its legal counsel, is of the opinion that the former parent's actual and contingent obligations
with respect to these leases will not ultimately be attributable to the Company, but that if a creditor obtained
a judgment against the former parent, stock in the Company formerly held by HGAI could be subject to
attachment or execution by the creditor under certain limited circumstances.  Accordingly, the Company
believes these matters will not have a material adverse effect on the Company's financial condition or results
of operations, and no provision for any estimated loss is reflected in the accompanying financial statements.

**4.	Earnings Per Share**



Basic earnings per share are calculated on the weighted average number of common shares outstanding during
each period.  No stock options exercisable at September 30, 2003 and 2002, had a dilutive effect on earnings
per share because the exercise price of the stock options was greater than the average share price of the
common shares and, therefore, the effect would have been anti-dilutive.





***************