SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549

                                 Form 10-Q

(Mark One)
[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for  the Quarterly period ended July 31, 1998.

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


Commission File Number: 0-16787

                       INTERNATIONAL YOGURT COMPANY       
          (Exact name of registrant 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                            (Zip Code)
              Executive Office)

                                     (503) 256-3754
                (Registrant's telephone number, including area code.)


Indicate by check mark whether the registrant (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 registrant's common stock, as of the
latest practicable date is:

                 Class:  Common stock outstanding at 
                    July 31,     2,336,593 shares

<PAGE>
                       INTERNATIONAL YOGURT COMPANY

                                CONTENTS

                                                           
                                                                             
                                                              Page
PART I     FINANCIAL INFORMATION:

   Item 1.  Financial Statements                             3 - 7

      Balance Sheet as of July 31, 1998,                         3
      (unaudited) and October 31, 1997

      Statements of Earnings for the                             4
      Three Months ended July 31, 1998 and 1997
      Nine Months ended July 31, 1998 and 1997
      (all unaudited)

      Statements of Cash Flows for the                           5
      Nine Months ended July 31, 1998 and 1997
      (all unaudited)

      Notes to Financial Statements                          6 - 7

   Item 2.  Management's Discussion and Analysis of         8 - 10
                Financial Condition and Results of
                Operations


PART II   OTHER INFORMATION 

      Item 1.  Legal Proceedings                               10

      Item 2.  Changes in Securities                           10

      Item 3.  Defaults upon Senior Securities                 10

      Item 4.  Submission of Matters to a Vote of              10
               Security Holders

      Item 5.  Other Information                               10

      Item 6.  Exhibits and Reports on Form 8-K                10

SIGNATURES                                                     11

<PAGE>
PART 1.   FINANCIAL INFORMATION
Item 1.   Financial Statements

                         INTERNATIONAL YOGURT COMPANY
                                BALANCE SHEETS

                                            July 31,        October 31,
                                              1998              1997
               ASSETS                      (unaudited)
Current assets
   Cash and cash equivalents             $   274,543       $   414,194
   Accounts receivable, net                1,132,618           828,860
   Inventories                             2,006,086         1,808,201
   Equipment held for resale, net             23,083            23,083
   Other current assets                      294,340           306,269
      Total current assets                 3,730,670         3,380,607
Fixed assets, net                          2,030,475         1,918,956
Deferred tax asset                           409,000           284,000
Intangible and other long-term assets, net   246,538           227,030

                                          $6,416,683        $5,810,593

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
   Note payable to bank                   $1,158,800        $1,337,000
   Current portion of long-term debt          45,097            38,329
   Current obligations under capital lease    36,862            36,862
   Accounts payable                          849,193           928,942
   Other accrued liabilities                 158,499            60,567
      Total current liabilities            2,248,451         2,401,700

Long-term debt, less current portion         163,917           159,549
Long term obligations under
   capital lease, less current portion        37,136            63,426
      Total liabilities                    2,449,504         2,624,675

Shareholders' equity
   Common stock, no par value,
      30,000,000 shares authorized;
      2,336,593 shares issued              5,015,889         4,710,850
   Accumulated deficit                      (978,261)       (1,477,736)
   Less common stock in treasury,
      28,000 shares                          (70,449)          (47,196)
      Net shareholders' equity             3,967,179         3,185,918

                                          $6,416,683        $5,810,593

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

                         INTERNATIONAL YOGURT COMPANY
                            STATEMENTS OF EARNINGS
                                  (unaudited)

                           Three months ended         Nine months ended
                                 July 31,                  July 31,

                           1998         1997         1998          1997

Sales                   $3,245,886   $2,681,957    $7,078,116   $6,466,883

Cost of sales            2,328,030    1,841,221     4,865,701    4,374,370

Gross profit               917,856      840,736     2,212,415    2,092,513

Selling and marketing  
   expenses                334,102      360,561       899,982      920,445
General and administrative
   expenses                314,607      263,538       848,724      760,504
           
   Income from operations  269,147      216,637       463,709      411,564

Other income (expenses)
   Interest income           2,715        4,168        10,201       12,143
   Interest expense        (33,401)     (36,951)     (107,463)    (110,240)
   Other, net                   -        19,676         8,028       19,676

Income before taxes        238,461      203,530       374,475      333,143

Deferred benefit           (75,000)         -        (125,000)         -

Net income               $ 313,461    $ 203,530     $ 499,475     $333,143



Basic net income per share    $.13         $.09          $.22         $.15

Diluted net income per share  $.13         $.09          $.21         $.15
          


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







                                INTERNATIONAL YOGURT COMPANY
                                  STATEMENTS OF CASH FLOWS
                                        (Unaudited)

                        For the Nine months ended July 31, 1998 and 1997

                                                                             
                                                     1998           1997
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities:
Net income                                    $   499,475     $  333,143
Adjustments to reconcile net 
income to net cash provided
(used) by operating activities:
   Depreciation                                   182,950        213,945
   Gain on sale of assets                          (8,028)       (19,684) 
   Deferred income taxes                         (125,000)           -    
   Change in assets and liabilities
      Accounts receivable                        (303,758)      (270,815)
      Inventories                                (197,885)      (302,804)
      Other current assets                         11,929       (137,867)
      Other assets                                (19,508)       (12,292)
      Accounts payable                            (79,749)       (24,148)
      Other accrued liabilities                    97,932        (21,033)
      Net cash provided (used)
         by operating activities                   58,358       (241,555)

Cash flows from investing activities:
   Proceeds from sale of equipment                    -           29,000
   Expenditures for plant and equipment          (286,441)      (141,979)
      Net cash used in investing activities      (286,441)      (112,979)

Cash flows from financing activities:
   Net increase (decrease) in line of credit     (178,200)       337,000
   Proceeds from issuance of stock                305,039            -
   Proceeds from bank equipment financing          42,179         15,000
   Payments for treasury stock purchases          (23,253)       (22,000)
   Principal payments on long term debt
      and capital leases                          (57,333)       (93,239)
         Net cash provided by 
            financing activities                   88,432        236,761

         Net decrease in cash and equivalents    (139,651)      (117,773)

Cash and equivalents, beginning of period         414,194        511,787

Cash and equivalents, end of period            $  274,543     $  394,014

The accompanying notes are an integral part of the financial statement.      
                     INTERNATIONAL YOGURT COMPANY
                     NOTES TO FINANCIAL STATEMENTS
                             (Unaudited)



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-Q 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.  For further
information, refer to the financial statements, and footnotes thereto,
included in the Corporation's annual report on Form 10-K for the year ended
October 31, 1997.


Note B - Inventories

Inventories consist of the following:                                        
                                            July 31,         October  31,
                                              1998               1997

Finished goods                           $1,409,526           $1,451,729
Raw materials                               416,706              171,893
Packaging materials and supplies            179,854              184,579

                                         $2,006,086           $1,808,201


Note C - Earnings per share

Earnings per share are calculated as follows for the three months ended July
31, 1998 and 1997:

                                 Three Months Ended July 31, 1998
                              Net Income        Shares        Per-Share
                              (Numerator)    (Denominator)      Amount

Basic income per share:
     Net income                $313,461        2,332,594         $.13

Effect of dilutive securities        -            83,230           -

Diluted income per share       $313,461        2,415,82          $.13
                                       Three Months Ended July 31, 1997
                                  Net Income        Shares        Per-Share
                                  (Numerator)    (Denominator)      Amount

Basic income per share:
   Net income                       $203,530       2,229,793         $.09

Effect of dilutive securities            -            33,133            -  

Diluted income per share            $203,530       2,262,926         $.09


Earnings per share are calculated as follows for the nine months ended July 
31, 1998 and 1997:


                                       Nine Months Ended July 31, 1998
                                 Net Income        Shares        Per-Share
                                 (Numerator)    (Denominator)     Amount

Basic income per share:
   Net income                       $499,475       2,278,505         $.22

Effect of dilutive securities            -            52,301         (.01)

Diluted income per share            $499,475       2,330,806         $.21



                                       Nine Months Ended July 31, 1997
                                 Net Income        Shares        Per-Share
                                (Numerator)    (Denominator)      Amount

Basic income per share:
   Net income                       $333,143       2,231,231         $.15

Effect of dilutive securities            -            17,575            -  

Diluted income per share            $333,143       2,248,806         $.15


In the above calculations, dilutive securities consist of stock options at
prices ranging from $1.75 to $4.44, net of tax benefits.  During the nine
months ended July 31, 1998, options were exercised to purchase 106,800
shares.




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

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 Company's management and on assumptions made by and
information currently available to management.  All statements other than
statements of historical fact, regarding the Company's 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 Company's 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 Company's 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
Company's products; and the Company's 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 Company's 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.

The Company's sales increased 21% to $3,245,866 for the third quarter, and
increased 9.5% to $7,078,116 for the nine months ended July 31, 1998,
compared to the corresponding periods in 1997.  The increase in sales is
primarily due to the growing success of the Company's smoothie products.

The Company is a leading innovator of frozen dessert, snack and beverage
products.  The hottest category in foodservice today is smoothies.  In
response to this trend, the Company has developed two lines of superior
products that are adaptable to both blender or dispenser operation. For
dispenser machines, the Company has introduced the COMPLETE FRUIT SMOOTHIE.
This is a line of ready-to-serve products which are all natural, nonfat and
nondairy.  All that is required is to shake and pour into your choice of
smoothie machine.  The Company has also introduced YO CREAM the SMOOTHIE
WAY, which allows the operator to develop their own unique recipes utilizing
either YO CREAM nonfat frozen yogurt, Sorbet by YO CREAM , or YO CREAM PURE
base mixes.  The response to these products has been exceptional, and has
led to the Company developing innovative smoothie products for certain major
chains.

Costco, a long term customer of the Company's yogurt products, is continuing
to expand the number of its smoothie machines to facilitate the exceptional
customer demand for the unique smoothie that the Company developed for their
operations. In April 1998, the Company announced that it had developed an
innovative line of smoothies that Maui Tacos International, Inc., a majority
owned subsidiary of Blimpie International, Inc., will utilize for its
Smoothie Island concept. Other  chains serving the Company's new smoothies
include Burgerville USA, Coffee People, Cool Temptations, Taco Del Mar, and
Cinnamonster.  The Company is also in the process of working with other
chains and marketing companies to further expand the distribution of its
products.  

YOCREAM Smoothies were launched in the spring of 1998.  As expected, the
number of locations utilizing these products reached a level in the third
quarter, that resulted in a significant improvement in operating results. 
Retail servings, nationally, are already in excess of one million.  They are
currently being served at the rate of approximately one-half million per
month.  

The Company's gross profit margin decreased slightly for the third quarter
from 31.3% to 28.3%, and for the nine months from 32.4% to 31.3%.  The lower
margin in the third quarter is primarily due to higher warehouse and
distribution expenses associated with the higher sales volume, and higher
unabsorbed production overhead due to planned lower production levels to
reduce finished goods inventory levels.  Finished goods inventory at July
1998 is lower than in the prior year.  The lower margin for the nine months
is primarily due to higher warehouse and distribution expenses.

Selling and marketing expenses in the third quarter decreased from 13.4% to
10.3%, and for the nine months decreased from 14.2% to 12.7% of sales.  The
decrease in selling expenses is primarily is the result of reduced expenses
since the Company assumed full responsibility for the marketing and sales of
its products to the food service segment in the fourth quarter of last year. 
  

General and administrative expenses, as a percentage of sales, remained
relatively constant in the third quarter at approximately 9.7%, and 12% for
the nine months.  Such expenses increased in total over the corresponding
period in 1997 primarily due to increases in travel, rent, professional
fees, and payroll related expenses, including 401k contributions and stock
option expenses. 

Income from operations increased to 8.3% of sales for the quarter, and 6.6%
of sales for the nine months, primarily due to the higher sales volume and
reduced food service marketing expenses.

As the result of the continued improvement in operating results, the Company
has evaluated the future benefit of its net operating losses.  This resulted
in an increase in the carrying value of its net noncurrent deferred tax
asset by $75,000 in the third quarter and $125,000 for the nine months of
1998.  In the prior year the evaluation was reflected in the fourth quarter.

Liquidity and Capital Resources.

Historically, the Company has financed its operations and expansion from
bank loans, leases, capital investment by its founders, private and public
securities offerings, stock option proceeds, and internally generated funds.

For the nine months ended July 31, 1998, the Company received $305,039 from
the exercise of 106,800 in stock options.

As of July 31, 1998, the Company's total borrowings under its bank line of
credit were $1,158,800.  At July 31, 1998 the Company had cash funds
available aggregating $274,543 which were available to reduce bank
borrowings.  The current level of borrowings is lower than normal for the
season of the year due to the proceeds from the stock options mentioned
above, and the higher level of income from operations.  Borrowings at July
31, 1997 amounted to $1,276,000. Interest is at 1% over the bank's basic
commercial lending rate. Under the terms of the secured bank line of credit,
the Company may borrow up to the $1,700,000 limit subject to maintaining
certain ratio requirements.  The bank has also approved a $300,000 credit
facility for equipment financing.

Accounts receivable at July 31, 1998 were $1,132,618, compared to $1,019,498
at July 31, 1997, and $828,860 at October 31, 1997.  The increase in
receivables relates to the increase in sales.

Inventories at July 31, 1998 were $2,006,086, compared to $1,872,077 at July
31, 1997, and $1,808,201 at October 31, 1997.  The higher level of
inventories in 1998, compared to the same time last year, primarily relates
to an increase in raw materials inventory necessitated by the increase in
customer demand for new products.  

The Company believes its existing assets, bank lines, and revenues from
operations will be sufficient to fund the Company's operations for at least
the next twelve months.  

The Company has begun the process of making its assessment of its Year 2000
issues.  Management has determined that its accounting software is Year 2000
compliant, and the Company is currently in the process of making a planned
upgrade to its network operating system, and replacing certain computers. 
Arrangements are in process to work with a computer consultant to review all
of its hardware and systems.  Contact has also been made with certain
business partners, and in the next few months the Company  plans further
contact with customers and suppliers, and plans to evaluate risks, and
formulate contingency plans.  At this time, management is not aware of any
issues that would have a material impact on its financial statements.    

                    PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings

The Company is not involved in any material pending legal proceedings, other
than non-material legal proceedings occurring in the ordinary course of
business.


Item 2.   Changes in Securities

None.


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

       Exhibit 27 - Financial Data Schedule is filed herewith

B.   Reports on Form 8-K - not applicable              





                             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:

INTERNATIONAL YOGURT COMPANY



Date: September 14, 1998               By     /s/  John N. Hanna
                                       John N. Hanna, Chairman of the
                                       Board, and Chief Executive Officer


Date: September 14, 1998                By:  /s/ W. Douglas Caudell
                                        W. Douglas Caudell,
                                        Chief  Financial Officer