U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549
                                    Form 10-KSB

[X]     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 
                          OF 1934 (FEE REQUIRED)

For the fiscal year ended                     May 28, 1998                   
                                                                 OR
[ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
                       ACT OF 1934 (NO FEE REQUIRED)

For the transition period from                     to                      

Commission file number                           0-1744                     

                         Ambassador Food Services Corporation              
                        (Name of small business issuer in its charter)

Delaware                                           44-0656199           
(State or other jurisdiction of     (I.R.S. Employer Identification No.)
 incorporation or organization)

3269 Roanoke Road, Kansas City, Missouri                             64111
(Address of principal executive offices)                          (Zip Code)

Issuer's telephone number:   816  561-6474       
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock (Par Value $1)
                                (Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by 
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for 
such shorter period that the Registrant was required to file such 
reports), and (2) has been subject to such filing requirements for the past 
90 days.
                 YES  X                      NO       
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be 
contained, to the best of Registrant's knowledge, in definitive proxy 
or information statements incorporated by reference in Part III of this Form
 10-KSB or any amendment to this Form 10-KSB.     [X]

Issuer's revenues for its most recent fiscal year are $19,205,078.

At November 2, 1998 there were 737,656 shares of the Registrant's common stock
outstanding.  Based on the average of the highest bid and lowest asked prices
reported on the national over-the-counter market (NASDAQ Symbol AMBF), the 
aggregate market value of the shares held by non-affiliates of the Registrant
was $ 829,863.

Exhibit Index is on page 36.
Transitional Small Business Disclosure Format:           YES    NO   X   



                                       PART I



Item 1.     Description of Business

     (a)     Business Development 

     The Registrant (hereinafter "Company" or "Ambassador") is a Delaware
corporation incorporated in 1963.  It is engaged, through divisions and a
subsidiary, in the food service and janitorial industries in Iowa, Kansas,
New York, Texas, New Jersey, Missouri, and Oklahoma.

   The principal business activity of the Company is the servicing of its 
customer accounts, primarily factories, offices, hospitals, schools, and social 
service agencies, through the use of vending machines, cafeterias, and 
prepared meals delivered from Company commissaries.
     On August 1, 1989, the name of the Company was changed from Automatique,
Incorporated to Ambassador Food Services Corporation.

     (b)     Business of Issuer

     (1)     Description of Business Done by the Registrant in its Food Segment

     (i and ii)The vending and cafeteria segment of the Company's business 
               consists of contracting to distribute beverages and food products
               to customer locations consisting of factories, offices, 
               hospitals, and schools.  The Company conducts surveys of 
               potential customer locations, determines profitability of the 
               location, and submits a proposal offering to provide the vending 
               and/or cafeteria service for the customer location.  Business 
               with local government social service agencies and not-for-profit 
               agencies is obtained through competitive bidding and is 
               serviced by producing meals in a central commissary and 
               delivering them to various designated points for consumption.

     (iii)     No new products have been developed by this segment.  The 
               Company, in general, markets the product developed by its 
               suppliers. 

     (iv)     The vending food service business, made up of a few large 
              companies and many small independently owned local and 
              regional enterprises, is highly competitive.  The practice in the 
              industry is to operate under written agreements with the 
              locations served.  In the market areas where the Company is 
              located, it has national, regional, and local competition, some of
              which have substantially greater total sales and assets.  
              Competition for locations in the food service industry 
              normally comes in the form of pricing and in quality of 
              service and product.

     (v)     Raw materials, consisting of packaged products and commodities, are
             purchased from manufacturers and purveyors and are warehoused 
             or processed by the Company in the local market. There is an 
             adequate supply of raw materials from normal sources; which 
             include Midwest Food Distributors, Inc., Pepsi Cola General
             Bottlers and Loeb and Mayer.
            
     (vi)     During the year ended May 28, 1998, this segment had no single 
              customer whose sales were equal to 10 percent or more of the 
              Company's consolidated revenues.

          Because the Company's customers are primarily the employees and 
          students of the various schools, colleges, factories, offices, and 
          hospitals at which it has its vending and cafeteria services, the 
          Company normally experiences a seasonal decline in sales during the 
          summer months and around holidays, during which times many of these
          customers vacation and many locations close completely.

     (vii)     The distinctive logo associated with the Company has been 
               registered under the laws of the United States relating to 
               trade names and trademarks.  The Company regards such logo as 
               valuable and will maintain the registration in effect for 
               continuing use in connection with the Company's business.  In 
               addition, the segment is a party to the following labor 
               agreements:
<TABLE>
<S>                          <C>                           <C>
Bargaining Unit              Market                        Expiration Date
Teamsters Local #838         Kansas City                   1/1/00
Teamsters Local #90          Des Moines                    4/30/02
United Service Employees
 Union #377                  New York                      12/31/99

</TABLE>

     (viii)     The Company does not have a material portion of its business 
                subject to renegotiation or termination at the election of 
                the Government.

     (ix)     The Company does not believe that existing or probable government 
              regulations have a material effect on its operation.

     (b)     (2)     Description of Business Done by the Registrant in its 
                     Janitorial Segment

      (i and ii)     The janitorial and maintenance service division of the 
                     Company's business consists primarily of contracting
                     various types of routine cleaning services for            
                     customers on a weekly, monthly, or as-needed basis.
                     Customers currently include grocery stores and public     
                     housing complexes in New York and New Jersey.             

     (iii)     No new products have been introduced by this segment.

     (iv)     The janitorial segment is limited to the New Jersey and New York 
              metropolitan areas. Competition for janitorial contracts comes in 
              the form of pricing and quality of service.  Competition in 
              general is from regional and local companies.

     (v)     The sources and availability of raw materials for this segment are 
             adequate.  Sources of raw materials include Graco Manufacturing 
             and Malone Chemical.

     (vi)     During fiscal 1998, this segment had no single customer whose 
              sales were equal to 10 percent or more of the Company's 
              consolidated revenues.

          This segment is not subject to material fluctuations in sales volume 
          due to seasonality.

          Sales in this segment are on open accounts receivable.  Inventory 
          levels are not significant.

     (vii)     This segment is operating without registered trademarks or 
               patents.  The segment is a party to a labor agreement with 
               the United Service Employees Union #377 in New York that expires 
               December 31, 1999.

     (viii)     The Company does not have a material portion of its business 
                subject to renegotiation or termination at the election of the 
                Government. 

     (ix)     The Company does not believe that existing or probable government 
              regulations have a material effect on its operations.


     (b)     (x) Through (xii) with Respect to the Registrant's Business in 
                General

          (x)     The Company has not incurred any expense for research and 
                  development activities during any of its last two (2) 
                  fiscal years.

          (xi)     Compliance with federal, state, and local laws and 
                   regulations involving the protection of the environment 
                   will not have a material effect.

          (xii)     As of May 28, 1998, the Company and its subsidiary employed 
                    approximately 250 persons.

Item 2.     Description of Properties

     The Company leased all real estate for office, warehouse, garage, repair 
     shops, and commissaries in each of its market areas throughout fiscal 1998,
     except for the property located at 3269 Roanoke Road, which was 
     purchased in July 1990.  The property was encumbered by a mortgage in the 
     amount of $275,476 at May 28, 1998.  Annual rentals were approximately 
     $281,485 less $22,200 of sublease income.  The suitability of the leased 
     properties is adequate; such properties are described below:
<TABLE>
<S>                                    <C>                  <C>       <C>
                                                            Size      Expiration
Location                               Type of Property     (Sq. Ft.) Date
3269 Roanoke Rd., Kansas City, MO        Office/Whse          13,600  Owned
208 E. Aurora, Des Moines, IA            Office/Whse           9,200  5/98
5-30 54th Ave., Long Island City, NY     Office/Whse           8,000  Mo/Mo
41-43 24th St., Long Island City, NY     Office/Whse           2,500  3/01
9100 Santa Fe Dr., Overland Park, KS     Restaurant-
                                          Discontinued         1,800  2/04
162 Closter Dock Rd., Closter, NJ        Office/Whse           1,200  Mo/Mo
900 West 8th St., Kansas City, MO        Warehouse               300  Mo/Mo
36 Clark St., Des Moines, IA             Office/Whse          10,600  3/01

</TABLE>
     The major portion of the physical properties used by the Company is made up
     of automatic vending equipment and food service and production equipment.  
     Most of the equipment used is owned by Company. In several instances, the 
     cafeteria and vending equipment is owned by the account to which food 
     services are rendered by the Company.  The Company operates 
     approximately 90 vehicles in the conduct of its business, approximately
     25% of which are leased and the balance owned.  The annual rentals on 
     all such leased real estate properties, equipment, and vehicles are 
     approximately $700,000.

Item 3.     Legal Proceedings

     None. 

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

     No matters were submitted to a vote of security holders during the fourth 
     quarter of the fiscal year of the Company.




                                PART II

Item 5.     Market for Common Equity and Related Stockholder Matters

     (a)     Price Range of Common Stock

     The principal market in which the common stock of the Company is traded is 
     the national over-the-counter market (NASDAQ symbol AMBF).  
     The bid quotation for the Company's common stock for each quarter during
     fiscal years ended May 28, 1998 and May 29, 1997 are shown below: 

<TABLE>
 
                                   1998                 1997     
                                Bid Quotation       Bid Quotation
<S>                            <C>       <C>        <C>      <C>     
                                High     Low        High     Low
First Quarter                 1 3/8          1    1 1/16   1  1/16
Second Quarter                1 1/16    1 1/16    1 1/8    1  1/16
Third Quarter                 1 3/16    1 1/8     1 1/2    1  1/16
Fourth Quarter                1 3/16    1 1/8     1 7/16   1  3/8
</TABLE>
     The quotations above reflect inter-dealer prices without retail mark-up, 
     mark-down, or commission and may not represent actual transactions.

     (b)     Number of Equity Security Holders

     As of November 2, 1998, there were 591 record holders of the Company's 
     common stock.

     (c)     Dividends

     The Company has never paid cash dividends on its common stock.  Payment of 
     dividends will be within the discretion of the Company's Board of 
     Directors and will depend, among other factors, on earnings, debt 
     agreements, capital requirements, and the operating and financial 
     condition of the Company.  

Item 6.     Management's Discussion and Analysis of Financial Condition and 
            Results of Operations

     Results of Continuing Operations
     
     1998 Results
                                      
     Sales declined from fiscal 1997 levels by $3,565,468 to $19,205,078 in
     the year ended May 28, 1998.  This decline reflected the impact of the 
     sale of the Company's St. Louis operations in April 1997 which resulted
     in a decline of $2,968,360.  Additional declines in revenues resulted 
     from the closing of the Company's operations in Tyler, Texas and from
     the loss of vending and cafeteria contracts to competitors in Kansas
     City.  Despite these lower sales, Ambassador reduced its loss from
     operations from $1,164,217 to $75,800.  This improvement partially
     resulted from the elimination of losses experienced during fiscal 1997
     in the Company's St. Louis operations.
                                                  
     The Company improved its gross margins in fiscal 1998 through improved
     purchasing and through the addition of sales in its New York operation
     in the form of short-term contracts which carried strong pricing
     relative to food cost.  Management continues to pursue increased pricing
     and to lower the cost of its products; however, the end of the short-term
     agreements in New York during late 1998 and early 1999 makes it unlikely
     the Company's gross margins will improve further in 1999.

     Operating costs declined compared to 1997 levels as a percentage of sales
     because of unusually high cost in this area associated with the closing
     of the Company's St. Louis operations during fiscal 1997.  The Company
     also lowered its operating expenses by reducing operating payrolls,
     vehicle costs, and the cost of supplies in its food service operations.
     Management has further reduced payrolls and anticipates even lower
     operating costs in fiscal 1999.

     Administrative, depreciation, and interest costs were all lower in
     1998 because of strict control of capital expenditures and reductions
     in all administrative cost areas.  Management anticipates further 
     improvements in these cost areas during fiscal 1999 through further
     staff reduction and continued controls on capital expenditures.

     The carrying value of intangible assets is periodically reviewed by
     the Company based on the estimated future operating income of each
     acquired entity on an undiscounted cash flow basis.  Based upon its
     most recent analysis, the Company believes that no material 
     impairment of intangible assets exists at May 28, 1998.

     1997 Results

     Despite growth in sales of more than $ 2,000,000 from fiscal 1996 levels, 
     Ambassador experienced a before tax loss from continuing operations of
     $1,164,217 compared to a before tax profit of $ 50,244 in 1996.  Growth in 
     sales waas provided through the acquisition of a competitor in the Des 
     Moines, Iowa market during the latter part of fiscal 1996 and the opening 
     of a new operation in Tyler, Texas during the second quarter of 1997.

     The loss reflects poor results in the Company's Midwest operations and the
     costs associated with the sales of Ambassador's operations in St. Louis.
     During 1997, operating losses of $432,000 were recorded in the St. Louis 
     operation with an additional loss of $199,000 recorded on the sales of the
     operation.  The new operation in Tyler, Texas failed to meet sales 
     objectives and produced a loss of $31,000 during the year.  The operation 
     in Tyler has been closed during fiscal 1998.

     Cost of food products sold continue to increase as a percentage of sales.
     This problem impacted all markets as cost of products rose dramatically 
     during the year and price increases implemented were not adequate to offset
     the effect of these rising costs.  Management continues to pursue pricing
     as well as purchasing opportunities to improve gross margins.

     Operating costs increased dramatically due to the cost associated with the
     closing of the St. Louis operation as well as high operating lease costs 
     that relate to the acquisition in Iowa.  Administrative cost increased as a
     percentage of sales due to higher payroll costs.  Additionally, the Company
     experienced unusually high costs relating to placement fees within the
     Company's corporate accounting office and late payment fees for various 
     obligations.  Management has taken steps to reduce operating and 
     administrative cost through staff reductions and stringent controls on
     expenditures in all areas.

     Year 2000

     Management has reviewed its systems relative to the Year 2000 issue and has
     determined that no material expenditures will be required for modifications
     or replacement of software due to this problem.  Management does anticipate
     replacing its primary financial reporting and control systems as part of 
     its short-term business plan and will ensure that all new systems are Year
     2000 compliant.

     Liquidity and Capital Resources

     The Company's working capital deficit declined by $146,631 from a deficit
     of $1,984,468 at May 29, 1997 to a deficit of $1,837,837 at May 28, 1998.
     Long-term liabilities declined by $582,943 during fiscal 1998.  Management
     was able to further strengthen the working capital position of the Company
     by refinancing certain of the current obligations on a long-term basis
     subsequent to May 28, 1998; and cash flow from operations will, in the
     opinion of managment, be more than sufficient to meet the Company's cash
     requirements.  Idle equipment continues to be available to provide for
     growth in the Company's vending operations, and financing is in place for
     any capital expenditure needs during fiscal 1999.

Item 7.     Consolidated Financial Statements

     Index to Consolidated Financial Statements


                                                                         Page
     Report of Independent Certified Public Accountants                     10


     Consolidated Balance Sheets as of May 28, 1998 and May 29, 1997      11-12


     Consolidated Statements of Operations for the Years Ended 
      May 28, 1998 and May 29, 1997                                        13


     Consolidated Statement of Changes in Stockholders' Equity for the 
     Years Ended May 28, 1998 and May 29, 1997                             14


     Consolidated Statements of Cash Flows for the Years Ended May 28, 1998 
     and May 29, 1997                                                      15-16


     Notes to Consolidated Financial Statements                            17





          REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors 
Ambassador Food Services Corporation and Subsidiary


We have audited the accompanying consolidated balance sheets of Ambassador Food 
Services Corporation and Subsidiary as of May 28, 1998 and May 29, 1997 and the 
related consolidated statements of operations, changes in stockholders' equity, 
and cash flows for the years then ended. These financial statements are the 
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits. 

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audits to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements.  
An audit also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial 
statement presentation. We believe that our audits provide a reasonable 
basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the consolidated financial position of Ambassador Food
Services Corporation and Subsidiary as of May 28, 1998 and May 29, 1997 and 
the consolidated results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.





Kansas City, Missouri
September 11, 1998,(except for Note P
as to which the date is September 23,1998)




                        Ambassador Food Services Corporation and Subsidiary
                                CONSOLIDATED BALANCE SHEETS
                                May 28, 1998 and May 29, 1997
<TABLE>
<S>                                                    <C>         <C>

               ASSETS                                     1998           1997
CURRENT ASSETS   
 Cash (including change funds of $196,412 in 1998
        and $241,719 in 1997) (note A10)               $   271,709  $  370,340
 Trade accounts receivable, net of allowance for
     doubtful accounts of $87,820 in 1998 and
     $118,234 in 1997 (notes A11 and D)                  1,193,619   1,697,773
 Income taxes receivable                                     3,277       8,881
 Inventories (note A4)                                     483,999     548,477
 Prepaid expenses                                          134,961     186,817
 Current portion of note receivable (notes N,O and P)      295,570     372,351                   
      Total current assets                               2,383,135   3,184,639
PROPERTY AND EQUIPMENT - at cost (notes A5 and E)          
 Vending equipment                                       4,682,523   4,804,840
 Cafeteria, commissary, and restaurant equipment         1,144,887   1,205,077
 Building and leasehold improvements                       634,457     641,814
 Other                                                     971,883     991,570
                                                         7,433,750   7,643,301 
 Less accumulated depreciation and amortization          5,622,766   5,445,471
      Total property and equipment                       1,810,984   2,197,830
OTHER ASSETS                                       
  Location contracts, net of accumulated amortization of
  $141,138 in 1998 amd $124,286 om 1997 (notes A6 and E)   253,345     267,530
  Note receivable, less current portion (notes N and O     909,100   1,227,048       
  Unrecognized prior service costs (notes A7 and H)        146,266     183,009   
  Excess of purchase price over net assets acquired,net of
     accumulated amortization of $21,645 in 1998 and
     $20,375 in 1997 (note A6)                              22,035      23,054
     Deferred expenses                                      49,956      52,432
     Miscellaneous                                         111,288     180,320
      Total other assets                                 1,491,990   1,933,393
                                                       $ 5,686,109 $ 7,315,862

                The accompanying notes are an integral part of these statements.

</TABLE>



            Ambassador Food Services Corporation and Subsidiary
                 CONSOLIDATED BALANCE SHEETS - CONTINUED 
                    May 28, 1998 and May 29, 1997

<TABLE>
<S>                                              <C>          <C>
      LIABILITIES AND STOCKHOLDERS' EQUITY           1998           1997
CURRENT LIABILITIES          
     Checks outstanding in excess of bank balances $ 224,290   $  662,086
     Trade accounts payable                        1,731,606    1,532,775
     Accrued expenses (note C)                       678,243    1,249,170
     Current maturities of long-term debt (note E)   864,904      582,863
     Line of credit (note D)                         721,929    1,142,213
               Total current liabilities           4,220,972    5,169,107
LONG-TERM LIABILITIES          
     Projected benefit obligation (note H)           318,545      337,468
     Other long-term liabilities                      16,366       42,035
     Subordinated note payable to stockholder 
      (note F)                                       250,000      250,000    
     Long-term debt, less current maturities 
      (note E)                                       396,803      921,617
     Accrued costs of discontinued restaurant 
      operations (note K)                             70,666       84,203
               Total long-term liabilities         1,052,380    1,635,323
COMMITMENTS AND CONTINGENCIES
  (notes G, I, K, L, and N)                            -                -
STOCKHOLDERS' EQUITY (notes F and I)     
     Common stock, par value $1.00 per share;
      authorized, 2,000,000 shares; issued, 
      1,009,230 shares                             1,009,230    1,009,230
     Additional paid-in capital                      718,291      718,291
     Retained earnings (accumulated deficit)        (993,328     (912,528)
                                                     734,193      809,993
     Less treasury stock - 267,074 shares in 1998
      and 251,774 shares in 1997                    (321,436)    (298,561)
               Total stockholders' equity            412,757      511,432
                                                  $5,686,109   $7,315,862

                The accompanying note are an integgral part of these statements.
</TABLE>









               Ambassador Food Services Corporation and Subsidiary
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                  Years ended May 28, 1998 and May 29, 1997
<TABLE>
<S>                                            <C>               <C>

                                                 1998                 1997
Net sales 
      Food                                      $17,511,476       $20,839,872
      Janitorial                                  1,693,602         1,930,674
                                                 19,205,078        22,770,546
Cost and expenses          
     Cost of food products sold                   7,924,592         9,497,576
     Operating (note M)                           7,523,717         9,818,547
     Selling and administrative                   2,852,652         3,521,127
     Depreciation and amortization                  602,166           684,352
     Interest                                       377,751           413,161
          Total cost and expenses                19,280,878        23,934,763
Loss before income taxes                            (75,800)       (1,164,217)
     Deferred income tax benefit (note J)               -             267,069
          Net Loss                               $  (75,800)     $   (897,148)
          
Loss per common share:
     Net loss per common share                    $   (.10)      $      (1.18)

Weighted average common shares
     outstanding (note A9)                           742,156           760,906


</TABLE>


                 Ambassador Food Services Corporation and Subsidiary
                          CONSOLIDATED STATEMENT OF 
                     CHANGES IN STOCKHOLDERS' EQUITY
                     Years ended May 28, 1998 and May 29, 1997
<TABLE>
                                                          Retained
                                             Additional   Earnings    Total
                                              Paid-In (Accumulated Stockholders'
                     Common Stock              Capital    Deficit)    Equity    
                Issued         Treasury Stock                        
           Shares     Amount   Shares    Cost                   
<S>       <C>       <C>        <C>     <C>      <C>      <C>        <C>
Balance at 
June 1, 
1996      1,009,230 $1,009,230 241,274 $283,905 $718,291 $(20,380) $1,423,236  
   
Net 
loss          -         -         -        -        -    (897,148)   (897,148)  
   
    
Purchase of 
treasury 
stock         -         -       10,500   14,656     -         -         (14,656)

Balance at 
May 29, 
1997      1,009,230  1,009,230 251,774  298,561  718,291  (917,528)     511,432  
    
Net loss      -         -         -        -        -      (75,800)     (75,800) 
  
Purchase of 
treasury 
stock         -         -       15,300   22,875     -         -         (22,875) 
  
Balance at 
May 29, 
1997       1,009,230 $1,009,230 267,074 $321,436 $718,291 $(993,328) $  412,757


</TABLE>




             Ambassador Food Services Corporation and Subsidiary
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                 Years ended May 28, 1998 and May 29, 1997
<TABLE>
<S>                                               <C>            <C>


                                                      1998             1997
Cash Flows From Operating Activities          
     Net earnings (loss)                           $  (75,800)     $(897,148) 
     Adjustments to reconcile net earnings (loss)
       to net cash provided by (used in) 
       operations
          Depreciation and amortization                602,166       684,352 
          Gain on sale of property and equipment       (10,596)      198,898
          Provision for bad debts                      (30,414)       96,060
          Deferred income taxes                           -         (267,069)         
          Changes in operating assets and 
          liabilities:          
                    Trade accounts receivable          534,568       (25,622) 
                    Income taxes receivable              5,604         8,161
                    Miscellaneous - other assets        45,149        39,264
                    Inventories                         64,478        45,343
                    Prepaid expenses                    51,856        62,099 
                    Trade accounts payable and 
                         accrued expenses             (404,556)      416,432 
                         Net cash provided by
                         (used in) operating 
                         activities                    782,455       360,770



Cash Flows From Investing Activities          
     Purchase of property and equipment              (195,028)       (844,257)
     Proceeds from sale of property and
        equipment                                      68,610            -
     Collections on notes receivable                  394,729          96,744 
                         Net cash used in investing
                         activities                   268,311        (747,513)  
Cash Flows From Financing Activities          
     Proceeds from issuance of long-term debt         309,091         524,046
     Principal payments on long-term obligations     (551,864)       (415,766)
     Purchase of treasury stock                       (22,875)        (14,656)
     Net increase in checks outstanding in excess
       of bank balances                              (437,796)         94,317
     Other financing activities                       (25,669)        (26,487)
     Net borrowings under line of credit             (420,284)        192,861
          Net cash provided by financing 
          activities                               (1,149,397)        354,315
Net Increase (Decrease) in Cash                       (98,631)        (32,428)
Cash, Beginning of Year                               370,340         402,768
Cash, End of Year                                $    271,709      $  370,340

Supplementary Schedule of Cash Flow Information:          
     Cash paid during year for:          
          Income taxes                           $      1,300     $      -
          Interest                               $    368,282     $   422,629
          
     Noncash investing and financing activities:          
           Sale of St. Louis location financed
               with note receivable               $        -      $ 1,200,000    
 
          
</TABLE>



                    Ambassador Food Services Corporation and Subsidiary
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       Years ended May 28, 1998 and May 29, 1997


A.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A summary of the significant accounting policies consistently applied in
     the preparation of the accompanying consolidated fanancial statements 
     follows.

     1.     Principles of Consolidation

The consolidated financial statements include the accounts of Ambassador Food  
Services Corporation and its wholly-owned subsidiary, Ambassador Fast   
Services,Inc. All material intercompany balances and transactions have been
eliminated.

     2.     Nature of Business

The Company and its subsidiary are engaged in two segments:  food service 
(vending, cafeteria and catering) and janitorial service.  The Company's 
customers are principally located in the Midwest and Northeast United States.

     3.     Reporting Periods

The Company has a fiscal year (52 or 53 weeks) ending on the Thursday nearest 
May 31.  Both fiscal years 1998 and 1997 contained 52 weeks.

     4.     Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or 
market.

     5.     Property and Equipment

Property and equipment are stated at cost.  Depreciation is
provided in amounts sufficient to relate the cost of depreciable assets to 
operations over their estimated useful lives on the straight-line method.
The estimated lives used in determining depreciation are:

           Vending equipment                            4-8 years
           Cafeteria and commissary equipment          3-10 years
           Building and leasehold improvements         3-22 years
           Other                                       3-10 years

     6.     Location Contracts and Excess of Purchase Price Over Net Assets 
            Acquired 
Location contracts and excess of purchase price over net assets acquired arise 
from the purchase of various companies and are carried at cost.  Location 
contracts represent the amount paid for customer vending relationships in 
existence at the time of acquisition which were generally cancelable by either 
party with limited notice.  Amounts resulting from acquisitions prior to 
November 1, 1970 ($1,064,787) were not amortized and relate mainly to St. 
Louis operations.  During 1997, these costs for St. Louis were disposed of in
conjunction with the sales of the operation (see Note N).  Acquisitions of 
$438,163 expended subsequent to November 1, 1970 are being amortized on a  
straight-line basis over 5 to 40 years.  

The carrying value of assets is periodically reviewed by the Company based
on the estimated future operating income of each acquired entity on an 
undiscounted cash flow basis.  Based upon its most recent analysis, the
Company believes that no material impairment of intangible assets exists at
May 28, 1998.

     7.     Unrecognized Prior Service Costs

Unrecognized prior service costs, related to the defined benefit pension plan 
discussed in Note H, are being amortized straight-line over the average 
remaining service period of the participants included in the plan.

     8.     Costs and Expenses

Preopening costs associated with new vending and cafeteria accounts are expensed
as incurred.

     9.     Earnings (Loss) Per Common Share

Loss per share has been computed using the weighted average common 
shares outstanding during the period.  In addition to these shares, certain 
stock options and convertible debt exist that were outstanding during the  
reporting periods.  These common stock equivalents were not considered in the 
net loss per share calculation for fiscal year 1998 and 1997 as their effect 
is antidilutive. 
          
     10.     Statements of Cash Flows

For purposes of reporting cash flows, cash includes cash on hand, in banks, and 
in change funds.

     11.     Concentration of Credit Risk

Of the Company's accounts receivable approximately $930,000 in 1998 and
$1,300,000 in 1997 are with customers located in the northeastern
United States.  The Company grants credit to customers; which includes 
businesses, schools, and governmental agencies.  Usually collateral is not 
required.


     12.     Use of Estimates

In preparing financial statements in conformity with generally accepted 
accounting principles, management is required to make estimates and assumptions 
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period.  Actual results could differ 
from those estimates.

     13.     Financial Instruments

The carrying value of the Company's financial instruments, including cash, 
accounts and notes receivable, accounts payable, line of credit, and 
long-term debt, approximate fair value.

B.     REALIZATION OF ASSETS

       The accompanying consolidated financial statements have been prepared in
       conformity with generally accepted accounting principles, which 
       contemplate continuation of the Company as a going concern.

       Recoverability of the recorded asset amounts shown in the accompanying
       consolidated balance sheets is dependent upon continued operations of the
       Company, which in turn is dependent upon the Company's ability to meet 
       its financing requirements on a continuing basis and to succeed in its
       future operations.  These financial statements do not include any 
       adjustments relating to the recoverability and classification of recorded
       asset amounts or amounts and classification of liabilities that might be
       necessary should the Company be unable to continue in existence.

       Management has taken the following steps to revise its operating and
       financial requirements, which it believes are sufficient to provide the 
       Company with the ability to continue in existence:

              Certain unprofitable operations have been closed
              Several administrative and regional positions have been eliminated
              Steps to improve margins and reduce costs have been taken.
              Increasing the growth and profit of current operations through
                internal sales efforts has become the Company's focus.
              The existing lender refinanced the equipment loan, and the Company
                obtained a short-term loan to provide additional liquidity.
              Total debt has been reduced and debt service requirements
                substantially decreased in June 1998.
        
C.     CURRENT LIABILITIES


     Accrued expenses include the following:
<TABLE>
<S>                                                 <C>          <C>
                                                      1998             1997
Legal fees                                           $ 42,183      $ 122,095
Vacation pay                                           65,952         69,546
Commissions                                            19,756         61,543
Taxes                                                 281,205        332,476
Salaries                                              187,382        217,132
Current portion of projected benefit
     obligation (Note H)                               18,900         18,900
Accrued costs of discontinued restaurant
     operations (Note K)                               13,562         13,652
Accrued litigation and sales tax costs
     (Note L)                                          19,674        123,416
Deferred revenue                                         -            98,405
Medical Insurance                                      23,318         54,589
Lease Termination                                        -            62,000
Other                                                   6,311         75,506
                                                   $  678,243      1,249,170
</TABLE>

D.     LINE OF CREDIT AGREEMENT

The Company has a line of credit agreement with a financing company which 
is due on demand.  The agreement carries interest at the publicly announced
prime rate (8.5% at May 28, 1998) plus 3.5%.   The amount drawn cannot 
exceed 80% of eligible accounts receivable (1,066,680 at May 28, 1998) 
and is collateralized by the Company's accounts receivable.  Borrowings
are limited to a maximum of $1,500,000 plus the outstanding principal
related to a portion of the line of credit due August 2000 ($297,202 at
     May 28, 1998). Interest is payable monthly and amounts outstanding are
     due upon demand.  At May 28,1998 and May 29,1997, amounts outstanding
     were $721,929 and $1,142,213, respectively.  The debt agreement contains
     provisions regarding other borrowings, acquisitions, redemption of the
     Company's stock distribution of property and assets, and delivery of
     audited financial statements within 120 days.  The financing company has
     waived the delivery of audited financial statements within 120 days and
     the redemption of the Company's stock.



E.     LONG-TERM DEBT
<TABLE>
<S>                                                    <C>          <C>
                                                         1998           1997
Note payable - bank, payable in monthly installments
     of $2,848, including interest at prime rate 
     (8.5% at May 28, 1998) plus 2%, due July 1998,
     collateralized by building.  Subsequent to          
     May 28, 1998, the bank granted an extension on
     the note payable, which changed the monthly
     payment to $3,081, the due date to January 1999
     and the interest rate to 11%.                    $   275,476  $  277,552         
Notes payable - equipment, payable in monthly 
     installments of $57,449, including interest at 
     rates ranging from 9% to 19.3%, due through 
     July 2002, collateralized by equipment               828,673   1,014,837
Note payable to Bassman Vending, Inc. payable in
     monthly installments of $5,150, including interest 
     at 8.5%, due through March 2001, collateralized by
     certain location contracts and equipment             155,105     201,430
Note payable - other                                        2,453      10,661
                                                        1,261,707   1,504,480
     Less current maturities                              864,904     582,863
                                                       $  396,803  $  921,617
</TABLE>

     Aggregate annual principal payments applicable to long-term debt due 
subsequent to May 28, 1998 are as follows:
<TABLE>
                       <S>            <C>
                        Fiscal Year
                        Ending             Amount  
                        1999           $   864,904
                        2000               215,082
                        2001               145,938
                        2002                35,783
                                        $1,261,707
</TABLE>

F.     SUBORDINATED NOTE PAYABLE TO STOCKHOLDER

The Company borrowed $250,000 from a stockholder and officer. The note calls
for interest at 10%, payable quarterly with quarterly principal payments of
$12,500 beginning June 30, 2001, with a final payment June 30, 2006.

The note is subordinate to all other indebtedness of the Company.

From April 30, 1998 to May 1, 2006, the note is convertible to shares of the 
Company's stock at a price of $1.25 per share.  In the event any payments 
are made on the note, the Company will issue warrants to the stockholder 
which will entitle the stockholder to purchase an equivalent number of shares 
during the same period.  The conversion terms may be adjusted upon certain 
events to prevent dilution of the stockholder conversion rights.
                     


G.     LEASES
Future minimum lease payments under all noncancellable operating leases as 
of May 28, 1998 are as follows
<TABLE>
            <S>            <C>             <C>              <C>

       Fiscal year
         ending          Real estate     Equipment          Total     
          1999                174,190         418,026          592,216
          2000                164,883         345,755          510,638
          2001                139,029         270,693          409,722
                           $  478,102      $1,034,474       $1,512,576

</TABLE>
     Rental expense charged to operations was $708.962 and $845,198 in 1997.

H.     EMPLOYEE BENEFIT PLANS

The Company has a nonqualified defined benefit pension plan covering two key 
employees and three former officers of the Company.  Under the terms of the 
plan, each individual will receive a fixed monthly payment for ten years 
after retirement.  The benefit does not vest until the employee reaches age 
65.  If the individual dies, either during employment or after retirement, the 
beneficiary is entitled to receive benefits as specified in the agreement. 
The plan is unfunded.

The following table sets forth the status and amounts recognized in the 
Company's consolidated financial statements for 1998 and 1997:

<TABLE>
<S>                                                 <C>            <C>         
                                                       1998         1997
Actuarial present value of benefit obligations:
        Accumulated benefit obligation, including
          vested benefits of $214,572 in 1998 and
          $248,080 in 1997                           $ 337,445      $ 356,368
     Projected benefit obligation for service
          rendered to date                           $ 337,445      $ 356,368
Plan assets at fair value                               -              -  
Projected benefit obligation in excess of 
    plan assets                                        337,445        356,368
Additional minimum liability recorded                  146,266        183,009 
Prior service cost not yet recognized in net
     periodic pension cost                            (146,266)      (183,009)
Net accrued pension cost                             $ 337,445      $ 356,368
          
Net accrued pension cost is included in the accompanying consolidated financial 
statements as follows:
                                                     1998            1997
Current portion included in accrued
  expenses                                       $   18,900        $   18,900
Long-term portion of obligation                     318,545           337,468
                                                  $ 337,445         $ 356,368
</TABLE>

     The weighted-average discount rate used in determining the actuarial 
present value of the projected benefit obligation was 8.0% in 1998 and 1997.

     Net pension cost for 1998 and 1997 includes the following components: 

<TABLE>
<S>                                                   <C>         <C>

                                                        1998         1997
Service cost - benefits earned
     during the period                                 $  5,931     $  5,491
Interest cost on projected benefit
     obligation                                          29,630       31,571
Amortization of prior service cost                       37,745       37,746
Net periodic pension cost                               $73,306      $74,808


     The Company contributed approximately $54,000 and $74,000 in fiscal years 
1998 and 1997, respectively, to several multi-employer pension plans for 
employees covered by collective bargaining agreements. These plans are not 
administered by the Company, and contributions are determined in accordance 
with provisions of negotiated labor contracts.  

     The Multiemployer Pension Plan Amendments Act of 1980(the Act) 
significantly increased the pension responsibilities of participating employers.
Under the provisions of the Act, if the plans terminate or the Company 
withdraws, the Company could be subject to a substantial "withdrawl liability."
Management has no intention of undertaking any action which would subject the 
Company to this obligation.

     The Company has a defined contribution plan that covers all permanent 
nonunion employees.  Under the terms of the plan, employees can contribute 
up to a maximum of 15% of their gross annual salary.  Company contributions 
to the Plan are at the discretion of the Board of Directors.  The Company made 
no contributions to this plan during fiscal year 1998 or 1997. 

I.     STOCK OPTIONS

During fiscal year 1998, The Board of Directors approved the granting of
nonstatutory options for 125,000 shares certain key employees.  The exercise 
price of the options are $1.37 per share, which approximated the fair market
value of the shares on the date of grant of the option June 1, 1998.  The 
options can be exercised at various dates starting September 1998 through
June 1, 1999.

J.          INCOME TAXES

Deferred income taxes includes the following amounts of deferred tax assets
and liabilities:


</TABLE>
<TABLE>
<S>                                               <C>              <C>
                                                   1998               1997
Deferred tax liability                            $ 256,890        $ 232,883   
Deferred tax asset                                 (746,111)        (721,444)
      Less:  Valuation allowance                    489,221          488,561   
Net deferred tax liability                        $    -           $    -
</TABLE>


The approximate tax effect of each temporary difference giving rise to the 
deferred tax liability and asset was as follows at May 28, 1998 and May 29, 
1997:

<TABLE>
<S>                                       <C>             <C>            
                                               1998              1997
Amortization of location contracts         $    2,305      $    1,201 
Accelerated depreciation                      254,585         231,682
                                           $  256,890      $  232,883

Accrued costs                              $  (33,691)     $  (62,308)
Amortization of pension costs                 (76,002)        (66,758)
Vacation accrual                              (26,381)        (27,123)
Allowance for bad debts                       (35,128)        (46,111) 
Other                                         (18,803)         (7,689)
Net operating loss carryforward              (289,498)       (244,847)
AMT credit carryforward                      (106,504)       (106,504)
Investment tax credit carryforward           (160,104)       (160,104)
                                           $ (746,111)     $ (721,444)

</TABLE>

The valuation allowance was established to reduce the deferred tax asset to the 
amount that will more likely than not be realized.  The reduction is necessary 
due to prior operating losses and uncertainty as to the Company's ability to 
utilize tax credit and net operating loss carryforwards before they expire.  
The valuation allowance was increased $660 and $56,534 in fiscal years 1998
and 1997, respectively.

The income tax benefit reflected in the consolidated statements of operations 
differs from the amounts computed at federal statutory income tax rates.  The 
principal differences are as follows:

<TABLE>
<S>                                               <C>           <C>
                                                    1998           1997
Federal income tax benefit
     computed at statutory rate                   $ (26,000)    $ (396,000) 
State income tax benefit                             (4,000)       (58,000) 
Tax effect of nondeductible expenses                 10,000         14,000 
Increase in valuation allowance                         660         57,000
Underaccrual of prior deferred tax liability           -           120,000
Other, net                                          (19,340)        (4,000) 
                                                 $     -        $ (267,000)
</TABLE>

The Company had available for income tax purposes the following investment 
credit carryforwards at May 28, 1998:

<TABLE>
<S>                          <C>
        Year of Expiration      Amount
          1999                    59,630
          2000                    25,168
          2001                    49,551
          2002                    25,755
                                $160,104
</TABLE>

In addition, the Company had the following net operating loss carryforwards 
available at May 28, 1998:

<TABLE>
<S>                      <C>
Year of Expiration        Amount 
         2008             $252,779
         2009              138,822
         2010               63,240
         2011              156,463
         2012               16,508
         2013              107,773
                          $735,585
</TABLE>

K.          ACCRUED COSTS OF DISCONTINUED RESTAURANT OPERATIONS

          During fiscal year 1988, management ceased restaurant operations. 
The estimated obligation under the property lease, netof anticipated sublease
rentals, is accrued.

          The accrual is included in the accompanying consolidated financial 
statements as follows:


<TABLE>
<S>                                              <C>             <C>           
                                                    1998             1997
Current portion included in accrued
    expenses                                      $  13,562      $ 13,562
Accrual included in long-term
    liabilities                                      70,666        84,203
                                                   $ 84,228      $ 97,765
</TABLE>


L.          ACCRUED LITIGATION AND SALES TAX COSTS

At June 1, 1996, the Company had an accrual of $75,594 relating to a New York
state sales tax audit performed in 1988.  The amount is a total of the sales
tax assessed plus interest and penalties, less total payments.  During 1997, 
the Company received a letter granting amnesty for tax-year liabilities up
to and including those for 1988.

During fiscal year 1997, the Company was assessed $133,233 in taxes and
penalties by the Missouri Department of Revenue for delinquent sales taxes 
for the period from September 1996 through February 1997.  The Company entered
into an agreement to pay this amount plus interest at 12% in monthly
installments of $11,150 through April 1998.

The accrual is in the accompanying consolidated financial statements 
as follows:

<TABLE>
<S>                                              <C>         <C>
                                                   1998          1997
Current portion included in accrued expenses    $ 19,674     $ 123,416
                                                $ 19,674     $ 123,416
</TABLE>

The New York State Department of Taxation and Finance is conducted a sales
use tax examination for the period from June 1993 through November 1995. 
The examination is completed and is still in mediation.

The ultimate outcome of this examination cannot currently be determined.
Therefore, no provision for any liability that may result has been made in
the accompanying consolidated financial statements.

M.     OPERATING EXPENSES

Operating expenses in the accompanying consolidated statements of operations are
composed of the following:

<TABLE>
<S>                                  <C>                     <C>
                                         1998                     1997          
Payroll and related costs             $5,725,843              $6,676,089     
Equipment rental costs                   476,677                 535,893     
Other                                  1,321,197               2,606,565     
                                      $7,523,717              $9,818,547
</TABLE>

N.          SALE OF ST. LOUIS OPERATIONS

During fiscal year 1997, the Company entered into an agreement to lease and sale
equipment and location contracts for its St. Louis operations. The agreement 
called for rental payments to be paid in monthly installments equal to 10% of 
the gross revenues from all sales during the lease to customers identified in 
the agreement.  The term of the lease was from April 18, 1997 to January 1, 
1998.  Equipment of the Company will be used for all customers indentified by
the agreement.  Equipment located at customers no longer receiving service from
the purchaser will be returned to the Company.  All returned equipment will 
result in a credit to the purchase price of 50% of the yearly revenue of the
customer as set forth in the agreement.

At the end of the lease, the remaining equipment will be purchased for a sales
price of $1,200,000,net of the credits above(See Note O).

As a result of this sale, the Company recognized a loss of $198,898 during 
fiscal year 1997.

O.          NOTES RECEIVABLE

          Notes receivable include the following: 

<TABLE>
<S>                                         <C>               <C>
                                               1998              1997
Note receivable from BVI, payable in 
  monthly installments of $12,300, including                                
  interest at 8.5% through April 2001,
  collateralized by the equipment and real
  estate being leased by the Company          $ 382,072          $ 493,247

Note receivable from sales of St. Louis
  operations, with $120,000 payment due in
  January 1998, with 60 monthly installments
  commencing February 1998, plus interest
  at 10%, collateralized by the equipment
  sold as discussed in Note N                    822,598          1,106,152
                                               1,204,670          1,599,399
Less current portion                             295,570            372,351                
                                              $  909,100         $1,227,048

</TABLE>
P.          SUBSEQUENT EVENT

The Board of Directors approved a resolution for the Company to enter into a
ten-year consulting agreement with a stockholder and former officer.  The 
consulting fee would be payable over the ten-year period at a rate of $100,000
per year.  No formal agreement has been signed.


Item 8.    Changes in and Disagreements with Accountants on Accounting and 
           Financial Disclosure

           There were no disagreements of the type described in paragraph (a)
           or any reportable event as described in paragraph (b) of Item 304
           of Regulation SB during the two most recent fiscal years.          


                                     PART III

Item 9.     Directors and Executive Officers of the Registrant; Compliance with 
16 (a) of the Exchange Act.

     (a), (b) The Executive Officers and Directors of the Company are:

<TABLE>
<S>                      <C>      <C>                                 <C>
            Name         Age      Principal Occupation                Director
                                                                        Since
Robert A. Laudicina(1)     58     President, Treasurer(2)               1986

Arthur D. Stevens (1)      74     Chairman of the Board of Directors(3) 1963

George T. Terris(1)        76     Investor (4)                          1966

Richard A. Mitchell        35     Secretary, Vice President
                                  of Operations (5)                      N/A
Ann W. Stevens             57     Real Estate Broker                    1996
Douglas M. Schosser,CPA    28     Director,Key Asset Management Co.     1997

</TABLE>

     (1)     Member of Executive Committee of Board of Directors
   
     (2)     Mr. Laudicina was elected President in March 1998 and 
             Treasurer in May 1998.  He served as Executive Vice President
             beginning in February 1989 and Vice President prior to that
             time beginning in January 1982.

     (3)     Mr. Stevens has been Chairman of the Board of Directors of 
             Ambassador since February 15, 1963.  He was also the first
             President and Treasurer of Ambassador beginning on April 19.
             1963, relinquishing those positions in April 1978 and October
             1969, respectively.  He again assumed the position of President
             on January 1, 1987 upon the retirement of Mr. George Terris
             from that position, serving in that capacity through March 1998.
             He was Chief Executive Officer from April 11, 1963 through May
             1998 and Treasurer from January 26, 1972 through May 1998.

     (4)     Mr. Terris, until his retirement January 1, 1987, was President and
             Chief Operations Officer of Ambassador.

     (5)     Mr. Mitchell served as Manager of Operating Systems from August 
             1991 through November 1994 and served as Assistant Secretary 
             since November 1991 through 1996.  In November 1994, he was
             appointed to the position of Vice President of Operations and
             appointed Secretary in November 1996.

     (c)     Arthur D. Stevens,Chairman, and Ann W. Stevens,Director,are
             husband and wife. No other family relationship exists between
             any of the executive officers and directors listed above. 

     Each Officer holds his office at the pleasure of the Board of Directors 
     until the next annual meeting of the Directors and until his successor 
     is duly elected and qualified.

     (d)     The Executive Officers and Directors listed above were not involved
              or a part of any legal proceedings as described in Item 401(d).

Item 10.     Executive Compensation

     (a), (b) The following table sets forth information as to the remuneration 
              accrued by Ambassador Food Services Corporation and its 
              subsidiary during the fiscal year ended May 28, 1998, for each 
              Director and Officer whose aggregate remuneration for the year 
              exceeded $100,000. 

<TABLE>
<S>                                                 <C>        <C>
Names of Individuals,
Number of Persons in Group                           Fiscal      Base
and Capacities in which Served                        Year      Salary  
Arthur D. Stevens,                                      1998    $147,877
Chairman of the Board, President, Chief Executive       1997     144,144
Officer and Treasurer of Ambassador and Officer         1996     188,428
and Director of its Subsidiary

Robert A. Laudicina,                                    1998    $165,095
Executive Vice President and                            1997     157,000
General Manager of New York Operations                  1996     169,597
</TABLE>

          Executive Retirement Program

     An executive retirement program was adopted during the 1990 fiscal year to 
provide a target annual retirement benefit at age 65 or upon retirement, if 
later, in an amount equal to approximately 40-45% of annual salary, payable 
for 10 years, for certain salaried employees, including the following officer:  
Robert A. Laudicina.  This target retirement benefit will be provided through 
the combination of (1) discretionary annual cash retirement bonus payments in 
the amount of $2,000, which must be invested in an individual retirement 
account or a universal life insurance policy, and (2) a nonqualified (for tax 
purposes) supplemental retirement agreement from the Company.  The nonqualified 
retirement agreements will pay the estimated portion of the target retirement 
benefit which cannot be funded by the executive through the annual cash 
retirement bonus payments.  The nonqualified retirement arrangements will 
also provide a pre-retirement death benefit in the event of the executive's 
death prior to age 65.

     These annual retirement benefits of the above named Officer, are estimated 
     to be as follows:
<TABLE>
<S>                <C>   <C>                    <C>              <C>
Name of Executive  Age   Estimated Benefit      Supplemental     Target
                         From Cash               Retirement      Retirement
                         Retirement                 Benefit      Benefit

Robert A. Laudicina  58    $9,123                    $46,227          $55,350

</TABLE>
     *based upon contributions of $2,000 per year until age 65 and interest at 
      8% annum.

The Company maintains insurance policies on the lives of the executives in 
amounts estimated to be sufficient to reimburse it for most of the supplemental 
retirement and/or death benefit payments.

     (d)     Stock Options

Robert Laudicina, President and Treasurer hold options to purchase 3,125 shares
of Ambassador common stock at $1.37 excersiable anytime before June 1, 2003,
effective June 1, 1998.

Item 11.     Security Ownership of Certain Beneficial Owners and Management

     (a)      Security Ownership of Certain Beneficial Owners

The following table sets forth, as of May 28, 1998, the information with 
respect to common stock ownership of each person known by the Company to own 
beneficially more than 5% of the shares of the Company's common stock, and of
all Officers and Directors as a group.

<TABLE>
<S>                                           <C>               <C>
                                              Amount            Percent of
                                              Beneficially      Outstanding
Name and Address of Beneficial Owner(s)       Owned             Shares

Arthur D. Stevens
1901 W. 69th Street
Mission Hills, KS  66205                       181,444      (1)        24.5%

Thomas G. Berlin 
800 Superior Avenue, Suite 2100 
Cleveland, Ohio 44114                          124,218      (3)         16.8%

George T. Terris
936 West Shaker Circle
Nequon, WI  53092                               64,000      (2)           8.7%

George F. Crawford
10110 Fontana Lane
Overland Park, KS  66207                         52,597                   7.1%

</TABLE>

     (1)     Does not include 60,000 shares beneficially owned by Mr. Stevens' 
             adult children, in which shares he disclaims any beneficial 
             interest.  Additionally, does not include 200,000 shares which may 
             be issued in the event of conversion of certain debt under its 
             conversion provisions which are effective from April 30, 1998 to
             May 1, 2006.

     (2)     Does not include 4,000 shares owned by Mr. Terris' immediate 
             family, in which shares he disclaims any beneficial interest.

     (3)     Includes 12,800 shares owned by Mr. Berlin's wife. 

     (b)     Security Ownership of Management

<TABLE>
<S>                                           <C>               <C>
                                                      Shares of Stock
                                                    Beneficially Owned
                                                     May 28, 1998              
Name                                             Number           Percent
                                              of Shares          of Stock

Arthur D. Stevens
1901 W. 69th Street
Mission Hills, KS  66205                        181,444   (1)      24.5%

George T. Terris
936 West Shaker Circle
Nequon, WI  53092                                 64,000   (2)      8.7%

Robert A. Laudicina
303 Cedar Court
Norwood, NJ  07648                                29,390   (3)      4.0%

Ann W. Stevens
1901 W. 69th Street
Mission Hills, KS 66205                            1,000             0.1%

Douglas M. Schosser
1050 Allston Road
Cleveland Heights, OH 44121                        2,000             0.3% 

All Directors and Officers
   as a Group (6 persons)                        289,989   (4)      38.4%

</TABLE>

     (1)     Does not include 60,000 shares beneficially owned by Mr. Stevens' 
             adult children, in which shares he disclaims any beneficial 
             interest.  Additionally, does not include 200,000 shares which may 
             be issued in the event of conversion of certain debt under its 
             conversion provisions which are effective from April 30, 1998 
             to May 1, 2006.

     (2)     Does not include 4,000 shares owned by Mr. Terris' immediate 
             family, in which shares he disclaims any beneficial interest.

     (3)     Includes 3,125 shares which Mr. Laudicina could purchase for $1.37
             per share under a stock option excersiable anytime before June 1, 
             2003.

     (4)     Includes 6,250 shares which could be purchased by certain officers
             and directors under stock options.

     (c)     Changes in Control

     The Company knows of no contractual arrangements which may, at a subsequent
     date, result in a change in control of the Company.


Item 12.     Certain Relationships and Related Transactions

     (a)     Certain Business Relationships

     There were no transactions with any member of management during 
     fiscal 1998 which exceeded $60,000.

Item 13.     Exhibits and Reports on Form 8-K 

     (a)     Exhibit No.:

          3A     Articles of Incorporation of the Registrant             (1)

          3B     By-Laws of the Registrant                               (1)

           6      1984 Incentive Stock Option Plan Dated January 31, 1984(2)

          10     Material Contracts Agreement with Paul F. Leathers      (1)

          22     Subsidiary of the Registrant                            (3)

     (1)     This exhibit was filed with the Ambassador's 10-K for the fiscal 
             year ended May 28, 1981.  A copy of the Certificate of Amendment 
             of Certificate of Incorporation changing the Company's name was 
             filed as a supplement to said exhibit for the fiscal year ended 
             June 1, 1989.

     (2)     This exhibit was filed with the Company's 10-K for the fiscal year 
             ended May 31, 1984.

     (3)     Exhibit attached as part of filing.


Exhibit No. 22

Subsidiary of the Registrant

Ambassador Food Services Corporation (a Delaware Corporation), the parent 
Company, has the following subsidiary, which is included in the consolidated 
financial statements.

Name of Subsidiary      State of Incorporation             % of Voting
                                                         Securities Owned
Ambassador Fast 
Services, Inc.
d/b/a Squire Maintenance
 Services                   New York                              100%


Note:     The Company will provide, on the written request of any stockholder, a
           copy of any exhibit to this Form 10-KSB at a rate of $.15 per page.  
           The minimum fee is $5.00.  Requests should be directed to Robert A.
           Laudicina, President, Ambassador Food Services Corporation, P.O. Box
           419586, Kansas City, Missouri 64141-6586.





                       Signatures


Pursuant to the requirements of Section 13 or 15(d) 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.


                                  AMBASSADOR FOOD SERVICES CORPORATION
                                         (Registrant)


             /s/ Arthur D. Stevens           Date December 9, 1998       
             Arthur D. Stevens
             Chairman of the Board




              /s/ Richard Mitchell           Date December 9, 1998
              Richard Mitchell
              Assistant Secretary


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and 
in the capacities and on the dates indicated.


                                  
                                   
/s/ Arthur D. Stevens             Chairman of the Board      December 9, 1998   
Arthur D. Stevens                 Title                      Date


/s/ Robert A. Laudicina           President and Chief
                                  Executive Officer/Director December 9, 1998  
Robert A. Laudicina               Title                      Date


/s/ Ann W. Stevens                Director                   December 9, 1998  
Ann W. Stevens                    Title                      Date


/s/ George T. Terris              Director                   December 9, 1998  
George T. Terris                  Title                      Date

/s/Douglas M. Schosser            Director                   December 9, 1998
Douglas M. Schosser               Title                      Date