SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

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 outstanding as of June 30, 2005.

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.

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 financial condition of the Company 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 June 30, 2005, Compared to December 31, 2004**

The Company's cash balance at June 30, 2005 ("Q2") was $91,909, which is $37,459 less
than it was at December 31, 2004 ("FYE"), when it was $129,368.  This is primarily due to
a reduction in current liabilities of $63,904 made since FYE.  Accounts receivable
increased and other current assets remained roughly the same compared to FYE.  Net
property and equipment increased slightly from FYE as a result of the purchase of some
office equipment; long term note receivable decreased slightly as a result of payments
received since FYE in connection with the sale of a restaurant in 1995.  Thus, total assets
at Q2 decreased by $40,579 to $208,719 from $249,298 at FYE.

Current liabilities decreased significantly by $63,904 to $39,000 at Q2 from $102,904 at
FYE.   This reflects a significant decrease in loan payable and accounts payable to related
party.  These were completely paid off since FYE.  Deferred franchise fees decreased from
$70,000 at FYE to $25,000 at Q2.  This was a result of the opening (and recognition as
income) of two franchises (De Pere and Dubuque) and the deferral of fees paid by a new
franchise (Appleton) that did not open until July 5, 2005.  Deferred revenue decreased
slightly from $70,377 at FYE to $65,740 at Q2, 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 June 30, 2005, Compared to June 30, 2004**

Significant changes in the results of operations for the three months ended Q2 compared to
the second quarter of 2004 ("Q04") include the following: Revenue increased significantly
from $69,000 in Q04 to $128,072 in Q2.  This is mostly due to the recognition as income
of the franchise fee received from Dubuque, Iowa, which opened in Q2, and a new source
of income coming from De Pere, Wisconsin, which opened in the first quarter.  Actual
franchise fees received by the Company from franchises opened for more than one year
were about the same from Q04 to Q2.  Operating expenses increased dramatically by
$63,471 during Q2 to $114,466 from $50,995 during Q04, primarily as a result of higher
accounting and legal expenses as a result of compliance with the new Sarbanes Oxley Act
(involving additional preparation and review of the Company's accounting), higher
training due to the opening of Dubuque, Iowa, and higher consulting, reflecting fees to Mr.
Jim Stabile for work and fees related to supervising franchisees in the Midwest and fees
for signing new franchises. As a result, income from operations actually decreased $4,399
during Q2, when compared to Q04.  Other income increased slightly compared to Q04.
Consequently, net income decreased by $2,279 when compared to Q04.

If taking into consideration the expensing of options that will begin in 2006, the income in
Q2 would be $11,153 as compared to income in Q04 of $13,164, which would reflect a
slightly lower decrease in net income.  See footnote 2 to the financial statements for more
detail.

Income per common share (both basic and diluted) was $.00 per share for Q2 and Q04.
Income per common share if expensing options (both basic and diluted) would be $.00 for
Q2 and Q04.

**The Six Months Ended June 30, 2005, Compared to June 30, 2004**

Significant changes in the results of operations for the six months ended June 30, 2005
("YTD05"), compared to the same period in 2004 ("YTD04") include the following: There
was a significant increase of $99,495 in YTD05 revenue mostly attributable to the
recognition as income of franchise fees from De Pere and Dubuque ($70,000) and a new
source of royalty fees from these two new operations.  Correspondingly, YTD05 operating
expenses increased by $99,018 in YTD05 to $214,776, mainly as a result of an increase in
legal and accounting expenses due to higher costs of complying with the Sarbanes Oxley
Act, increased training costs associated with the opening of the two new franchises, and
consulting fees to Mr. Jim Stabile, who received fees for signing the two new franchises
and for overseeing the franchises located in the Upper Midwest.  As a result, income from
operations remained consistent year over year.  Other income decreased by $2,377 mostly
because settlement income, which ceased in YTD04, decreased by $3,000 when compared
to YTD04.  Thus, because of these decreases, net income decreased by $1,900 to $27,962
in YTD05.

If taking into consideration the expensing of options that will begin in 2006, the income in
YTD05 would be $16,516 as compared to income in YTD04 of $16,090, which would
reflect a slightly higher net income.  See footnote 2 to the financial statements for more
detail.

Income per common share (both basic and diluted) was $.00 per share for YTD05 and
YTD04.   Income per common share if expensing options (both basic and diluted) would
be $.00 for YTD05 and YTD04.

**Liquidity and Capital Resources**

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.

Beginning in the third quarter of 2005, the Company hopes to accumulate cash since it has
finished paying off all of its accounts payable to related parties in the second quarter of
2005, and since three new franchisees will be creating new royalty streams. The
Company's cash balance of $91,909 at June 30, 2005, was $37,459 less than at the year
ended December 31, 2004.

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.  Disclosures; Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

As of the end of the period, the Company carried out an evaluation, under the supervision
and with the participation of the Company's management, including the Company's
President, of the effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that
evaluation, the President concluded that the Company's disclosure controls and procedures
are effective in gathering, analyzing and disclosing information needed to satisfy the
Company's disclosure obligations under the Exchange Act.

(b) Changes in Internal Controls

There were no significant changes in the Company's internal controls or in other factors
that could significantly affect those controls during the quarter ended June 30, 2005.

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 June 30, 2005.

Item 3.  Defaults Upon Senior Securities.

The Company 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 the quarter ended
June 30, 2005, other than the annual voting for directors and the annual ratification of the
Company's auditors.

Item 5.  Other Information.

The Company 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.

(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 15, 2005
| | --------------------------------------------------------------------------------------------------------------------------------

| |                                  |                                                         | HUDSON'S
GRILL
INTERNATIONAL, INC.                     |  |               |  |              | 
| | -------------------------------- | ------------------------------------------------------- | ------------------------------------------------------ |  | ------------- |  | ------------ | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| |                                  |                                                         | BALANCE
SHEETS                                         |  |               |  |              | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| |                                  |                                                         | ASSETS                                                 |  |               |  |              | 
| |                                  |                                                         |                                                        |  | June 30,
2005 |  | Dec 31,
2004 | 
| |                                  |                                                         |                                                        |  | (Unaudited)   |  | (Audited)    | 
| | Current
assets:                  |                                                         |                                                        |  |               |  |              | 
| |                                  | Cash and
cash
equivalents                               |                                                        |  | $ 91,909      |  | $
129,368    | 
| |                                  | Accounts
receivable                                     |                                                        |  | 27,998        |  | 24,675       | 
| |                                  | Other
current
assets                                    |                                                        |  | 6,902         |  | 8,602        | 
| |                                  |                                                         | Total
current
assets                                   |  | 126,809       |  | 162,645      | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| | Property
and
equipment, at
cost: |                                                         |                                                        |  |               |  |              | 
| |                                  | Furniture
and
office
equipment                          |                                                        |  | 24,704        |  | 23,204       | 
| |                                  | Accumulated
depreciation                                |                                                        |  | (18,994)      |  | (17,834)     | 
| |                                  |                                                         | Property
and
equipment, net                            |  | 5,710         |  | 5,370        | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| | Long-term note
receivable        |                                                         |                                                        |  | 76,200        |  | 81,283       | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| |                                  |                                                         | TOTAL
ASSETS                                           |  | $
208,719     |  | $
249,298    | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| |                                  |                                                         | LIABILITIES AND STOCKHOLDERS' EQUITY                  
| | Current
liabilities:             |                                                         |                                                        |  |               |  |              | 
| |                                  | Loan
payable                                            |                                                        |  | -             |  | $ 11,000     | 
| |                                  | Accounts
payable
and
accrued
expenses                   |                                                        |  | 14,000        |  | 8,919        | 
| |                                  | Accounts
payable
to related
parties                     |                                                        |  | -             |  | 12,985       | 
| |                                  | Deferred
franchise
fees                                 |                                                        |  | 25,000        |  | 70,000       | 
| |                                  |                                                         | Total
current
liabilities                              |  | 39,000        |  | 102,904      | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| | Deferred
revenue                 |                                                         |                                                        |  | 65,740        |  | 70,377       | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| | Contingencies
(Note 3)           |                                                         |                                                        |  | -             |  | -            | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| | Stockholders'
equity:            |                                                         |                                                        |  |               |  |              | 
| |                                  | Common
stock,
Class A,
no par
value,
100,000,000
shares |                                                        |  |               |  |              | 
| |                                  |                                                         | authorized,
7,256,986 shares
issued
and
outstanding at |  |               |  |              | 
| |                                  |                                                         | June 30,
2005 and
December 31,
2004,
respectively      |  | 142,545       |  | 142,545      | 
| |                                  | Common
stock,
Class B,
no par
value,
15,000,000 shares  |                                                        |  |               |  |              | 
| |                                  |                                                         | authorized, no
shares
issued
and
outstanding           |  | -             |  | -            | 
| |                                  | Accumulated
deficit                                     |                                                        |  | (38,566)      |  | (66,528)     | 
| |                                  |                                                         | Total
stockholders'
equity                             |  | 103,979       |  | 76,017       | 
| |                                  |                                                         |                                                        |  |               |  |              | 
| |                                  |                                                         | TOTAL
LIABILITIES
AND
STOCKHOLDERS'
EQUITY             |  | $
208,719     |  | $
249,298    | 

| |                        |                               |                        | HUDSON'S
GRILL
INTERNATIONAL,
INC. |   |                      |   |             |  |   |                  |   |            
| | ---------------------- | ----------------------------- | ---------------------- | ---------------------------------- | - | -------------------- | - | ----------- |  | - | ---------------- | - | -----------
| |                        |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| |                        |                               |                        |                                    |   | STATEMENTS OF
INCOME |   |             |  |   |                  |   |            
| |                        |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| |                        |                               |                        |                                    |   | Three
Months
Ended   |   |             |  |   | Six
Months
Ended |   |            
| |                        |                               |                        |                                    |   | June
30,             |   | June
30,    |  |   | June
30,         |   | June
30,   
| |                        |                               |                        |                                    |   | 2005                 |   | 2004        |  |   | 2005             |   | 2004       
| |                        |                               |                        |                                    |   | (Unaudited)          |   | (Unaudited) |  |   | (Unaudited)      |   | (Unaudited)
| |                        |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| | Revenues               |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| |                        | Franchise
Fees                |                        |                                    | $ | 128,072              | $ | 69,000      |  | $ | 236,810          | $ | 137,315    
| |                        |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| | Operating
costs:       |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| |                        | General
and
administrative    |                        |                                    |   | 113,849              |   | 50,824      |  |   | 213,616          |   | 115,416    
| |                        | Depreciation
and
amortization |                        |                                    |   | 617                  |   | 171         |  |   | 1,160            |   | 342        
| |                        |                               | Total
operating
costs  |                                    |   | 114,466              |   | 50,995      |  |   | 214,776          |   | 115,758    
| |                        |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| |                        |                               | Income
from
operations |                                    |   | 13,606               |   | 18,005      |  |   | 22,034           |   | 21,557     
| |                        |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| | Other
income(expense): |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| |                        | Settlement
income             |                        |                                    |   | -                    |   | -           |  |   | -                |   | 3,000      
| |                        | Income
from
sale
of
assets    |                        |                                    |   | 2,449                |   | 1,569       |  |   | 3,458            |   | 3,892      
| |                        | Interest
income               |                        |                                    |   | 1,716                |   | 1,076       |  |   | 2,770            |   | 2,613      
| |                        | Interest
expense              |                        |                                    |   | -                    |   | (600)       |  |   | (300)            |   | (1,200)    
| |                        |                               | Total
other
income     |                                    |   | 4,165                |   | 2,045       |  |   | 5,928            |   | 8,305      
| |                        |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| | Net
income             |                               |                        |                                    | $ | 17,771               | $ | 20,050      |  | $ | 27,962           | $ | 29,862     
| |                        |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| | Net
income
per
share-  |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| |                        | basic
and
diluted             |                        |                                    | $ | -                    | $ | -           |  | $ | -                | $ | -          
| |                        |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| | Weighted
average       |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| |                        | outstanding
shares-           |                        |                                    |   |                      |   |             |  |   |                  |   |            
| |                        | basic                         |                        |                                    |   | 7,256,986            |   | 7,256,986   |  |   | 7,256,986        |   | 7,256,986  
| |                        |                               |                        |                                    |   |                      |   |             |  |   |                  |   |            
| |                        | diluted                       |                        |                                    |   | 8,434,525            |   | 7,256,986   |  |   | 8,344,609        |   | 7,256,986  

| |                                       |                                                 |                                             |                                              |                                       | HUDSON'S
GRILL
INTERNATIONAL,
INC.        |  |                  |  |  |            
| | ------------------------------------- | ----------------------------------------------- | ------------------------------------------- | -------------------------------------------- | ------------------------------------- | ----------------------------------------- |  | ---------------- |  |  | -----------
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| |                                       |                                                 |                                             |                                              |                                       | STATEMENTS
OF
CASH
FLOWS                  |  |                  |  |  |            
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| |                                       |                                                 |                                             |                                              |                                       |                                           |  | Six
Months
Ended |  |  |            
| |                                       |                                                 |                                             |                                              |                                       |                                           |  | June
30,         |  |  | June
30,   
| |                                       |                                                 |                                             |                                              |                                       |                                           |  | 2005             |  |  | 2004       
| |                                       |                                                 |                                             |                                              |                                       |                                           |  | (Unaudited)      |  |  | (Unaudited)
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| | Cash
Flows
From
Operating
Activities: |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| |                                       | Net
Income                                      |                                             |                                              |                                       |                                           |  | $
27,962         |  |  | $
29,862   
| |                                       | Adjustments
to
reconcile net
income to
net
cash |                                             |                                              |                                       |                                           |  |                  |  |  |            
| |                                       |                                                 | provided by
(used
in)
operating
activities: |                                              |                                       |                                           |  |                  |  |  |            
| |                                       |                                                 |                                             | Depreciation
and
amortization                |                                       |                                           |  | 1,160            |  |  | 342        
| |                                       |                                                 |                                             | Amortization
of
deferred
revenue             |                                       |                                           |  | (4,637)          |  |  | (7,286)    
| |                                       |                                                 |                                             | Changes in
operating
assets
and
liabilities: |                                       |                                           |  |                  |  |  |            
| |                                       |                                                 |                                             |                                              | Accounts
receivable
and
other
assets  |                                           |  | (1,623)          |  |  | (3,810)    
| |                                       |                                                 |                                             |                                              | Accounts
payable and
accrued
expenses |                                           |  | 5,081            |  |  | (5,183)    
| |                                       |                                                 |                                             |                                              | Accounts
payable to
related
parties   |                                           |  | (12,985)         |  |  | (15,000)   
| |                                       |                                                 |                                             |                                              | Deferred
franchise
fees               |                                           |  | (45,000)         |  |  | 35,000     
| |                                       |                                                 |                                             |                                              |                                       | Net
cash
provided by                      |  |                  |  |  |            
| |                                       |                                                 |                                             |                                              |                                       | (used
in)
operating
activities            |  | (30,042)         |  |  | 33,925     
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| | Cash
Flows
From
Investing
Activities: |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| |                                       | Repayment
of
note
receivable                    |                                             |                                              |                                       |                                           |  | 5,083            |  |  | 5,720      
| |                                       | Purchase of
property and
equipment              |                                             |                                              |                                       |                                           |  | (1,500)          |  |  | (2,198)    
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| |                                       |                                                 |                                             |                                              |                                       | Net
cash
provided by
investing
activities |  | 3,583            |  |  | 3,522      
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| | Cash
Flows
From
Financing
Activities: |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| |                                       | Repayment
of line
of
credit
and
loan
payable    |                                             |                                              |                                       |                                           |  | (11,000)         |  |  | (12,000)   
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| |                                       |                                                 |                                             |                                              |                                       | Net
cash
used
in
financing
activities     |  | (11,000)         |  |  | (12,000)   
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| | Net
Increase
(Decrease) In
Cash       |                                                 |                                             |                                              |                                       |                                           |  | (37,459)         |  |  | 25,447     
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| | Cash,
beginning of
period             |                                                 |                                             |                                              |                                       |                                           |  | 129,368          |  |  | 90,671     
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| | Cash,
end of
period                   |                                                 |                                             |                                              |                                       |                                           |  | $
91,909         |  |  | $
116,118  
| |                                       |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| | Supplemental
Disclosures:             |                                                 |                                             |                                              |                                       |                                           |  |                  |  |  |            
| |                                       | Income taxes
paid                               |                                             |                                              |                                       |                                           |  | $ 0              |  |  | $ 0        
| |                                       | Interest paid                                   |                                             |                                              |                                       |                                           |  | $ 0              |  |  | $ 0        

**1. UNAUDITED INFORMATION**

The balance sheet of Hudson's Grill International, Inc. (the "Company") as of June 30, 2005 and
the statements of income for the three and six month periods ended June 30, 2005 and 2004, 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, 2005, and the results of operations for
the three months and six months ended June 30, 2005 and 2004.

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 financial
statements as filed on Form 10-KSB for the year ended December 31, 2004.

Please note that income from the sale of assets, included in other income on the statement of
income, reflects the gain from discontinued operations since the gain was related to the sale of an
entity whose operations and cash flows have been eliminated from the Company's operations as a
result of a prior disposal transaction.  Thus, this income should not be reported with income from
operations.  Earnings per share, both basic and diluted for all periods presented, is the same for
both continuing and discontinued operations, but management does not believe separate
discontinued operations presentation is necessary as such amounts are not significant.

As noted in the Company's financial statements as filed on Form 10-KSB, one the Company's
directors owns two franchises that do 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 two franchises owned by the director.

**2. STOCK OPTIONS**

The Company president's compensation includes the granting of stock options.  Currently, the
president is granted 18,000 stock options 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 directors and employees using the
intrinsic value method prescribed by Accounting Principles Board Opinion No. 25,
*Accounting for Stock Issued to Employees*, ("APB No. 25") and related interpretations.
APB No. 25 requires compensation expense be recognized for grants of stock options
when the quoted market price of the Company's common stock on the date the options
were granted exceeds an option's exercise price.  The Company did not grant any stock
options with an exercise price that was less than the fair market value of the stock at the
date of grant during the periods ended June 30, 2005 and 2004.  Accordingly, no
compensation cost has been recognized for its employee stock options in the
accompanying financial statements.  The Company has adopted the disclosure provisions
of Statement of Financial Accounting Standard ("SFAS") No. 123, *Accounting for Stock-Based Compensation*, ("SFAS 123") and SFAS No. 148, *Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment of FASB Statement No. 123*which require the Company to provide pro forma information regarding net income and
net income per share as if compensation cost for the Company's stock options had been
determined under the fair value method prescribed by SFAS No. 123.

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 six month periods ended June 30, 2005 and 2004, on a pro forma
basis, would have been as follows:

| | THREE MONTHS
ENDED

June 30, |  | SIX MONTHS
ENDED

June 30,
| | ---------------------------- |  | --------------------------

|                                                                            | 2005         |  | 2004         |  | 2005         |  | 2004        
|--------------------------------------------------------------------------- | ------------ |  | ------------ |  | ------------ |  | ------------
|                                                                            |              |  |              |  |              |  |             
|Net
income: as
reported                                                     | $ 17,771     |  | $ 20,050     |  | $ 27,962     |  | $ 29,862    
|Add:
Stock-based
compensation
expense
included
in
reported
net
income       | -            |  | -            |  | -            |  | -           
|Deduct:
Stock-based
compensation
expense
determined under
fair value
method | (6,618)      |  | (6,886)      |  | (11,446)     |  | (13,772)    
|Net
income:                                                                 | $ 11,153     |  | $ 13,164     |  | $ 16,516     |  | $ 16,090    
|                                                                            |              |  |              |  |              |  |             
|Net
income
per share:                                                       |              |  |              |  |              |  |             
|as
reported -
basic and
diluted                                             | $         -  |  | $         -  |  | $         -  |  | $         - 
|Pro forma
- basic
and
diluted                                               | $          - |  | $          - |  | $          - |  | $          -

The fair values of stock options granted during 2005 and 2004 were estimated on the dates of grant
using the Black-Scholes option pricing model with the following weighted average assumptions:

|                              |  | 2005    |  | 2004   
|----------------------------- |  | ------- |  | -------
|Volatility                    |  | 158%    |  | 200%   
|Interest rate (at
Period End) |  | 4.22%   |  | 4.62%  
|Dividend yield                |  | - %     |  | - %    
|Expected life                 |  | 7 years |  | 7 years

**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. SUBSEQUENT EVENTS**

On July 5, 2005, Vissions, Inc., a company owned by Jim and Lisa Stabile, opened a new
Hudson's Grill restaurant.  The new restaurant is located at 1950 North Casaloma Drive, Appleton,
Wisconsin.

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