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                                    FORM 10Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                   Quarterly Report Under Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934



For the Quarter ended          September 30, 1996                  
                       --------------------------------------------

Commission file number               0-2246                     
                       --------------------------------------------

                           VESTRO NATURAL FOODS INC.                  
    --------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


         Delaware                               11-1676942      
-------------------------------------  --------------------------------
(State or other jurisdiction of              (IRS Employer     
incorporation or organization)            Identification Number)


            1065 East Walnut Street, Carson, California 90746        
-------------------------------------------------------------------------
      (Address of principal executive offices)      (Zip code)


                                 (310) 886-8200        
                         -------------------------------
                         (Registrant's telephone number)

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

                            Yes   X        No       
                                -----          -----

As of October 25, 1996, 5,950,588 shares of the Registrant's Common Stock, 
par value $.01 were issued and outstanding.


                                  Page 1 of 11 

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                   VESTRO NATURAL FOODS INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEET

                                     ASSETS


                                              September 30,    December 31,
                                                  1996            1995    
                                              -------------   ------------
                                               (Unaudited)
Current assets:
    Cash and cash equivalents                 $     -         $   192,000
    Accounts receivable trade - net             2,649,000       2,084,000
    Inventories                                 3,440,000       2,910,000
    Prepaid expenses and other                    852,000         973,000
                                              -----------     -----------
                                                6,941,000       6,159,000
                                              -----------     -----------
Properties, at cost:
    Machinery and equipment                       632,000         566,000
    Leasehold improvements                         15,000          15,000
                                              -----------     -----------
                                                  647,000         581,000
    Less accumulated depreciation                 491,000         425,000
                                              -----------     -----------
                                                  156,000         156,000
Excess of cost over net assets of 
 businesses acquired - net                      6,748,000       6,907,000

Other assets                                      414,000         545,000
                                              -----------     -----------

        Total assets                          $14,259,000     $13,767,000
                                              -----------     -----------


        See accompanying notes to consolidated financial statements.


                                     2

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                   VESTRO NATURAL FOODS INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDERS' EQUITY



                                             September 30,    December 31,
                                                  1996            1995    
                                             -------------     ------------
                                              (Unaudited)
Current liabilities:
                    
    Accounts payable                          $ 2,001,000      $ 2,409,000
    Notes Payable-current portion               1,092,000          775,000
    Accrued liabilities                           834,000          507,000
                                              -----------      -----------
                                                3,927,000        3,691,000
Notes payable                                   2,127,000        2,765,000
                                              -----------      -----------
    Total liabilities                           6,054,000        6,456,000

Commitments and contingencies (Note 3)        

    Common stock, $.01 par value, 30,000,000 
     shares authorized: 5,950,588
     shares issued and outstanding                 60,000           60,000
    Additional paid-in capital                 16,758,000       16,758,000
    Accumulated deficit                        (8,613,000)      (9,507,000)
                                              -----------      -----------
                                                8,205,000        7,311,000 
                                              -----------      -----------
Total liabilities and shareholders' equity    $14,259,000      $13,767,000 
                                              -----------      -----------


        See accompanying notes to consolidated financial statements.


                                   3


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                   VESTRO NATURAL FOODS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)



                                                     Three Months Ended
                                                        September 30, 
                                              ------------------------------
                                                   1996             1995 
                                              -------------    -------------

Net sales                                     $  8,188,000     $ 7,066,000 
Cost of sales                                    5,036,000       4,421,000 
                                              ------------     ------------

Gross profit                                     3,152,000       2,645,000
Selling, general and          
      administrative expense                     2,703,000       2,429,000
                                              ------------     ------------
Operating income                                   449,000         216,000

Interest & other income (expense)                  (64,000)        (58,000)
                                              ------------     ------------

Net income before income taxes                     385,000         158,000

Income tax provision                                61,000               
                                              ------------     ------------

Net income                                    $    324,000     $   158,000

EARNINGS PER COMMON SHARE

Net income                                    $        .05     $       .03
                                              ------------     ------------


         See accompanying notes to consolidated financial statements.


                                    4


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                   VESTRO NATURAL FOODS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)


                                                     Nine Months Ended
                                                       September 30, 
                                              ------------------------------
                                                   1996             1995 
                                              -------------    -------------

Net sales                                      $25,378,000      $20,886,000
Cost of sales                                   15,728,000       13,342,000
                                              -------------    -------------

Gross profit                                     9,650,000        7,544,000
Selling, general and          
      administrative expense                     8,453,000        7,034,000
                                              -------------    -------------
Operating income                                 1,197,000          510,000

Interest & other income (expense)                 (198,000)         (99,000)
                                              -------------    -------------

Income before income taxes                         999,000          411,000

Income tax provision                               105,000            4,000
                                              -------------    -------------

Net Income                                     $   894,000      $   407,000

EARNINGS PER COMMON SHARE

Net income                                     $       .14      $       .07
                                              -------------    -------------


          See accompanying notes to consolidated financial statements.


                                     5


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                   VESTRO NATURAL FOODS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                (Unaudited)     


                                                     Nine Months Ended
                                                       September 30, 
                                              ------------------------------
                                                   1996             1995 
                                              -------------    -------------

Cash flows from operating activities:                         
     
  Net income                                   $   894,000      $   407,000
  Adjustments to reconcile net income               
     to net cash provided (used) by 
     operating activities:
  Depreciation and amortization                    225,000          216,000
    Provision for doubtful accounts                 11,000           27,000
  Change in assets and liabilities,
     net of effect of business acquisitions:
    (Increase) decrease in accounts receivable    (576,000)        (725,000)
    (Increase) decrease in inventories            (530,000)        (165,000)
    (Increase) decrease in prepaid               
     expenses and other                           (121,000)        (439,000)
    Increase (decrease) in accounts payable       (408,000)        (341,000)
    Increase (decrease) in other accrued 
     liabilities                                   327,000         (110,000)
                                              -------------    -------------
          Total adjustments                       (830,000)      (1,537,000)
                                              -------------    -------------

     Net cash provided (used) by
      operating activities                          64,000       (1,130,000)
                                              -------------    -------------

  Cash flows from investing activities:
  Expenditures for equipment                       (66,000)         (53,000)
  Deferred proceeds from sales of net assets            --           84,000
  (Increase) decrease in other assets              116,000           37,000
                                              -------------    -------------
     Net cash provided (used) by              
      investing activities                          50,000           68,000
                                              -------------    -------------
  
  Cash flows from financing activities:

  Payments on subordinated notes                  (506,000)        (412,000)
  Net borrowings (payments) on 
     line of credit                                200,000               --
                                              -------------    -------------
                                                                       
      Net cash provided (used) by 
       financing activities                       (306,000)        (412,000)
                                              -------------    -------------

  Increase (decrease) in cash                     (192,000)      (1,474,000)
  Cash and cash equivalents, beginning         
     of period                                     192,000        1,489,000 
                                              -------------    -------------
  Cash and cash equivalents, end of period     $         0       $   15,000 
                                              -------------    -------------



        See accompanying notes to consolidated financial statements.


                                   6

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                   VESTRO NATURAL FOODS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        CONSOLIDATED FINANCIAL STATEMENTS

The consolidated balance sheet as of September 30, 1996, and the consolidated 
statements of operations and cash flows for the three months and nine months 
ended September 30, 1996 and September 30, 1995 have been prepared by the 
Company without audit.  In the opinion of management, all adjustments 
necessary to present fairly the financial position, results of operations and 
changes in financial position at September 30, 1996 and for all periods 
presented have been made.  Such adjustments consisted only of normal 
recurring items.

Certain information and footnote disclosures normally included in annual 
financial statements have been condensed or omitted.  It is suggested that 
these consolidated financial statements be read in conjunction with the 
financial statements and notes thereto included in the Company's Annual 
Report on Form 10-K for the year ended December 31, 1995.  The results of 
operations for the periods ended September 30, 1996 and September 30, 1995 
are not necessarily indicative of the operating results for the full years.

NOTE 1.  PROVISION FOR INCOME TAXES

Effective January 1, 1993, the Company adopted SFAS No. 109 for accounting 
for income taxes.  The adoption of SFAS No. 109 did not have a material 
effect on the Company's net income for the three months and nine months ended 
September 30, 1996.

For Federal tax purposes, the Company has a tax basis net operating loss 
carryforward of $3,800,000 expiring through 2009.  During the three  months 
and nine months ended September 30, 1996, the income tax provision reflects 
the utilization of available operating loss carryforwards in lieu of income 
taxes that would have been incurred.  Utilization of the remaining 
carryforwards is dependent on future taxable income.  

NOTE 2.  EARNINGS (LOSS) PER SHARE

Earnings (loss) per share amounts are based on the weighted average number of 
shares outstanding - 

     For the three months ended September 30, 1995     6,129,823
     For the nine months ended September 30, 1995      6,070,528
     For the three months ended September 30, 1996     6,348,042
     For the nine months ended September 30, 1996      6,231,495
  
Assumed exercise of outstanding options have been considered in the 
computation of per share data to the extent they may cause dilution.


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NOTE 3.  CONTINGENCIES

Management has considered information furnished by legal counsel of the 
current status of all outstanding legal proceedings and the development of 
these matters to date.  Based upon this review, it is the opinion of 
management that adequate provision has been made for all reasonable estimable 
costs and that the ultimate aggregate liability, if any, should not 
materially affect the consolidated financial statements.

NOTE 4.  RECLASSIFICATIONS

Certain reclassifications have been made to the 1995 statements to conform to 
the 1996 presentation.   

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1996

Net sales for the quarter ended September 30, 1996 increased by 16% to 
$8,188,000 compared to $7,066,000 in the prior year's period.   Significant 
sales increases were experienced in the Company's non dairy beverages and 
canned products.  The introduction of canned organic vegetables (peas, green 
beans and corn) and the previously introduced non dairy beverages in half 
gallon sizes provided the major impetus to the increase.  A new full 
truckload promotion sparked the sale of canned products, and snack foods, led 
by Big Bag potato chips, produced an increase over the prior year.

Gross profit of the Company was $3,152,000 or 38.5% of sales for the quarter 
ended September 30, 1996 compared to $2,645,000 or 37.4% of sales in 1995.  
The gross margin increase of 1.1% was caused by a change in product mix 
during 1996 toward the Company's higher margin product categories.  In 
addition, several of the Company's new product offerings provide better 
margins than existing products.

Selling, general and administrative expenses were $2,703,000 or 33.0% of 
sales for the quarter ended September 30, 1996 compared to $2,429,000 or 
34.4% of sales in 1995.  The increase was due largely to programs with 
distributors and retailers to promote the Company's products at attractive 
retail prices.   The Company believes that these expenditures helped produce 
the sales increase which was experienced during this period.

The Company had net interest and other expense of $64,000 in the current 
quarter compared to expense of $58,000 in the prior year.  The Company 
recorded $61,000 of income tax expense, representing state income taxes and 
the Federal alternative minimum tax, in the quarter ended September 30, 1996. 


                                    8

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As a result of the above, the Company recorded net income of $324,000 or $.05 
per share for the quarter ended September 30, 1996, more than double the net 
income of the quarter ended September 30, 1995 of $158,000 or $.03 per share.

NINE MONTHS ENDED SEPTEMBER 30, 1996

Net sales for the nine months ended September 30, 1996 increased by 22% to 
$25,378,000 compared to $20,886,000 in the prior year's period.  Significant 
sales increases were experienced in the Company's major product categories 
with particularly strong increases in non dairy beverages, snack foods and 
canned products.  New product introductions- half gallon sizes of several of 
the Company's best selling non dairy beverages, Big Bag versions of three of 
the Company's best selling snack food products and canned organic vegetables 
(peas, green beans and corn)- accounted for a portion of the sales increase.  
A truckload promotion on the Company's canned products produced significant 
increases in that product category.

Gross profit of the Company was $9,650,000 or 38.0% of sales for the nine 
months ended September 30, 1996 compared to $7,544,000 or 36.1% of sales in 
1995.  The gross margin increase of 1.9% was caused by a positive change in 
product mix during 1996 toward the Company's higher margin product 
categories.  In addition, several of the Company's new product offerings 
provide better margins than previous products.

Selling, general and administrative expenses were $8,453,000 or 33.3% of 
sales for the nine months ended September 30, 1996 compared to $7,034,000 or 
33.7% of sales in 1995.  The increase was due largely to programs with 
distributors and retailers to promote the Company's products at attractive 
retail prices.  The Company believes these expenditures helped lead to the 
sales increase which was experienced.

The Company had net interest and other expense of $198,000 in the nine months 
ended September 30, 1996 compared to net interest and other expense of 
$99,000 in the prior year.  The Company recorded $105,000 of income tax 
expense, representing state income taxes and the Federal alternative minimum 
tax, in the quarter ended September 30, 1996.

As a result of the above, the Company recorded net income of $894,000 or $.14 
per share for the nine months ended September 30, 1996, more than double the 
net income of the nine months ended September 30, 1995 of $407,000 or $.07 
per share.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1996, the Company did not have a cash balance.  However, the 
Company has a line of credit with a bank to provide up to $4,000,000 of 
financing based upon certain percentages of the Company's accounts receivable 
and inventory.  At September 30, 1996, there was $300,000 outstanding under 
this line of credit and $2,600,000 of additional borrowing capacity.


                                    9

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The Company has outstanding $2,895,000 of Subordinated Notes.  The Subordinated
Notes call for monthly principal and interest payments.  During the next 12
months, through September 30, 1997, the Company is obligated to pay $792,000 of
principal and $203,000 of interest on these notes.  

The Company projects that cash flow from operations together with the 
availability under its credit line should be sufficient to support its 
operating needs for at least the current fiscal year.

                           Part II - OTHER INFORMATION


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

     a)   At the Annual Meeting of Shareholders held on June 20, 1996 the
          shareholders: 

          1)   Elected nine directors to serve until the next Annual Meeting -
               Robert J. Cresci, Allan Dalfen, Anthony Harnett, B. Allen Lay,
               Jay J. Miller, Stephen Monticelli, F. Noel Perry, Henry W. Poett
               III and Donald R. Stroben.

          2)   Voted to adopt the 1996 Incentive Stock Plan.

          3)   Ratified and approved the grant of non-qualified  options to
               purchase an aggregate of 160,000 shares of common Stock to non-
               employee directors.



                                     10

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                   VESTRO NATURAL FOODS INC. AND SUBSIDIARIES
                                    SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934 the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                    VESTRO NATURAL FOODS INC. 




Date: November 6, 1996               By: /s/ B. Allen Lay             
     --------------------                ---------------------------------
                                         B. Allen Lay
                                         President and Chief Executive 
                                         Officer




Date: November 6, 1996               By: /s/Stephen I. Schorr        
     --------------------                ---------------------------------
                                         Stephen I. Schorr
                                         Vice President, Finance




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