UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549

                                 Form 10-QSB


        [X]   Quarterly report pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

               for the quarterly period ended July 31, 2004.

        [ ]   Transition report pursuant to Section 13 or 15(d) of the
                       Securities Exchange Act of 1934.

                       Commission File Number: 0-16787


                         YOCREAM INTERNATIONAL, INC.
                     (Exact name of small business issuer
                         as specified in its charter)

           Oregon                                          91-0989395
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                        Identification Number)

                            5858 N.E. 87th Avenue
                           Portland, Oregon  97220
                   (Address of principal executive office)

        (Issuers telephone number, including area code): (503)256-3754


Indicate by check mark whether the issuer (1) has filed all reports required 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 _____


The number of shares outstanding of the issuers common stock, as of the latest
practicable date is:

                     Class:  Common stock outstanding at
                      September 14, 2004:  2,277,956 shares

Transitional Small Business Disclosure Format:  YES _____   NO X












                         YOCREAM INTERNATIONAL, INC.

                                   CONTENTS


                                                                    Page
<TABLE>
<CAPTION>
PART I   FINANCIAL INFORMATION:
<S>                                                                 <C>
Item 1.  Financial Statements                                       3-9

            Balance Sheets as of July 31, 2004,                     3
            (unaudited) and October 31, 2003

            Statements of Income for the                            4
            Three Months ended July 31, 2004 and 2003,
            and Nine Months ended July 31, 2004 and 2003
            (all unaudited)

            Statements of Cash Flows for the                        5
            Nine Months ended July 31, 2004 and 2003
            (all unaudited)

            Notes to Financial Statements                           6-9

Item 2.  Managements Discussion and Analysis of                     10-15
         Financial Condition and Results of
         Operations

Item 3.  Controls and Procedures                                    15-16

<CAPTION>
PART II  OTHER INFORMATION
<S>                                                                 <C>
Item 1.  Legal Proceedings                                          16

Item 2.  Changes in Securities and Small Business Issuer            16
         Purchases of Equity Securities

Item 3.  Defaults upon Senior Securities                            16

Item 4.  Submission of Matters to a Vote of                         16
         Security Holders

Item 5.  Other Information                                          16

Item 6.  Exhibits and Reports on Form 8-K                           16-17

SIGNATURES                                                          17
</TABLE>










PART 1.   FINANCIAL INFORMATION
Item 1.   Financial Statements

                         YOCREAM INTERNATIONAL, INC.
                                BALANCE SHEETS
<TABLE>
<CAPTION>                                     July 31,         October 31,
                                                2004              2003
                                             (Unaudited)
                                            -----------        -----------
                   ASSETS
<S>                                         <C>                <C>
Current assets
    Cash and cash equivalents               $ 2,621,687        $ 2,644,436
    Accounts receivable, net                  1,224,433            934,259
    Inventories                               2,076,440          1,846,989
    Other current assets                        268,130            247,012
    Income taxes receivable                     303,447            378,269
    Deferred tax asset                          186,037             74,250
                                            -----------        -----------
       Total current assets                   6,680,174          6,125,215

Fixed assets, net                             6,368,153          6,241,922
Intangible and other long-term assets, net      432,451            499,970
                                            -----------        -----------
                                            $13,480,778        $12,867,107
                                            ===========        ===========
<CAPTION>
            LIABILITIES AND SHAREHOLDERS EQUITY
<S>                                         <C>                <C>
Current liabilities
    Current portion of long-term debt       $   384,000        $   336,333
    Accounts payable                          1,064,426          1,144,045
    Other accrued liabilities                    84,632            140,146
                                            -----------        -----------
       Total current liabilities              1,533,058          1,620,524

Long-term debt, less current portion          2,392,293          2,279,667
Deferred tax liability                        1,019,700            795,451
Other liabilities                                41,018             25,826
                                            -----------        -----------
       Total liabilities                      4,986,069          4,721,468
                                            -----------        -----------
Shareholders equity
Preferred stock, no par value,
  5,000,000 authorized; none issued			      -	             -
Common stock, no par value,
  30,000,000 shares authorized;
  2,277,956 shares issued and
  outstanding                                 4,733,281          4,733,281
 Retained earnings                            3,761,428          3,412,358
                                            -----------        -----------
       Total shareholders equity              8,494,709          8,145,639
                                            -----------        -----------
                                            $13,480,778        $12,867,107
                                            ===========        ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.






                         YOCREAM INTERNATIONAL, INC.
                             STATEMENTS OF INCOME
                                 (Unaudited)
<TABLE>
<CAPTION>

                               Three months ended        Nine months ended
                                    July 31,                 July 31,
                           ------------------------  -------------------------
                                2004         2003         2004        2003
                           -----------  -----------  ------------  ------------
<S>                        <C>          <C>          <C>           <C>
Sales                      $5,906,991   $6,635,915   $14,212,727   $15,500,197

Cost of sales	            4,439,177    4,649,178    10,423,754
11,155,046
                           -----------  -----------  ------------  ------------
   Gross profit             1,467,814    1,986,737     3,788,973     4,345,151

Selling and marketing
     Expenses                 660,356      630,665     1,694,619     1,659,598
General and administrative
     Expenses                 517,360      653,410     1,506,861     1,728,696
                           -----------  -----------  ------------  ------------
   Income from operations     290,098      702,662       587,493       956,857

Other income (expenses)
     Interest income            1,191        1,386         4,397         4,976
     Other income              13,000            -        13,000             -
     Interest expense	      (21,438)     (10,087)      (66,820)      (29,292)
     Unusual expense	            -     (157,163)            -      (157,163)
                           -----------  -----------  ------------  ------------
     Other, net                (7,247)    (165,864)      (49,423)     (181,479)
                           -----------  -----------  ------------  ------------
Income before taxes           282,851      536,798       538,070       775,378

Income tax provision           93,500      200,800       189,000       290,000
                           -----------  -----------  ------------  ------------
Net income                 $  189,351   $  335,998   $   349,070   $   485,378
                           ===========  ===========  ============  ============

Earnings per common share:

      Basic                      $.08         $.15          $.15          $.22
                                 ====         ====          ====          ====
      Diluted                    $.08         $.15          $.15          $.21
                                 ====         ====          ====          ====
</TABLE>







The accompanying notes are an integral part of the financial statements.






                         YOCREAM INTERNATIONAL, INC.
                          STATEMENTS OF CASH FLOWS

               For the nine months ended July 31, 2004 and 2003
                                 (Unaudited)
<TABLE>
<CAPTION>
                                                        2004          2003
                                                   -----------   -----------
<S>                                                <C>           <C>
Cash flows from operating activities:
   Net income                                      $  349,070    $  485,378
   Adjustments to reconcile net
   income to net cash provided by
   operating activities:
      Depreciation and amortization                   443,778       381,624
      Deferred income taxes                           112,462       289,919
      Change in assets and liabilities
         Accounts receivable                         (290,174)     (483,142)
         Inventories                                 (229,451)      571,598
         Other assets                                  46,401      (173,275)
         Accounts payable                             223,911       580,687
         Income taxes receivable                       74,822      (138,765)
         Other accrued liabilities                    (40,322)          877
                                                   -----------   -----------
             Net cash provided by
                operating activities                  690,497     1,514,901
                                                   -----------   -----------
Cash flows from investing activities:
   Expenditures for fixed assets                     (825,576)     (789,904)
                                                   -----------   -----------
             Net cash used in investing
                Activities                           (825,576)     (789,904)
                                                   -----------   -----------
Cash flows from financing activities:
   Proceeds from issuance of long-term debt           394,886       168,500
   Proceeds from exercise of stock options    	            -        40,100
   Principal payments on long-term debt              (282,556)     (246,872)
             Net cash provided by (used in)
                financing activities                  112,330       (38,272)
                                                   -----------   -----------
             Net increase(decrease) in cash
                and cash equivalents                  (22,749)      686,725
                                                   -----------   -----------
Cash and cash equivalents, beginning of period      2,644,436     1,528,818
                                                   -----------   -----------
Cash and cash equivalents, end of period           $2,621,687    $2,215,543
                                                   ===========   ===========
</TABLE>





The accompanying notes are an integral part of the financial statements.


                         YOCREAM INTERNATIONAL, INC.
                        NOTES TO FINANCIAL STATEMENTS


Note A - Basis of Presentation

The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, which
consist of normal recurring accruals, considered necessary for a fair
presentation have been included. Operating results for the quarter ended July
31, 2004 are not necessarily indicative of the results that may be expected for
the year ending October 31, 2004.  For further information, refer to the
financial statements and related footnotes included in the Companys annual
report on Form 10-K for the year ended October 31, 2003.


Note B - Inventories

Inventories consist of the following:
<TABLE>
<CAPTION>                                 July 31,         October 31,
                                            2004              2003
                                         ----------        ----------
<S>                                      <C>               <C>
Finished goods                           $1,492,306        $1,246,700
Raw materials                               405,112           368,441
Packaging materials and supplies            179,022           231,848
                                         ----------        ----------
                                         $2,076,440        $1,846,989
                                         ==========        ==========
</TABLE>
Note C - Current and Long-Term Debt

The Company has an uncollateralized bank line of credit, which permits
borrowings of up to $2,000,000.  The line bears interest at the banks
commercial lending rate.  The line is subject to renewal by July 2007.
There were no borrowings outstanding at July 31, 2004.  At October 31, 2003,
the Company borrowed $1,566,000 under the line of credit in anticipation of
completing the master finance lease facility, discussed below.

In December 2003, the Company finalized the terms of the master finance lease
facility, which refinanced the existing bank term loans of approximately
$992,000 and provided additional monies of up to approximately $2,675,000 to
fund food manufacturing equipment expenditures.  The facility, which reduced
the interest rate by 25 basis points beginning in July 2003 and extended the
maturity date on the existing term loans, provides for payments over seven
years with interest at 30-day LIBOR plus 175 basis points, with the option to
convert to a fixed rate by using an interest rate swap at the Companys
discretion. The facility is collateralized by the aseptic system project
assets, and by the other equipment and fixtures related to the existing term
loans.  In December 2003, $1,566,000 that had been borrowed under the line of
credit was transferred into the long-term facility and the Company borrowed an
additional $395,000, leaving a balance available to borrow of approximately
$714,000 under the terms of the master lease agreement.  In conjunction with
the payoff of the existing term loans, the lender agreed to release its blanket
security interest in the other equipment and fixtures owned by the Company.

The agreement provides for 84 monthly payments of $33,680 at the initial 30-day
LIBOR rate of 1.15% plus 175 basis points.  The actual monthly payment will
fluctuate with changes in the 30-day LIBOR rate.  The 30-day LIBOR rate at July
31, 2004 is 1.50%.

The line of credit and the master finance lease facility contain certain
financial covenants including covenants related to the ratio of senior
liabilities (as defined) to adjusted tangible capital, current ratio and
operating cash flow to fixed charges.  At July 31, 2004, the Company was in
compliance with all of these ratios and covenants.


Note D - Earnings Per Share

Earnings per share is calculated as follows for the three months ended
July 31, 2004 and 2003:
<TABLE>
<CAPTION>                           Three Months Ended July 31, 2004
                                 ----------------------------------------
                                 Net Earnings      Shares       Per-Share
                                 (Numerator)    (Denominator)     Amount
                                 ------------   -------------   ---------
<S>                                <C>            <C>            <C>
Basic earnings per share
   Net earnings                    $189,351       2,277,956      $   .08

   Effect of dilutive securities        -             7,072            -
                                   --------       ---------      -------
Diluted earnings per share         $189,351       2,285,028      $   .08

                                   ========       =========      =======
<CAPTION>
                                    Three Months Ended July 31, 2003
                                 ----------------------------------------
                                 Net Earnings      Shares       Per-Share
                                 (Numerator)    (Denominator)     Amount
                                 ------------   -------------   ---------
<S>                                <C>            <C>            <C>
Basic earnings per share

   Net earnings                    $335,998       2,257,511      $   .15

   Effect of dilutive securities       -             11,967           -
                                   --------       ---------      -------
Diluted earnings per share         $335,998       2,269,478      $   .15
                                   ========       =========      =======
</TABLE>

Earnings per share is calculated as follows for the nine months ended
July 31, 2004 and 2003:
<TABLE>
<CAPTION>	                        Nine Months Ended July 31, 2004
                                 ----------------------------------------
                                 Net Earnings       Shares      Per-Share
                                  (Numerator)    (Denominator)    Amount
                                 ------------   -------------   ---------
<S>                                <C>            <C>            <C>
Basic earnings per share

   Net earnings                    $349,070       2,277,956      $   .15

   Effect of dilutive securities          -          20,213            -
                                   --------       ---------      -------
Diluted earnings per share         $349,070       2,298,169      $   .15
                                   ========       =========      =======
<CAPTION>
	                              Nine Months Ended July 31, 2003
                                 ----------------------------------------
                                Net Earnings       Shares       Per-Share
                                 (Numerator)    (Denominator)     Amount
                                 ------------   -------------   ---------
<S>                                <C>            <C>            <C>
Basic earnings per share

   Net earnings                    $485,378       2,253,334      $   .22

   Effect of dilutive securities          -          25,016         (.01)
                                   --------       ---------      --------
Diluted earnings per share         $485,378       2,278,350      $   .21
                                   ========       =========      ========
</TABLE>

Note E - Supplemental Cash Flow Information

Supplemental cash flow information for the nine months ended July 31, is as
follows:
<TABLE>
<CAPTION>
                                                      2004         2003
                                                    --------     --------
<S>                                                 <C>          <C>
Cash paid during the period for income taxes        $  1,716     $138,846
Cash paid during the period for interest            $ 66,739     $ 30,005
Acquisition of capital assets with debt             $ 47,963            -
Payment of vendor payables used to acquire
   capital assets                                   $303,529            -
</TABLE>


Note F - Unusual Expenses

As disclosed in the Companys third quarter 2003 Form 10Q, the Company
received notification from its lead customer regarding a claim for
additional freight charge reimbursements for shipments that occurred
primarily in 2001 and 2002, with a portion in 2003.  The financial results
for the third quarter 2003 include a provision of approximately $182,000 for
these additional freight costs.  This matter has been fully resolved, with
the underlying circumstances remedied.

Note G - Stock Based Compensation Plans

The Company has stock-based employee compensation plans for which it has
adopted the disclosure only provisions of Financial Accounting Standard No.
123, Accounting for Stock-Based Compensation (SFAS 123).  It applies APB
Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for
its Plans.

Had the Company used the fair value methodology of SFAS 123 for determining
compensation expense, the Companys net income and net income per share for the
quarter and nine months ended July 31, would approximate the pro forma amounts
below:
<TABLE>

<CAPTION>

                             Three Months Ended     Nine Months Ended
                                  July 31,              July 31,
                           --------------------------------------------
                              2004        2003        2004        2003
                           --------    --------    --------    --------
<S>                        <C>         <C>         <C>         <C>
Net income, as reported    $189,351    $335,998    $349,070    $485,378

Deduct: stock based
   compensation expense
   determined under the
   fair value method,
   net of tax                     -      (8,150)    (19,770)   (54,615)
                           --------    ---------   ---------   --------
Net income proforma        $189,351    $327,848    $329,300    $430,763
                           ========    =========   =========   ========
Net income per share,
as reported
   Basic                       $.08        $.15        $.15        $.22
   Diluted                     $.08        $.15        $.15        $.21

Net income per share,
pro forma
   Basic                       $.08        $.15        $.14        $.19
   Diluted                     $.08        $.14        $.14        $.19

Number of options which
became exercisable                -       5,000      16,668      41,666

Weighted average
assumptions:
   Risk-free interest rate        -       3.19%       3.24%       3.09%
   Expected dividend yield        -         0           0           0
   Expected lives (years)         -         5           5           5
   Expected volatility            -       35.8%       42.4%       41.7%
</TABLE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The following discussion includes forward-looking statements within the meaning
of the safe-harbor provisions of the Private Securities Litigation Reform Act
of 1995.  Such forward-looking statements are based on the beliefs of the
Companys management and on assumptions made by and information currently
available to management.  All statements other than statements of historical
fact, regarding the Companys financial position, business strategy and plans
and objectives of management for future operations of the Company are forward-
looking statements.  When used herein, the words anticipate, believe,
estimate, expect, and intend and words or phrases of similar meaning, as
they relate to the Company or management, are intended to identify forward-
looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. Forward-
looking statements are subject to certain risks and uncertainties, which could
cause actual results to differ materially from those, indicated by the forward-
looking statements.  These risks and uncertainties include the Companys
ability to maintain or expand its distribution abilities, including the risk of
disruptions in the transportation system and relationships with brokers and
distributors. Further, actual results may be affected by the Companys ability
to compete on price and other factors with other manufacturers and distributors
of frozen dessert products; customer acceptance of new products; general trends
in the food business as they relate to customer preferences for the Companys
products; and the Companys ability to obtain raw materials and produce
finished products in a timely manner, as well as its ability to develop and
maintain its co-packing relationships and strategic alliances. In addition,
there are risks inherent in dependence on key customers, the loss of which
could materially adversely affect the Companys operations. The reader is
advised that this list of risks is not exhaustive and should not be construed
as any prediction by the Company as to which risks would cause actual results
to differ materially from those indicated by the forward-looking statements.

Results of Operations

The primary business of the Company is the manufacture, marketing and sales of
superior quality frozen yogurt, frozen custard, sorbet, cultured soy, smoothie,
coffee latte and ice cream products in a variety of premium, low-fat, nonfat
and low-carb flavors in either non-organic or organic formulations.  The
Company also copacks similar products for other companies.  Because of the
nature of these products, sales are subject to seasonal fluctuations, with the
summer months normally being the busiest season.  The introduction and roll out
of new products has tended to level the seasonal fluctuations.

Sales

The Companys sales decreased 11.0% for the third quarter, and 8.3% for the
nine months ended July 31, 2004, compared to the corresponding periods in 2003.
The sales levels in the third quarter and nine months of 2004 were primarily
effected by three events that took place in the prior year.  These included
the Companys lead customer switching from the Companys premixed coffee latte
freeze to a competitors coffee concentrate product, a regional chain of
specialty restaurants suspending purchases of a proprietary gourmet ice cream,
and a copacking customer acquiring its own production facility.  Were it not
for the loss of this business, the Company would have reported an increase in
sales of approximately 5.2% from its other products. See below for a further
explanation.  The breakdown of sales by product for nine months ended July 31,
2004 and 2003 are as follows:
<TABLE>
<CAPTION>

                              %                     %        Total         %
Category           2004     Total       2003      Total      Change      Change
-----------   -----------   -----   -----------   -----   ------------   ------
<S>           <C>           <C>     <C>           <C>     <C>          <C>
Yogurt        $ 8,106,000   57.1%   $ 7,792,000   50.3%   $    314,000    4.0%

Smoothies       5,325,000   37.5%     5,238,000   33.8%         87,000    1.7%

Aseptic
Coffee
Concentrate       275,000    1.9%             -       -        275,000  100.0%

Coffee
Latte
Freeze                  -       -     1,371,000   8.8%      (1,371,000)(100.0)%

Custard,
Ice Cream
and Soy           488,000    3.4%       942,000   6.1%        (454,000) (48.2)%

Copacking          19,000     .1%       157,000   1.0%        (138,000) (87.9)%
              -----------   -----   -----------   -----   ------------- -------
Total         $14,213,000    100%   $15,500,000   100%     $(1,287,000)  (8.3)%
              ===========   =====   ===========   =====   ============= =======
</TABLE>

Frozen Yogurt:	Sales of frozen yogurt increased due to growth in club store,
military and healthcare business.

In October 2003, Premier Inc., a leading healthcare alliance, awarded the
Company a 36-month Committed Agreement to supply Dannon(registered trademark)
YoCream(registered trademark) Frozen Yogurt to Premier healthcare members.
Since the introduction to members began at shows in October, the Company has
opened twenty-five new national points of distribution to facilitate Premier
sales.  The Companys sales plans for this account anticipate securing the
business of additional members as well as building volume at the points of
distribution.  The Dannon YoCream alliance was instrumental in introducing the
Company to this account.

Since becoming an approved supplier for the Amerinet manufacturer allowance
program in December 2003, the Company has been introducing its products to
Amerinet distributors.  Amerinet is a health care group purchasing
organization in the United States with more than 1,800 hospitals and other
health care member facilities.  The 24-month agreement covers all YoCream
products and certain other private label frozen dessert products that the
Company manufactures.

At selected food shows in the spring of 2004, the Company introduced the first
two flavors of its Dannon(registered trademark) YoCream(registered trademark)
Low-Carb Premium Soft Serve Frozen Yogurt line.  Initial sales began in the
second quarter and are expanding through specialty distributors.  The Companys
product has net carbohydrate counts of 3 to 4 grams depending on flavor.
Management believes it is the only nationally branded low-carb soft serve that
includes live active yogurt cultures to promote a healthy digestive system.
Superior taste and very pleasing product texture set Dannon(registered
trademark) YoCream(registered trademark) Low-Carb Frozen Yogurt apart from
competitive products. Sweetened with Splenda brand sucralose, this product
meets the dietary guidelines for low-carb as well as diabetic consumers. The
low carbohydrate product category is one of the quickest emerging and fastest
growing in recent times. This single food category has had an unprecedented
impact in the marketplace. As this trend takes shape, the Company sees the
opportunity for growth in the healthier options category and will position
its product as no-sugar-added to appeal to a broader consumer base.

Smoothies:	Sales of coffee latte freeze smoothies decreased as a result of
the Companys lead customer switching from the Companys premixed product to a
competitors coffee concentrate product in the fourth quarter of 2003.  The
Company has subsequently completed its shelf stable aseptic packaging line,
and reformulated its coffee latte product into an aseptically packaged coffee
concentrate, which does not require refrigerated storage.  Since then, the
Company has reacquired a portion of the coffee concentrate business from its
lead customer.  The Company plans to introduce its own shelf stable
YoCaffe(registered trademark) Latte Coffee Concentrate to the general
marketplace by the first quarter of 2005.

The Company is extending its smoothie product line to include a shelf stable
bag-in-the box product, packaged on the Companys new aseptic packaging line.
In the fourth quarter of 2004, the Company will introduce Fruitquake(registered
trademark) aseptic, shelf stable, dispenser smoothies. Packed in half gallon to
three gallon bags, this smoothie line extension meets the needs of operators
that have limited refrigeration or, as in military, geographic locations
without refrigeration.  As with the Companys existing frozen smoothie line,
the addition of water or ingredients at the operators location is not
required, promoting a consistent product and reduced labor for the customer.
The smoothie mobile meal solution is targeted at students and military
personnel.  The Company has developed a concentrated fruit smoothie line for
those customers desiring to mix the product with water at their dispensing
location.  This line extension is being selectively introduced to key accounts
for test market and is scheduled for release in the second quarter of 2005.

Custard, Ice Cream and Soy:	Gourmet softened ice cream decreased when
compared to the same period in the prior year primarily due to a major
regional chain of specialty restaurants suspending purchases in June 2003 of
this proprietary ice cream formulation due to pricing concerns.  The Company
has formulated new products to meet the customers needs and has received a
contract to re-engage sales in Oregon, Idaho and California.  In the second
quarter of 2004, a Nebraska based chain of 64 restaurants that had been
purchasing the Companys soft serve frozen custard changed to the Companys
reduced fat ice cream product with a lower price.  This customer has recently
elected not to renew the contract in favor of local supply effective December
31, 2004.  The Companys Lite ice cream is currently being tested in a large
chain account.

This category also includes sales of soft serve soy cultured dessert.  Late in
fiscal 2003, the Company introduced a lactose free, dairy free and dairy
protein free cultured soy product targeted at the vegetarian/vegan consumer.
Sales have been slow to respond given the narrow market and education required
for this new product category.  The Company has repositioned its marketing
strategy for 2004 to target a broader market now including the health-conscious
and lactose intolerant consumer and specifically healthcare facilities and
universities.  A line extension of single serve 4 oz cups of this product is
being introduced to address the needs of operators that do not have the volume
or space to support soft serve equipment.

Copacking:	The Company is promoting its copacking capabilities, and the
flexibility of its manufacturing facilities.  The Companys manufacturing plant
has three distinct packaging operations that can be operated simultaneously
based on demand.  The first line fills half-gallon gable top containers for
soft serve mixes or liquid products.  The second line is capable of packaging
hard packed frozen desserts with or without inclusions in quarts, pints and 4
ounce cups.  Within these two operations are a multitude of packaging sizes,
styles, and finished casing capabilities. The third line is a new aseptic
packaging line completed in October of 2003.  The Companys new aseptic
processing system, costing over $2 million, expands the production
capabilities, and enables the Company to produce shelf stable products that
do not require refrigeration for shipping or storage.  The system will
initially be used to satisfy customer demands for shelf stable fruit and
coffee smoothie products in half-gallon, one-gallon, and three-gallon bags.
The line will also be available for copacking juices, fruits, purees, and
other beverages in sizes ranging from half-gallon to five-gallon bags.

The decrease in copacking revenue for the current fiscal year occurred as a
result of a large copacking customer acquiring its own production facility.
The Company is presently developing new proprietary products at the request of
significant potential customers that could result in new, high volume accounts
for the next fiscal year.

Gross Profit

The Companys gross profit margin decreased from 29.9% to 24.8% for the third
quarter and from 28.0% to 26.7% for the nine months in 2004.

The decrease in gross margin was primarily due to the lower sales level
compared to the prior year along with, increased costs associated with the
conversion of sales from a fresh smoothie to an aseptic shelf-stable
smoothie.  Gross margins have also been reduced due to higher dairy and
other ingredient costs along with current fuel surcharges for both incoming
and outgoing freight.  The Company has also expanded its research and
development activities, which have impacted margins.  Management expects
that margins will increase in the future as a result of additional sales
volumes, price improvements and stabilization of ingredient costs.

Selling and Marketing Expenses

Selling and marketing expenses increased, as a percentage of sales, from 9.5%
to 11.2% for the third quarter, and increased from 10.7% to 11.9% for the nine
months in 2004.  The increase in selling and marketing expenses, as a percent-
tage of sales, was in part due to the decrease in sales, and partially due to
increases in travel and promotional expenses incurred in implementing the
Companys marketing and sales plan to expand its sales volume with the new
products described above.  Management believes the investment of Company
resources in this marketing and sales plan are necessary if the Company is to
capitalize on the potential opportunities for growth.

General and Administrative Expenses

General and administrative expenses decreased, as a percentage of sales, from
9.8% to 8.8% of sales for the quarter, and decreased from 11.2% to 10.6% for
the nine months in 2004.  General and administrative expenses have decreased in
total primarily due to reductions in professional fees and personnel related
expenses.

Income from Operations

Income from operations for the third quarter of 2004 was $290,100, which
represented 4.9% of sales, compared to 10.6% for the corresponding quarter
last year.  The results for the nine months of 2004 were $587,500, which
represented 4.1% of sales, while last year it represented 6.2% of sales.
See above for the explanation of operating results.

Interest Expense

Interest expense increased in the third quarter and nine months of 2004 as a
result of the investment in the aseptic shelf stable packaging line, the
financing for which was arranged at the end of the previous fiscal year, as
described in Note C to the Financial Statements.

Unusual Expense

The Company incurred no unusual expenses in the nine months ended July 31,
2004.  The unusual expense in the third quarter of 2003 was a one-time charge
resulting from the settlement of a freight charge claim from the Companys
lead customer for shipments in 2001 and 2002.  See Note F to the Financial
Statements for a further description of this unusual expense.  The parties
have resolved the underlying circumstances related to the freight issue and
Management does not expect a re-occurring charge in future periods.

Provision for Income Taxes

The effective tax rate was 33.1% and 35.1% for the third quarter and nine
months ended July 31, 2004, respectively, compared with 37.4% for the third
quarter and year-to-date period in 2003.  The effective tax rates in 2004 are
approximately the same as the rates for the full fiscal year 2003.

Net Income

Net income was approximately $189,400 for the third quarter of 2004, or 3.2% of
sales, compared to $336,000, or 5.1% for the corresponding quarter last year.
The net income for the nine months of 2004 was $349,100, or 2.5% of sales,
compared to $485,400, or 3.1% for the same period last year.

Liquidity and Capital Resources.

In recent years, the Company has financed its operations and expansion from
bank loans, operating leases, capital leases, stock sales, and internally
generated funds.

Cash provided by operations was approximately $690,000 in the first nine
months of 2004, compared with cash provided by operations of approximately
$1,515,000 in the same period in 2003.  Changes in cash flow from the Companys
operating activities are commonly due to fluctuations in receivables, inventory
and payables.  In this case the reduction in operating cash flow is due to a
planned buildup in inventories in 2004, from a low point at year-end.  This was
a consequence of the expected demand for the Companys new aseptic smoothie.
In the prior year, the Company was in the process of reducing inventory levels
from a higher beginning level, which resulted in an increase in cash provided
by operations.  Management expects that the Company through the normal course
of operations will continue to generate positive annual cash flows.

Expenditures for plant and equipment of approximately $826,000 in the first
nine months of 2004 were greater than the $790,000 spent in the same period
last year.  A majority of the plant and equipment expenditures in 2004
relates to the aseptic packaging system project, which was placed in service
in October 2003.

At July 31, 2004, working capital was approximately $5,147,000, including
$2,622,000 of cash and cash equivalents.  Working capital increased approx-
imately $642,000 at July 31, 2004 compared to October 31, 2003 and the current
ratio increased to 4.4:1 at July 31, 2004, from 3.8:1 at October 31, 2003.

As of July 31, 2004, the Company had not borrowed on its $2 million bank line
of credit.  The line of credit remains in place and permits borrowings subject
to the Company being in compliance with certain ratios and negative covenants.
The Company is in compliance with requirements imposed under the bank financing
agreement.  Interest on the line of credit is at the banks basic commercial
lending rate.

During the first quarter of 2004 the Company finalized the terms of the
master finance lease facility, as described in Note C to the Financial
Statements.  Approximately $714,000 is available to borrow under the terms
of this financing agreement.

Management believes the Companys favorable cash and working capital position,
along with its unused borrowing capacity provide the Company the ability to
withstand possible, short term economic downturns and finance the continued
expansion of its business.

Management believes the Companys existing assets, bank lines, and revenues from
operations will be sufficient to fund the Companys operations for at least the
next twelve months.

New Accounting Pronouncements

There were no new accounting pronouncements applicable to the Company during
the nine months ended July 31, 2004.

Critical Accounting Policies and Estimates

The critical accounting policies and the use of estimates as reported in the
Companys Form 10-K for the year ended October 31, 2003 are reaffirmed.

Item 3. Controls and Procedures

     (a)  Disclosure Controls and Procedures

Under the supervision and with the participation of its Chief Executive Officer
and Chief Financial Officer, management has evaluated the effectiveness of the
Companys disclosure controls and procedures as of the end of the period
covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange
Act of 1934 (the Exchange Act). Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer have concluded that, as of the end of the
period covered by this report, the Companys disclosure controls and procedures
are effective in ensuring that information required to be disclosed in the
Companys Exchange Act reports is (1) recorded, processed, summarized and
reported in a timely manner, and (2) accumulated and communicated to the
Companys management, including its Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required
disclosure.

     (b)  Internal Control Over Financial Reporting

There has been no change in the Companys internal control over financial
reporting that occurred during the last fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Companys internal
control over financial reporting.


                         PART II.  OTHER INFORMATION


Item 1.   Legal Proceedings

     The Company is not involved in any material pending legal proceedings.


Item 2.   Changes in Securities and Small Business Issuer Purchases of
	Equity Securities

      The only repurchases of the Companys equity securities during the
      quarter ended July 31, 2004 were 1,000 shares purchased in May at
      a price of $4.70 per share for the Companys 401(k)Employee Savings
      Plan and Trust.


Item 3.   Defaults Upon Senior Securities

      None.


Item 4.   Submission of Matters to Vote of Security Holders

      None.


Item 5.   Other Information

	None


Item 6.  Exhibits and Reports on Form 8-K

      A.   Exhibits

           31.1  Certification of John N. Hanna pursuant to Section 302 of the
                 Sarbanes-Oxley Act of 2002

           31.2  Certification of W. Douglas Caudell pursuant to Section 302
                 of the Sarbanes-Oxley Act of 2002

           32.1  Certification of John N. Hanna pursuant to 18 U.S.C. Section
                 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
                 Act of 2002

           32.2  Certification of W. Douglas Caudell pursuant to 18 U.S.C.
                 Section 1350 as adopted pursuant to Section 906 of the
                 Sarbanes-Oxley Act of 2002

      B.   Reports on Form 8-K:

		A Form 8-K was filed on June 25, 2004, to report that the
		Company had issued a press release announcing its earnings for
		the second quarter of fiscal year 2004.


                                  SIGNATURES


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.

  Registrant:

                                            YOCREAM INTERNATIONAL, INC.

Date:     September 14, 2004                By:    /s/ John N. Hanna
                                            -------------------------
                                            John N. Hanna, Chairman of the
                                            Board, and Chief Executive
                                            Officer

Date:     September 14, 2004                By:   /s/ W. Douglas Caudell
                                            ----------------------------
                                            W. Douglas Caudell
                                            Chief Financial Officer