U.S. SECURITIES AND EXCHANGE COMMISSION
                     Washington, D. C. 20549
                                
                                
                                
                           FORM 10-QSB
(Mark One)

[x]  QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the period ended September 30,1998.

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE Act of 1934 for the transition period from ___ to ____.

Commission file number: 000-23319


                 AVANI INTERNATIONAL GROUP INC.
                 ------------------------------
         (Name of Small Business Issuer in its charter)

 Nevada                                         88-0367866
-------                                         ----------
(State of                                      (I.R.S. Employer
 Incorporation)                                 I.D. Number)

#328-17 Fawcett Road, Coquitlam, B.C. (Canada)           V3K 6V2
----------------------------------------------           -------
(Address of principal executive offices)              (Zip Code)

Issuer's telephone number 604-525-2386.
                          ------------
Securities registered under Section 12 (b) of the Act:

         Title of each class         Name of exchange on which
         to be registered            each class is to be registered

              None                              None

Securities registered under Section 12(g) of the Act:

                          Common Stock
                         -------------
                        (Title of Class)

Check whether issuer (1) filed all reports to be filed by Section
13  or  15(d) of the Exchange Act during the past 12  months  (or
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.
(1). Yes:    No:  X
(2). Yes: X  No:

The  number  of shares issued and outstanding of issuer's  common
stock, $.001 par value, as of September 30, 1998 was 11,608,257.

Transitional Small Business Issuer Format (Check One):
Yes:      No:  X



                              INDEX

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.                                  Page No.

       -Consolidated Condensed Balance Sheet as of                      
        September 30,1998 and December 31, 1997.                   3
       -Consolidated Condensed Statement of Operations for the
        Nine Months Ended September 30, 1998 and 1997.             4
       -Consolidated Condensed Statement of Stockholders
        Equity for the Nine Months Ended September 30, 1998
        and 1997.                                                  6
       -Consolidated Condensed Statement of Cash Flows
        for the Nine Months Ended September 30, 1998
        and 1997                                                   7
       -Notes to Financial Statements.                             8
Item 2. Management's Discussion and Analysis.                     10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.                                        11
Item 2. Changes in Securities.                                    12
Item 3. Defaults upon Senior Securities.                          12
Item 4. Submission of Matters to Vote of Securityholders.         12
Item 5. Other Information.                                        12
Item 6. Exhibits and Reports on Form 8-K.                         12
Signatures                                                        12
                  
                                    -2-


PART I - FINANCIAL STATEMENTS

Item 1. Financial Statements.


                 AVANI INTERNATIONAL GROUP INC.
                        AND SUBSIDIARIES
              CONSOLIDATED CONDENSED BALANCE SHEETS

                                               September    December
                                                    30,          31,
                                                    1998        1997
                                               ---------    --------
ASSETS                                        (Unaudited)  (Audited)
                                                                
CURRENT ASSETS                                                  
   Cash                                           $242,292  $  120,492
   Accounts receivable                             179,397      76,343
   Goods and services tax receivable                37,458      54,105
   Subscription receivable                               -     240,000
   Inventory                                        72,919     105,530
   Prepaid expenses                                 44,096      60,716
                                                ----------  ----------
                
TOTAL CURRENT ASSETS                               576,162     657,186
                                                                
PROPERTY, PLANT AND EQUIPMENT - Net              1,616,307   1,752,806
                                                ----------  ----------

OTHER ASSETS                                                    
  Security deposits                                 10,505       8,541
  Trademarks                                         5,216       4,244
  License                                           32,800       4,800
                                                 ---------  -----------
                                                    48,521      17,585
                                                                
TOTAL ASSETS                                    $2,240,990  $2,427,577
                                                ==========   =========

       LIABILITIES AND STOCKHOLDERS' EQUITY                            
                                                                
CURRENT LIABILITIES                                             
  Current portion of long-term debt                $25,958     $68,924
  Accounts payable and accruals                     37,752      54,794
  Wages and benefits payable                        13,278      16,086
  Unearned income                                   16,071      19,737
  Bottle and cooler deposits                        78,465      66,859
                                                   -------     -------
TOTAL CURRENT LIABILITIES                          171,524     226,400
                                                                
LONG-TERM DEBT - Net of current portion            392,432     440,669
                                                   -------     -------
              
TOTAL LIABILITIES                                  563,956     667,069
                                                   -------     -------
              
         STOCKHOLDERS' EQUITY                                            
                                                                
COMMON STOCK - $.001 par value, 25,000,000                      
shares authorized;                                  11,608      10,114
   11,608,257 and 10,113,600 shares issued and
outstanding

COMMON STOCK DISCOUNT                               (55,000)        -
                                                                
ADDITIONAL PAID-IN CAPITAL                        4,745,431  3,465,257
                                                                
COMMON STOCK SUBSCRIBED                                   -    240,000
                                                                
ACCUMULATED OTHER COMPREHENSIVE INCOME             (198,999)  (100,361)
                                                                
ACCUMULATED DEFICIT                              (2,826,006)(1,854,502)
                                                 ----------- ----------
                                                                
TOTAL STOCKHOLDERS' EQUITY                        1,677,034  1,760,508
                                                  ---------  ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $2,240,990 $2,427,577
                                                 ---------- ----------

The accompanying notes are an integral part of these consolidated
                      financial statements.
                               
 
                                     -4-
   
                 AVANI INTERNATIONAL GROUP INC.
                        AND SUBSIDIARIES
         CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                
                                 Three Months Ended       Nine Months Ended
                                      September 30,           September 30,
                                 -------------------------------------------
                                  1998      1997       1998       1997
                            ----------  ----------- ----------  -----------
                            (Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUE                                                             
  Bottled water and supply                                           
  sales                         $161,144   $89,700  $384,168  $352,628
  Cooler and equipment sales         419     2,553     9,686     9,465
  Cooler rentals                   9,718     7,665    29,039    17,875
                                   -----     -----    ------    ------         
                                 171,281    99,918   422,893   379,968
                               ---------   ------- ---------  --------
         
COST OF GOODS SOLD                                                  
  Cost of goods sold                                                  
  (excluding depreciation)       102,537    60,515   253,297   235,552
  Depreciation                    21,731    24,428    65,551    59,574
                               ---------   -------   -------   -------         
                                 124,268    84,943   318,848   295,126
                               ---------   -------   -------   -------
                                     
GROSS PROFIT                      47,013    14,975   104,045    84,842
                                  ------    ------   -------   -------

OPERATING EXPENSES                                                  
  General and administrative     185,454   252,881   670,771   593,101
  Marketing                       93,547   140,712   392,644   274,491
  Research and development             -     6,668         -     9,957
                                 -------   -------   -------   -------
                                 279,001   400,261 1,063,415   877,549
                                 -------   ------- ---------  --------
                                                                  
LOSS FROM OPERATIONS            (231,988) (385,286) (959,370) (792,707)
                                --------- -------- ---------- ---------

OTHER INCOME (EXPENSE)                                              
  Other                            1,435         -     4,224         -
  Interest income                  4,294     3,452    13,822    13,656
  Interest expense               (10,714)  (10,300)  (30,180)  (34,690)
                                ---------  --------  --------  --------
                                  (4,985)   (6,848)  (12,134)  (21,034)
                                                                    
NET LOSS                       $(236,973)$(392,134)$(971,504)$(813,741)
                                                                    
                                                                    
BASIC AND DILUTED LOSS PER                                          
   COMMON SHARE                                                     
                                 $(0.02)   $(0.04)   $(0.09)   $(0.08)
                                 ======    ======    ======    =======
                                                                    
WEIGHTED AVERAGE NUMBER                                             
   OF SHARES                  11,604,242 9,612,583 11,255,937 9,612,583
                              ========== ========= ========== =========

The accompanying notes are an integral part of these consolidated
                      financial statements.

                                    -5-

                        AVANI INTERNATIONAL GROUP INC.
                               AND SUBSIDIARIES
           CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
                     NINE MONTHS ENDED SEPTEMBER 30, 1998
                                  (UNAUDITED)
                                       
                                                                    
                                                          Accumulated
                                                             Other
               COMMON STOCK    Common Additional  Common    Compre-     
              ---------------   Stock   Paid-In    Stock    hensive Accumulated 
               Shares   Amount Discount Capital  Subscribed  Income  Deficit
              -------- ------- -------- -------  ---------- ------- -----------
                                                                    
BALANCE,                                                            
DECEMBER 
 31, 1997                     
(Audited)   10,113,600 $10,114 $    -  $3,465,257 $240,000$(100,361)$(1,854,502)

PURCHASE 
AND                                                        
RETIREMENT 
OF COMMON 
STOCK       (400,000)    (400)      -    (399,600)   -       -             -

ISSUANCE 
OF COMMON 
STOCK       1,654,657    1,654  (55,000) 1,618,003   -       -             -

CASH UNDER                                                          
SUBSCRIPTION                                  
AGREEMENT     240,000      240      -     239,760 (240,000)  -             -
                                                                               
OFFERING COSTS
FOR SHARES                                  
ISSUED              -       -       -    (177,989)   -       -             -

NET LOSS            -       -       -          -     -       -         (971,504)

OTHER 
COMPREHENSIVE 
INCOME              -       -       -          -     -     (98,638)         -
                ----- ------- -------  ---------   -----   -------- ------------
BALANCE, 
SEPTEMBER 30, 
  1998     11,608,257 $11,608 $(55,000) $4,745,431 $ -   $(198,999) $(2,826,006)
           ========== ======= ========= ========== ===== ========== ============


The accompanying notes are an integral part of these consolidated financial
statements.

                               -6-
                                       
                 AVANI INTERNATIONAL GROUP INC.
                        AND SUBSIDIARIES
         CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
    NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
                                
                                                     1998      1997
                                               (Unaudited) (Unaudited)
OPERATING ACTIVITIES                                               
Net loss                                         $(971,504) $(813,741)
Adjustments to reconcile net loss to net cash                      
used in operating activities
Issuance of common stock for professional fees      10,000        -
Depreciation                                        65,551    166,586
(Increase) decrease in assets                            -         
Accounts receivable                                (95,689)    24,347
Inventory                                           27,600    (54,930)
Prepaid expenses                                    15,492      4,434
Other assets                                        (2,349)        -
Increase (decrease) in liabilities                                 
Accounts payable                                   (17,525)   (52,573)
Unearned income and deposits                        13,057     42,546
                                                   --------   --------
Net cash used in operating activities             (955,367)  (683,331)
                                                  ---------   ---------       
INVESTING ACTIVITIES                                               
Acquisition of property, plant and equipment       (23,300)  (325,332)
Investment in trademarks and patents               (28,000)        -
                                                  --------   ---------        
Net cash used in investing activities              (51,300)  (325,332)
                                                  ---------  ---------         
FINANCING ACTIVITIES                                               
Proceeds from mortgages payable                          -    116,209
Payments of mortgages payable                      (65,088)   (62,691)
Issuance of common shares, net of offering costs 1,616,670    493,100
Purchase of common shares                         (400,000)  (301,000)
                                                 ----------  ---------         
Net cash provided by (used in) financing                           
activities                                       1,151,582    245,618
                                                 ----------  --------- 
                                                                   
EFFECT OF EXCHANGE RATES ON CASH                   (23,115)        85
                                                                   
NET INCREASE (DECREASE) IN CASH                    121,800   (762,960)
                                                                   
CASH - BEGINNING OF PERIOD                         120,492    898,581
                                                  ---------   ---------
               
CASH - END OF PERIOD                              $242,292   $135,621
                                                  ========   =========         

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                  
Cash paid for:                                                     
Interest                                           $30,180    $34,690
                                                   =======   ======== 

Income taxes                                       $-        $-
                                                   ========  ========

The accompanying notes are an integral part of these consolidated
                      financial statements.
                                
                               -7-
                                
                 AVANI INTERNATIONAL GROUP INC.
                        AND SUBSIDIARIES
      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                   SEPTEMBER 30, 1998 AND 1997

NOTE 1 - INTERIM PERIODS

The unaudited information  has been prepared on the  same basis  as the  
annual  financial  statements  and, in  the  opinion  of  the Company's   
management reflects  normal recurring adjustments necessary for a  fair 
presentation  of the information  for  the periods presented.

Certain  information  and  footnote  disclosures  normally  included in 
financial statements  prepared  in  accordance with  generally accepted   
accounting  principles have  been omitted.  These financial  statements  
should be  read in conjunction with the financial  statements and notes 
thereto  included in  the Company's Form  10-KSB  for  the  year  ended 
December 31, 1997.

Certain   reclassifications  have  been  made   to  the  1997 financial 
statements to conform to 1998 presentations.

The results of operations for the nine month periods ended September 30,  
1998 and 1997 are not necessarily  indicative  of operating  results for 
the full year.


NOTE 2 - BASIS OF PRESENTATION

The consolidated condensed financial statements include the accounts of  
Avani International Group, Inc. (the 'Company')  and its  wholly  owned  
subsidiaries.   All  material  intercompany  balances  and intercompany 
transactions have been eliminated.

NOTE 3 - COMPREHENSIVE INCOME

The Company adopted Statement of Financial Accounting Standards No. 130 
('SFAS'),  Comprehensive  Income for the first quarter  of fiscal  year  
1998.  Comprehensive income is  a  more  inclusive financial  reporting  
methodology that includes disclosure of certain  financial  information 
that historically has not been recognized  in  the  calculation of  net  
income.   Comprehensive income (loss), representing  foreign   currency   
translation adjustments for the nine months ended September 30,1998 and 
1997 was $98,638 and $(17,786).

                          -8-

NOTE 4 - MAJOR CUSTOMER AND SUPPLIER

The Company sells a substantial portion of its products to one customer.   
During the nine months ended September 30,1998  and 1997, sales to this 
customer aggregated $89,294 and $170,498.  At September  30,  1998  and 
1997, amounts  due  from  this  customer  included  in  trade  accounts 
receivable were $62,446 and $-0-.

During the nine months ended September 30, 1998 and  1997,  the Company 
purchased approximately 49% and 36% of its materials from one supplier.  
At September 30, 1998 and  1997 amounts due to that supplier were  $-0-  
and  $-0-.  If  the  supplier  ceased  doing business with the Company, 
management believes that other sources of materials are available.

                           -9-


                   PART II - OTHER INFORMATION
                                
Item 2. Management's Discussion and Analysis.
The following  discusses the financial  results and  position  of  the 
consolidated accounts of the Company and its wholly owned subsidiaries 
for the periods indicated.

Results of Operations

Revenues  for  the  three  and  nine  months  ended  September  30, were 
$171,281 and $422,893, respectively, compared  with $99,918 and $379,968 
for the same periods in  1997. The increase of 11.30% for the nine month 
period in 1998 was due to the increase in local sales of its five gallon  
and  PET bottles, and the commencement of shipments to  foreign  markets 
other  than Taiwan  which  occurred in September  1998. The increase was  
partially offset by a reduction in sales to the Company's major customer 
in Taiwan.   Revenues for  the  nine month  period  in 1998 consisted of 
$384,168 in water and supply sales  (an increase of  8.93% from $352,628  
for the prior period), $9,686 in cooler and equipment sales (an increase 
of 2.33% from $9,465 for the prior period) and $29,039 in cooler rentals  
(an  increase of 62.46% from $17,875 for the prior period). Of the total 
revenue for the nine  month period in  1998, $89,294 (or 23.24% of total 
water sales) represented  sales  to a Taiwan  distributor.  This  amount 
represents  a  decrease  of  47.63%  from   sales  of  $170,498  to  the 
distributor for the prior period.  Interest income  earned on investment  
of  cash totaled $13,822 for the nine month period in 1998  representing  
an  increase of 1.22% from $13,656  for  the prior period.  The decrease 
is a result of the reduction of  available cash.  

Cost  of  sales  for  the three and nine month  periods  in 1998 totaled  
$124,268 and $318,848, respectively, compared with $84,943  and $295,126 
for the same periods in 1997.  The increase of  8.04% for the nine month 
period and the increase for the three  month  period in 1998 is a result 
of an increase of sales for  the period. Cost of goods sold for the nine  
month period as a percentage of sales  decreased by 2.27% from 77.67% to
75.40%  due  to the lower  cost  of  sales  associated with  its  gallon 
bottles.  Cost of sales for the nine month period  in  1998 consisted of 
$253,297  in  bottled water, supplies, coolers and related equipment (an 
increase of 7.53% from  $235,552  for the  prior  period) and $65,551 in 
depreciation (an increase  of 10.03% from $59,574 for the prior period). 
Gross profit for the three and nine month periods  in  1998  was $47,013  
and  $104,045, respectively,  compared  with $14,975 and $84,842 for the
same periods in 1997. The increase  for the nine  month  period  in 1998 
was due to  the higher  margins associated  with its five gallon bottles 
contrasted with lower margins for overseas sales of PET bottles.

General  and  administrative  expenses   which  includes  administrative
salaries and overhead  for  the  three and  nine  month periods in  1998  
totaled $185,454 and $670,771, respectively, compared with  $252,881 and 
$593,101 for the same periods  in  1997.  The increase of 13.10% for the 
nine month period  is  due  to principally  increased professional fees, 
printing and general office expense. Marketing expenses totaled $392,644  
for the  nine  month period in 1998  representing an  increase of 43.04% 
from $274,491  for the  prior period. The increase in marketing expenses 
is  due   principally  to  one  time  costs  related  to  the  Company's 
sponsorship of the Los Angeles Marathon and the Vancouver Marathon,  and   
certain television advertising. Interest expense in connection with  the 
Company's  real estate totaled $30,180 for the nine month period in 1998 
representing a decrease of 13% from $34,690  for  the prior  period. Net 
loss for the  three  and nine  month periods in 1998  was  $236,973  and  
$971,504, respectively, compared with  a  loss  of $392,134 and $813,741 
for the prior periods. 
                            -10-

Liquidity and Capital Resources

Since its inception  through  December 31, 1997, the  Company has raised 
approximately $4,300,000 from the private placement of its  common stock 
(net of offering costs). The Company has used these proceeds to fund the 
construction of  its  manufacturing facilities  and  its working capital 
requirements.  Through  the third  quarter  of  1998, the Company raised  
$1,616,670   in additional  proceeds  (net of offering costs)  from  the  
private placement  of  its common stock. In addition, during  the  first
quarter of 1998, the  Company repurchased 400,000 shares of common stock 
at $1.00 per share from certain shareholders.

As  of September 30, 1998, the Company has working capital in the amount  
of  $404,638.  The  Company  is  uncertain as  to  when it  will achieve  
profitable operations. Until such time, the Company intends  to  finance 
its ongoing  operations through  the  private placement  of  its capital 
stock or through debt financing.  The Company has no commitments for any 
such financing. No assurances can  be  given  that  the  Company will be  
successful  in  these endeavors. If the Company is unsuccessful in these 
endeavors, such  event  will  have  a  material  adverse  impact  on the 
company.  

Property, plant and equipment, net of accumulated  depreciation, totaled  
$1,616,307 on September 30,1998.  Property, plant and equipment,  net of 
accumulated depreciation,  totaled $1,752,806  on  December 31, 1997. In 
connection  with its  real estate  properties, as of September 30, 1998,  
the  Company  has  balloon mortgage payments  in the aggregate amount of 
$392,432. 

Forward Looking Statements.  Certain of the statements contained in this 
Quarterly Report  on Form  10-QSB includes  "forward looking statements"  
within  the meaning of Section 21E  of  the  Securities  Exchange Act of 
1934, as amended ("Exchange Act").  See  the Company's  Annual Report on 
Form 10-KSB for additional  statements concerning  operations and future 
capital requirements.

                    Part II OTHER INFORMATION
Item 1. Legal Proceedings.
None

                             -11-

Item 2. Changes in Securities.
None

Item 3. Defaults upon Senior Securities.
None

Item 4. Submission of Matters to a Vote of securityholders.
None

Item 5. Other Information.
None

Item 6. EXHIBITS.
(a). Furnish the Exhibits required by Item 601 of Regulation S-B.

Exhibit 27.1 - Financial Data Schedule

(b) Reports on Form 8-K.
None.

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




                               AVANI INTERNATIONAL GROUP, INC.




Date: December 21, 1998        /s/ Peter Khean
                               Peter Khean
                               Chairman and President



                               /s/ Nico Huang
                               Nico Huang
                               Chief Financial Officer and Treasurer

                              -12-

                          SCHEDULE 27.1
                     FINANCIAL DATA SCHEDULE
                                

ART.5 FDS FOR 3rd QUARTER 10-Q

Multiplier  1,000


PERIOD TYPE                                   9 MONTHS
FISCAL YEAR END                               DEC-31-1998
PERIOD END                                    SEP-30-1998
CASH                                          242
SECURITIES                                    0
RECEIVABLES                                   179
ALLOWANCES                                    0
INVENTORY                                     73
CURRENT-ASSETS                                576
PP&E                                          1,682
DEPRECIATION                                  66
TOTAL ASSETS                                  2,241
CURRENT-LIABILITIES                           172
BONDS                                         0
COMMON                                        12
PREFERRED-MANDATORY                           0
PREFERRED                                     0
OTHER-SE                                      1,665
TOTAL-LIABILITIES-AND-EQUITY                  2,241
SALES                                         423
TOTAL-REVENUES                                423
CGS                                           319
TOTAL-COST                                    1,382
OTHER-EXPENSES                                (17)
LOSS-PROVISION                                0
INTEREST-EXPENSE                              30
INCOME-PRETAX                                 (972)
INCOME-TAX                                    0
INCOME-CONTINUING                             (972)
DISCONTINUED                                  0
EXTRAORDINARY                                 0
CHANGES                                       0
NET-INCOME                                    (972)
EPS-PRIMARY                                   (.09)
EPS-DILUTED                                   (.09)

                             -13-