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, 2004

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 September 30, 2004.

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 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 September 30, 2004, Compared to December 31, 2003**

The Company's cash at September 30, 2004 ("Q3") was $121,827, which is $31,156
more than it was at December 31, 2003 ("FYE"), when it was $90,671.This primarily
reflects the receipt of the fee for a new franchise in Iowa ($35,000), which is slightly offset
by the continued reduction of accounts payable to related parties.Due to the increase in cash
and the slight increase in accounts receivable, the current assets at Q3 increased $34,333 to
$152,463 from $118,130 at FYE.  Net property and equipment increased slightly from FYE
as a result of software purchases; long term receivable decreased $8,049 as a result of
payments received since FYE in connection with the sale of a restaurant in 1995.  Thus, total
assets at Q3 increased by $27,968 to $239,105 from $211,137 at FYE.

Current liabilities decreased slightly by $3,630 to $82,111 at Q3 from $85,741 at
FYE.   This reflects the booking of the $35,000 franchise fee received from the Company's
new Iowa franchisee as unearned deferred income (which will not be recognized as income
until the franchisee opens its restaurant and the Company has fulfilled its obligations under
the franchise agreement); the increase in deferred income was offset by a reduction in the
Company's loan payable and accounts payable to related parties of $38,630.  The reduction
in accounts payable to related parties is primarily a result of the profits it has made during
the period.   Deferred revenue decreased slightly from $92,841 at FYE to $82,274 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, 2004, Compared to September 30, 2003**

Significant changes in the results of operations for the three months ended Q3
compared to the third quarter of 2003 ("Q03") include the following: Revenue decreased
slightly from $74,068 in Q03 to $70,625 in Q3.  Actual franchise fees received by the
Company decreased slightly, as well, from Q03 to Q3.  Fee revenue decreased at Ventura,
California, because it was closed down; it also decreased at Marshfield, Wisconsin, because
of slightly decreased sales combined with a reduction in the royalty percentage charged to
the franchisee.  Revenues also decreased at San Luis Obispo, reflecting the impact of local
construction and the franchisee's failure to pay his royalty fees.  These decreases were mostly
offset by increased franchise fees from Jackson, Michigan, as a result of increased sales, and
the combined effects of the other locations.  Operating expenses increased by $5,579 during
Q3 to $60,945 from $55,366 during Q03, 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 travel (for trips to the Midwest
to visit with prospective and current franchisees), and higher penalties and taxes.   These
were somewhat offset by a reduction in miscellaneous expenses of $5,283.   As a result,
income from operations decreased $9,022 during Q3, when compared to Q03.  Other income
decreased $10,158 compared to Q03, mainly as a result of the Company no longer receiving
settlement payments.   Consequently, net income decreased by $19,180 when compared to
Q03.

Income per common share (both basic and diluted) was $.00 per share for Q3 and
Q03.

**The Nine Months Ended September 30, 2004, Compared to September 30, 2003**

Significant changes in the results of operations for the nine months ended September
30, 2004 ("YTD04"), compared to the same period in 2003 ("YTD03") include the
following: There was a decrease of $7,181 in YTD04 revenue mostly attributable to a
decrease in franchise fees from Ventura (which closed), San Luis Obispo (which quit paying
when construction began nearby), and Marshfield (which negotiated a lower fee rate and had
lower sales).  YTD04 operating expenses increased by $10,310 in YTD04 to $176,703,
mainly as a result of an increase in salaries that began in September 2003, and legal and
accounting expenses due to higher costs of complying with the Sarbanes Oxley Act.  As a
result, income from operations decreased by $17,491 to $31,237 in YTD04.  Other income
decreased by $23,426 because settlement income decreased by $23,499 when compared to
YTD03.  Thus, because of these decreases, net income in YTD04 decreased by $40,917 to
$42,165 in YTD04.

Income per common share (both basic and diluted) was $.01 per share for YTD04 and
was $.01 per share for YTD03.

**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.

The Company is currently allocating a major part of its cash flow to pay off accounts
payable to related parties; it plans to continue to do so until all of its past due debts are paid
off.  This may take more than a year to accomplish. The Company's cash balance of
$121,827 at September 30, 2004, was $31,156 more than at the year ended December 31,
2003.

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 September 30,
2004.

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, 2004.

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 September 30, 2004.

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 and Reports on Form 8-K.

(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   

(b)  Reports on Form 8-K.

None were filed during the quarter ended September 30, 2004.

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:     November 15, 2004
| | ----------------------------------------------------------------------------------------------------------------------------------

|Hudson's Grill International, Inc.
|----------------------------------
|Balance Sheets                    
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|Hudson's Grill International, Inc.
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|Statements of Income              
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|Hudson's Grill International, Inc.
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|Statements of Cash Flows          
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**1.	UNAUDITED INFORMATION**



The balance sheet of Hudson's Grill International, Inc. (the "Company") as of September 30,
2004 and the statements of income for the three and nine-month periods ended September 30,
2004 and 2003 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 September 30, 2004
and the results of operations for the three and nine months ended September 30, 2004 and 2003.



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,
2003.

**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 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, 2004 and 2003, on a pro forma basis,
would have been as follows:



| | THREE MONTHS ENDED

September 30, |  | NINE MONTHS ENDED

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

|                                                                            | 2004         |  | 2003         |  | 2004           |  | 2003    
|--------------------------------------------------------------------------- | ------------ |  | ------------ |  | -------------- |  | --------
|                                                                            |              |  |              |  |                |  |         
|Net income: as reported                                                     | $	12,303     |  | $	31,483     |  | $	42,165       |  | $	83,082
|Add: Stock-based compensation
expense included in reported
net income       | -            |  | -            |  | -              |  | -       
|Deduct: Stock-based
compensation expense
determined under fair value
method | (3,382)      |  | (646)        |  | (18,236)       |  | (2,669) 
|Net income: pro forma                                                       | $	8,921      |  | $	30,837     |  | $	23,929       |  | $	80,413
|                                                                            |              |  |              |  |                |  |         
|Net income per share:                                                       |              |  |              |  |                |  |         
|as reported - basic and diluted                                             | $        	-  |  | $        	-  |  | $         	.01 |  | $	.01   
|Pro forma - basic and diluted                                               | $         	- |  | $         	- |  | $         	-   |  | $	.01   





The fair values of stock options granted during fiscal years 2004 and 2003 were estimated on
the dates of grant using the Black-Scholes option pricing model with the following weighted
average assumptions:



|               |  | 2004    |  | 2003   
|-------------- |  | ------- |  | -------
|Volatility     |  | 190%    |  | 50%    
|Interest rate  |  | 4.12%   |  | 3.75%  
|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
can no longer be attributable to the Company because of the statute of limitations, but if counsel
is wrong in its assessment and 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.  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.



For the three month period ended September 30, 2004 and 2003, the Company had 2,596,000
and 3,704,000 stock options, respectively, that were not included in the dilutive earnings per
share calculation because the effect would have been anti-dilutive.  Such stock options were
excluded because the exercise price of the stock options was greater than the average market
price of the Company's common stock in the applicable period.

**5.	SUBSEQUENT EVENTS**



On October 20, 2004, the Company reported the signing of a new franchisee in Wisconsin.  The
franchisee paid a non-refundable deposit of $35,000, the recognition of which as income will
be deferred until the Company has fulfilled its obligations under the franchise agreement to help
open the new restaurant.  The Company anticipates that the new franchisee will be open for
business sometime in the first quarter of 2005.

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